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[Topher]

non gaming podcast taking about this.... Phil.... What have you done?!

Holy shit. Leo Laporte?

 

[LuckyLuke]

I seriously expect a major Game Pass downgrade soon, maybe even a slow death after that.


The 'Netflix of gaming' pitch was always a nice fantasy, but I think we're heading toward the endgame. Now that the dust is settling, I wouldn't be shocked if Microsoft starts walking it back or reshaping it into something way less consumer-friendly.


At this point, Game Pass isn't just a question of sustainability. It's starting to feel like a liability for the future of Xbox itself. With the company shifting toward a multiplatform strategy and the next console seemingly designed around services and flexibility, Game Pass might end up clashing with the broader vision. It made sense in the old ecosystem war mindset, not so much now.

 

[mayham2199]

If you're not including first party costs then of course it's profitable. 1st party costs I'm sure are partially included. They also sell it on the Xbox store, on Steam, and now on PS5 so they have to include multiple revenue sources outside of GP to cover the full budget of a 1st party game and assess its profitability.

I think this guy got a really incomplete comment if they're saying that absolutely no GP funds are used to cover 1st party. That's obviously not true. Doesn't even really make sense if you think about it for 10 seconds. They're probably doing exactly what the guy replying to Dring said; some kind of formula based on allocating a value to downloads / players and seeing how it fits into the monthly revenue they get. I think the stuff they detailed in court is probably more reliable than a random comment to Dring.

Random comment? The idea that MS is just randomly telling reporters that their service isn't profitable after saying for years that it is, is next level delusion.

 

[IAmRei]

This is how a child would do accounting; 'I don't like that, so let's not count it'.

Superb.

i'm amazed that they could survive this long with this kind of premise

 

[Hugare]

They wanted to destroy competition with a deal too good to be true while they bled money (since they had a lot, they could support it)

And it has failed. They werent able to eat Sony's/Nintendo's launch, and the money to support it became too much even for Microsoft.

It was clearly Microsoft's last hope for Xbox and it has failed.

 

[Jaybe]

A large price increase before the next Call of Duty release is pretty much a certainty

 

[HeisenbergFX4]

Holy shit. Leo Laporte?

Back probably 20 years ago one of his shows he would pull things out of an old squeaky fridge and my miniature pinscher would lose his shit

I emailed him and told him this and one of his following shows he said something like one of my viewers told me this drives his dog crazy so he opened and closed it several times

I have looked so many times for that show to keep that but have never found it online anywhere

 

[Punished Miku]

Random comment? The idea that MS is just randomly telling reporters that their service isn't profitable after saying for years that it is, is next level delusion.

They didn't say their service isn't profitable. They were asked if it was profitable.

The way they assess the impact of a 1st party title on a subscription is probably a lot more complex than just completely omitting it. Sounds like total BS to me, but go ahead and enjoy your early Christmas bash.

 

[Jaybe]

They wanted to destroy competition with a deal too good to be true while they bled money (since they had a lot, they could support it)

And it has failed. They werent able to eat Sony's/Nintendo's launch, and the money to support it became too much even for Microsoft.

It was clearly Microsoft's last hope for Xbox and it has failed.

Yes, they were more than happy to dole out $1 promos and that crazy 1:1 Xbox Live conversion to try and hit some massive scale.

 

[Topher]

Back probably 20 years ago one of his shows he would pull things out of an old squeaky fridge and my miniature pinscher would lose his shit

I emailed him and told him this and one of his following shows he said something like one of my viewers told me this drives his dog crazy so he opened and closed it several times

I have looked so many times for that show to keep that but have never found it online anywhere

lol.....yeah, that sounds like him. I always enjoyed watching his shows. Post a link if you ever find it.

 

[Sooner]

Correct me if I'm wrong, wasn't Netflix only profitable after more than 10 freaking years? And this is because Netflix was a hit.
Why would this crap would be?

And Netflix saw massive membership increases year over year. GamePass hit a wall LONG before they expected to.

 

[meech]

How do you know the lost revenue is "fictional"? And I believe what is being talked about here is called "opportunity cost".

Because you can only estimate.Anyway, its not the same as not including "real" cost. Its quite strange that first he mentions this and then claims that he was told that development costs are not included. Does not make any sense .

 

[Panajev2001a]

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.

The great "pro-consumer" approach was to burn the industry down to the ground betting on being the only monopolist standing. Sigh… at least so far they have not done it competently enough and hopefully they will not buy a clue…

 

[DenchDeckard]

MS/XB is taking a beating this week.

A lot of this stuff has been known by most and ignored by others. Layoffs have happened and will continue. What changed? Is it that BS is getting so deep that even supporters are starting to see through it? Business as usual next week?

They just sacked thousands of people. I think they deserve a good bit of a verbal / written beating. Its not like they're going to get it any other way.

 

[poppabk]

Random comment? The idea that MS is just randomly telling reporters that their service isn't profitable after saying for years that it is, is next level delusion.

They normally have a vested interest in saying its profitable. Currently they have a vested interest in saying it is isn't. How they do the accounting allows either to be true depending on the message they want to get across.

 

[Panajev2001a]

i love how people get so worked up over this. So a company is giving gamers something great at a good value and its our problem? Let microsoft figure that out....

Yeah, so good they planned (they said so as much) to burn the industry to the ground to make themselves the monopolist and then ravage the users in price increases… yeah… how generous .

 

[Shane89]

this was totally expected. And i'm surprised it took so long to get leaked.

 

[nowhat]

Microsoft, or at least the gaming division, needs to be audited. Cooking the books to this degree has to violate federal laws.

Never heard of "Hollywood accounting"? It's done constantly by studios, where a movie is made profitable by dubious means. Or alternatively, have a successful movie make a loss to avoid paying the creators. No reason why IT/gaming would be any different.

 

[Baemono]

That's the other thing I'm noticing.

Years of caginess and they just give it out?

For me it's like they were like « it's profitable » and no question asked for years, and now Dring is like « do you mean subscription revenues minus third party deals and first party dev costs ? » and they're like « no no excluding first party dev costs obviously »

 

[Topher]

Because you can only estimate.Anyway, its not the same as not including "real" cost. Its quite strange that first he mentions this and then claims that he was told that development costs are not included. Does not make any sense .

He isn't talking about dev costs. Just lost revenue. Dring is saying that the profitability stated by MS is determined only using associated revenue/costs of third parties and doesn't account for lost revenue from first party.

 

[Viruz]

 

[Skifi28]

The question is, is this how they treat it internally too? Imagine making a game as a Studio, the execs practically giving it away and then being judged on whether the game was profitable or not in sales as the development costs are separate from gamepass costs. I suppose that would explain some decisions.

 

[GHG]

They wanted to destroy competition with a deal too good to be true while they bled money (since they had a lot, they could support it)

And it has failed. They werent able to eat Sony's/Nintendo's launch, and the money to support it became too much even for Microsoft.

It was clearly Microsoft's last hope for Xbox and it has failed.

Frankly, they are idiots, becuase I fully believe they would have had a much longer financial runway for this grift if they didn't go and spend 80 billion dollars of Microsoft's money in a vain attempt to get their subscriber numbers growing again.

They dont give any details in there actual financials. Don't think they have stated it is profitable in their financial data because they don't have to because gaming is a miniscule part of their business.
Likewise how much does Netflix release about its gaming business? Not a whole lot - they are rumored to have spent at least a billion dollars. Is it profitable? Doubtful but how would you tell? Is Amazon's gaming initiative profitable? Again doubtful, but again how would you tell?

Yeh, well that all changed the moment they decided to force through the biggest acquisition in Microsoft's history.

And the difference is that those other companies you mentioned don't lie when asked direct questions regarding the financial situation for their sub-divisions.

 

[FoxMcChief]

 

[Baemono]

Doesn't even really make sense if you think about it for 10 seconds.

That's where you draw the line when it comes to the whole Xbox debacle ?

 

[FoxMcChief]

I wish I could run a business without worrying about the costs of anything.

 

[Miles708]

The biggest companies in the world are ran by absolute clowns.

 

[skit_data]

That's like saying you have a shitton of money due to the value of your house
...but exclude your mortgage.

 

[HeisenbergFX4]

And if MS invites DF in and gives them exclusives to the next Xbox again they will be right back on their knees in front of Phil

 

[PSFore]

It's sad but not unexpected that on other forums and subreddits, people are defending Microsoft and attacking Dring. He is just reporting what we all knew was logical already.

 

[viveks86]

You see guys? If I build a car and then give it away for $100, spend $5 in advertising and fees, and call it CARPASS, CARPASS makes $95 in profit! Makes sense, right? What about the money to build the car, you ask? Well... fuck you!

 

[GHG]

If you're not including first party costs then of course it's profitable. 1st party costs I'm sure are partially included. They also sell it on the Xbox store, on Steam, and now on PS5 so they have to include multiple revenue sources outside of GP to cover the full budget of a 1st party game and assess its profitability.

I think this guy got a really incomplete comment if they're saying that absolutely no GP funds are used to cover 1st party. That's obviously not true. Doesn't even really make sense if you think about it for 10 seconds. They're probably doing exactly what the guy replying to Dring said; some kind of formula based on allocating a value to downloads / players and seeing how it fits into the monthly revenue they get. I think the stuff they detailed in court is probably more reliable than a random comment to Dring.

Oh Miku... Just weeks after we had our little discussion where I told you that given the size of the overall library, it was unfeasible for new 1st party games to be thrown the generous amount of $2 per user in the month that they release, we get new information just as the chickens are coming home to roost and the best you can do is denial?

What will it take for you to remove your head from the sand? Do they need to get rid of gamepass all together?

 

[FoxMcChief]

The biggest companies in the world are ran by absolute clowns.

Countries too. But this is nothing new.

 

[analog_future]

"I love Gamepass"

"Best deal in gaming"

"Such value"

These people killed Xbox, well done *slow clap*

You are really going to try to blame this on customers who just wanted a good deal?

It's the executives at Xbox who killed Xbox. You can't blame consumers for wanting to save money on the games they play.

 

[IntentionalPun]

lol, some real clown shit

In the end these sub services based on content that also sells in other channels can't 100% reliably measure profit, but they sure as shit should include at least some of the cost of 1st party development if they want to even come close.

 

[panda-zebra]

xbox employing the same accounting techniques as City and Chelsea.

Sounds like total BS to me, but go ahead and enjoy your early Christmas bash.

Phil Spencer's Electric Monk located.

Even ol' uncle Phil doesn't have the energy to believe in xbox these days from the look of things; doesn't matter when so many are still willing to do all that for him... despite everything.

 

[mckmas8808]

the system needed to change. spending 70 bucks for a game that ends up sucking with no way to return is a stupid business model. Gamepass or death

How about STOP pre-ordering games. And just wait for reviews. Geez.

I think this guy got a really incomplete comment if they're saying that absolutely no GP funds are used to cover 1st party. That's obviously not true. Doesn't even really make sense if you think about it for 10 seconds. They're probably doing exactly what the guy replying to Dring said; some kind of formula based on allocating a value to downloads / players and seeing how it fits into the monthly revenue they get. I think the stuff they detailed in court is probably more reliable than a random comment to Dring.

So then why did MS tell him that exactly?!

They normally have a vested interest in saying its profitable. Currently they have a vested interest in saying it is isn't. How they do the accounting allows either to be true depending on the message they want to get across.

And so what makes you think it's profitable and them NOT explaining to their shareholders how it's profitable? They barely ever tell their shareholders how many people are subscribed anymore.

 

[Felessan]

Yep, it took Netflix until 2022 to go cash flow positive:

FCF is not profit, Netflix profitable since at least 2009
They just invested more money than they earned (investment is not a loss, it's profit neutral at basis), so they had negative FCF.

 

[HeisenbergFX4]

So without digging through his posts who is the person he is referring to that knows Xbox financials or is it anonymous?

 

[Elfstar]

It's sad but not unexpected that on other forums and subreddits, people are defending Microsoft and attacking Dring. He is just reporting what we all knew was logical already.

Poor bastards. They've been eating shit for like 15 years straight and they're still waiting for Phil to save them, they thought they were getting exclusive CoD and Diablo, now they need to delude themselves Xbox isn't over, that Gamepass will last forever... this is beyond desperate.

 

[Setsuna Mudou]

I see Microsoft Gaming division is of the "spend $2B to make $1B" school of economics.....

 

[StereoVsn]

, of course they aren't including first party costs since GamePass wouldn't be "profitable".

GamePass has been a plague on the industry, developers and employees.

I guess at least Phil got to keep his high paying gig and Ass of Can Whooping can keep refunding monthly GamePass charges!

 

[damidu]

This is how a child would do accounting; 'I don't like that, so let's not count it'.

Superb.

im so profitable when i ignore my huge cc debt

 

[GHG]

FCF is not profit, Netflix profitable since at least 2009
They just invested more money than they earned (investment is not a loss, it's profit neutral at basis), so they had negative FCF.

The money left in the business after all expenses was negative up until 2022.

Any business can be as creative as they want in terms of claiming "profit" while opting to ignore other expenses (such as "investments" and other capex - which in Netflix's case was "content acquisition/creation"), but the reality is that cash flow will give you a more honest view on the overall health of the business, hence it was a huge milestone for them.

 

[LordCBH]

I see Microsoft Gaming division is of the "spend $2B to make $1B" school of economics.....

They just like me frfr

 

[Melfice7]

How can they NOT include First Party game cost when factoring in if GamePass is profitable or not?

So it can look good for shareholders, otherwise it would be canned

 

[poppabk]

So then why did MS tell him that exactly?!

Because they just fired 1000's of developers and cancelled projects. They want to look like they need to make cuts.

 

[Sooner]

This is borderline fraud

 

[Baemono]

This is borderline fraud

 

[LordCBH]

So it can look good for shareholders, otherwise it would be canned

All they did was prolong the canning. Cause I definitely feel like it'll happen eventually. Not outright, but prices will go up, more features will be stripped away, and then they'll say "not enough people are subbed now. We can't continue this service."