News

Microsoft Games Division Almost Doubles Profit

by Matthew Kato on Oct 23, 2009 at 10:03 AM

Microsoft unveiled its quarterly earnings report for the period ending on September 30, and it was a tale of two reports. The company showing a 14 percent decline from last year, but the Entertainment and Devices Division, which houses the Xbox 360 and Zune, almost doubling its operating profit from $159 million to $312 million. Overall gaming revenue was up almost $100 million, with a 50 percent increase in Xbox Live revenues. Certainly the release of Halo 3: ODST is a big contributing factor here.

In a conference call following the report, Bill Koefoed, Microsoft's investor relations general manager, said that the Xbox 360 is boasting a 8.7 software attach rate and that the system's global installed base is almost 34 million units. This puts it in second place behind Nintendo (with over 50 million Wii systems sold) and ahead of Sony (almost 24 million PS3s).

The Xbox 360's attach rate – the average number of titles bought by each console owner – is key here, as it's software sold that makes Microsoft money in this case and not consoles. And 8.7 is historically very, very high.

With this news of Microsoft's game division doing so well, it'll only be harder for gamers to swallow the rumored Xbox Live price hike, should it come to pass. Of course, we don't know the reasons for the purported hike or where Microsoft is hoping to funnel that money into.