Microsoft: Xbox 360 will last three more years

All eyes have turned to the next-generation and, in Microsoft's case, Xbox One, due out alongside the PlayStation 4 in November. But according to one senior Xbox executive, the eight-year-old Xbox 360 has plenty of life left in its old bones.

Speaking at the Citi Global Technology Conference yesterday, Xbox chief marketing and strategy officer Yusuf Mehdi was asked about the volatile profitability of Xbox over the years - and what the launch of Xbox One means for Microsoft's bottom line.

Responding, Mehdi pointed to Xbox 360, which launched in November 2005, as a money-maker, offsetting the expense of researching, manufacturing and launching a next-generation console.

"You've seen us over the years constantly be focused on profitability and improving year over year," he said. "There are different points in the cycle of when you invest in new hardware.

"If you look at 360 that platform lasted for seven to eight years and it's going to go for another three years. It's incredibly profitable now in the tail.

"Some of these things take some time in the launch year in which you invest, and then they they play out over time."

Mehdi also pointed to Xbox Live, the digital subscription-based platform that generates millions for Microsoft, as another on-going revenue stream.

"We've seen our Xbox Live subscription service continue to grow," Mehdi said. "We're up to 48 million members now. We're shipping more games than we've ever done before. Those are things I look to to say, 'hey we can grow not just top line revenue but also profitability.'"

Later, Mehdi said Microsoft will ship over 100 new games for Xbox 360. "We're going to continue to invest in Xbox 360, and the two devices can work in concert. So it's not like the day we ship Xbox One your 360 won't work. We'll continue to support it."

If Xbox 360 does last another three years, Microsoft will phase it out in 2016 - what amounts to an impressive 11-year lifecycle.

Many publishers, including Call of Duty maker Activision, have said they expect their multiplatform games to sell best on current generation platforms because of their huge install bases.

Meanwhile, while console manufacturers often make a loss on each unit sold, particularly at launch, Microsoft said it intends for the £429 Xbox One to be a profitable product from day one.

"The strategy will continue which is that we're looking to be break even or low margin at worst on [Xbox One]," Mehdi said, "and then make money selling additional games, the Xbox Live service and other capabilities on top.

"And as we can cost reduce our box as we've done with 360, we'll do that to continue to price reduce and get even more competitive with our offering."

Sony has also suggested the PlayStation 4 will be profitable quicker than the PlayStation 3 was. "We have taken some strategic decisions around cost structure, architecture of the system itself and key components, which are all radically different from decisions that we took around PlayStation 3," Sony Computer Entertainment boss Andrew House said in June.