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Kinect will sell for a profit, says Mattrick

Monday, 25 October 2010 17:48 GMT By Patrick Garratt

kinext

No loss-leading here.

Kinect will retail at a profit, Don Mattrick, Microsoft’s interactive entertainment boss, has told the New York Times.

The motion device, which is about to be the subject of an advertising campaign that will cost around $500 million, will add to company revenues for every unit sold.

Mattrick told the publication that the first Kinect prototype cost Microsoft $30,000 to build, but 1,000 workers would eventually be involved in the project.

He said that Kinect has cost “hundreds of millions of dollars” to develop, but will retailer with a margin at $150 in the US and £130 in the UK.

Microsoft’s confirmed that Kinect’s “launch portfolio” consists of 17 titles in the US and 19 in Europe.

Kinect launches on November 4 in the US and November 10 in Europe.

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30 Comments

  1. choochoo

    Day 1 buy for me and my friends u can count on me Microsoft.

    #1 4 years ago
  2. Razor

    Seems like a waste.

    #2 4 years ago
  3. choochoo

    @2 If u don’t have anything positive to say about Kinect don’t comment. Only positive comments would be appreciated lol.

    #3 4 years ago
  4. PwnedHaxor

    @3 Go Screw yourself, We’ve heard you say something positive about PS3?, Right!

    #4 4 years ago
  5. Gekidami

    And we’re expected to take Don Mattricks word on this? Seriously, Don Mattrick.

    #5 4 years ago
  6. cookiejar

    @1 lol

    #6 4 years ago
  7. AHA-Lambda

    srsly guys @1 is the absolute case where you should actually ban the fucker COME ON!

    #7 4 years ago
  8. Dark

    @3 STFU Kid.

    #8 4 years ago
  9. NiceFellow

    2 things

    1 – regular price will be $150 not margin. Margin is what you have when you deduct costs from sales price. MS would be very, very happy if the margin on Kinect was $150 per unit but it clearly won’t be (also a grammar failure in the same line. Might want to change it to “retail for $150″)

    2 – joining the dots it sounds to me like MS is going to have spent, between development and advertising, around $ 1 billion when Kinect launches. I’m assuming a margin of say $20 per unit at $150 retail, maybe $30 dollars at most unless they’ve really cut the production costs. So, that’s a lot of Kinect units they need to sell before they offset the development and marketing costs

    Just saying.

    #9 4 years ago
  10. lexph3re

    @1 and 3. Never seen bigger fanboism in my life. Do you even know why you hate anything else? Its like your hate is as justified as an Aryans hate. If you don’t want negative comments stop reading people are going to have an opinion. Just like your hate post of everything sony.

    #10 4 years ago
  11. manamana

    choochoo you are a prick – milk yourself and stop ruining this site with your utter useless comments.

    @Patrick: How about an ignore button ;-)

    #11 4 years ago
  12. OrbitMonkey

    Call me lazy, but i’m gonna wait till this can work when your sitting down :D Great concept though, will defo be keeping a eye on it.

    #12 4 years ago
  13. Psychotext

    “I’m assuming a margin of say $20 per unit at $150 retail, maybe $30 dollars at most unless they’ve really cut the production costs.”

    I just did a quick calculation on what I could buy all the parts of Kinect for at retail prices and I reckon about £56 without the costs of any custom processors (I believe there’s one on there) and packaging / manufacturing costs. It depends how much they’re giving each retailer (I’d wager a hell of a lot, which would explain why they’re pushing it)… but they’re going to be making more than $30, easy.

    #13 4 years ago
  14. DrDamn

    @13
    Not to mention profits from software, extra 360 sales, extra regular software sales to those new 360 owners, peripherals for those new 360 owners etc. Yes they will sell Kinect to make profit, but they aren’t relying on just that profit to make their money back.

    #14 4 years ago
  15. manamana

    I bet they make a lot more. As you can read at kotaku, what the iPhone is about:

    “One market research firm has estimated that the iPhone 4G costs US$6.54 to make in China.”

    if the “market research firm” is to be believed. Gaining a 60% profit margin on each hardware. I bet M$ will be somewhere around that number …

    #15 4 years ago
  16. Psychotext

    Something’s wrong there… if it was $6.54 they’d be making nearly a ten-thousand percent profit, not sixty.

    #16 4 years ago
  17. manamana

    Guess it just takes the components into account and not the assembly and the productioncosts as a whole… Hmmm, while the article states “making”…

    Maybe they must add shipping, distribution, marketing etc.?

    #17 4 years ago
  18. NiceFellow

    @13 & @14 retail will be taking a nice snip out of it. This isn’t Apple tech. I’m sure they’re making a profit, but the retailer is going to want a nice margin of the initial $150.

    Say the retailer takes $30, that leaves $120. Say MS takes $30, that leaves $90 dollars for production plus shipping and other associated costs.

    MS might be seeing more than $30 but only if production/shipping costs are a lot less than I’d imagine or if retailers were willing to take a very small cut.

    Even if MS is seeing $50 profit (which seems hugely unlikely) that’s still a ton of Kinects that have to sell just to cover marketing costs of $500 never mind development.

    MS are of course going to say each unit sells individually for a profit (they probably will) but that doesn’t mean MS is actually going to see a profit vs sunk costs anytime soon.

    Also, Pat, you’re still quoting margin incorrectly. Kinect will retail for $150 not margin.

    #18 4 years ago
  19. Bremenacht

    It’ll what for a profit?

    arf

    #19 4 years ago
  20. freedoms_stain

    @15,16,17 According to iSuppli, guys who tear down electronics and estimate the raw cost of manufacture, the iphone 4 runs $187.

    The quoted $6 and change probably refers to the cost of assembly and possibly shipping shit to-from China.

    #20 4 years ago
  21. DrDamn

    @18
    It’s not just about profit on each unit.

    #21 4 years ago
  22. Psychotext

    “Even if MS is seeing $50 profit (which seems hugely unlikely) that’s still a ton of Kinects that have to sell just to cover marketing costs of $500 never mind development.”

    Of course, but it’s a lot more complicated than that. You’ll obviously see increased 360 sales, increased xbox live subscription sales, increased live points sales, increased gaming revenue… etc etc. That’s assuming it sells any reasonable amount of course. :)

    As for development costs… well, they’re already accounted for by the divisional results so far, and they’re yet to dip back into losses.

    #22 4 years ago
  23. themadjock

    @choochoo Have you seen that latest Kinect trailer

    http://www.youtube.com/watch?v=i0Xu6EN6mlQ

    lol

    #23 4 years ago
  24. NiceFellow

    @22 remember, unless Kinect really bucks trends, that if you look at the Wii these kinds of titles/platforms tend to see lower attach rates, etc. and less online activity.

    I’ve no doubt Kinect has the potential to be profitable, but it won’t be for a while in terms of return on investment, and not at all unless it sells past a certain install base.

    Not bashing, just saying. When the Wii launched it sold at a profit, but return on investment by Nintendo wouldn’t have come until a later point.

    #24 4 years ago
  25. Psychotext

    Ironically the Wii’s attach rate was virtually identical to the PS3′s until very recently (and at one point a decent amount higher). But yes, I’d assume that casual gamers would buy fewer titles, but even so, it only takes two or three games bought by each Kinect owner to significantly increase their profitability through each Kinect sold.

    As for the Wii, I can pretty much guarantee it was profitable within the first six months. They made $600m profit in that time, and nearly $2bn over the first year.

    #25 4 years ago
  26. NiceFellow

    @25

    y’know, whatever you say, I’m factually correct in pointing out:

    1 – while Kinect will no doubt sell for a profit per unit it’ll take a while to actually make a return on investment

    2 – the article says (still) that the device will retailer for a margin of $150 which is both grammatically and factually incorrect as it will Retail for $150, margin unknown but according to the quote a positive one

    I’m not knocking Kinect but you sure seem keen to try and respond as though I am – or at least it seems like that.

    It’s new tech, which means initial margins will probably be low as production costs reduce over time, and unlike most peripheral’s it’s fairly new design/tech combination.

    Nothing wrong with that, but one quote saying each unit will sell for a profit shouldn’t have everyone (wrongly to be blunt) going oh’migod MS are going to be raking it in.

    Nintendo were raking it in although sales sure seem to have dipped recently, and to be blunt (again) Kinect needs to post some fairly hefty sales before (with the marketing budget freely disclosed plus a pretty obvious hint as to the development costs) MS are going to be raking it in via Kinect, particularly as nothing about the device screams to me they’ll see abnormally high attach rates nor big spikes in Live subscriptions driven by the launch titles.

    MS aren’t spending $500 million for nothing, though, and Kinect is clearly part of a long play not just for the 360 but to better set them up for their next console.

    #26 4 years ago
  27. Psychotext

    I care not about Kinect. I like numbers, especially sales figures, profit and the like. I’m sure you’ve seen me around here before and must have had an inkling when you saw my post. Look carefully at my posts again, they’re hardly defensive of Kinect, I simply disagree with some of your points.

    But anyway, as I alluded to, the tech inside Kinect isn’t witchcraft, or particularly expensive (you could grab it pretty much all of it between Maplin and RS Electrical). The software is complicated, but obviously the costs associated with that are already at play in the financial results. Talking of which, we’ll see the first launch related effects of Kinect in their quarterly results later this month. Should be interesting.

    As for what I said about attach rates. You think they can’t manage an attach rate of 3 (is that “abnormally high?) games for each new 360 / Kinect owner? Even Nintendo has managed 7+ for the Wii at its peak, and the 360 catalogue (not Kinect, the 360 catalogue on the whole) is significantly stronger. I’d be surprised if people don’t try a few things out before throwing it in the cupboard.

    As for live subscriptions, no, probably not, but they’ll be pushing movies, music and other assorted crap like Hulu, Netflix, ESPN, Sky etc at the casual market, HARD. Hell, maybe they’ll sell a few avatar accessories along the way too…

    You’re absolutely right about that $500m though, and as you said, looking at it as just Kinect marketing is a little limited because they’re really not just marketing Kinect, they’re marketing the entire Xbox brand.

    (Finally, yes, margin is definitely used incorrectly in this article. But Pat doesn’t understand complicated financial terms. :D )

    #27 4 years ago
  28. LOLshock94

    whatever choochoo is doing please keep it up

    #28 4 years ago
  29. Kuwabara

    im going to make a video of me crapping on kinect just for u choochoo

    #29 4 years ago
  30. Jan

    choochoo +1

    #30 4 years ago

Comments are now closed on this article.

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    BioWare cinematic director Ken Thain has given us a very slim look behind the scenes at some motion capture work from the upcoming Mass Effect game. The upcoming Mass Effect game, whether it ends up being called Mass Effect 4 or not, will most definitely incorporate some form of motion capture work. How do we […]

  • Borderlands: The Handsome Collection – 8GB day one patch on PS4, 16GB on Xbox One

    Day one patches for Borderlands: The Handsome Collection are pretty hefty. Both the PlayStation 4 and Xbox One versions of Borderlands: The Handsome Collection require players to download lots of gigabytes to make the experience as smooth as possible. The PlayStation 4 version has an 8.31GB day one patch. The Xbox One version however has […]

  • Get a PlayStation 4 with Bloodborne and The Last of Us for $435

    If you’ve been waiting for the perfect game to get to buy a PlayStation 4, there’s no better time than the present. Amazon is offering a good PlayStation 4 bundle at the moment. For $434.99, you get a PlayStation 4 console, The Last of Us, and Bloodborne. The Last of Us is of course the […]

  • Upcoming Battlefield Hardline patch to nerf the K10, buff battle rifles

    Battlefield Hardline’s first patch will focus on weapon balance and a few changes have been proposed. Battlefield Hardline lead multiplayer designer Thaddeus Sasser posted a few of the balance changes that the team is considering for the next patch. K10: reduce bullet damage to 33 Saiga and PTR: reduce recoil to bring more in line […]

  • Call of Duty: Black Ops 3 and a new Resident Evil game coming this year, according to research firm

    According to digital games analyst SuperData, a new Resident Evil game is due this fall and that this year’s Call of Duty is Black Ops 3. In its latest report on digital console games, research and analytics firm SuperData revealed that a new Resident Evil is coming this fall. “We anticipate this month’s downturn to […]

  • Bloodborne: you can add gestures to your messages

    As players get deeper into Bloodborne, they keep uncovering so many of its little new additions, including this one. Bloodborne, like all of the Souls games before it, allows players to leave messages for other players. These messages could be used to point players towards impending doom, treasure, or just be sarcastic and witty. What […]

  • PlayStation 4 firmware update 2.50 is now live

    PlayStation 4 firmware update version 2.50 has started rolling out. Reports are coming in saying that Yukimura, PlayStation 4′s firmware 2.50 has been made available to download. The update is clocking in at just 245mb, so get downloading. 2.50 brings with it many new additions, including the suspend/resume feature, backup and restore, accessibility options and […]

  • Harley Quinn DLC for Batman: Arkham Knight is a prequel

    Batman: Arkham Knight’s Harley Quinn pre-order DLC is set before the events of the main game, according to Amazon’s description. Today we learned a few details about the pre-order DLC for Batman: Arkham Knight, namely the Harley Quinn one. According to the description on Amazon, the DLC takes place in the lead-up to the events […]

  • Bloodborne Vicar Amelia summon mystery solved

    Bloodborne players unable to summon near Vicar Amelia: here’s your solution. Bloodborne’s secrets are unfolding by the hour as clever players piece together From Software’s cunning design. Yesterday we reported problems summoning in the Cathedral Ward, before the Vicar Amelia boss fight. It turns out this isn’t a bug – or if it is, it’s […]

  • Steven Spielberg will direct film adaption of Ready Player One

    Steven Spielberg will direct the film adaption of the sci-fi, virtual world, video game themed novel Ready Player One by Ernest Cline. Warner Bros. bought the rights to the film in June 2010 and hired screenwriter Zak Penn to rewrite the previous draft written by Eric Eason, according to Deadline. The book takes place in […]

  • Bloodborne players with PS4 headsets shouldn’t forget about the custom audio

    Here’s a friendly reminder for Bloodborne players with PS4 headsets: be sure to download the Headset Companion App from the PlayStation store if you haven’t already. As previously reported, the game supports a custom Bloodborne audio mode which can be uploaded. It contains custom audio created by developers specifically tuned to enhance the audio. This […]

  • EA explains why FIFA Ultimate Team transfer prices are now platform specific

    EA has posted a blog entry explaining its FIFA Ultimate Team transfer market price ranges which now include platform-specific pricing in order to best the coin sellers. EA said it has implemented the changes to FUT over the last several weeks because it should be “fair and fun for every player,” ultimately coming to the […]

  • Game of Thrones: Episode 3 – The Sword in the Darkness now available

    In case you forgot, Game of Thrones: Episode 3 – The Sword in the Darkness was released today. It is available on Mac, PC, PlayStation 3, PS4, Xbox 360 and Xbox One. The third episode releases on iOS devices and Android tomorrow, March 26. The Sword in the Darkness finds Asher Forrester heading to Mereen […]

  • Bloodborne players are already documenting their crazy antics

    Bloodborne has been available for almost two days now in North America, and already players are posting interesting clips and character customization choices for the game. Below are interesting takes on creating a character and videos of a frustrating death and another full of blood coming from a very painful place – monster or not. […]

  • FIFA Ultimate Team celebrates sixth year in existence with giveaways

    FIFA Ultimate Team is celebrating its sixth year in existence with special events running from today until March 29. According to EA, every FUT fan will be handed one free pack every day, and those who play at least one match in the FUT Birthday Cup will have a chance to win rare “tradable In-Forms” […]

  • Halo Online is a F2P PC game in development exclusively for Russia – video

    Halo Online is a free-to-play game which will launch this spring in Russia, and is in development with Saber Interactive. According the reveal event attended by IGN Russia, the game was designed to run well on lower-end PCs and runs on a modified Halo 3 engine. The game is set on a secret UNSC space […]

  • SteamWorld Dig Xbox One release expected in late May

    SteamWorld Dig is coming to Xbox One, developer Image & Form has announced. A firm release date hasn’t been announced, but the studio expects the title to arrive on the system in late May. “We’re preparing quite an elaborate Easter egg for the Xbox One version – a gaming thing that we really wanted to […]

  • SMITE celebrating first anniversary with a sale on skins, Ultimate God Pack

    Hi-Rez Studios is celebrating the first anniversary of SMITE with a sale. From today through Friday, March 27, the Ultimate God Pack, which includes all current and future Gods, will run you $19.99. Alll individual pre-launch skins are 50% off, and all Gem Packs will award bonus gems. In addition, from March 27-29, all SMITE […]

  • Borderlands 2 has sold around 12 million copies, says Gearbox

    Speaking with Microsoft’s Major Nelson in his podcast, Gearbox Software boss Randy Pitchford stated Borderlands 2 has sold somewhere around the 12 million mark. As of August 2014, it was announced by Take-Two in its financial report the 2012 game had sold-in 10 million units. Pitchford noted in the podcast he learned of the figures […]

  • Broken Age releasing on PS4 and Vita same day as Act 2 on PC

    Double Fine Productions has announced it will release Broken Age on the PlayStation Store next month. Act 2 will also be released on PC. The full Broken Age adventure will release on PlayStation 4 and Vita on April 28 in North America and April 29 in Europe. It features cross-buy and cross-save. Broken Age Act […]

  • Star Citizen earned another $1 million within two weeks – total hits $76 million

    Star Citizen continues its funding streak with backers pumping another $1 million into the game’s development in the last two weeks. The total earned for the space sim has now reached $76 million ($76,015,532 to be exact) with 851,395 backers contributing to the staggering figure. Star Citizen’s latest update was version 1.1 which included two […]

  • Final Fantasy Type-0 HD, Resident Evil Revelations 2 and Battlefield: Hardline top Media Create charts

    Final Fantasy Type-0 HD, Resident Evil Revelations 2 and Battlefield: Hardline were the big ticket debuts during the March 16-2 period in Japan, with each game claiming the top three slots on the Media Create charts, respectively. Final Fantasy Type-0 HD moved 92,094 on PlayStation 4, while Resident Evil Revelations 2 moved 73,373 units on […]

  • You can now learn English or Spanish on Xbox One with the Rosetta App

    Want to learn English or Spanish? Rosetta Stone has an App for that on Xbox One. According to the language teaching firm, Rosetta Stone’s Discover Languages, the new application teaches English and Spanish by way of immersive simulation. Users will virtually travel to learn vocabulary and grammar “necessary for real-world interactions.” Here’s how it works: […]

  • PayDay 2 and PayDay: The Heist have sold over 9 million units combined

    The PayDay franchise is a lucrative IP for Starbreeze and Overkill, as both games combined have sold over 9 million copies as of November 2014. The company has also sold over 8 million paid DLC packages since PayDay 2 was released in 2013 (via NeoGAF). In its Q2 half year report issued in February, net […]

  • Nintendo wants to “surprise” customers with NX, not expand upon existing hardware

    Nintendo president Satoru Iwata has firm wants to “surprise” players with its new NX system. Speaking in an interview with Nikkei, translated by Kotaku, Iwata wouldn’t go into details on the new system, but stated expanding on a current gaming system would be “dull.” “In the past few years, the idea of what [encompasses] a […]

  • Kojima Station show suspended

    In another episode in the the ongoing kerfuffle between Hideo Kojima and Konami, the publisher has suspended the Kojima Station web show. Recent tweets from the newly created Japanese Metal Gear Solid account confirm that Kojima Station will not be broadcast tomorrow, but would not provide a date for the next episode. The Tweets were […]

  • Watch Battle Royale for free this weekend on Xbox Live

    Square Enix is celebrating the launch of Final Fantasy Type-0 HD by offering Xbox Live members in the UK a free rental of Battle Royale. Starting Saturday, March 28 and through Sunday, March 29, Xbox Live members in the UK will be able to rent Battle Royale through the Xbox Video Store, for free. The […]

  • Bloodborne journal, part 1: managing anxiety on the path to the Cleric Beast

    Bloodborne is both like and unlike the Souls games. Brenna descends into Yharnam with reluctance and trepidation. Need help succeeding in Bloodborne? You need our Bloodborne walkthrough and boss guide. Bloodborne isn’t Demon’s Souls or Dark Souls. Let’s get that out of the way right off. I enjoyed both Dark Souls games, but it was […]

  • PS Store Easter sale discounts MGS: Ground Zeroes, Far Cry 4, more

    The Easter Sale is live on the EU PS Store, with Metal Gear Solid 5: Ground Zeroes for less than £10, FIFA 15 Deluxe Edition for £30 and other savings. Some of the PlayStation 3, PS4 and Vita discounts are valid through April 8, other through April 15. PlayStation Plus members can also take an […]

  • Bloodborne video: how to unlock the first shortcut in Old Yharnam

    Here’s a video for Bloodborne players showing a quick way to unlock the first shortcut in Old Yharnam. It also provides a look at things you may have missed in Central Yharnam and The Sewers, courtesy of VaatiVidya. Don’t forget, we have guides posted for the game with more updates coming soon. Bloodborne released in […]

  • Bloodborne issue prevents summons at Vicar Amelia fight

    A Bloodborne bug has prevented players calling on help to take on one of the nasty early bosses. Bloodborne bosses are significantly easier to take down in co-op. Unfortunately, at least one of them is proving difficult to find help for – and not just because not many players have obtained the Small Resonant Bell […]

  • Mass Effect 3 on sale on EU PSN, but not free

    Mass Effect 3 is discounted on the European PSN, but it’s not free. Update 2: The option to add to cart now lets you choose between the free trial or full version. The full version is on sale for £6.49 or £5.84 for PlayStation Plus members. The free trial is of course is still available, […]

  • Elite: Dangerous Race to Elite winners announced, one player makes £10,000

    The winners of Elite: Dangerous’ Race To Elite competition have been announced, with one player receiving the grand prize of £10,000. Back when Elite: Dangerous launched, developer Frontier announced a competition that would award players to first reach Elite rank in trading, exploration, or combat, a prize of £1,000 each. The grand prize – £10,000 […]

  • GTA 5 Online Heists guide: How to make the most money with Special Bonuses and Elite Challenges

    You’re not hitting heists for the good of your health. Here’s how to max cash rewards. Money. GTA Online players love it. Greenbacks are the core of the entire experience, allowing you to buy the best weapons, vehicles and stupid haircuts. Heists, as promised, gives more opportunities than ever to earn serious cash, but once […]

  • PlayStation 4 firmware update 2.50 coming tomorrow

    PlayStation 4 firmware 2.50, codenamed Yukimura, is due for release tomorrow, March 26. Firmware update 2.50 for PlayStation 4 will be launching tomorrow, March 26, Sony has announced. Codenamed Yukimura, the system update is promised to bring suspend/resume feature, trophy sync improvements, accessibility options, and much more. 2.50 has been in beta testing a while […]

  • GTA 5 Online Heists guide: adversary modes, daily objectives, free roam challenges and more

    Heists aren’t the only addition in GTA Online’s latest DLC – there’s a lot of content that can earn you big RP and cash payouts. GTA 5 Online Heists guide: adversary modes, daily objectives, free roam challenges While heists are the talking point and big payoff after more than a year of waiting, there’s a […]

  • Battlefield Hardline: what’s the best Police sniper rifle?

    What’s the best bolt-action, Police sniper rifle for the Professional class in Battlefield Hardline? Let us help you answer that question. As you’re probably aware, Battlefield Hardline weapons are class specific and faction specific. This makes deciding on a good weapon and loadout much harder than it was in Battlefield 4. Which is where Westie […]

  • Evolve 1.3 patch nerfs Wraith, adjusts Kraken

    Evolve is receiving a new patch that aims to put an end to the Wraith’s dominance. Evolve developer Turtle Rock outlined a few of the changes coming in patch 1.3. The patch brings balance changes to the monsters – mainly the Wraith – as well as other various changes to Hunters’ tools based on player […]