Over the past several years, there have been three major players in the console market, Microsoft, Nintendo and Sony.
A console-maker has a number of avenues for drawing revenue from its console. It charges for console development kits, and code-signing, which allows it to pull a share of all third-party games revenue. It can charge network subscription fees to draw ongoing revenue from the console’s customers, it can produce its own first-party games with a greater margin than third-party developers, and – of course – it sells the actual console hardware and accessories. In short, the console-maker has the most opportunity to pull revenue from every part of the console ecosystem.
So, how much actual profit does that amount to for a console-maker? Well, in the case of Microsoft and Sony, the simple answer is none at all.
Sony’s console division hasn’t generated any profit since the Playstation 2, and Microsoft’s console division has never made a profit.