Chris Dring - I asked[Xbox] for clarification on the "Game Pass is profitable" claim, and was told no first party costs are included.

This isn't even creative accounting, it's borderline-fraudulent accounting.. Just fucking throwing out basic costs from the calculations wtf? Should the Azure team start excluding cost of electricity next?

Just fucking lmao at the ineptitude of the Xbox team, how the fuck do you exclude first party sales cannibalization from this calculation then decide "well actually we need more first party asap"?
 
They've tried to outspend their competitors and poison the market using their infinite money, which is the same strategy Amazon routinely did to destroy competition in serveral markets.

Something didn't work out really well.

Instead they bought out half the American industry and killed it

The likes of Capcom and FromSoftware are pissing themselves laughing all the way to the bank.
 
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Thats the point.

Nope, it only makes sense to make an apples to apples comparison in situations like this. Which happens to mean, publicly listed companies.

Releasing information publicly has nothing to do with how well a company is ran and everything to do with what information you want or need to supply.

Not always the case at all. Creative accounting is very much a concept that many publicly listed companies adopt as and when they need to.
 
How would you account for it though? No-one thinks that gamepass is covering the entire cost of all the games they make, especially with CoD in the mix where each release has to cost at least a billion probably more to develop and keep supported.

Plus do they count add-on content bought for games on gamepass as revenue for gamepass or separate.

The whole thing is way too complicated to have a definitive answer unless they are losing billions of dollars.
You have to allocate the expense in some logical manner. For example if your total game revenue is X and your revenue from GamePass is Y, then you allocate the total dev costs to game pass for each game as Y/(X+Y). So that way you can see how much revenue your game generates and how it compares to the cost.

This is how every business operates. There are many ways to allocate cost but you can't just leave them out lol. It sounds like they are also not counting what they would pay to themselves (e.g, what Starfield would get if it was third party) which is insane.
 
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Answer: So they can fudge the numbers and use them in marketing stuff and for "evangalizers".

But wouldn't the shareholders figure this out someday? What's the plan after that?

Because that's the quality of games media we have these days. Colin over at LSM was one of the few who has been saying there's no way it's profitable and correctly predicted they were doing some fancy accounting (like Chris just revealed) in order to make statements like the ones Phil says true.

There's a reason he's still my Avatar, even though I had to do it by losing a GAF bet LOL!
 
This is not PR speak, this is Bullshit Speak. And it's peak BS Speak if I ever saw one.

I've always wrote that GamePass is hardly sustainable and was in the red from the start, but I guess now we at least know what exactly they were selling to Nutella.

Big tech is something else, man, No comedy show will ever touch such high levels of delulium.
 
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They don't include the cost of first party when considering gamepass numbers? :messenger_tears_of_joy:
This isn't even creative accounting, it's borderline-fraudulent accounting.. Just fucking throwing out basic costs from the calculations wtf? Should the Azure team start excluding cost of electricity next?

Just fucking lmao at the ineptitude of the Xbox team, how the fuck do you exclude first party sales cannibalization from this calculation then decide "well actually we need more first party asap"?
They don't throw it out, but its buried in other rollups. That's why its reported under a whole segment.
 
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They've tried to outspend their competitors and poison the market using their infinite money, which is the same strategy Amazon routinely did to destroy competition in serveral markets.

Something didn't work out really well.
yeah their dream was "a race to the bottom" with sony and nintendo with this unsustainable shit, where they can outspend them
unfortunately they tried to pull that shit in an industry, where they have smallest mind and market share.
plus gamepass was never going to be the disruptor they dreamed of, because game subscription doesnt make sense outside the tiny bubble of "ultra hardcore"
 
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lol I hate Microsoft so much. How the fuck do you not include first party costs here. Really goes to show people in high up positions aren't there because they're smart.
 
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So: apparently Xbox (and by association MS), a massive trans-national corporation, doesn't have an accounting department or any real interest in financial numbers of any kind.

Okay then.
 
Considering the games release on PS5 and PC outside of gamepass it wouldn't make sense to include it all.

Activision as a whole were bringing in $7.5 billion and $1.5 billion in profit. So $6 billion in costs - so they would be in the red just from that.

How much they include of that budget - they could make gamepass profitable or making a huge loss just on that.

So should Netflix not include the cost of making their movies and TV shows next? They should include the entire thing in my opinion. But if someone smarter wanted to use some percentage of game cost, that'll be cool too. But to use 0% of the game cost is INSANE!!! LOL!

How many unique "players" actually bought Indiana Jones vs. played it on GamePass Ultimate? Take that percentage and subtract it from the "game cost". That'll be better than acting like it cost $0 to put games like Avowed, Indiana Jones, and Oblivion: Remaster on GamePass day one.

I hate it so much how extremely super right we were about this and all of those suits and manager people that were wrong at Xbox actually got paid very well to be stupid and wrong.

And yet most in the gaming media let them get away with it and STILL are! Shout out to Chris Dring here for actually doing some real reporting. Geez.....it's like most in the gaming media just want free swag or something.
 
Yeah, I guessed this was the method to their fudge-accounting. Way to confirm you're taking a flamethrower to money there.

It cannot be overstated how reptilian Spencer is. He was and still is trying to twist the entire game industry into this shit on openly false pretences going on 8 years.
 
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It really feels as though Phil's only real purpose is to cut cost everything to try to make the gaming division seem as profitable as possible as his exit strategy. He gave up on Xbox being a real game company a long time ago and this is all he can do before he jumps ship. He is trying to appease the higher ups in the short term. It's over for him.
I doubt he is looking at any particular game in development or any developer as the Messiah that will turn Xbox fortunes around. He knows his time is up.
He looks awful, I wonder if he pulls out the bottles of whiskey and vodka out of his desk drawer while he weeps at said desk.
 
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Oh damn... as a consumer, I must deeply analyze every subscription I enter to think about how it will affect the mega-corp's profits. I don't want to hurt them so maybe I'll unsub to save them.
 
what
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Oh damn... as a consumer, I must deeply analyze every subscription I enter to think about how it will affect the mega-corp's profits. I don't want to hurt them so maybe I'll unsub to save them.

Or maybe as a consumer, you can smarten up and realize how their subscription model is killing them from within and given enough time, won't be around much longer. Or at best......will cost you most money per month to maintain.



Or..........................you can remain ignorant and just act like reality doesn't exist.

Season 10 Nbc GIF by One Chicago
 
Oh damn... as a consumer, I must deeply analyze every subscription I enter to think about how it will affect the mega-corp's profits. I don't want to hurt them so maybe I'll unsub to save them.
Look man, the medium will look one way or another depending on how you spend your money.

Less than the people who took advantage of this deal (however few in number they may be), I blame the games media for perpetuating this obvious lie about Gamepass profitability and a host of others that took off this gen.
 
It's impossible to calculate how many lost retail sales they would have because gamepass, not every download would be a legitimate sale. But as a division you should calculate the cost of labor in profitability.

Unless you hide it
 
This isn't even creative accounting, it's borderline-fraudulent accounting.. Just fucking throwing out basic costs from the calculations wtf? Should the Azure team start excluding cost of electricity next?

Just fucking lmao at the ineptitude of the Xbox team, how the fuck do you exclude first party sales cannibalization from this calculation then decide "well actually we need more first party asap"?

Well all know it's how they operate for years regarding Xbox. They divided Xbox into segments to say which one makes a bit of money ("Xbox content and services", to name it), to call the whole service profitable. The hardware losses are merged with the other hardware, Gamepass itself isn't included in the costs to make the games, etc.

And you point that out to people, they're like "source ? They say it's profitable" yeah
 
I will clarify.
It is not, never was and never will be profitable.
it's also shit, it stinks and it ruins the whole industry.
And sony are idiots for following this
 
So basically what some of us have been saying since 2022: Game Pass isn't profitable.

Never mind they admitted this in court to the FTC when they said it cannibalized game sales.

But, let the denialists and shills find a way to spin this. They always manage to.
And once again we say, Gamepass was never about being profitable. It was always about getting people hooked on Microsoft ecosystem, but people will tell otherwise.
 
I don't think PS Plus is comparable since the number of included games isn't anywhere close to Game Pass. And they won't put any games they publish on the service for at least a year, even if it's technically another studio.
 
It's impossible to calculate how many lost retail sales they would have because gamepass, not every download would be a legitimate sale. But as a division you should calculate the cost of labor in profitability.

Unless you hide it

I think Sony, Take Two, and Activision all said they have run the calculations and deemed it not worth it. They said so in the FTC or EU Court Trials.

I will clarify.
It is not, never was and never will be profitable.
it's also shit, it stinks and it ruins the whole industry.
And sony are idiots for following this

But Sony didn't follow GamePass.
 
I think Sony, Take Two, and Activision all said they have run the calculations and deemed it not worth it. They said so in the FTC or EU Court Trials.



But Sony didn't follow GamePass.
Bobby Kotick did an interview after the acquisition where he literally said subscription services destroy value.

Of course he is right. It's true in movies and tv it's true in music it's true in vidya. He knows that MS will never make ABK more valuable than what he sold it for and that's why he did it.
 
The whole thing makes no sense. Judging by Microsoft's reactions over the years, they are far from a charity, if anything they are like Judge Dredd. Yet, they have been running a service for almost a decade that is unprofitable. Yes, many companies have loss leaders but this is madness. Its either profitable or Microsoft is insane. Most consoles are sold at a loss, but the intention is for it to not be sold at a loss at some point.
 
I think Sony, Take Two, and Activision all said they have run the calculations and deemed it not worth it. They said so in the FTC or EU Court Trials.

Not only that, but Sony actually experimented with one of their titles (Horizon FW) by putting it on PS+ much earlier than they normally would have, and they estimated that they lost something like $80m in potential sales.
 
adamsapple adamsapple Brother, I will not lie. You are my favorite poster here. I'm a big fan of the underdog. I would not change your ideology if given the choice....but these MS dudes are just like Wolf of Wall Street, lol.(we're the marks)
Leonardo Dicaprio Reaction GIF
Matthew Mcconaughey Chest Thump GIF by Paramount Movies
the wolf of wall street GIF
 
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If you supported gamepass, you contributed to XBOX's downfall. Whether intentional or not, that is the harsh truth.
I know. And it was on purpose. 🥹

Right now, my last 3 years GPU top up cost me 75€ instead of the 649€ I would have to fork if I pay full price. The previous 3 years top up was even cheaper.

Also, my Series X bought NEW from factory directly from MS Store January 2021 with cheap MS Store cards cost me 390€ instead of the 500€ it would have cost me then, so if the number thrown around is true, I fooked them out of a 310€ subsidy instead of the usual 200€.

And while I love very much my Series X and GPU years, yep, I took the best deal in gaming ever being fully aware I was kicking them out of a serious amount of money, which made it the sweeter. 😇

Any corporation desperate enough to bribe me to like them deserves that I take the bribe and then fuck them and never love them haha. Poetic justice and all that 😜
 
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The enshitification stage has already begun, price rises and walling off day one behind the ultimate tier.

It's only going to get shitter.
 
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Bobby Kotick did an interview after the acquisition where he literally said subscription services destroy value.

Of course he is right. It's true in movies and tv it's true in music it's true in vidya. He knows that MS will never make ABK more valuable than what he sold it for and that's why he did it.

Yep!!!

While speaking at the hearing, Kotick said that Activision currently isn't interested in "multi-game subscription services" like Xbox Game Pass. "I have a general aversion to the idea of multi-game subscription services," said Kotick. "Maybe part of it is being in Los Angeles and having large, big media companies move their content to these subscription streaming services and the business results have suffered
He went on to say that he has no plans to put Call of Duty — Activision's largest and most lucrative franchise and one of the biggest games in the world — on these services. Kotick also noted that while his company has "experimented with a few streaming services," he doesn't plan to make other titles available on them moving forward.
"I don't agree with the idea of a multi-game subscription service as a business proposition going forwards, but we [Activision and Microsoft] can agree to disagree," said Kotick in response to a question from Judge Corley about why he agreed to the merger if he didn't believe services like Game Pass made "commercial sense."


Also here if you like Forbes.....

 
I know. And it was on purpose. 🥹

Right now, my last 3 years GPU top up cost me 75€ instead of the 649€ I would have to fork if I pay full price. The previous 3 years top up was even cheaper.

Also, my Series X bought NEW from factory directly from MS Store January 2021 with cheap MS Store cards cost me 390€ instead of the 500€ it would have cost me then, so if the number thrown around is true, I fooked them out of a 310€ subsidy instead of the usual 200€.

And while I love very much my Series X and GPU years, yep, I took the best deal in gaming ever being fully aware I was kicking them out of a serious amount of money, which made it the sweeter. 😇

Any corporation desperate enough to bribe me to like them deserves that I take the bribe and then fuck them and never love them haha. Poetic justice and all that 😜

So what are you going to do starting next year when it comes to gaming?
 
It's impossible to calculate how many lost retail sales they would have because gamepass, not every download would be a legitimate sale. But as a division you should calculate the cost of labor in profitability.

Unless you hide it
I don't think it's "hidden" per say. First party development costs are probably allocated either studio wise or under some other segmentation in their internal management accounts. They maybe not under counted under gamepass segment, but rest assured the costs are counted somewhere when totting up total gaming profit & loss, or total Xbox profit & loss.

I could see the management accounts being looked at like below.

Gamepass: total sub revenues - 3p licensing costs, marketing costs, server costs etc.

First party: total revenues from copies sold - all development costs. Likely the hit to sales and profits from certain buyers playing 1p games via gamepass will appear here. In other words...the brunt of negative impact from sales cannibalisation will be here.

Showing a decent return once both the segments are added together is likely what MS is chasing. But given the layoffs and slow growth of GP subs, it's probable that they ain't near the goal.
 
Of course it's not profitable. They have like 35 million users paying 12 dollars a month(and a shit ton paying $1). How do you sustain a business off that when no one is buying $70 games???
 
LOL so 1st party just works for free!?

Welp guess that answers my question about how Gamepass is sustainable? Basically you just have to not include first party costs even though every first party game is on the service.

This is such a joke.
 
lol I hate Microsoft so much. How the fuck do you not include first party costs here.
Because Phil Spencer is a used car salesman who somehow bilked +100bn out of Satya Nadella.

And because Microsoft were clearly doing this to spend competitors out of business. That's the only way anyone would ever greenlight this service the way it is rn.
They don't include the cost of first party when considering gamepass numbers? :messenger_tears_of_joy:

They don't throw it out, but its buried in other rollups. That's why its reported under a whole segment.
No rational company would establish and continually bankroll a service without actually factoring in all the costs and figuring out if it has a chance at profitability. So the conclusion here has to be that MS are aiming for something other than profitability here: Driving competitors out of the marketplace.

First party costs are absolutely massive rn, especially after they got Zenimax and ABK in. So to not include cannibalization (which is now starting to hit them on PC-first titles too, like Doom) is just completely retarded.
 
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