Can we agree that Xbox aquisition strategy has been an absolute flop?

They should leave the hardware market and focus on gaming ips only. Put the efforts on that:

You have a lot of space to make great great games (halo, gears, perfect dark, tes, fable) -AND THEY CHOSE TO BLEW IT UP-.

But, of course, we know nothing... we are just a community that has been gaming since we were 2 years old.

Look at what happened, for example, with "Hi Fi Rush," an excellent game unique in its genre. It arrived on "GamePass" on day 1. A week later, they closed the studio.

It's not a problem that they don't have games, it's a problem of mismanagement, Phil has to go.
 
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I guess that OP doesn't get strategies

- Xbox is not just a console brand, it's a service. Wanna play Forza on a Samsung TV? Steam Deck? PS5? Xbox wins. They're not into exclusives anymore, and it's been a while actually
- when you buy a company, it's not really expected to have profits from the get go. A cost is a billion? They think in like ten years if they can make just a little more. Public companies turning into private are expected to get profit in like 20 years for comparison
- Even thou the company can be established as a whole, Xbox thinks it's more from the IP perspective than the production team
- Microsoft, Apple and Nvidia surfs in the podium of biggest companies in the world. Ego talks a lot, and this means buying other smaller companies just because. It's not normal to kill in this scenario. I mean, Shazam is from Apple since a few years, and they're not killing since is a very popular app, but we are seeing a lot of layoffs. Take the last three years and you see that this is very normal on the industry
So they paid 80B to make Forza available on a Samsung TV? I really don't get the argument or how it relates to anything said here.
 
On the other hand, no one wants to play a game on cloud, its a messy thing. You have a full market pushing competitive gameplay 275hz, 0.1 ms second response. Why would anyone choose to play with 140ms, when you could save up and buy a console for 300 dollars?
 
So they paid 80B to make Forza available on a Samsung TV? I really don't get the argument or how it relates to anything said here.

They paid $80 billion dollars to acquire some of the most valuable IPs in gaming and increase their revenue.

It's basic maths and investment that most people don't understand here or are to stupid to, Microsoft have insane amounts of cash on hand that just keeps growing. They spend $80 billion and it generates $80 billion in return faster than the interest.

They DO NOT CARE where you play their games, as long as they're getting the most revenue generated possible for those games.

They also continue to own that valuable asset.

Edit - also how many fucking times are we going to have this thread.
 
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They paid $80 billion dollars to acquire some of the most valuable IPs in gaming and increase their revenue.

It's basic maths and investment that most people don't understand here or are to stupid to, Microsoft have insane amounts of cash on hand that just keeps growing. They spend $80 billion and it generates $80 billion in return faster than the interest.

They DO NOT CARE where you play their games, as long as they're getting the most revenue generated possible for those games.

They also continue to own that valuable asset.

Edit - also how many fucking times are we going to have this thread.
facepalm.gif
 
The larger acquisitions only made sense in support of a strategy of having a future console stacked with major exclusives ready to go at or near launch. ie. If they intended to win the next console cycle. Presumably they have now abandoned that.

It reeks of an internal power struggle over the direction they should go in. I really don't think those acquisitions were made with the intention of abandoning the console war and becoming a glorified version of Sega, but now they've decided to cut their losses and make the best of it.
 
Everything this company touches turns to shit. Not even just Xbox but general computer software, hardware, AI development, cloud solutions, enterprise solutions; everything is just varying degrees of awful.
 
No, we can't agree to that.



the sopranos smoking GIF
 
It really is crazy that Phil still has a job
He's a higher up. There's so many companies where bad choices they make affect everyone but them. I know a guy that his company's VP (who was in charge for 2 years) had this idiotic brain child that flopped hard. My friend, who's worked at the company for over 10 years, was laid off and all their work went to India. The VP wasn't punished.
 
We can all agree that buying Activision and Bethesda had three primary goals:
  1. Increase Xbox hardware sales
  2. Increase number of exclusives
  3. Increase GP subcriptions
Already disagree with the initial hypothesis.
Companies do acquisitions to increase their value, not to win console wars.
 
IMO, Microsoft tried to buy their way to success and it didn't work out in their favor, so it's throwing the hands up time.

They did this in other industries(iPod, phones, etc). Xbox simply made so many mistakes that it was insurmountable in the end also.

It's like beating a dead horse as I've mentioned in so many other threads, but I just firmly believe they never recovered from 2013.

I was on the front lines back then in gaming retail with GameStop and the backlash against Microsoft was *immense* post-E3, not just consumers but the retail industry.

GameStop was not interested in supporting them and back then, GameStop had a *lot* more power than they do now by a long shot.

I received my allocation email for my stores regarding pre-orders for the systems and it was, kid you not, most PS4 allocation per store was 90 on the low end to 125. Xbox was 10 on low end to 25 at max. Numbers may be off due to memory, but it was easily that subtantial.

I asked my regional "What gives? Why arent there any Xbox Ones available comparatively? No supply?"

He responded "No, there is. Xbox doesnt support GameStop business model and Playstation does. So we aren't ordering much at all as a company"

So again, I think they made too many mistakes and decided, for lack of a better comparison, throwing money out was the answer.

Their actions lately have been like Nicholsons Joker throwing money at the crowds and then turning on the Smilex Gas balloons.
 
It has been a failure on all accounts.

Failure with output
Failure on retaining talent
Failure with imrpoving sales figures and market share
Failure with regulation apparatuses (which should have blocked such a massive merger immediately)

Microsoft has been a nonstop disaster and it's still not finished.
 
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Here's what they should have done. Everything but CoD exclusives. Decrease Gamepass price and DO NOT allow day one AAA titles on it. Play the long game.

The issue is that they rush the process to recoup investment. No way tango should have closed. They should have green lit a sequel and drop massive marketing budget behind it.
 
I'm sure the ATK acquisition makes sense for MS, ATK is very profitable. For Xbox things are different, but MS doesn't really need Xbox and if it gets too annoying for them, they'll just kill it like many other things they have killed in the past.
 
We can all agree that buying Activision and Bethesda had three primary goals:
  1. Increase Xbox hardware sales
  2. Increase number of exclusives
  3. Increase GP subcriptions
Let's first examine the cost of the acquisitions. Usually when you buy a company you expect to recoup the investment by the free cash flow the adquired company will generate in the future.
  1. Activision was generating about 2.5B FCF before the acquisition. Microsoft paid around 75B for them, so they paid 30x FCF. If FCF grows at 5% a year it means they'll need at least 19 years to recover the invesment.
  2. For Bethesda we do not know how much FCF they were generating but we know they paid 8B dollars for them. I doubt Bethesda was generating even 20% of what activision generating, so let's say they were generating 800M FCF a year, again, highly optismic. They would need 10 years to recover the investment.
This is important because it's Satya's point of view. He doesn't give two fucks about console wars, he knows he spent a lot of money because Phil asked and now he wants to recover the investment.

Now let's look back at the three goals:
  1. Increase Xbox hardware sales: Absolute Flop, not sure if more explanation is needed: https://www.kitguru.net/gaming/mustafa-mahmoud/xbox-series-xs-console-sales-fell-by-almost-50-in-2024/
  2. Increase number of exclusives: Gears of War, Forza Horizon, Sea of Thieves, Oblivion Remaster, Indiana Jones... Not only significant % of new games 1st party games are not exclusive, also massive exclusive franchises have gone multiplatform.
  3. Increase GP subcriptions: OK. Number of gamepass subs we know it has grown from 24-25 million in 2022 to 35-36 million in Q2-Q3 2024. But that growth seems to be stagnating:
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This is an additional issue, because everyone in the industry know with 35M subs you cannot cover 1st party cost + 3rd party licenses + opex cost. That's why MS is going multiplatform, they tought they could spend competition into bankruptcy offering a service below the cost of revenue and it has flopped.

Opinions?
hell yes
 
This was just microsoft doing what they've always done in every market.. buy everything they can, slowly destroy it (sometimes fast) rinse and repeat, yet somehow people still get surprised when it happens
 
It could have worked.
But when they finally had everything lined up, some cuck decided they'd go 100% multi-plat for IMMEDIATE gains, rather than build a library of exclusives that'd grow the brand and userbase for the future.

No exclusives = no reason to buy your console. There is zero point them releasing another console at all.
 
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The whole concept of buying a Studio, throwing their games on Gamepass and expecting a return on your investment when your gamepass is the one failing mostly is crazy to me, so yeah that strategy sucks and it shows
 
This was just microsoft doing what they've always done in every market.. buy everything they can, slowly destroy it (sometimes fast) rinse and repeat, yet somehow people still get surprised when it happens

Exactly.
This strategy has been created and perfected by Microsoft and the US Department of Justice even gave it a name: Embrace, Extend and Extinguish

 
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And everything beforehand, the original Xbox was a huge flop.

360 was a blip, it was a decent console that took advantage of PS3's high price, it became THE place to play the latest FIFA and COD games for that generation and that generation alone.

See this is where I tend to break on the whole "it's a flop, it's not a flop" POV. OG Xbox didn't stand a chance of outselling PS2, but they still managed to outsell the GameCube, and had a lot of cool games that were exclusive or first on the system, or where the only other place you could've played them was PC. Halo 1 & 2, Crimson Skies, DOA3, Outrun 2, the Otogi games, Shenmue II (Dreamcast got it but only in Japan), Gun Valkyrie, Spike Out, Ninja Gaiden, best console version of Splinter Cell, PGR 2, Rallisport Challenge, Riddick, DOOM 3, and plenty more. XBL was a huge deal at the time and easily beat whatever online infrastructure PlayStation and Nintendo had going. You could tell OG Xbox was truly focused on gaming and trying to define its own niche while still competing with PS2 & GameCube.

The pre-Kinect 360 years were similar, but luckily for MS that's also when Sony dropped the ball with PS3 and Nintendo went a different direction with the Wii. So all the work they did with OG Xbox finally started paying off for 360, similar to how PS3's recovery paid off for PS4. And those pre-Kinect 360 years were fantastic, even if PS3 was the stronger system (if you mastered the Cell) and easily had the stronger back half to that generation games-wise.

I think when you only look at systems for how many units they sell or what super-mainstream games they hosted, you lose nuance in truly appreciating what those consoles offered to the market at the time. I'm a gaming enthusiast, so talking about 360 for being the COD & FIFA machine means nothing, even if that was technically true. Dismissing OG Xbox because it "only" sold 25 million in a gen where PS2 was basically guaranteed to dominate, is ignoring all the cool, quirky & awesome exclusives that system had and how, yeah, it did in a lot of ways feel like a spiritual successor to the Dreamcast.

The acquisitions made sense. Microsoft didn't have a library of strong IPs or were able to build and grow talent, so they bought it. You can make curry at home, but if you don't know how or don't have the ingredients, you need to buy it at the store. Microsoft bought lots of curry, red, green, massaman, but they don't know how to cook it to make it sing. They put it in the microwave.

That's a good way of describing most of the XGS studio purchases, and The Initiative especially. What a clusterfuck The Initiative turned into, and quickly.

It's the same reason people can't understand why ps would release helldivers on Xbox or why ps management aren't popping champagne and swinging from the chandeliers because they've won the console war.

These are publicly listed companies invested in by people that largely don't have an6 emotional investment in what exclusives are available on what platforms or which ip ends up where. They want to see share price go up … no matter what

Well other reason SIE are doing those things is because they're compromised. And we know Sony Corp & Microsoft Corp share a lot of the same investors, which by nature prevents them from being truly competitive with each other. Those investors don't want either entity to lose money for them, so they'll influence decisions between them that (IMO) otherwise actual competitors wouldn't bother doing, especially when those investors own a lot of the majority shares.

Honestly I think that's sufficient in explaining a lot of SIE's decisions this generation. But it also means I can clearly see what direction they'll be going forward and it's not one where a future PS console is likely in my best interest to purchase.

Obsidian is doing OK. I liked Avowed and their next game looks better than its predecessor.

Not $80 better.
 
They paid $80 billion dollars to acquire some of the most valuable IPs in gaming and increase their revenue.

It's basic maths and investment that most people don't understand here or are to stupid to, Microsoft have insane amounts of cash on hand that just keeps growing. They spend $80 billion and it generates $80 billion in return faster than the interest.

They DO NOT CARE where you play their games, as long as they're getting the most revenue generated possible for those games.

They also continue to own that valuable asset.

Edit - also how many fucking times are we going to have this thread.
It's always cute seeing the "It's just an investment! They bought a productive asset!" argument. As if there is no such thing as a bad investment or no way to mismanage your assets.

That 80 billion in cash was earning 4% risk free. Is that 80 billion in ABK generating higher annual returns than that? If so, will it continue to do so as MS continues to gut the "valuable" assets they just bought? More importantly, was there no better way to invest that 80 billion? Out of all the possible things MS could have invested 80 billion into, was buying Call of Duty the be all, end all? Maybe MS should have invested that money in improving their AI, since that is where the future is and where they have already fallen behind their competitors. Perhaps that would be more prudent than investing in an ancient video game franchise that has already peaked and has now started its inevitable decline under Xbox "leadership". Heck, they could have just bought 80 billion of bitcoin if they were that allergic to sitting on cash. With how it performed it would have been a much better strategy than any corporate acquisition.

The ABK acquisition has been an abject failure so far. It did not improve Xbox console sales. It did not improve gamepass numbers. It did not hurt the competition at all (it actually helped them since Sony/Nintendo now have one less console/platform competitor to deal with). All it did was provide a short term injection of revenue to a failing division that would have otherwise been shut down or spun off by now. What I see happening now is a continued winding down of the xbox console business and a slow divestment of most of the ABK/bethesda assets while keeping only the profitable parts.
 
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I find it funny to think about how these companies have extremely expensive strategists who come up with their plans that completely backfire. I wonder what they base their strategies on.
 
Xbox/Microsoft have no understanding of nuance. They see something is successful and the only thing they think to do is throw money at it and acquire it. Did they really spend all that money on ABK, just to get Call of Duty maybe Diablo as well? Thats the craziest most roundabout way to go about things. It does seem they had no intention of taking on the whole lot, and were preparing to dismantle all along. They do not know what to do with anything they acquire as though these studios are made of fairy dust and are just going to acquire money for them magically.
Starfield, not so great
Doom, seems to have flopped (How does Doom flop?) LOL!!!
Indiana Jones, nice but after one badly received movie and an outright flop, the writing should have been on the wall on that one.
Xbox is completely middling between Playstation and Nintendo with nothing compelling to recommend them and now you can buy one of those consoles and still play their games or just play on pc. Microsoft has no place in the game business. The sad truth is a 3rd wheel at this point is redundant, not like anybody can come and take Xbox's place, 3 consoles is not necessary anymore.
 
I might be naive but I think xbox is preparing itself and you've not seen the full results of its acquisition yet. Xbox series collapsed faster than they anticipated and xbox consoles are just a lost cause now, but they're going to try yet again to convince people using those acquired games with exclusive sequels and features. I believe they're trying to turn their YoY losses into profit to be able to undercut as much as they can. Their previous gaming P&L hardware subsidies were $1.5b but they're going to try to outdo that this time.
 
Member when people thought MS would use it's money to help improve the studios, allowing their acquisitions to create bigger and better games?

Pepperidge farm remembers.
 
TBH maintaining 5 years of AAA game development with 150+ employees + external employed + marketing what leads to 200M+$ cost is unsustainable.
& when you see game flops like Redfall, Concord, Skull & Bones, etc. you realize that cuts need to be made & that is the truth no meter how it looks.
Every profitable business depends on that cost vs gain.
 
Everything this company touches turns to shit. Not even just Xbox but general computer software, hardware, AI development, cloud solutions, enterprise solutions; everything is just varying degrees of awful.
Exactly what was predicted when the acquisition was announced. I remember the waves of people coming out praising this saying it was "good for consumers". Nothing MS does ever goes as expected, they've had several products that were great, but most of what they do sucks and gets shuttered. They are just as bad, if not worse than EA.
 
What they bought is/was valueable and a great addition in theory. Obviously management at MS is completely incompetent at leveraging the newly added talent and studios. Yes I know this always takes time and some restructuring, but MS had plenty of that and they still have nothing to show for it. Not having all of these IP exclusive to their platform doesn't help, either.
 
It was been a windfall for Microsoft.

They wanted content and they got almost ALL of "the content" when they got ACTV/Blizz/King/Zenimax.
They have an absolutely MAMMOTH back catalogue now and their gamepass strategy will focus on bringing more and more of that content into their tiered offerings.

It may be a horrific shit show for the industry (it is), but that isn't what Microsoft cares about and it isn't their problem. They want people subbing to their content offerings and using their devices to engage with the content.

They are winning BIGLY rn.
 
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TBH maintaining 5 years of AAA game development with 150+ employees + external employed + marketing what leads to 200M+$ cost is unsustainable.
& when you see game flops like Redfall, Concord, Skull & Bones, etc. you realize that cuts need to be made & that is the truth no meter how it looks.
Every profitable business depends on that cost vs gain.
I'm pretty sure MS knew that coming in, which tells us the intent was never looking for sales outlook for games from the start but just to claim the IP for themselves. I doubt that even being successful would've prevented this layoff at all.
 
I'm pretty sure MS knew that coming in, which tells us the intent was never looking for sales outlook for games from the start but just to claim the IP for themselves. I doubt that even being successful would've prevented this layoff at all.
True but still they need to make games ?
Who knows how far is their AI making games project.......maybe it is in advance stages....
 
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True but still they need to make games ?
Who knows how far is their AI making games project.......maybe it is in advance stages....
If it is, then they would be spending more in game development not cutting resources. You can't make AAA games with a fraction of the talent or budget or they would've done that back in the last generation. And this AI game making project is nothing more than a checkbox to tell shareholders they're getting more "AI" projects. It's just gonna go the way of Power-of-the-Cloud Destruction tech for Crackdown 3.
 
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