Xbox consoles aren't profitable, but Nintendo Switch consoles sure are.
Yesterday, Microsoft exec Lori Wright confirmed no Xbox console has ever been sold at a profit (Xbox is however about to make more money than it ever has before). The opposite couldn't be more true for the Nintendo Switch, which was manufactured to be profitable right at launch. Nintendo's recent FY2021 results illustrate this point quite clearly.
While Sony and Microsoft sell consoles at a loss and rely on game sales, monetization, and services to turn a profit, Nintendo designed the Switch so it made a profit at the beginning of its lifespan. Every year Nintendo makes profits from Switch hardware, and in FY2021 alone, the company generated a whopping $8.2 billion from hardware sales. Hardware made up over half (57.2%) of its total gaming earnings (over $16 billion), the company said in a recent earnings report.
Microsoft's Wright also said the company relies strongly on its 30% commission to even fund Xbox console development and produce systems. Sony, Microsoft, and Nintendo each have a 70-30 revenue split where developers keep 70% of all revenues, and they keep the remaining 30%.
For Nintendo, this 30% cut is a kind of bonus on top of its mighty hardware revenues and has contributed strongly to its more than $16 billion in gaming earnings for FY2021.
The company sold over 28 million Switch consoles during the year, pushing the Switch to 85.49 million and beating out legacy titan platforms like the Game Boy Advance.
Nintendo managed to sell over 230 million games and now its top 10 best-sellers now have sold over 10 million copies each.