[xienze]

> This is still $150M of pure gravy every single year

You're neglecting to consider that any time they acquire a studio or have a flop or two -- poof goes that $150M and probably more. It's not a risk-free venture. Entertainment is all about hits, and misses hurt.

Would you put up $5K to win $150 on a hypothetical roulette wheel that hits 90% of the time? The math's not perfect obviously but Xbox is a somewhat similar situation. Microsoft is putting up nearly $5B a year to make $150M. They'd be better off stuffing the $5B into bonds or something. There is a point where the returns aren't high enough to justify the expenses when risk is taken into consideration.

[nicolas_17]

If they shut down their gaming operation and instead decide to stuff money into bonds, where would that $5B even come from?

As said elsewhere in the thread:

> You’re saying that they should take the money people pay to buy Xboxes and put it in T-bills instead of delivering Xboxes?

[mike_hearn]

ROI lags. If they laid off 90% of the Xbox division and left only enough to keep the lights on (they don't run their own factories I guess), then they'd still get nearly the same amount of income the next year with far lower costs. Of course revenue would start to sharply decline as the number of games produced was much lower, as the tech became obsolete. But it's not like revenue would evaporate instantly.

So they could do that and invest the income they still get into bonds, and then that would be where the returns come from.

They don't want to do that obviously, hence why Xbox needs reform.

[xienze]

> If they shut down their gaming operation and instead decide to stuff money into bonds, where would that $5B even come from?

Wherever it comes from now! They're spending about $4.85B to bring in $5B.

[twoodfin]

The money they’re not spending on the Xbox every year!