Support NeoGAF

[viveks86]

But what about something like CoD which likely covers dev costs and profits just from Playstation and PC sales. Do you add that extra profit to gamepass?

Why would sales that are outside of Gamepass be added back to Gamepass? Playstation and PC sales have nothing to do with GP. Let me try to simplify, if a game costs $100 million to make and they made $30 million from Playstation and PC sales, then the studio has $70 million left to earn to break even. That $70 million will have to come from Gamepass. Otherwise, you aren't balancing your books. What's likely happening here is the $70 million is being treated as a loss for the game studio, while Gamepass walks away with whatever profit it makes from subs minus advertising/licensing.

Now in your example of CoD, let's say they made a billion dollars in Playstation and PC sales. That means the studio made $900 million in profit (assuming the same $100M dev cost). Not Gamepass. Everything Gamepass makes for that game would just be additional profit. Does that mean Gamepass was profitable for CoD? Yes. More notably, CoD could be profitable for Gamepass with increased subs. But is Gamepass profitable overall? We will need to apply this rule to all games developed in-house to determine that. The chances are, most other games are taking a hit, hence Phil's admission in the FTC case.

It's ok for accounting, but most of their game studios could be in the red and MS would essentially have to keep the gaming division up at a net loss. It doesn't make a dent because MS makes profits elsewhere (outside of gaming) to more than make up for it. But shareholders will allow that only for some time because it is equivalent to setting money on fire. If they can make even more money by simply axing/selling off the gaming division, they would. If CoD is the only one making money despite gamepass, then they will just keep Cod, kill gamepass and sell the rest. Hopefully that's not how this plays out, but it is one possible scenario if they don't get their heads out of their asses.

Eventually, something will give.

 

[laynelane]

The metric is:

Ms is closing studios, firing people and going full on third party and closed box oem pc.

Im sure GP is reaaaally profitable.

Considering MS has already provably lied about Game Pass (Game Pass increases software sales), that's about all we can go on. Barring another situation where they are put under oath, I take what they say with a grain of salt - including Phil's statement on the matter.

 

[ChiefDada]

I don't think that's the case at all, Dring is just saying that Dev cost doesn't come under GP, which I think makes perfect sense. The game(s) are available on premium sales, often on multiple platforms.

No one is denying this. They have a mixed model for delivering game content where they SHOULD BE allocating development costs against game pass players and traditional players who purchased the game outright. If 1 million total players played Forza, and 70%/30% accesed the game via Gamepass vs retail purchase, respectively, why shouldn't development costs be allocated accordingly? This is a very basic example to illustrate a logical accounting method most people would understand. Perhaps there are tons of more or less complicated but LOGICAL ways to account for the costs that Microsoft can rightfully justify. But for them to say that 0% of development costs should be allocated to the GamePass business for the purpose of being able to proclaim the business model is profitable is simply misleading at best and I won't pretend it's anything other than.

 

[Boo Who?]

I wonder what other costs they are leaving out this time

 

[KenaiPhoenix]

Yeah.. thing is so great and so profitable that they have to cut a lot of their workers and also cancel games, you know, the main "blood" of the service model: games.

 

[Bernardougf]

Considering MS has already provably lied about Game Pass (Game Pass increases software sales), that's about all we can go on. Barring another situation where they are put under oath, I take what they say with a grain of salt - including Phil's statement on the matter.

To me is pretty easy really.. we dont have hard data.. only the market and the company to try and make assumptions . Gamepass is the leading program for XBOX, it has been since its launch in 2017, game sales are obviously secondary, and MS/Xbox has been pushing this thing since forever. And after all this years they had to start buying publishers for billions, closed studios with acclaimed games on gamepass, had to go third party and finally are possible terminating their traditional home console business. There are multiple reasons for this end ? Sure. But I cant fandom a world were gamepass is a very healthy profitable and sustainable business and all of this shit with xbox is happening the exact same way. IMHO Its just ludicrous to think this.

 

[LuckyLuke]

I agree with Jason, and in fact the service is not growing.

 

[Bojanglez]

LoL so steam sales outside of gamepass pc .. and a handfull of recent games third party should make years and years of GP profitable... mmOkay

Literally this is about their definition their definition of profitability, which doesn't include the costs of these games for Gamepass.

I would expect most of their games that aren't CoD, Minecraft, Doom, Forza probably lose or fail to make worthwhile money just in a straight cost vs sales metric too, hence why they are closing down our scaling back studios.

I think the whole house of cards is built on the assumption now that sales of CoD, rev from Minecraft and a few others will make enough for the whole division to subsidise/justify Gamepass long enough in the hope that it takes off significantly. But as I say, I'm not sure that model works if game buyers become GamePass subscribers instead.

All of this is hard to know fully because I don't think MS don't publish accounts (P/L) for Xbox division, and we probably can guess why that is.

 

[Bernardougf]

Literally this is about their definition their definition of profitability, which doesn't include the costs of these games for Gamepass.

I would expect most of their games that aren't CoD, Minecraft, Doom, Forza probably lose or fail to make worthwhile money just in a straight cost vs sales metric too, hence why they are closing down our scaling back studios.

I think the whole house of cards is built on the assumption now that sales of CoD, rev from Minecraft and a few others will make enough for the whole division to subsidise/justify Gamepass long enough in the hope that it takes off significantly. But as I say, I'm not sure that model works if game buyers become GamePass subscribers instead.

All of this is hard to know fully because I don't think MS don't publish accounts (P/L) for Xbox division, and we probably can guess why that is.

Yeah.. thats "their definition" .. but unfortunately their words dont mean jackshit for me. Its a cesspool of lies this company.

 

[Topher]

 

[VolticArchangel]

So, all that word salad to say what he already said before, which is first party game sales and microtransactions revenue have been sacrificed for game pass subs and it's overall revenue.

 

[dem]

Why would any consumer give a shit whether its profitable or not?

I'll keep milkin that tit until its dry.


Does anyone give a shit whether Epic game store free games are profitable?

 

[viveks86]

Why would any consumer give a shit whether its profitable or not?

I'll keep milkin that tit until its dry.

An average consumer wouldn't. An enthusiast would, because an unsustainable business model could result in no tit left to milk. Which means fewer games to play. Would that not bother an enthusiast?

I think this will course correct soon. But given how entire gaming divisions have disappeared due to idiotic business models or bad leadership, a colossal failure won't be unprecedented.

 

[dem]

An average consumer wouldn't. An enthusiast would, because an unsustainable business model could result in no tit left to milk. Which means fewer games to play. Would that not bother an enthusiast?

I think this will course correct soon. But given how entire gaming divisions have disappeared due to idiotic business models or bad leadership, a colossal failure won't be unprecedented.

Entire gaming divisions are dying because they are bloated garbage that can't make a game. The entire industry is shit. No one knows how to make a game.

Has fuck all to do with a subscription gaming services on a flailing console.

 

[mckmas8808]

I agree with Jason, and in fact the service is not growing.

And we know GP isn't growing.

Entire gaming divisions are dying because they are bloated garbage that can't make a game. The entire industry is shit. No one knows how to make a game.

Has fuck all to do with a subscription gaming services on a flailing console.

If bloated garbage that can't make a game, then releases those games on a Sub Service for $20 a month.............I'd think that sub service would be "ADDING" more pain to the company. Not helping it.

 

[viveks86]

Entire gaming divisions are dying because they are bloated garbage that can't make a game.

Sure. I don't disagree.

Has fuck all to do with a subscription gaming services on a flailing console.

And your evidence for the bolded is...? Gamepass is on PC too, so we can remove "flailing console" from the equation. To call gamepass "subscription gaming services" sounds like you are trying to group it with services offered by competitors, even though there is no actual 1:1 equivalent in the market (for good reason).

 

[calico]

You don't get rid of thousands of people and shut down studios for 'growth', you do it because you think you will be more profitable without them.

Companies want growth but not stupid growth or growth just for the sake of it (that's how you get a Ubisoft). The growth is in pursuit of greater profits at some point.

 

[adamsapple]

Sure. I don't disagree.

And your evidence for the bolded is...? Gamepass is on PC too, so we can remove "flailing console" from the equation. To call gamepass "subscription gaming services" sounds like you are trying to group it with services offered by competitors, even though there is no actual 1:1 equivalent in the market (for good reason).

I think their point is that publishers, studios and projects are being closed and canceled irrespective of a sub service.

 

[viveks86]

I think their point is that publishers, studios and projects are being closed and canceled irrespective of a sub service.

And that's a fair point. My issue is with "has fuck all to do with gamepass". I don't think anyone can confidently say that after Phil himself admitted to cannibalized sales and stagnant growth. The extent of its influence is unknown, but there isn't any indicator that is objectively, quantifiably positive, if you look past their spin on profitability.

 

[ProtoByte]

I guess it depends on how you break out the cost. They can put it in its own sector and GP have publishing deals and not be in MS game publishing. I am sure there is an accounting shell game going on somewhere.

Irrespective of how they break it down, I mean. Money is going out and money is going in. They're clearly not enough of the latter compared to the former for them.

I agree with Jason, and in fact the service is not growing.

Not only is the service not growing, it's paradoxically making Xbox users spend the same amount of time or less actually playing games.

I think that indicates something very interesting about perceived value.

 

[Topher]

I agree with Jason, and in fact the service is not growing.

You don't get rid of thousands of people and shut down studios for 'growth', you do it because you think you will be more profitable without them.

Companies want growth but not stupid growth or growth just for the sake of it (that's how you get a Ubisoft). The growth is in pursuit of greater profits at some point.

Yeah and if we are going to talk about "squishy metrics" then let's just throw out "growth" as a metric without even stating what is supposed to be growing. Revenue? Profit? Subs? Just saying "growth" by itself is meaningless. Jason is just a hack. He doesn't have any better clue about what "matters" than anyone else.

 

[Lord Malachite]

What does profitable actually mean though? If I spend 99 cents to make a dollar, I'm profitable. But the ROI is so insignificant my business model is not sustainable.

 

[marquimvfs]

I believe the service, as per Microsoft own calculations, is profitable.

I mean, people here want them to factor first party dev costs, but I don't think it should work that way from a business perspective.

What really matters is if first party games weren't at the service, people would still sign up to it, and if the gamepass revenue is enough to justify cannibalizing some (or most, like some folks here like to see) revenue from first party studios.

People here have conjectured that the revenue from studios is severely handicapped by the gamepass lending some of those games to the service, and if gamepass had to pay to first party studios like they pay to third parties, the service wouldn't be profitable. Some here even think that if the studios were payed in a "fair" way, gamepass wouldn't exist or some canceled games or closed studios could have a different fate.

I have another view about it. I think that, without the service, Xbox Series would be as dead as WiiU. So, it wouldn't matter if the split is fair or not, if the people aren't invested in your platform, it will eventually die. Simple as that. Maybe the Xbox and studios management aren't good enough to put good titles in a consistent way that only games are enough to keep the platform afloat. And that is a management problem, not gamepass one. Maybe gamepass and a gigantic publisher acquisition are the only way that Phill and co. could come up to keep the platform alive. I also have saw other hardware manufacturers step out of the market and none of them dare to go back in the industry to fight against the giants again and that is why I believe that isn't viable to just call Xbox a day, reorganize, and lauch again in another time. So that's why they would try everything in order to keep Xbox alive.

So, in the end, it simply isn't productive to discuss if a service is profitable or not, or in what metrics, when the very same company havr stated that it is, no matter who have said. That is, unless, some have presented proof that the stated isn't true.

In the end, the very service most of you here have accused of being the defeat of the platform, could be the very thing that is keeping your beloved Xbox afloat till now.

 

[mayham2199]

So, in the end, it simply isn't productive to discuss if a service is profitable or not, or in what metrics, when the very same company havr stated that it is, no matter who have said. That is, unless, some have presented proof that the stated isn't true.

Is it productive? I agree it's not because we don't have any information. It has nothing to do with what MS said though because they are liars and will say whatever they want to. They also said at one point that game pass doesn't hurt the sales of a game and then during the trial it was revealed it does hurt game sales.

So while I agree the conversation isn't really productive it's because of the lack of information we have not because of anything MS said. What MS says doesn't matter they will say whatever they want you to hear.

 

[marquimvfs]

They also said at one point that game pass doesn't hurt the sales of a game and then during the trial it was revealed it does hurt game sales.

Well, maybe based in sales merit alone, it hurts a given title. But, again, you have to belive that a title would sell alone by it's merits for it to be true. It's the same fallacy that people use to say that one pirated copy of a game is equal to one less sell. It depends, maybe the game, even if good, would bomb because of several factora. In the end is like I said, if the gamepass is helping the platform stay afloat, why bother?

 

[The Mad Draklor]

Profitable?
100% not

This thread reads like a support group for victims of gaslighting.
Stop with the denial, accept the truth.

They can't because they're prisoners of the sunken cost fallacy.

 

[mckmas8808]

Yeah and if we are going to talk about "squishy metrics" then let's just throw out "growth" as a metric without even stating what is supposed to be growing. Revenue? Profit? Subs? Just saying "growth" by itself is meaningless. Jason is just a hack. He doesn't have any better clue about what "matters" than anyone else.

At least he tries to break stories that are real in the video game industry. I give him his credit there.

 

[Topher]

At least he tries to break stories that are real in the video game industry. I give him his credit there.

I like him just fine as long as he leaves his personal politics out of it.

 

[ChiefDada]

Why would any consumer give a shit whether its profitable or not?

I don't know. Maybe ask a fan of games/franchises developed by Rare, Arkane, Tango Gameworks, Alpha Dog, Turn 10, The Initiative......

 

[semiconscious]

I agree with Jason, and in fact the service is not growing.

the thing is (as ms has already demonstrated) 'growth' is also a metric that can be fucked with. tho, i agree, with game pass this becomes much more difficult to do as time goes by...

 

[mckmas8808]

Well, maybe based in sales merit alone, it hurts a given title. But, again, you have to belive that a title would sell alone by it's merits for it to be true. It's the same fallacy that people use to say that one pirated copy of a game is equal to one less sell. It depends, maybe the game, even if good, would bomb because of several factora. In the end is like I said, if the gamepass is helping the platform stay afloat, why bother?

It sounds like you are describing a house made out of cards then, to be perfectly honest. If the majority of Xbox gamers are mainly there due to GamePass, then that house of cards will eventually fall. It's like planting seeds for flowers in a bed full of rocks, instead of fine soil.

 

[ChorizoPicozo]

The opium of playing AAA Day One games for free is making people irrational. Even when the games are garbage, which they see as a plus: "oh, at least I didn't pay for this mid game". People are steadily reaching a moment of enlightenment every time Game Pass increases its price and they realize that, as time goes by, they're actually paying more to access old games, and on top of that, losing their "savings" once a game leaves the service.

People don't fucking understand how lucky we are that Game Pass didn't take off. Now it's only a matter of time before we witness its death and see the most hardcore green evangelists lose their fricking minds; Game Pass is the only thing they have.

 

[BbMajor7th]

TL;DR : MS had a word.

 

[Jesb]

How can you even calculate if it actually is profitable or not. There are too many variables. Like you do need to take into account the cost of any acquisitions that are making its way onto gamepass. Not including that doesn't make any sense as they wouldn't exist on the platform.

 

[AlphaDump]

The Xbox division is failing because of gamepass.

Asking if gamepass is profitable isolates gamepass itself in the discussion, which would be profitable bc it's simply referring to the service itself, which probably has a small cost footprint to maintain. It isnt referring to any of the XBOX division's costs to develop games to be put on gamepass. It's a shitty way to trick everyone involved.

It isnt fraud, it's misleading in the sense it ignores the xbox division as a whole in how damaging it is to simply exist.

 

[Jigsaah]

Yes because GP was meant to support shitty games and failing hardware sales

Not sure if posts like these are trolling or people actually believe this

Like I said earlier Sony closed 2 or 3 studios in the last year, canceled games they were working even closing one after it launched and just announced a game they published going to Xbox

Guess PS+ didn't support all that stuff

If it's good for the goose...

 

[adamsapple]

I don't know. Maybe ask a fan of games/franchises developed by Rare, Arkane, Tango Gameworks, Alpha Dog, Turn 10, The Initiative......

But what would their comments have to do with the perceived profitability of Game Pass? Would Everwild have already been out if it weren't for GP, for example? or Perfect Dark

I might say no, you might say yes. Who can say for sure.

 

[FoxMcChief]

 

[tr1p1ex]

GP grew a ton when Xbox Live was renamed to GP Core.