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MS Earnings Call - FY23Q3 | 4% decline for MS Gaming, Xbox HW down 30%

GHG

Gold Member
No?

For example, I just checked and non-bundled Series X consoles are out of stock at Best Buy, Target, and Amazon right now. PlayStation 5 is available on all 3 of those sites.

It’s been like this for months.

If someone wants the console they will get it, bundle or no bundle.

It's in stock and has been all year. I don't know why people are beating around the bush on this topic, it shouldn't even be surprising given their recent output.
 
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Nydius

Member
Supply constraints.
Not sure I buy that at all.

How did Microsoft manage to avoid supply constraints for the first two years when Sony was struggling? Even at its lowest point, I could find Series S units in stock. Less so with Series X, but still more than PS5s. But now the supply chain is resolved for Sony and PS5s are readily available yet Microsoft is suddenly having issues with their supply chain?

I find the claim suspect. Seems more a case of everyone who wanted a Series S or X has one, and there's been little compelling reason for Series S owners to upgrade to the Series X.
 

OmegaSupreme

advanced basic bitch
Oh No Reaction GIF by Laff


Those hardware numbers are especially troublesome.
 

Baki

Member
I'm expecting to hear that yet again, PC will be responsible for the vast majority of any GP growth that there was.
I do wonder why content and services grew 3% despite hardware being 30% comparatively to the previous Q3 2022 that was the highest (hardware wise) for Xbox.

Game Pass and game sales I guess (and aside Hi fi Rush they did not release anything - I presume April releases are not included right?)

Because hardware install base increased from last year. The decline is comparing sales from last year. But the total install base has probably increased by 20-25% in the last 12 months. With a 25% increase in install base , a 3% increase in content and services is not surprising.
 

Neo_game

Member
Because hardware install base increased from last year. The decline is comparing sales from last year. But the total install base has probably increased by 20-25% in the last 12 months. With a 25% increase in install base , a 3% increase in content and services is not surprising.

So they did better than expected last year Q3 and this Q3 is more or less expected ?
 

ADiTAR

ידע זה כוח
Microsoft is lacking focus. I think people don't know what to make of purchasing a console and then a subscription. Something doesn't translate in their marketing, because on paper it's a great feature that saves you a lot of money.

Yes, they don't have any software that drives sales, so everything rests on Starfield needs to be everything they promised and much much more. In their next showing it needs to blow people away. It literally is a system seller.
 

feynoob

Banned
XSX production problems?

If XSS (which is half the price and has had discounts) has been more sold than XSX, that has an effect on Hardware revenue.

30% less hardware revenue does not have to mean that 30% less consoles have been sold.
Its still confusing.

MS should have sticked with one device. These revenue split is creating confusing headlines.
 
We are talking about hardware revenue, which is not indicative of units sold.

Sure, unit sales are lower, but that 30% figure may also be a consequence of XSS selling more than XSX.

But we know actual unit sales are down in the US from NPD reports. Ain't nobody thinking thats gonna be offset by Japan and Europe. Not to mention Microsoft themselves just said its due to supply constraints indicating that unit sales are down from last year. Ain't no way of spinning this one.

Atleast there'll be positive news for xbox tomorrow when the CMA approve the Activision deal.
 
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onQ123

Member
30% down in 3rd year is awful. No way to spin this. Even more worrying is how do they improve this? Starfield alone will not change anything. What do Microsoft do if console sales keep declining?
If they are willing to make the right changes they can turn things around but I don't think their heart is in the console business right now they want the mobile market .
 

feynoob

Banned
That doesn't say Game Pass accounts for more than 15%. Phil Spencer said GP is between 10 and 15 percent.
The revenue went up with gamepass growth.
So more gamepass growth, means more revenue for software, which will be higher than initial 10%-15% after a certain number.
 

chonga

Member
Supply constraints.




Saying the prior year had increased supply is not the same as saying the current year had constrained supply.

Let's make it easy by assuming a constant supply and demand. Let's say you planned to produce 100 products in years 1, 2 and 3. For whatever reason you could only make 50 in year 1. In year 2 you pull out all the stops and make 150. You then revert back to the planned 100 in year 3.

Notice that year 3 is a massive drop compared to year 2, but in no way are you making less than you'd hoped to make, and in turn sell, so it would be untrue to say there were supply constraints.

To really understand if it were the case you need more detail that they never provide.
 

Woopah

Member
I do wonder why content and services grew 3% despite hardware being 30% comparatively to the previous Q3 2022 that was the highest (hardware wise) for Xbox.

Game Pass and game sales I guess (and aside Hi fi Rush they did not release anything - I presume April releases are not included right?)
There may be fewer people buying Xbox Series compared to last year, but the people who own Xbox Series are still buying games/subscriptions
Serious question......aside from Starfield what other big exclusive do they have coming?
Forward should also be big this year. There's others like Avowed, Perfect Dark and Hellblade 2, but its difficult to know how big they will be.
 
Supply constraint is probably true about XSX but it's a definite NO for XSS that has being available with plenty of deals for ages about everywhere.
 

SlimySnake

Flashless at the Golden Globes
30% is awful. In a very busy quarter with lots of big selling games like hogwarts and re4. I am not sure if Redfall, Starfield and Forza are going to provide them a big bump let alone get the sales back on track. This is the type of sales drop we see at the tail end of the gen.

I wonder if they've given up on this gen internally, and are going to focus on next gen when they finally have CoD to themselves.
 

T-Cake

Member
Some said in another thread, Series S is readily available for consumers to buy, all the Series X chips are going into the server blades for XBox Cloud Gaming which seems to be gaining more popularity. I've now started to experience wait times to play games which never happened previously.
 

DeepEnigma

Gold Member
No?

For example, I just checked and non-bundled Series X consoles are out of stock at Best Buy, Target, and Amazon right now. PlayStation 5 is available on all 3 of those sites.

It’s been like this for months.
It must not be that in demand, if bundles are readily available and they are still down 30%.
 
Do people really believe MS investors don't care if the gaming division is underperforming and that MS will throw endless dollars at it because they are profitable overall due to other divisions?

Not trying to say Xbox is doomed, but use some common sense people.
 
If they are willing to make the right changes they can turn things around but I don't think their heart is in the console business right now they want the mobile market .

When has a console ever declined so early? When the decline starts, it only gets worse. Not better. Not to mention that it hasn't only been a month or two but from late last year. Last November was the worst for xbox in over 10 years. Since then, it's continued to be in decline. Either xbox is having very bad supply issues or demand has sharply dropped off. It can't be a coincidence that it all started the moment PS5 supply drastically improved.
 

FrankWza

Member
We are talking about hardware revenue, which is not indicative of units sold.

Sure, unit sales are lower, but that 30% figure may also be a consequence of XSS selling more than XSX.
And the series s routinely being discounted in the - 30%-ish range
am I too late say that ms will become a 3rd party publisher soon?

Am I doing it right?
xbox* won't because they are backed by microsoft. Most other companies in this position probably would have by now. At the very least there would be investor pressure but they don't reveal their numbers in depth enough.
 
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