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[Mr Reasonable]

500 billion in revenue doesn't mean much if you spent 600 billion to get it.

But you could sell the things that cost 600billion and keep the 500, I suppose.

 

[GoldenEye98]

So Xbox hardware sales slowing to a halt, gamepass subs stagnating for the last 3 years and them now needing to release their games on their biggest rivals platform...

lacks nuance?

Denial is an art form.

For what it's worth, everything I just mentioned doesn't mean Xbox cannot go on to do well. They will just look nothing like what they look now. I still believe Xbox has the capacity to become the largest third-party publisher on the planet.... if they play their cards right that is.

They have 34M gamepass subscribers at last count.

Conservatively that's $4B a year in revenue but probably more like $6B when you factor some of those are Ultimate subscribers.

I also think COD is going to have some pull there. Like if you play a lot of COD on console Gamepass Ultimate is by far the best value.

 

[BlackTron]

I remember reading here that the gaming division was perfectly fine overall including Activision, and this is what I meant when I said that their business was fine.

So I have no clue what you are talking about. And I don't care, by the way.

My post included the statement that MS's revenues exploded post-acquisition. That's probably what you mean by "fine".

But if you're going to say you're "sure" everyone "agrees" it's "obvious" they are meeting internal targets. You might want to be able to parse the difference between revenue and profit, because the execs care and are pressuring Xbox.

It's surprising to me that you don't care about this (you appear to care about this topic greatly).

 

[cireza]

because the execs care and are pressuring Xbox.

So exactly what I have been saying since my very first post. Congratulations on finally understanding.

It's surprising to me that you don't care about this (you appear to care about this topic greatly).

 

[BlackTron]

Its gonna go sky high under them.

Just like Rare and Minecraft.

Minecraft needed Microsoft to make it big? Rare didn't get worse after? I don't get it.

 

[BlackTron]

So exactly what I have been saying since my very first post. Congratulations on finally understanding.

Your post implied that they are currently meeting targets and all is fine. Not that execs are pressuring them to fix a problem because they are failing targets.

 

[vaibhavpisal]

Rare didn't get worse after? I don't get it.

This is a sales/revenue thread. Pick your lane.

 

[cireza]

Your post implied that they are currently meeting targets and all is fine. Not that execs are pressuring them to fix a problem because they are failing targets.

You understand quickly, but one still needs to explain you things for quite a long time.

Here is a quick summary of my two lines initial post, to try and help you :

Xbox hardware : future is not clear
Gaming business as whole : looks fine.

 

[Jaybe]

This is some financial shenanigans by MS, using Xbox as the base for being up. Rather than the combined entity of ABK and Xbox.

The ABK portion itself was down -17% in Q3 and the combined ABK+Xbox business is -12% the last quarter (Q4).

Using Welfare’s post and going back to ATVI earnings reports, it looks like the ABK side of the business lost a significant amount of revenue versus year ago (-17.3%) likely due to CODMW3 selling a fair bit less than CODMW2.

ABK JanFebMar2024: $1.971 billion
ABK JanFebMar2023: $2.383 billion
$ change: - 412 million
ABK year over year $ change, -17.3%

Looking at MS Gaming and ABK combined, revenue DROPPED 12%!

MS Gaming Q4 2024 is $5.03 Billion (3.491B x1.44)

As separate companies, MS Gaming and ABK when summed together made $5.7 Billion in the April 2023 to June 2023 period. ABK’s $2.2 Billion was driven off of Diablo 4. MS Gaming was $3.491 Billion ordering to @Welfare ‘s calculations on IB.

 

[bbeach123]

Wtf is this logic , ofc their revenue up , that what you get when you spend billions of $ buying publisher .

 

[BlackTron]

You understand quickly, but one still needs to explain you things for quite a long time.

Here is a quick summary of my two lines initial post, to try and help you :

Xbox hardware : future is not clear
Gaming business as whole : looks fine.

You just gave a different statement masquerading as a quick summary.

It's not that easy to change history on a forum man. You didn't say "looks fine", you specifically said "most certainly reaching their targets."

Which as I just made the case is an extremely optimistic statement but you completely ignored that part and started changing the past instead so we appear to be at an impasse. I can't argue with time travel and selective amnesia.

 

[GoldenEye98]

You understand quickly, but one still needs to explain you things for quite a long time.

Here is a quick summary of my two lines initial post, to try and help you :

Xbox hardware : future is not clear
Gaming business as whole : looks fine.

Disagree. Their current state with traditional consoles is still far far better than whatever this "hybrid PC" discourse nonsense is.

The market for "hybrids" barely exists.

 

[Chukhopops]

Yeah it's true MS owns this asset now, but it's not worth a static 70bn because that's what they paid. It's only worth as much as the next buyer is willing to pay if they chose to liquidate it.

This is especially true given the value of said asset could begin depreciating the moment they start controlling it.

Actually it is, since ABK is no longer traded the only thing that can affect its valuation at this point is MS recording (or provisioning) an asset valuation wipe or degradation. No idea how that could happen (maybe the loss of a trademark due to a dispute).

If anything, from a purely financial perspective ABK is worth more than it was at the moment it was bought (not necessarily at the moment MS decided to buy it) because of the layoffs’ impact on its cost/revenue structure.

 

[AngelMuffin]

revenue is not net profit.

 

[Mr.Phoenix]

They have 34M gamepass subscribers at last count.

Hate to break it to you, that's an inflated number. Gamepass had been sitting on around 26M - 28M since 2020, until Xbox converted everyone with an Xbox Live Gold sub to a gamepass core sub in 2023. Thats how they got to that 35M subs...

Conservatively that's $4B a year in revenue but probably more like $6B when you factor some of those are Ultimate subscribers.

So you really believe that all 35M subscribers are paying for 12 months? I am one of those 35M subs, and I have been a subscriber since 2020. I have never paid for more than 2 months of gamepass in any given year.

I also think COD is going to have some pull there. Like if you play a lot of COD on console Gamepass Ultimate is by far the best value.

I'll give you the one. It's stuff like this that makes me say they can go on to become the greatest publisher out there.

So much FUD https://www.statista.com/statistics/1276183/xbox-game-pass-subscriber-count-global/

Phil Spencer says Game Pass now has 34m "fully paid" subscribers

Microsoft has shared updated Game Pass membership figures for the first time since January 2022, saying the on-demand g…

www.eurogamer.net

So you just put up data that you don't even understand? gamepass stagnated, and I even gave it a higher number than the link you provided gave it. Until they merged Xbox Gold with gamepass.. that's how they got to that 34M number.

And 34M fully paid subs? Yeah right... still listening to Phil? If you pay for a monthly sub... that's a fully paid monthly subscriber. And use you r head here, Do you really believe 34M people are paying for 12 months upfront on a service that has no quarterly/yearly discounts? Does that even make sense to you. People pay monthly for gamepass... and if you tally that number on any one of their busiest months, you land at a sub count in excess of 35M. For that one month alone. And yet the yearly sub-average would be a lot less than that.

 

[Little Chicken]

Commercially rich, creatively bankrupt

Age of Mythology, ARA, Flight Sim 2024, Call of Duty, Indiana Jones and Avowed releasing within 6 months of each other would suggest otherwise.

Xbox releases the most diverse range of genres out of the three but nobody acknowledges it.

 

[pasterpl]

I laughed at this part.

How is concord and astrobot? Or are you waiting for another remake/remaster? /s

Minecraft needed Microsoft to make it big? Rare didn't get worse after? I don't get it.

Minecraft has about 186 million users registered worldwide. This number does not include Minecraft China players. Minecraft's audience has grown by more than 100 million users since 2018, which recorded 75 million registered users. Minecraft recorded its highest amount of registered users in 2024.

And re. Rare - Sea of Thieves is their most successful game ever.

 

[BlackTron]

Actually it is, since ABK is no longer traded the only thing that can affect its valuation at this point is MS recording (or provisioning) an asset valuation wipe or degradation. No idea how that could happen (maybe the loss of a trademark due to a dispute).

If anything, from a purely financial perspective ABK is worth more than it was at the moment it was bought (not necessarily at the moment MS decided to buy it) because of the layoffs’ impact on its cost/revenue structure.

Oh, I recognize ABK has a value on the books, it's just not necessarily a value anyone will pay. Who other than MS would have done this to begin with.

It's not exactly going into debt for a food truck, profiting off use of the asset for a year, and keeping in mind you can sell the truck when you decide to exit. They're in deep.

 

[BlackTron]

How is concord and astrobot? Or are you waiting for another remake/remaster? /s

Who in the lord's name utters Concord and Astrobot in the same sentence?

And re. Rare - Sea of Thieves is their most successful game ever.

I give you guys shit when you're wrong so I'll admit I am here. In a thread about business, fair enough, Minecraft and Sea of Thieves are successes.

 

[Mr Moose]

How is concord and astrobot? Or are you waiting for another remake/remaster? /s





And re. Rare - Sea of Thieves is their most successful game ever.

Who cares about Concord? Astrobot is great. People seem to like Helldivers 2 as well.
Hi-Fi Rush was started in 2018, and they killed the company. Another company had to buy them and the IP to resurrect them. Avowed and SoM haven't released, they don't look too good.

Hasn't Xbox lost 1.4B in the last 3Q?

 

[Ashamam]

A multi year strategy has failed. This is a company that doesn't aim to tread water, it aims to dominate.

Everything is not fine. You would have to glasses so rose colored they are painted to think everything is fine.

The big question is how well they execute on the new strategy. Probably more to the point, is the strategy sound given the speed at which it had to be put in place? Even more to the point, how much input did the execs responsible for the prior (failed) strategy have? To me it looks like not much in terms of broad strokes, but probably everything in terms of detail. Frankly I think they should have made bigger changes at the top.

I think someone mentioned comparing return on investment (ABK) vs cash in the bank as being the relevant metric. This is not in the slightest bit true. The comparison has to be between what the cash could have been spend on instead. Cash has a known fixed return, its kept on hand for reasons other than growing the business, so expectations are different. The moment its put back into the business it has to perform. ABK revenue takes an immediate hit from GP, anyone who already had the sub, but would have bought new releases. Therefore it has to actually do better than it was. Theoretically this should have taken the form of much increased GP subs, but without the hardware base to support it the question becomes, 'will there be enough?'. On balance, probably, especially if they cut their cost base enough. But they obviously want more otherwise why go 3rd party?

Personally I look at the whole situation, see the public facing comments, the layoffs, the third party ports, the hardware rumours etc and it looks like its a deck of cards that was built on the acquisition not being delayed and GP being much closer to whatever was internally projected. Sometime last year it became impossible to deny the divergence from projections and here we are. Everything is not fine.

But they are a big company, too big to fail really, so Xbox isn't going anywhere. But without a leadership change I don't think they will ever get their shit together enough to look like a really professional outfit. They just need to stop talking and start delivering. We shall see.

 

[BlackTron]

Age of Mythology, ARA, Flight Sim 2024, Call of Duty, Indiana Jones and Avowed releasing within 6 months of each other would suggest otherwise.

Not saying these games are garbage but AoM again, Flight Sim again, CoD again and unplayed titles such as first person Indy made by the first person Nazi killer studio is an answer to "creatively bankrupt"?

It's hard to even acknowledge what Xbox has because every other comment is trying to turn it into something they don't. TBH I really hoped some of you guys were getting paid by MS now I'm just freaked out.

 

[DryvBy]

Companies look for upward trajectory. They don't have any. Revenue being up is essentially the same as someone getting paid more at work but it doesn't explain if right after they decided to buy a bigger house and accept more debt.

 

[ManaByte]

CoD again

It's the #1 selling game every year on every platform. No shit they're going to release it every year. The game makes $20B a year by itself.

first person Indy made by the first person Nazi killer studio is an answer to "creatively bankrupt"?

It's a first-person Indy game made by the people who made Chronicles of Riddick, a game people have wanted a follow-up to for nearly twenty years at this point.

 

[twilo99]

They’ve invested about this same level in AI stuff that’s yielding much less profit than ABK.

Bro…

Microsoft wants Three Mile Island to fuel its AI power needs

Microsoft’s 20-year deal is a first of its kind for the software maker.

www.theverge.com

 

[Little Chicken]

Not saying these games are garbage but AoM again, Flight Sim again, CoD again and unplayed titles such as first person Indy made by the first person Nazi killer studio is an answer to "creatively bankrupt"?

It's hard to even acknowledge what Xbox has because every other comment is trying to turn it into something they don't. TBH I really hoped some of you guys were getting paid by MS now I'm just freaked out.

There are also ongoing trades like Sea of Theives and recent releases like HiFi Rush and Pentiment.

Unless you're just addicted to the cycle of TPS games feat. Daddy issues or a 700th Mario platformer.

Not every game can reinvent the wheel.

 

[twilo99]

Minecraft.

How much they paid and how much is it worth today?

 

[BlackTron]

There are also ongoing trades like Sea of Theives and recent releases like HiFi Rush and Pentiment.

Unless you're just addicted to the cycle of TPS games feat. Daddy issues or a 700th Mario platformer.

Not every game can reinvent the wheel.

Is the definition of creativity fluid based on activity in other brands?

If Sony releases a really creative game, then COD isn't. But if they don't, then COD is creative. Because creativity only exists as a ratio to a competing product.

Am I getting how it works?

Edit: BTW I play very few TPS games. My last two third person adventure or shooter games were Last of Us on PS3 and Rachet & Clank PS4.

People laugh at "the same" Mario games but if they played them, would realize they have more fresh ideas and mechanics changes each time than regular releases in some other brands.

 

[Moriarty1889]

Xbox makes money with software and services. Subs to gamepass are over 30 million and generating a fair chunk. Putting their games on other platforms is another source of revenue. Consoles don’t really make money in the long term and Xbox consoles are not selling anywhere near like Playstation. The acquisition of Activision Blizzard is the real source of revenue for them now more than anything else. COD, like it or not, prints money every year and MS now owns that. They spent a ton of money now to make it back over time. They can never compete with Sony in terms of consoles so their only way to keep active is thru subs and services.

 

[cireza]

You just gave a different statement masquerading as a quick summary.

It's not that easy to change history on a forum man. You didn't say "looks fine", you specifically said "most certainly reaching their targets."

Which as I just made the case is an extremely optimistic statement but you completely ignored that part and started changing the past instead so we appear to be at an impasse. I can't argue with time travel and selective amnesia.

I made point perfectly clear form the beginning. Now go bother someone else.

 

[RoboFu]

Shhh... we don't talk about Ms doing well here. People start to disappear.

 

[vaibhavpisal]

How much they paid and how much is it worth today?

A whole generation of gamers have grown up playing it.

How much is that worth?

How much is Mario worth today?

 

[MisterXDTV]

Let's see:

- Hardware sales dead
- Software sales dead
- GamePass stopped growing after people stacked YEARS for cheap

All of this after spending $80B for ABK+ZeniMax

Yeah, you are really missing something

 

[Chukhopops]

Oh, I recognize ABK has a value on the books, it's just not necessarily a value anyone will pay. Who other than MS would have done this to begin with.

It's not exactly going into debt for a food truck, profiting off use of the asset for a year, and keeping in mind you can sell the truck when you decide to exit. They're in deep.

It’s not a short term operation for sure but I don’t think what they paid is particularly overpriced compared to ABK’s yearly revenue prior to the acquisition.

For comparison MS spent 26bn on LinkedIn in 2016, a company that reported under 1bn yearly revenue at that time, so the cost to revenue ratio was significantly worse than ABK. Last year (2023) Linkedin posted 15.7bn yearly revenue.

Then you factor in the opportunity cost: how long would it take MS to generate that amount of extra revenue? How much would they need to invest to build the ABK franchises from scratch?

 

[adamsapple]

Once they acquire Sony, both the revenue and profit streams will align, don't worry folks

 

[ShadowkillXNA]

Can we learn to basic finance before getting 350 pages into this thread and I’ll explain it for the 50th time since people missed it in high school and keep it on the first page.

An acquisition is not a sunk loss, they now have that asset worth $80 billion that they can dispose of for $80 billion or more in the future due to inflation, the revenue it brings in paying down that outlay, normal growth yadda yadda.

Exact same as Minecraft when people said they where nuts, they could sell off Minecraft tomorrow for $20 billion they own that asset, that asset continues to bring in excess I would say of a billion a year.

Activision will now bring in $X amount a year, quicker than the interest their cash reserves of that $80 billion was bringing in, and with that brings ‘growth’ of the company. CoD will do record numbers this year even with being on game pass and drive sales of their subscription service also bringing in growth.

Consoles make fuck all in revenue it’s all about the software and DLC, Microsoft know that so selling 1/4 the consoles of Nintendo they make more still from their gaming division.

I’ll enjoy the 100+ quotes ahead of time, cheers cunts.

So yes Op, you’re not missing anything and they’re doing completely fine they’ll never match Sony for consoles sold it doesn’t matter.

 

[Astray]

A multi year strategy has failed. This is a company that doesn't aim to tread water, it aims to dominate.

Everything is not fine. You would have to glasses so rose colored they are painted to think everything is fine.

The big question is how well they execute on the new strategy. Probably more to the point, is the strategy sound given the speed at which it had to be put in place? Even more to the point, how much input did the execs responsible for the prior (failed) strategy have? To me it looks like not much in terms of broad strokes, but probably everything in terms of detail. Frankly I think they should have made bigger changes at the top.

I think someone mentioned comparing return on investment (ABK) vs cash in the bank as being the relevant metric. This is not in the slightest bit true. The comparison has to be between what the cash could have been spend on instead. Cash has a known fixed return, its kept on hand for reasons other than growing the business, so expectations are different. The moment its put back into the business it has to perform. ABK revenue takes an immediate hit from GP, anyone who already had the sub, but would have bought new releases. Therefore it has to actually do better than it was. Theoretically this should have taken the form of much increased GP subs, but without the hardware base to support it the question becomes, 'will there be enough?'. On balance, probably, especially if they cut their cost base enough. But they obviously want more otherwise why go 3rd party?

Personally I look at the whole situation, see the public facing comments, the layoffs, the third party ports, the hardware rumours etc and it looks like its a deck of cards that was built on the acquisition not being delayed and GP being much closer to whatever was internally projected. Sometime last year it became impossible to deny the divergence from projections and here we are. Everything is not fine.

But they are a big company, too big to fail really, so Xbox isn't going anywhere. But without a leadership change I don't think they will ever get their shit together enough to look like a really professional outfit. They just need to stop talking and start delivering. We shall see.

Microsoft Gaming definitely isn't going anywhere, but Xbox can definitely go if things get bad enough.

Much of the commentary is muddled because Microsoft muddled the messaging and kept calling MS Gaming "Xbox" when Xbox is part of MS Gaming and not the other way around. Even Phil went by two titles for the longest time "CEO of Xbox vs CEO of Microsoft Gaming"

Most of what he's saying isn't incorrect, but there's a weird and very misplaced sense of antagonism in the post that I just can't understand.

Maybe he just had a bad day.

 

[grvg]

IMHO cooked books, legally of course. Kinda like unemployment statistics in the USA.

 

[Duchess]

Hollywood accounting - Wikipedia

en.wikipedia.org

 

[BlackTron]

It’s not a short term operation for sure but I don’t think what they paid is particularly overpriced compared to ABK’s yearly revenue prior to the acquisition.

For comparison MS spent 26bn on LinkedIn in 2016, a company that reported under 1bn yearly revenue at that time, so the cost to revenue ratio was significantly worse than ABK. Last year (2023) Linkedin posted 15.7bn yearly revenue.

Then you factor in the opportunity cost: how long would it take MS to generate that amount of extra revenue? How much would they need to invest to build the ABK franchises from scratch?

Yeah, not saying they overpaid for the asset. But they are fully committed in the long haul with it. There's no one else who can buy it from them (at that price).

I see them making back the investment before the company culture is finished eroding any lingering pre-MS goodness, which will take years (see Halo). So for the way they do things, good buy. Also, the deal is so huge they can't possibly wreck all the IP, some revenue will always come from somewhere. The big one is COD...I have a bad feeling it could become the next Halo over the course of a few games.

 

[BlackTron]

I made point perfectly clear form the beginning. Now go bother someone else.

At no point did I say your point wasn't clear at the beginning sir, nor did I ever express confusion at exactly what you are doing. Very well then...

 

[BlackTron]

It's the #1 selling game every year on every platform. No shit they're going to release it every year. The game makes $20B a year by itself.

I never said it was a crime to release COD yearly. Just that it's a dumb addition to a list of "creative games".

 

[vaibhavpisal]

I never said it was a crime to release COD yearly. Just that it's a dumb addition to a list of "creative games".

It is creative if same company is making COD and Pentiment, HiFi Rush.

 

[BlackTron]

It is creative if same company is making COD and Pentiment, HiFi Rush.

Brother, in a post-MS shill world, you need a psychiatrist.

Checks are the only excuse for this.

You guys would have a heart attack and die if someone said a safe, numbered, third person action adventure by Sony was creative because of a different game.

 

[Bernardougf]

I’m not being facetious, I likely *am* missing something. If Xbox’s revenue is increasing year over year, then isn’t that kind of objectively doing pretty well?

As far as I can tell, it seems like the decision to bring their games to other platforms, while obviously lowers demand for their own console, actually seems like it’s a pretty smart play? It would be kind of depressing to see them leave the console market, but if the company is still seeing record(?) profits, then it certainly doesn’t seem to be necessary.

What am I missing?

If your division revenue (ms gaming) is 2 billion and your parent company (ms) purchase a 70 billion revenue dollar company you now have 72 billion revenue in your divison ... this is artificial growth and its also different from profits

 

[Woopah]

Games you have listed are very similar to other games on the market eg. RoR vs GoT or Nioh. Flight Sim is enthusiast game and risky project, and level of innovation (technical) is crazy in 2020 and now in 2024 versions. Avowed is nothing ground breaking I agree, but MS got more new IPs that we know of compared to Sony.


So much FUD https://www.statista.com/statistics/1276183/xbox-game-pass-subscriber-count-global/

Phil Spencer says Game Pass now has 34m "fully paid" subscribers

Microsoft has shared updated Game Pass membership figures for the first time since January 2022, saying the on-demand g…

www.eurogamer.net

Well if we're talking gameplay then Astrobot is getting praise for being creative

I'm not saying MS isn't creative, but Sony is too.

 

[Astray]

I never said it was a crime to release COD yearly. Just that it's a dumb addition to a list of "creative games".

COD is literally the least creative game ever, it was Activision poaching people off EA and aping their game concept.

Kotick poached the key guys of the Medal of Honor: Allied Assault dev (2015, Inc games) and they formed Infinity Ward, which made the first COD.

Infinity Ward - Wikipedia

en.wikipedia.org

 

[Zacfoldor]

I don’t think revenue is the problem. The problem is nobody is buying their console, and they have no future in consoles because they lost the trust of the market. Here’s something else you will assuredly find surprising, Microsoft has sold about half the amount XS as PS5s. See, Microsoft started this generation with the benefit of the doubt. They lost it when they didn’t put out any good games(they didn’t even money hat many/any) and closed the only studio they had that made a good game. Their biggest games also flopped. Then, instead of returning to basics, they decided to port all of their games to PlayStation, jack up the game pass price on Xbox, and remove day and date from Xbox game pass, except in the premium tier. They didn’t jack up the price on PC, making their few console fans, second-class citizens. So Xbox as a console has limited time on this Earth. The issue there is that most of the game pass subscriptions which create the revenue that you mentioned, come from Xbox. There’s also a ceiling for gaming subscriptions and unless they’re getting way more than their moneys worth, PC gamers are all about free to play or cheap to play(ironically) so I don’t see them pulling the revenue they want to out of that group in the long term. Do y’all really think PC gamers are going to fund Microsoft through game pass subscriptions?

Also, because of game pass, nobody buys their games anymore, except on PlayStation.

 

[Topher]

Last few financials have highlighted that ABK is the part of MS Gaming that is bringing in the revenue while the Xbox side is losing money.

Most of what he's saying isn't incorrect, but there's a weird and very misplaced sense of antagonism in the post that I just can't understand.

Maybe he just had a bad day.

Mattyp comes across as a nice guy on his youtube channel. Gets on GAF and he becomes incredibly condescending at times. He isn't wrong here at all, but still....disappointing.

 

[Boss Mog]

Revenue is irrelevant, only profits matter.