Lower-cost Xbox One is hurting the platform's bottom line


Microsoft’s financials are in

Microsoft slashing the price of the Xbox One may be a positive for consumers, but it’s a negative for the company’s investors. The results from quarter three of Microsoft’s 2015 fiscal year are in, and the Xbox division took a hit.

According to the report, the Xbox platform saw a decrease in revenue of $306 million — 24 percent — when compared to the same quarter last year. This can be attributed to a 20 percent decline in console sales year-over-year combined with a lower price point which drives less revenue. Microsoft also cited an unfavorable foreign currency impact of four percent, which didn’t help matters.

For the year-to-date, Xbox isn’t faring much better. The platform’s revenue is down eight percent compared to the same time in 2014. Sales remain relatively consistent, however; last year outpaced 2015 by only 100,000 consoles sold. The decline in revenue stream can (again) be chalked up to that lower price and a decrease in money earned from second- and third-party games.

Microsoft didn’t make mention of adjusting its end-of-year expected figures to account for these declines. That could be an indication that it anticipated this effect. If that’s the case, Microsoft’s gambling on sacrificing revenue in the short-run to ensure the longevity of the platform in the long-run.

Microsoft quarter three results for fiscal year 2015 [Microsoft]