Chris Dring - I asked[Xbox] for clarification on the "Game Pass is profitable" claim, and was told no first party costs are included.
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Astray
Member
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"?
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"?
RetroGamingUK
Member
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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GHG
Member
Nope, it only makes sense to make an apples to apples comparison in situations like this. Which happens to mean, publicly listed companies.
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.
diffusionx
Gold Member
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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mckmas8808
Mckmaster uses MasterCard to buy Slave drives
But wouldn't the shareholders figure this out someday? What's the plan after that?
There's a reason he's still my Avatar, even though I had to do it by losing a GAF bet LOL!
ShaiKhulud1989
Gold Member
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.
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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diffusionx
Gold Member
It sounds like the shareholders are figuring it out now…
Guardian Monkey
Member
They don't include the cost of first party when considering gamepass numbers? 
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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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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mckmas8808
Mckmaster uses MasterCard to buy Slave drives
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.
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.
ProtoByte
Weeb Underling
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.
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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Sorcerer
Member
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.
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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L*][*N*K
Member
Ass of Can Whooping
Member
mckmas8808
Mckmaster uses MasterCard to buy Slave drives
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.
ProtoByte
Weeb Underling
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.
DaleinCalgary
Member
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
Unless you hide it
Baemono
Member
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
Roman Empire
Member
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.
RetroGamingUK
Member
No
Sony Reaffirms That PlayStation Plus Is Not Going the Game Pass Route
A PlayStation executive has confirmed that first-party PS5 games will not be joining PS Plus on day one anytime soon.
beebom.com
mckmas8808
Mckmaster uses MasterCard to buy Slave drives
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.
Lord Panda
The Sea is Always Right
Viruz
Member
diffusionx
Gold Member
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.
rofif
Can’t Git Gud
No
Sony Reaffirms That PlayStation Plus Is Not Going the Game Pass Route
A PlayStation executive has confirmed that first-party PS5 games will not be joining PS Plus on day one anytime soon.
potato poteyto
Viruz
Member
Madserb2023
Member
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.
AmuroChan
Member
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.
PlayStaytion
Member
That's the safest choice, 3rd party games matters more and the irony that wasn't what fanboys used to think.
Zacfoldor
Member
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)
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Nonehxc
Member
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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mckmas8808
Mckmaster uses MasterCard to buy Slave drives
Yep!!!
Activision CEO wouldn't put Call of Duty, other titles on Xbox Game Pass
"I have a general aversion to the idea of multi-game subscription services."
www.windowscentral.com
Also here if you like Forbes.....
Bobby Kotick Says He Wouldn’t Put ‘Call Of Duty’ On Xbox Game Pass Or Other Services
One interesting exchange was when Kotick was questioned about Call of Duty and subscription services. Early on, Sony alleged that publishers “hated Game Pass,” but it appears leaning into that idea, true or not, may be part of a play to get this deal approved.
www.forbes.com
semiconscious
Member
the game pass 'plan':
mckmas8808
Mckmaster uses MasterCard to buy Slave drives
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?
Bulletbrain
Member
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.
Astray
Member
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.
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.They don't include the cost of first party when considering gamepass numbers?
They don't throw it out, but its buried in other rollups. That's why its reported under a whole segment.
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.
