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MS Earnings Call - FY23Q2 |

diffusionx

Gold Member
I don't think because it's just to many studios to close... Would be really bad.
They don’t have to close, Sega didn’t when they pulled out of consoles.

Xbox has never been a big performer for MS in 20 years. Out of all the key product lines and pillars, it's got to be the worst one out there compared to cloud, windows, MS Office, server stuff etc...

But it's still around.
And, believe it or not, some investors have griped over the years and said MS has no business being in console for just that reason. If their strategy for this generation does not pan out, I am hard-pressed to think there will be another.
 

reksveks

Member
Here is the problem. If you bring out a product that displaces another then you must at the very least replace the revenue you displace, and ultimately you aim really is to gain extra.

Additionally the benefit and idea of things like service titles and Game Pass is to avoid the peaks and troughs of figures from hit titles. Instead you're aiming for a more steady flow of cash.

We are still seeing ebbing and flowing and it is failing to displace lost revenues.

It is, so far, a failure.
GP isn't going to fix all of macro engagement issues that the industry could be facing, we know software units are down double digits in EU/UK in Q4 and Sony highlighted lower engagement numbers in the previous earning call.
 

Sanepar

Member
They don’t have to close, Sega didn’t when they pulled out of consoles.


And, believe it or not, some investors have griped over the years and said MS has no business being in console for just that reason. If their strategy for this generation does not pan out, I am hard-pressed to think there will be another.
If they close the AB deal at least next 10 years they will try.
 
What major third party games dropped in Q4 besides the usual stuff? Callisto Protocol was a bomb. Midnight Suns and NFS likely underperformed. No big Ubisoft game like we usually get. Sales for Gotham Knights and Saints Row dropped off a cliff. Awful, awful year for third party software.
I think COD Modern Warfare II and Fifa 23 were bigger than their previous iterations and other third party games alongside other older releases.
 

IntentionalPun

Ask me about my wife's perfect butthole
But it's rather worrying if the only way a company can increase their gaming revenue is through buying up other gaming publishers and assimilating their revenue into their console division's. That ultimately is not a sustainable long-term growth option.

And you have the CEO of the company himself being bonused on Gamepass subs...

... and a mountain of evidence the only reason he opened up the pocket books is because he was sold on the idea of GP blowing up with xCloud usage...

I've been saying the same thing for years; if cloud doesn't take off to the extent that it actually starts looking like a large console userbase on it's own, then Xbox is going to be sold off.
 

TLZ

Banned
The Office Oops GIF
Now replace face with Phil"s 😄
 

Elios83

Member
No significant new game releases and specifically targeting customers who don't have buying power will do that to you.

Their strategy was to provide a cheap hardware access point to a mass market audience promising these people that after that even the games would be really cheap to get through a subscription.
This is the big part of their strategy this gen and it is already fully in place and it's failing.
Are they going to try to shift production back to Series X or it's even a more dangerous bet?
The other part of the strategy is boosting the exclusive software output through big acquisitions and this is work in progress.
The Activision deal was probably supposed to play a big part in that but the future of that deal is now uncertain, what is certain is that it won't happen at the conditions Microsoft wanted (no COD at all on Playstation within 3 years, immediatly available only on GP day one).

An other point coming out of these results is the strong seasonality of the brand and their need to have a big title pushing sales for them during the holiday season, under these circumstances what is their big holiday season 2023 title? Do they have something else big planned outside Starfield and if not does it make sense to position that game as their next holiday season title even at the cost of an other delay? This point and the fate of the Activision deal will be huge things for them this year.
 

Clear

CliffyB's Cock Holster
Based on those numbers I'd say their strategy is failing.

Content and services being down 12% is not good considering their focus on generating revenue through these offers. The idea being of course that by focusing on metrics like MAU that even slumping in hardware sales should only result in revenue rising more slowly than anticipated.

With hardware revenue and C+S both tracking down by roughly the same amount it shows that these things are performing in lockstep, which of course begs the question for shareholders to question where the value is in expending huge sums on the content and services side compared to previous years.
 

poppabk

Cheeks Spread for Digital Only Future
The really alarming thing here is how early into the generation we are and how quickly the XBOX console sales are falling, despite the deep price cuts.
Where are people getting the console sales from?
 
Based on those numbers I'd say their strategy is failing.

Content and services being down 12% is not good considering their focus on generating revenue through these offers. The idea being of course that by focusing on metrics like MAU that even slumping in hardware sales should only result in revenue rising more slowly than anticipated.

With hardware revenue and C+S both tracking down by roughly the same amount it shows that these things are performing in lockstep, which of course begs the question for shareholders to question where the value is in expending huge sums on the content and services side compared to previous years.
Based on one quarter lol when it’s clear they’ve been up others when there’s content. If you don’t release any games it’s kinda hard to retain users who have other avenues to game .
 
No way they’d close it, if anything I’m sure either Apple or Amazon could buy it. Nintendo and Sony wouldn’t be allowed even if they had the money.
Here is a wrinkle to any potential closing situation: Google set the bar extremely high for customer protection/friendliness when they shut down Stadia. I know the situations are very very different, but it is the most recently example and will certainly be brought up as comparison.

Not that I would think they would ever just straight up shut Xbox down, if anything this is just further reason why they wouldn't.
 
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Clear

CliffyB's Cock Holster
Based on one quarter lol when it’s clear they’ve been up others when there’s content. If you don’t release any games it’s kinda hard to retain users who have other avenues to game .

It really shouldn't be inline with hardware revenue though. The whole point on going big with digital services is its supposed to insulate the platform against variances within hardware sales. The idea being that things like the dips you get at generational transitions no longer apply, the audience is carried forwards as its about investment in the ecosystem not just the box. Something you can't really guarantee especially for casual gamers many of whom buy a piece of hardware purely to play "their" game, be it CoD, Fifa, whatever.
 

Pelta88

Member
Hope he’s getting paid well for these big brain takes. Very insightful stuff.

He's tracking the decline in XBOX Series console sales. There's no need to slight someone for looking at the math. Unless of course, you think Microsoft's quarterly reports are inaccurate.
 

Kacho

Gold Member
He's tracking the decline in XBOX Series console sales. There's no need to slight someone for looking at the math. Unless of course, you think Microsoft's quarterly reports are inaccurate.
No. He’s regurgitating information that’s readily available and adding the most John Madden take imaginable.

“The Cowboys are down 10 points and it’s really not looking good for them. If they want to win the game they need to score more touchdowns, Pat.”
 

reinking

Gold Member
Ask Zune, ask Mixer, and Microsoft phones. Xbox is in danger.
I would not say Xbox is in danger right now but people that act like MS is going to lose money for any product indefinitely are being silly. As you pointed out, MS is not afraid to shutter a product or a service.
 
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