$500,000 for a 30 minute Xbox 360 advertorial when advertisers pay a million for a minute of airtime during the Superbowl? This was a real bargain, which Forbes is headlining as a “steal.”.

Let’s say the Xbox sells for $350. I don’t think anybody knows what the actual street price will be when it’s released later this year, but I would be surprised if it’s under $299.

1,428 units at $350 = $500k (rounded up).

Microsoft won’t be making much money on the system or controllers, the hardware is almost always being sold with low margins. So let’s say they make a miniscule 10% profit of the sale of each system. How many to sell to make back that $500,000?

14,286 x $35 = $500k (rounded up)

A mere 14,000 units with a profit of $35 per system. But let’s not stop there with the math because those systems probably won’t come with a controller or game. And the games will carry licensing fees to Microsoft. There is also the new proposed mall inside and I bet that won’t be completely free.

All in all Microsoft will pay for this MTV show ad in the first 15,000 units sold, which will probably be sold in their home state alone the first day at that’s if their profit margin is 10% and doesn’t even count licensing fees on third party titles.

I bet somebody got a raise for cutting this MTV ad deal. Deals like this and the new Xbox 360 may finally get Xbox out of the red, if they aren’t already. Sony had better hurry up on the PS3.

Did this post make you go hmm?

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