Xbox 360 sales are down 50 per cent this quarter compared to last year. Perhaps this is the reason Microsoft has been releasing positive information like a big growth in Xbox Live usage.
The sales numbers of new systems throughout Q1 were 1.4 million, which is just under half of what was sold last year. Thanks to this, revenue also took a big hit, dropping by 33 per cent to $584 million.
According to MCVUK, this represented a third of the $1.6 billion revenue for the period but even that turnover wasn't enough to score profitability. Over the quarter the Xbox division lost $339 million. This time last year, it posted a profit of $210 million.
It's also been reported that R&D costs for the Xbox division have been on the rise recently, perhaps due to the development of internal next generation machines. There has been speculation that Microsoft could be splitting the 360 sequel into two distinctive consoles: one known as the Durango being the spiritual gaming successor, and the second, the Loop, being more of an entertainment centre.
It seems likely however, with the growing trend of multi-tasking devices like smartphones replacing MP3 players, sat navs and more, that Microsoft will simply release one next-gen machine and market it as a media as well as gaming device. It'll certainly have the internal hardware to handle both.