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[ByWatterson]

The problem with #1 is if you can't do #2, you'll eventually fail at #1.

People don't see the financial reports for GamePass, but people have been guaranteeing you all that it isn't sustainable. It's not as bad as say MoviePass, but the idea that this is going to last as is just isn't realistic. Games cost way too much money to develop to put on GamePass, unless Microsoft is paying for the entire life cycle of the game's sales, and if they are, their margins are shot.

Think about it, let's say all game publishers make a collective of 10 billion dollars annual on Xbox in revenue. Microsoft would naturally take 30% of that revenue (less physical sales, but let's ignore that for now). That's 3 billion dollars for Xbox in revenue.

If Microsoft has to pay 7 billion dollars to get the games on GamePass, not only are they not receiving royalties anymore, but all of their revenue needs to come from subs. Obviously there is a bit of a mix, people are still buying games, but making up 7 billion in revenue via subs, isn't easy. And you have to maintain that.

So obviously, Microsoft doesn't put EVERY game on GamePass, but what they're doing by putting significant titles on GamePass is that people are content with their GamePass games and buy FEWER games, which means even the games that aren't on GamePass make less money.

This means publishers aren't going to want to put their games on Xbox (as much) and certainly don't want to put exclusives on Xbox where they could have made their money on PlayStation which has a larger userbase.

What was the big news for GamePass recently? That Persona was coming, games that also came to PS4 (though it looks like Microsoft probably made a deal for them not to come to PS5 right away). Atlus only agreed to this because they know most people have already purchased the games on the PlayStation ecosystem. Ask yourself why Microsoft hasn't gotten a game like CoD, GTA, Final Fantasy, Metal Gear, Silent Hill, Resident Evil, Cyberpunk, Witcher exclusive? The answer is because it costs way too much, you have to cover the loss in sales on PS5 AND the damage to the franchise. If I think Cyberpunk is going to sell 15 million copies on PS5 and the sequel could have sold another 15 million.... I'm going to ask you for at least 20 million copies worth of compensation. That's a 1.4 billion dollar exclusivity deal...

Sony can do exclusivity deals, because the Xbox userbase is small and to Spencer's credit, Sony does want to keep them small, because it keeps these deals affordable and helps you sell units for which you'll make up the costs via continued royalties.

Bottom line is I don't see how you keep a GamePass type subscription going if it focuses on external content and even your internal content takes a hit.

Imagine Starfield in a perfect universe sells 20 million units exclusive to xbox. Let's call that 20 million at 70 dollars. Again, that's 1.4 billion dollars for just one game. Not even including PC sales. Now you look at GamePass subscriptions and those same 20 million people paying 10 dollars a month for a year, that's 2.4 billion... but the question is do they keep gamepass for the whole year or just the month or so they play starfield. Not to mention the lost sales with the rest of the library...

Totally agree.

I love Gamepass, but it has this sort of stink of being ephemeral unless and until they start handling their studios better.

Until then I'm gonna enjoy it, but it does seem lately as if built on sand.

 

[Mibu no ookami]

Game development is hard. Even for the best studios in the business like Naughty Dog. When you have to grow your developers from 100, to then 200, to then 500 or more....It's really difficult because the people you hire are mostly going to be either new and straight out of college, or completely new to the industry itself trying to break through. This can put a lot of stress on the Leads that know what to do to actually train all of these people and keep them adequately busy, which can lead to burnout and turnover. This is true in any industry that's rapidly growing.

The key difference is that despite their challenges, the top studios still managed to deliver consistently high quality output on a regular basis (even if slightly delayed).

What we are talking about here (in general) for many of Microsoft's big studios goes far beyond mere growing pains. It's not knowing what games are years into development, significant reboots, starting over from scratch, etc. etc....that's why we're here 5 years later and not seen a single tangible thing from The Initiative.

And it's not to say Sony doesn't go through those REALLY bad periods, Sony Santa Monica certainly did. But amazingly from 2013 to 2018 (5 years), they were able to completely abandon a failing new IP and turn out a GOTY contender. So it's possible to still fail AND manage to deliver eventually within a reasonable time. But what we are seeing so far from some of MS games studios is a lot worse than that with no confidence from Xbox leadership that things are getting better.

To build on this Santa Monica had significant layoffs to the studio as a result of GOW:A and the failed IP project. The studio COULD have been closed down, what shows good leadership is Sony didn't close them down and instead allowed them to reboot a franchise which is EXTREMELY risky. The risk obviously paid off and God of War 2018 sold basically as much as all of the games before it combined, but the studio still had pedigree from 3 God of War games that were all 90s.

Microsoft tasks these projects out to brand new studios and puts immense pressure on them.

Look at what Sony is doing with Deviation Games. They basically want them to make a CoD killer and the studio head already left probably because the project wasn't going well. What's the difference between Deviation Games and the Initiative? Deviation isn't an internal studio, the game they are making isn't an established IP. Even if you have to cancel the game, no one really cares ultimately. It hasn't impacted anything. They also haven't announced what their project even is really. It all comes down to the pipeline, Microsoft gets in trouble because their pipeline is really small. Sony has already established a large pipeline. They have studios like Insomniac working on 2-3+ games at a time, same with Naughty Dog. Name one Microsoft studio that can say the same (aside from Zenimax studios). That puts pressure on every single title to perform. Where as Sony can choose to delay a game if they have to. They delayed GT7, Horizon, and God of War. Even Rift Apart iirc. They've got a great long term view, whereas Microsoft is so desperate to anchor GamePass and so desperate to keep their hardware sales at this pace. It's a recipe for disaster.

I really think DC was the best example of similar mismanagement.

 

[Mibu no ookami]

Ask yourself why Sony hasn't closed down Bend Studios or had serious layoffs there. Their staff is up 18% in the last 6 months according to linkedin... Sony is doubling down on them. That's a risky move, but one that could pay off. The studio has talent and pedigree, they really just need an opportunity. It's hard to build a studio from scratch, so you have to be careful with shuttering them.

Sony shuttered Japan Studio because they saw no redemption for them. That says a lot actually.

 

[bentanchorbolt]

Ask yourself why Sony hasn't closed down Bend Studios or had serious layoffs there. Their staff is up 18% in the last 6 months according to linkedin... Sony is doubling down on them. That's a risky move, but one that could pay off. The studio has talent and pedigree, they really just need an opportunity. It's hard to build a studio from scratch, so you have to be careful wither shuttering them.

Sony shuttered Japan Studio because they saw no redemption for them. That says a lot actually.

To be fair Days Gone is criminally underrated and I think everyone, even Sony, knows it. I’m patiently waiting to see what they do next.

 

[DenchDeckard]

Game development is hard. Even for the best studios in the business like Naughty Dog. When you have to grow your developers from 100, to then 200, to then 500 or more....It's really difficult because the people you hire are mostly going to be either new and straight out of college, or completely new to the industry itself trying to break through. This can put a lot of stress on the Leads that know what to do to actually train all of these people and keep them adequately busy, which can lead to burnout and turnover. This is true in any industry that's rapidly growing.

The key difference is that despite their challenges, the top studios still managed to deliver consistently high quality output on a regular basis (even if slightly delayed).

What we are talking about here (in general) for many of Microsoft's big studios goes far beyond mere growing pains. It's not knowing what games are years into development, significant reboots, starting over from scratch, etc. etc....that's why we're here 5 years later and not seen a single tangible thing from The Initiative.

And it's not to say Sony doesn't go through those REALLY bad periods, Sony Santa Monica certainly did. But amazingly from 2013 to 2018 (5 years), they were able to completely abandon a failing new IP and turn out a GOTY contender. So it's possible to still fail AND manage to deliver eventually within a reasonable time. But what we are seeing so far from some of MS games studios is a lot worse than that with no confidence from Xbox leadership that things are getting better.

Great points, I hear you. Yeah Microsoft really need to get their shit together and deliver some top tier games ASAP.

 

[James Sawyer Ford]

Great points, I hear you. Yeah Microsoft really need to get their shit together and deliver some top tier games ASAP.

I think they can still take their time. My biggest worry is that they just haven't shown their audience enough to get excited that the future looks bright. It's just a bunch of hollow empty promises at this point.

The perception can change if they show some really great gameplay of upcoming exclusives this year.

 

[bentanchorbolt]

Great points, I hear you. Yeah Microsoft really need to get their shit together and deliver some top tier games ASAP.

Minus the ASAP part. I think the biggest problem they have is announcing projects early. Nobody should be taking about their project less than two years out. Hype can turn on you quick and I see the biggest fault of Phil is managing expectations. Nobody would care about delayed games if they didn’t know about them in the first place.

 

[ADiTAR]

The problem ... with the rest of the library...

I shortened the quote. Hope that's ok.

To counter, I'd say while yes games are costing now a lot of money, but if Microsoft had better management I think they could've created a development ecosystem of developers that could reduce costs. Creating one engine to rule them all, and support studios that focus on different disciplines like gameplay, asset creation, cinematics, multiplayer, etc. So basically you're creating an oiled machine that has an overarching goal and a pipeline that can spit out games faster. I believe Nintendo was rumored to have their own engine that is used by most of their dev teams internally.

It's a thought, you'll need to be a true visionary to create something like that without fucking up. And I don't trust Xbox to do that.

 

[Mibu no ookami]

To be fair Days Gone is criminally underrated and I think everyone, even Sony, knows it. I’m patiently waiting to see what they do next.

Well looks like they're developing a Days Gone movie with an Oregon-based production studio (might not say much to be honest, but whatever). I think we'll see a remake or remaster of the game to coincide with the movie. Or that might just let the patched game and PC version stand up for themselves.

An important reason why people should never burn bridges.

 

[Mibu no ookami]

I shortened the quote. Hope that's ok.

To counter, I'd say while yes games are costing now a lot of money, but if Microsoft had better management I think they could've created a development ecosystem of developers that could reduce costs. Creating one engine to rule them all, and support studios that focus on different disciplines like gameplay, asset creation, cinematics, multiplayer, etc. So basically you're creating an oiled machine that has an overarching goal and a pipeline that can spit out games faster. I believe Nintendo was rumored to have their own engine that is used by most of their dev teams internally.

It's a thought, you'll need to be a true visionary to create something like that without fucking up. And I don't trust Xbox to do that.

Difficult to create one engine good for a variety of genres. Even Unreal isn't great for everything. There is some validity to the argument that they should standardize, but I'm not sure that would solve their problem.

 

[Mibu no ookami]

Minus the ASAP part. I think the biggest problem they have is announcing projects early. Nobody should be taking about their project less than two years out. Hype can turn on you quick and I see the biggest fault of Phil is managing expectations. Nobody would care about delayed games if they didn’t know about them in the first place.

They have to announce the games to appease people buying the console now. If people stop buying the consoles today, there really isn't a tomorrow.

 

[bentanchorbolt]

Well looks like they're developing a Days Gone movie with an Oregon-based production studio (might not say much to be honest, but whatever). I think we'll see a remake or remaster of the game to coincide with the movie. Or that might just let the patched game and PC version stand up for themselves.

An important reason why people should never burn bridges.

The drama surrounding Days Gone always seemed kind of fake to me, to a degree anyway. The only way they game is a disappointment is when you stack it head to head with the cream of the crop at Sony, and tbf most games would look less than stellar under those lights.

 

[bentanchorbolt]

They have to announce the games to appease people buying the console now. If people stop buying the consoles today, there really isn't a tomorrow.

You’re right but it’s short sighted and mostly why MS is getting railroaded lately. They should have spent money on timed deals for the near term while their 1st parties were developing games so they weren’t so desperate to announce projects that were 3-5 years out.

 

[Mibu no ookami]

You’re right but it’s short sighted and mostly why MS is getting railroaded lately. They should have spent money on timed deals for the near term while their 1st parties were developing games so they weren’t so desperate to announce projects that were 3-5 years out.

I think this comes down to Microsoft's senior leadership and maybe even the board. They tried the timed exclusivity deals on 360 and they didn't really pan out. They're also significantly more expensive now.

I think this ABK deal was kind of a last straw for the Microsoft board. They'll go for a big splash but they aren't interested in small deals. And they probably think worst case scenario they could sell ABK for something similar to what they bought it for (which I think is wrong).

If this deal doesn't go through, I really think it'll be bad for the entire market.

 

[Mibu no ookami]

The drama surrounding Days Gone always seemed kind of fake to me, to a degree anyway. The only way they game is a disappointment is when you stack it head to head with the cream of the crop at Sony, and tbf most games would look less than stellar under those lights.

Well, I think that's the same situation Perfect Dark is in. It's stacked against Sony 1st party games.

If Sony is going to release God of War Ragnarok, you don't want to put out a game that you know doesn't stack up next to it.

The only problem with this thinking is that Spider-Man 2 is going to blow the pants of Ragnarok, so Starfield has to be that much better. And regardless of how good Starfield is, Spider-Man 2 is going to be more digestible by more people.

2023 is an L for Microsoft already and there really isn't anything they can do about it. Like maybe, they could have jumped in last minute and got Hogwarts Legacy as an exclusive and started the year off right, but that would have been a VERY pricey exclusivity deal.

 

[bentanchorbolt]

I think this comes down to Microsoft's senior leadership and maybe even the board. They tried the timed exclusivity deals on 360 and they didn't really pan out. They're also significantly more expensive now.

I think this ABK deal was kind of a last straw for the Microsoft board. They'll go for a big splash but they aren't interested in small deals. And they probably think worst case scenario they could sell ABK for something similar to what they bought it for (which I think is wrong).

If this deal doesn't go through, I really think it'll be bad for the entire market.

What do you mean the deal falling through would be bad for the market? I haven’t heard that discussed.

Also, Stalker would have been out last year for MS had the war in Ukraine not been a thing. That’s a gut punch.

 

[The Alien]

So if story and art direction were done and full steam ahead with development on TR in UE5, maybe comes out 2024.

PD was the first project for a from-the-ground-up new studio made from scratch.

I'll be a little slower to the punch on gloom and doom for xbox. If PD releases and kicks ass, who cares. If not, more threads, I suppose.

 

[Mibu no ookami]

What do you mean the deal falling through would be bad for the market? I haven’t heard that discussed.

Also, Stalker would have been out last year for MS had the war in Ukraine not been a thing. That’s a gut punch.

Let's say that the deal falls through, what happens next?

Microsoft has essentially no major games in its pipeline. GamePass will stumble as will XSX/S sales.

Microsoft's board may have enough and they might decide that they're done with Xbox. Microsoft considered calling it quits with Xbox in 2013/2014.

If Microsoft calls it quits, that gives Sony a complete monopoly, and we've seen that play out a bit already. The vacuum of Microsoft probably invites Tencent, which I don't think anyone wants, which also involves Tencent buying more studios, which I know no one wants.

A strong Microsoft is good for PlayStation consumers just as a strong PlayStation is good for Microsoft consumers. Competition makes the industry better.

If Microsoft is outsold 2:1 in 2023, they'll be outsold 4:1 in 2024. Once there is a clear "it" console, it's pretty much all over.

Microsoft needs CoD on GamePass year in and year out to keep the service subscribed to and it would make sense for CoD fans to jump ship from PS4 to XSX/S if CoD is free on GamePass.

 

[Bruno_Arrais85]

Microsoft management...

 

[gothmog]

The problem with #1 is if you can't do #2, you'll eventually fail at #1.

People don't see the financial reports for GamePass, but people have been guaranteeing you all that it isn't sustainable. It's not as bad as say MoviePass, but the idea that this is going to last as is just isn't realistic. Games cost way too much money to develop to put on GamePass, unless Microsoft is paying for the entire life cycle of the game's sales, and if they are, their margins are shot.

Think about it, let's say all game publishers make a collective of 10 billion dollars annual on Xbox in revenue. Microsoft would naturally take 30% of that revenue (less physical sales, but let's ignore that for now). That's 3 billion dollars for Xbox in revenue.

If Microsoft has to pay 7 billion dollars to get the games on GamePass, not only are they not receiving royalties anymore, but all of their revenue needs to come from subs. Obviously there is a bit of a mix, people are still buying games, but making up 7 billion in revenue via subs, isn't easy. And you have to maintain that.

So obviously, Microsoft doesn't put EVERY game on GamePass, but what they're doing by putting significant titles on GamePass is that people are content with their GamePass games and buy FEWER games, which means even the games that aren't on GamePass make less money.

This means publishers aren't going to want to put their games on Xbox (as much) and certainly don't want to put exclusives on Xbox where they could have made their money on PlayStation which has a larger userbase.

What was the big news for GamePass recently? That Persona was coming, games that also came to PS4 (though it looks like Microsoft probably made a deal for them not to come to PS5 right away). Atlus only agreed to this because they know most people have already purchased the games on the PlayStation ecosystem. Ask yourself why Microsoft hasn't gotten a game like CoD, GTA, Final Fantasy, Metal Gear, Silent Hill, Resident Evil, Cyberpunk, Witcher exclusive? The answer is because it costs way too much, you have to cover the loss in sales on PS5 AND the damage to the franchise. If I think Cyberpunk is going to sell 15 million copies on PS5 and the sequel could have sold another 15 million.... I'm going to ask you for at least 20 million copies worth of compensation. That's a 1.4 billion dollar exclusivity deal...

Sony can do exclusivity deals, because the Xbox userbase is small and to Spencer's credit, Sony does want to keep them small, because it keeps these deals affordable and helps you sell units for which you'll make up the costs via continued royalties.

Bottom line is I don't see how you keep a GamePass type subscription going if it focuses on external content and even your internal content takes a hit.

Imagine Starfield in a perfect universe sells 20 million units exclusive to xbox. Let's call that 20 million at 70 dollars. Again, that's 1.4 billion dollars for just one game. Not even including PC sales. Now you look at GamePass subscriptions and those same 20 million people paying 10 dollars a month for a year, that's 2.4 billion... but the question is do they keep gamepass for the whole year or just the month or so they play starfield. Not to mention the lost sales with the rest of the library...

I agree but I feel this is fixable if they had a reality check. Create a lower tier that drops the day 1 commitment and price. Keep up the pretty great monthly mix of indies and quality third party games. Talk to major cable and mobile companies and get GP as part of their unlimited packages. Sub numbers go up, and when you get your studios producing a bit more predictably you push the higher tiers hard to add in the day 1, PC, and streaming.

 

[bentanchorbolt]

Let's say that the deal falls through, what happens next?

Microsoft has essentially no major games in its pipeline. GamePass will stumble as will XSX/S sales.

Microsoft's board may have enough and they might decide that they're done with Xbox. Microsoft considered calling it quits with Xbox in 2013/2014.

If Microsoft calls it quits, that gives Sony a complete monopoly, and we've seen that play out a bit already. The vacuum of Microsoft probably invites Tencent, which I don't think anyone wants, which also involves Tencent buying more studios, which I know no one wants.

A strong Microsoft is good for PlayStation consumers just as a strong PlayStation is good for Microsoft consumers. Competition makes the industry better.

If Microsoft is outsold 2:1 in 2023, they'll be outsold 4:1 in 2024. Once there is a clear "it" console, it's pretty much all over.

Microsoft needs CoD on GamePass year in and year out to keep the service subscribed to and it would make sense for CoD fans to jump ship from PS4 to XSX/S if CoD is free on GamePass.

You make good points and I agree with most of it but the deal falling through I don’t think is quite that dire. I would suspect when you’re willing to spend $70b on a publisher you probably are in this for the long haul but who really knows tbh. My concern for the deal falling through is 1) where does Activision go and 2) what others studios and pubs will MS go after. It’s probably better for everyone, like you said, for the deal to go through.

 

[Mibu no ookami]

I agree but I feel this is fixable if they had a reality check. Create a lower tier that drops the day 1 commitment and price. Keep up the pretty great monthly mix of indies and quality third party games. Talk to major cable and mobile companies and get GP as part of their unlimited packages. Sub numbers go up, and when you get your studios producing a bit more predictably you push the higher tiers hard to add in the day 1, PC, and streaming.

I agree that you have to mix things up, but let's look at your plan

Lower value and lower price means low margin and doesn't change the fact that you still have a day 1 tier and people are still not buying your games stand alone. If anything you're giving them the ability to lower their monthly charge and only up it when there is a game they want to play... That would absolutely destroy your margins.

Making a deal with cable and mobile providers means once again discounting GamePass, which impacts your margin. These companies won't buy it for full price and unlike subscriptions for media streaming services, it ties people to specific hardware. Not sure if the value is even there for them. Not sure anyone goes with t-mobile over verizon because it has gamepass.

 

[Mibu no ookami]

You make good points and I agree with most of it but the deal falling through I don’t think is quite that dire. I would suspect when you’re willing to spend $70b on a publisher you probably are in this for the long haul but who really knows tbh. My concern for the deal falling through is 1) where does Activision go and 2) what others studios and pubs will MS go after. It’s probably better for everyone, like you said, for the deal to go through.

I think it is the opposite. I think they said go big or go home. They've been battling it out with Sony for 20 years without a ton to show for it and the XSX is about to drop in sales significantly this year AND money is no longer cheap like it was during the pandemic when they made this deal.

I think it is dire, but that's just my perspective, I could definitely be wrong.

 

[gothmog]

I agree that you have to mix things up, but let's look at your plan

Lower value and lower price means low margin and doesn't change the fact that you still have a day 1 tier and people are still not buying your games stand alone. If anything you're giving them the ability to lower their monthly charge and only up it when there is a game they want to play... That would absolutely destroy your margins.

Making a deal with cable and mobile providers means once again discounting GamePass, which impacts your margin. These companies won't buy it for full price and unlike subscriptions for media streaming services, it ties people to specific hardware. Not sure if the value is even there for them. Not sure anyone goes with t-mobile over verizon because it has gamepass.

Well I think the day 1 thing is a mistake but I think removing it outright would not go over well. I personally like the Sony model where I can pay premium for day 1, wait for a sale which usually happens in the next month or two, or wait longer for it to eventually end up on the subscription. Sony makes their money and I get to choose how patient I want to be understanding that these high quality games are expensive to make.

As far as bundled subscriptions , I get Disney plus, ESPN plus, Hulu, and Apple tv plus as part of my current Verizon package which I know is way overpriced versus what I could be spending if I went prepaid. I don't think about it too much because I get these added services for free (also got a year of PSNow for free a few years ago). I know I probably wouldn't be a subscriber of any of these services if they didn't come with it.

Sure Microsoft will get less per sub but at the same time they will get tens of millions of guaranteed new subscribers. It's like building up your credit.

 

[James Sawyer Ford]

Let's say that the deal falls through, what happens next?

Microsoft has essentially no major games in its pipeline. GamePass will stumble as will XSX/S sales.

It's not anywhere near as dire as you make it out to be. Microsoft can easily be fine without Activision.

They just recently bought ALL of Zenimax, after all. They have the resources necessary to collectively deliver great exclusive games.

And furthermore, Microsoft doesn't need Starfield to compete with Spider-Man 2. We know it very likely won't be as big. And that's fine. If it sells 1/3 of what SM2 will it will be an enormous success. The most important thing is that Starfield is a great 1st party game that's exciting for the platform and gets people to buy into the Xbox ecosystem.

 

[Mibu no ookami]

It's not anywhere near as dire as you make it out to be. Microsoft can easily be fine without Activision.

They just recently bought ALL of Zenimax, after all. They have the resources necessary to collectively deliver great exclusive games.

And furthermore, Microsoft doesn't need Starfield to compete with Spider-Man 2. We know it very likely won't be as big. And that's fine. If it sells 1/3 of what SM2 will it will be an enormous success. The most important thing is that Starfield is a great 1st party game that's exciting for the platform and gets people to buy into the Xbox ecosystem.

How many PS5s sell this year and how many XSX/S?

 

[James Sawyer Ford]

How many PS5s sell this year and how many XSX/S?

I don't think Xbox needs to sell as much as Playstation to be a success.

 

[Mibu no ookami]

Well I think the day 1 thing is a mistake but I think removing it outright would not go over well. I personally like the Sony model where I can pay premium for day 1, wait for a sale which usually happens in the next month or two, or wait longer for it to eventually end up on the subscription. Sony makes their money and I get to choose how patient I want to be understanding that these high quality games are expensive to make.

As far as bundled subscriptions , I get Disney plus, ESPN plus, Hulu, and Apple tv plus as part of my current Verizon package which I know is way overpriced versus what I could be spending if I went prepaid. I don't think about it too much because I get these added services for free (also got a year of PSNow for free a few years ago). I know I probably wouldn't be a subscriber of any of these services if they didn't come with it.

Sure Microsoft will get less per sub but at the same time they will get tens of millions of guaranteed new subscribers. It's like building up your credit.

But where does that help Verizon?

You wouldn't subscribe to all of those, but you have the ability to without owning any specific hardware.

Verizon buying bundles to drive up their own costs when a consumer might not even own the hardware is probably too tough a pill to swallow. And exactly why people are cutting the cord when it comes to Cable. When you bundle something they have zero interest in.

 

[Mibu no ookami]

I don't think Xbox needs to sell as much as Playstation to be a success.

But that isn't what I asked. I asked how many each sells this year.

 

[James Sawyer Ford]

But that isn't what I asked. I asked how many each sells this year.

Well why are you asking that? If Xbox gets outsold 2:1 by Playstation this entire gen that's not necessarily a failure.

 

[gothmog]

But where does that help Verizon?

You wouldn't subscribe to all of those, but you have the ability to without owning any specific hardware.

Verizon buying bundles to drive up their own costs when a consumer might not even own the hardware is probably too tough a pill to swallow. And exactly why people are cutting the cord when it comes to Cable. When you bundle something they have zero interest in.

Verizon makes money by selling you an overpriced unlimited plan. They could make streaming part of it or offer a cheap/free Series S as well to drive up hardware numbers.

 

[LavitzSlambert]

I’d like to stop seeing people shit on Phil.

Phil Spencer is good for the gaming industry and he has a good understanding of what MS should be doing. And I do think he is leading them in the right direction. But I don’t think MS is a good fit for Phil, at all. The positives are giving Phil the power to make certain decisions, and deep pockets, but that’s where it ends.


Phil needs help. He has a great vision and understanding of the industry, and he absolutely understands the joy of gaming and what makes a good game. The problem is that he’s out of his league when it comes to managing game development itself, and doesn’t seem to have the qualified help he needs. He needs a Miyamoto, an Aonuma, a Yoshida, Hurst even. Someone to actually guide development of their studios full time while he worries about the business aspects. Phil’s role in practice is more like Jim Ryan or Shuntaro Furukawa, but he has to go to daddy Nadella for money.


He also needs time to properly integrate all the studios MS bought, because they (like other large companies) buy first and sort out the details later. Considering Phil himself reported to the leader of Windows and Devices until just a few years ago, and the long time it takes to actually acquire and integrate completely separate dev teams under one Xbox Game Studios, I’m not surprised that we are seeing him struggle. It’s not happening fast enough, but that is no fault of Phil himself. If anything he is getting undeserved flack for being one of the few people at MS that actually knows what he is doing when it comes to gaming.

 

[Mibu no ookami]

Well why are you asking that? If Xbox gets outsold 2:1 by Playstation this entire gen that's not necessarily a failure.

I think the Microsoft board would see it as a failure, especially if there isn't an especially high attach rate for GamePass with what does sell.

PS4 sold 120 million and X1 sold 60 million.

Between X1 and XS Xbox has sold has probably sold 75 million units, but in tandem with PC only have about 30 million GamePass subscribers.

Obviously some X1 sales and XS sales overlap, but they ultimately want much higher sub numbers. They'd prefer to get it on XS but will take them on PC.

If PS5 outsells XS 2:1 (even with the cheaper series S) AND subs continue to lag... I think it's a dire situation for Phil Spencer.

Nearly every PS5 sold is a subscription you're not going to get on GamePass. And if 2:1 happens in 2023, 2024 will probably be worse.

 

[Feel Like I'm On 42]

While the first parts of your post are completely correct and I 100% agree with you....To act like Naughty Dog hasn't been in the press more times than most others for Incompetent management, Terrible working environment, horrible work culture, bleeding staff, huge staff turnover, Crunch literally rinsing out nearly all staff in the Santa Monica area is completely un true but I guess you just choose to ignore or not know that stuff. Their own staff have literally said that the only reason they ship games is they have unlimited budget from Sony and literally preferential treatment where they can pretty much get away with anything.

Theyve literally had to hire staff straight out of colledge and hollywood because they'd burnt through every single other available professional in the area.

Yet they still managed to release Last of Us 2. For better or worse a huge hit in both sales and with critics and a technical masterpiece. What does that have to do with MS's management issues and development hell across many projects anyway?

 

[Mibu no ookami]

Verizon makes money by selling you an overpriced unlimited plan. They could make streaming part of it or offer a cheap/free Series S as well to drive up hardware numbers.

If they offered a free Series S, that again is going to have to come out of Microsoft pocket mostly, and now you're talking about a seriously impacted margin.

Let's say Verizon agreed to pay 100 dollars for each unit and Microsoft paid the other 150 (plus whatever they're losing on the unit)

At just a million units you're talking about 150 million dollars lost and I'm not sure Verizon would even subsidize 100 dollars worth.

Microsoft is much better off selling a 50-100 dollar streaming stick and trying to bundle that with a service carrier.

 

[James Sawyer Ford]

I think the Microsoft board would see it as a failure, especially if there isn't an especially high attach rate for GamePass with what does sell.

PS4 sold 120 million and X1 sold 60 million.

It may be seen as a failure but I don't think buying Activision is the be-all-end-all solution. It's a hugely risky and unnecessary acquisition in my view, and the industry is better without it going through.

The solution is to do better with what they already have. I honestly just don't think them dominating the industry is in the cards, if that's their only metric for success.

 

[jigglet]

Phil Spencer is good for the gaming industry and he has a good understanding of what MS should be doing.

Phil is a delegation type leader, where he gets others to do stuff for him. It's the right way - I've worked with CEO's get too involved before and as the old adage goes, they were unable to see the forest from the trees.

However for this to work he needs people under him that can get shit done. People that will be willing to cause friction to make that happen. For example, when I see people not committed to a deadline, watch me become psychotic. None of this work life balance shit - if you need to work 24 hours a day and give up all family commitments, then I don't give two fucks. I've called people at 2am in the morning cause they didn't get their work done. This is the type of thinking he needs to run stuff, you can't have this lovey dovey shit, you need a head knocker that will deliver. Yeah, call me an asshole, but that's what the job calls for.

 

[gothmog]

If they offered a free Series S, that again is going to have to come out of Microsoft pocket mostly, and now you're talking about a seriously impacted margin.

Let's say Verizon agreed to pay 100 dollars for each unit and Microsoft paid the other 150 (plus whatever they're losing on the unit)

At just a million units you're talking about 150 million dollars lost and I'm not sure Verizon would even subsidize 100 dollars worth.

Microsoft is much better off selling a 50-100 dollar streaming stick and trying to bundle that with a service carrier.

Sure. My point is that there are ways to make it sustainable. It starts, though, with dropping the assumption that you can just declare what works and lean back on your parent company's deep pockets to sustain.

 

[TheUndeadGamer]

I think it is the opposite. I think they said go big or go home. They've been battling it out with Sony for 20 years without a ton to show for it and the XSX is about to drop in sales significantly this year AND money is no longer cheap like it was during the pandemic when they made this deal.

I think it is dire, but that's just my perspective, I could definitely be wrong.

How is 2023 already an L for MS if they do release redfall, Forza, Starfield, and what have you this year?
And if that does pan out why would sales of Series console’s drop significantly this year?

 

[Rhazer Fusion]

Shocking. Seems like literally every XBOX exclusive hits “roadbumps” or issues and this won’t be the last one. Seriously, what’s going on over there? Wow.

 

[Mibu no ookami]

It may be seen as a failure but I don't think buying Activision is the be-all-end-all solution. It's a hugely risky and unnecessary acquisition in my view, and the industry is better without it going through.

The solution is to do better with what they already have. I honestly just don't think them dominating the industry is in the cards, if that's their only metric for success.

"So that was in November. Marc left to go to Sonos. Satya Nadella… [laughs] We also didn't have a CEO at Microsoft at this time because Steve Ballmer had left. So Satya becomes the CEO in February. Then the question is, do we go forward with Xbox? Because we're getting really outsold by PlayStation in the market at this point. Do we stay invested in it? Or do we make a different decision?"

"He and I had a discussion, and I made a pitch. I said, "You know, gaming can be a real important consumer category for the company." He didn't quite understand it yet, not from an intelligence standpoint, but he just hadn't been close to it. But he was willing to make a bet on us as a team. And I said, "The thing I need, if I'm going to step into the role to head this group, is I need to bring it back together. I can't have my hardware team over there and the platform team over there, and first-party over there. I need to bring it back as a cohesive team." And he agreed to that. So I ended up working in the Windows division, but we brought all those pieces back together."

"
There are certain times when we don't get that right. I'm not saying we're perfect. But Game Pass for us was just, "I want to be able to play more games" and "Why don't I play more games today?" One answer is, "Do I have access to the game?" We had to get more games on the platforms for people to play. Another barrier to me playing more games is, "I have to buy every game that I want to try. Can we use a subscription model that's working in music and working in video to increase the diversity of games that I try?" And consequently from that, hopefully, is the diversity of things that are built.

We see in the games business that when you get a hit—battle royale, PVP, whatever it might be— as an industry, naturally, we'll see so much of the creative go chase the last thing that was successful because in the end, these games have to make money put food on the table for the people who work in the industry. We wanted to create in Game Pass something where a diversity of creations can find real success without each one having to be a pure retail success. We thought that model could work."

 

[Mibu no ookami]

How is 2023 already an L for MS if they do release redfall, Forza, Starfield, and what have you this year?
And if that does pan out why would sales of Series console’s drop significantly this year?

Neither Redfall or Forza are going to move the needle. And Starfield has a ceiling attached to it.

 

[James Sawyer Ford]

"So that was in November. Marc left to go to Sonos. Satya Nadella… [laughs] We also didn't have a CEO at Microsoft at this time because Steve Ballmer had left. So Satya becomes the CEO in February. Then the question is, do we go forward with Xbox? Because we're getting really outsold by PlayStation in the market at this point. Do we stay invested in it? Or do we make a different decision?"

"He and I had a discussion, and I made a pitch. I said, "You know, gaming can be a real important consumer category for the company." He didn't quite understand it yet, not from an intelligence standpoint, but he just hadn't been close to it. But he was willing to make a bet on us as a team. And I said, "The thing I need, if I'm going to step into the role to head this group, is I need to bring it back together. I can't have my hardware team over there and the platform team over there, and first-party over there. I need to bring it back as a cohesive team." And he agreed to that. So I ended up working in the Windows division, but we brought all those pieces back together."

"
There are certain times when we don't get that right. I'm not saying we're perfect. But Game Pass for us was just, "I want to be able to play more games" and "Why don't I play more games today?" One answer is, "Do I have access to the game?" We had to get more games on the platforms for people to play. Another barrier to me playing more games is, "I have to buy every game that I want to try. Can we use a subscription model that's working in music and working in video to increase the diversity of games that I try?" And consequently from that, hopefully, is the diversity of things that are built.

We see in the games business that when you get a hit—battle royale, PVP, whatever it might be— as an industry, naturally, we'll see so much of the creative go chase the last thing that was successful because in the end, these games have to make money put food on the table for the people who work in the industry. We wanted to create in Game Pass something where a diversity of creations can find real success without each one having to be a pure retail success. We thought that model could work."

You answered your own question.

They made a different decision and went all in on GamePass, which is independent of the console battle for consumer sales.

 

[bentanchorbolt]

Phil is a delegation type leader, where he gets others to do stuff for him. It's the right way - I've worked with CEO's get too involved before and as the old adage goes, they were unable to see the forest from the trees.

However for this to work he needs people under him that can get shit done. People that will be willing to cause friction to make that happen. For example, when I see people not committed to a deadline, watch me become psychotic. None of this work life balance shit - if you need to work 24 hours a day and give up all family commitments, then I don't give two fucks. I've called people at 2am in the morning cause they didn't get their work done. This is the type of thinking he needs to run stuff, you can't have this lovey dovey shit, you need a head knocker that will deliver. Yeah, call me an asshole, but that's what the job calls for.

The best things the world ever produced was by people you described. There is a reason for it.

 

[Mibu no ookami]

You answered your own question.

They made a different decision and went all in on GamePass, which is independent of the console battle for consumer sales.

They need console sales to get subs. Growth has already begun to stagnate yet cost continue to rise.

 

[James Sawyer Ford]

They need console sales to get subs. Growth has already begun to stagnate yet cost continue to rise.

Console or PC

And console can mean many things, maybe they eventually get a version on Playstation.

 

[bentanchorbolt]

They need console sales to get subs. Growth has already begun to stagnate yet cost continue to rise.

Starfield is a needle mover. We’ve all laughed as MS hasn’t had a ton of system sellers this gen. That changes with Starfield. A game like that is what brings people into the ecosystem.

 

[Mibu no ookami]

Console or PC

And console can mean many things, maybe they eventually get a version on Playstation.

Pc won’t be enough to sustain game pass and Sony will never let game pass on ps5.

 

[James Sawyer Ford]

Pc won’t be enough to sustain game pass and Sony will never let game pass on ps5.

Well, GamePass sustainability is already in serious doubt at the current model.

I wouldn't be so quick to dismiss GamePass on Playstation eventually. Microsoft could make an "Exclusive only" version of GamePass that only has their 1st party games and put them on Playstation, and I see no reason why Sony would be against that since they would get a cut out of that sub cost

 

[El Pistolero]

"Quick, let us acquire another publisher!"

Phil to Satya, upon getting the report.