Neo Blaster
Member
Here we go to the 'infinite war chest' point again...like all of MS cash were available for Xbox division to use freely and unaccounted for.
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ToadMan
Member
Indeed. The income of Gamepass is anywhere between $18 million at $1 per subscriber or $180,000,000 at $10 per. That’s quite a revenue spread.
Income directly due to gamepass is between that range
FrankWza
Member
They’re also offsetting a lot of that with the 95+% profit they get from gold subs. That’s the big attach rate that they never talk about. It’s all profit and of course, they attempted to double it not long ago. So it’s subsidized partly by gold.
Setsuna Mudou
Member
That's still not enough to cover costs when you're the no 3 console hardware seller generation after generation and to make it worse, releasing all their first party games on PC day one killing any actual need to buy their system. So clearly Xbox is putting all their eggs on the gamepass basket, which can only work for so long until corporate asks to see the r.o.i.
I was asking this earlier and my thread got closed. Microsoft will not keep throwing money at something that is not making a lot of money. I just cant see the long term viability
SlimySnake
Flashless at the Golden Globes
Satya didnt say but I'd imagine its a large portion because I was subbed for three months for a dollar at the end of last year. But they did go from 15 million in september to 18 million in december which means they werent just adding these dollar subs, they were retaining old subs.
Lets assume 1/3rd of them are $1 subs. You still have a subscription that generates $120 million in revenue every month. Revenue that could be spent on getting new games and growing it like Netflix did. I really dont think MS wants to make money off of it right now. Netflix didnt make any money for the first decade or so. They just used the revenue to buy more shows and it paid off. Now they have 200 million subscribers who end up giving them a monthly revenue of $2 billion. Thats how they can now afford to spend $19 billion on tv shows and movies every year.
I think MS's goal is to get at least 50 million. 100 million would be ideal but i think 50 million will get them $500 million in revenue every month and thats basically your COD and your GTA sales. they can just write $500 million checks at that point.
You assume its not enough to cover their cost, they already said that xbox was a profitable business in 2017 (Microsoft says Xbox is growing in profitability and monetizes far more than other gaming networks - MSPoweruser - it's there in the first paragraph). I don't think you will see Microsoft kill the console anytime soon as it's much easier to get that mtx revenue on console in comparison to pc, mobile is just as easy. PC is admittedly harder though so wondering how they are going to leverage extra cash out of that but I think you can still buy DLC from the Xbox app.
I think they'll just make changes elsewhere. Game Pass is here to stay.
Setsuna Mudou
Member
I'm talking about game pass, not xbox in 2017.
And it's not me trying to kill their console, it's uncle phil himself when he talks about game pass being the thing while it doesn't matter where you play.
Btw, the mtx business is profitable, but mostly so to the publisher. The platform holder gets about 30% which is why install base matters a lot (usually). Clearly they are going for a different model here, it all depends on how many get duped to support it long term (subscription model).
I dont doubt that the service is here to stay, I question the amount of big titles in the years to come
IntentionalPun
Ask me about my wife's perfect butthole
I think their goal is MUUUUCH higher than 50 million. And it's why I think the long term future of Xbox is at risk.
SlimySnake
Flashless at the Golden Globes
Well, they dont have to sell a 100 million xbox consoles. Gamepass is on PC too. And PC has a much larger userbase than both PS4 and X1 combined. If they can start getting those PC gamers to jump in, it's doable in 7-10 years. I mean if they start to get AAA games like Battlefield (rumored in the other thread) then the numbers are going to explode and they might even get there sooner than that.
Digital purchases like MTX is more profitable to publishers yes but it's a significant amount of each platform holders something in the 40% range from that last number i saw.
Does Gamepass increased focus mean that Xbox are going to kill their hardware console offering, no cause some users want to game on a console and Microsoft knows that (Xbox Series X won't be the last Xbox, if Phil Spencer has his way | TechRadar) they just want to allow users to access the Xbox platform wherever they want. There is a difference between reducing dependency and 'killing', i suspect you know that.
IntentionalPun
Ask me about my wife's perfect butthole
They have their sites set on the mobile market not just XBox + PC.
I would hope they have more realistic short term goals but it's hard to tell from how they talk. The mobile market adopting a $10 / month streaming service is such wishful thinking in general though. That's a market making most of it's money by giving away games and selling people skins virtual currencies. And they aren't having to host massive GPU based server farms all over the world to do it.
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SlimySnake
Flashless at the Golden Globes
I think the only reason Netflix isnt profitable is because they put back all the revenue into new content. Their plan is to spend $19 billion in content this year. They already have 200 subs. They can stop now, but they are not. They can be extremely profitable if they just spend $10 billion and pocket the $9 billion. But they know that Disney, Hbo and Amazon are breathing down their neck so they have to keep investing. And That is the point I was trying to make, this streaming business is actually keeping these companies honest and forcing them to create new content on a monthly basis. This would also apply to MS who will have to come up with an Outriders or an MLB every month to keep people from switching. Which technically really isnt bad for consumers like kinect and TV was.
I think guaranteed revenue will pay for the upkeep of first party studios. So lets say Halo launches in September. MS should have at least 20 million subs by then. Halo might get them a few million more. Thats $200 million in guaranteed revenue if they can convince people to keep their subs one more month. Studios barely cost $20 million a year. Halo has taken 6 years so thats a $120 million budget. They will still come in under the $200 million revenue they would get from gamepass that month. Standalone sales will always be there even if they are only 17% like outriders.
Yeah, the mobile market is just a completely different market altogether. But I have seen Disney sell mobile games at a sub. I bought a painting app for my sons which they never play with and im still paying $6.99 for it every month. If they can get Minecraft and a couple of other mobile friendly games on gamepass, its possible people might sub.
that said, its such a different market there is really no point going after them. Youtube recommended me a Jack Tretton video from 2013 where hes asked about mobile gaming and he says i dont feel threatened by it because those people will eventually get bored playing basic games and come to my platform. But the important point was that he didnt feel it was a worthwhile market to penetrate.
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IntentionalPun
Ask me about my wife's perfect butthole
Right; but it's clearly the numbers MS are referring to when they talk about "2 billion gamers" (what Satya mentions every time he talks XBox.)
You are right that there are games selling subs/passes/whatever that are monthly, and people spending loads more than $10/month on games.. but those people are generally doing that on a single game they get addicted to, some "free" time waster that they downloaded that got them hooked and egged them on to buy something.. not some monthly service full of games that don't play particularly well on a phone and are far more than just time wasters. There are popular shooters on mobile, but they are a fraction of the market.
Will GamePass eventually have a lot of mobile friendly games? I imagine it will.. and maybe they'll have a cheap sub specially for that.. because it's gotta be something less than the $10 / month that MS is charging right now minimum for GamePass IMO.. and it still barely makes sense.. why would a mobile friendly game even need to stream to a phone? A mobile friendly game plays on a mobile phone nativelly just fine. And I feel like we are still a decade+ away from that actually being something viable tech wise anyways.. people keep falling for the promise of new mobile tech and then you realize it's.. just marginally better than the last "G" they advertised, and still works like dogshit while in a car, or inside of a building not made of plywood.
Just so many catch 22's with the "game streaming will reach BILLLIONS" BS.
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oldergamer
Member
Of course they are accounting for everything related to memberships. You act like MS isn't smart enough to realize simple factors? I mean they wouldn't be in the position they are as a software company without being able to analyze and factor basic data.
I wondering what some of these people would have being saying about Amazon when they weren't turning profits.
ToadMan
Member
Amazon made money selling products, not renting them...
If their subscription was turning a profit worthy of the name and Amazon were confident, they’d be publishing that in the earnings as a line item. They don’t...
LucidFlux
Member
The reason Netflix isn't currently profitable is because Netflix pays out the ass for licensed content (13.75b in 2020 with only 11b on original content) while Disney spends exactly $0 on licensing because it already has an enormous library and therefor already owns everything it puts on Disney+.
However, Netflix has been slowly decreasing its licensing budget while steadily increasing investment in original exclusive content and at this rate analysts forecast they will become profitable in the next 2-3 years.
SlimySnake
Flashless at the Golden Globes
I understand all that. I have seen the road to ps5 conference more times than I can count. I just think they need to show me this shit already. Like I said in my post, I am looking forward to seeing what this ssd and I/O can do. I just dont see it right now and its getting to the point where I roll my eyes at devs singing its praises instead of showing me what it can do. Cerny said they knew they wanted a fast SSD in 2017. It's been 4 years, and they are still thinking about the possibilities?
What are first party studios for if not to take advantage of custom hardware? The only thing we have seen is ratchet is basically using a glorified loading screen to load a brand new level. Demon Souls and miles had faster loading.
Again, show dont tell. I watched the same conference you did. But we have already started the gen and aside from loading, Sony hasnt shown what this new I/O and ssd can do. They didnt do it last year when they held two conferences showing games. And now we have to wait until their conference this year to see what they are able to do. I am just sick and tired of waiting.
I think thats why the Zenimax acquisition was so important. They realize that they cant just rent all the time. they needed to acquire not just bethesda but an entire slate of very productive studios. They are all B studios aside from bethesda and ID, but they churn out a lot of B games which is perfect for gamepass because while they will never sell 5 million copies they will do well on a sub where they are essentially free.
StreetsofBeige
Gold Member
NF has been profitable since 2003. Slow ramp up. But critical mass struck in 2017 and profits have zoomed.
Netflix: net profit by year 2000-2023 | Statista
Netflix's net profit amounted to 5.4 billion USD in 2023. This was an increase of around 1 billion USD from 2022.
www.statista.com
Its something them and Amazon Prime figured before it was too late. And why WB, Disney, Sony, MS, etc are in a better position for these types of services. Content is always king. Being able to make your own is even better.
IntentionalPun
Ask me about my wife's perfect butthole
Netflix runs at an operating profit... WTF are you guys even babbling about? lol
BGs
Industry Professional
Well, I think you have two or three clear examples in which you can compare with other versions. Spiderman, Demons and R&C. Both in load times and in game experience eliminating transitions from inside to outside or loads between worlds and eliminating popping.
DarkMage619
$MSFT
A guy named PropellerEar is making fun of my username. Ha. Cute.
MS clearly produces a wider variety of games than Sony even if Sony for the genres they make are good titles. That diversity will be key to how well the Game pass services works. None of this has anything to do with Game pass being anything like Kinect at all or that no one can deny that MS currently its focused on games where before they were not as evidenced by last gens launch.
I see so many people misconstrue the 2 billion gamers comment. It is simply about granting access to Xbox games to more people and that is done by not confining customers to just one device. I get no indication that they intend to actually have a billion Xbox customers. I also hear lots of comments about how Game pass will have so many mobile friendly games. I hope you aren't talking about Candy Crush or things like that seeing how MS doesn't make any games like that. It would also make no sense to design a console like the XSX to play Candy Crush. The most important thing is that xCloud is an add-on to Game pass not the primary component and as far as I know you can't access it as a stand alone service. The thing is that the power of those mobile devices don't matter as much as the connection speed they have. These Xbox games won't be running natively. It's an option and one that I don't see a downside.
This is an odd concern seeing how the titles hitting the service are getting bigger and bolder. Not to mention big games hitting the service as day 1 releases. As I said in your locked thread how much money or not the service makes doesn't matter to customers. Only the price, quality and numbers of games do. If the prices rises and games drop off people will drop the service. Frank keeps talking about they taking a pound of flesh but forgets we are the customers. If they don't make us happy we stop being customers just like during the X1 generation. We aren't hostages. Our resident dev
davidjaffe
made a stream about this very topic:
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Bojanglez
The Amiga Brotherhood
They do a pretty good job and renting out their Web Services
The type of product sale makes a difference to the profitability how?
BTW Prime Video and Music isn't meant to be a profitable business on its own, its meant to keep users attention within their ecosystem so they can upsell you later on a product outside of those subscription services.
ToadMan
Member
They do a pretty good job and renting out their Web Services
As MS do with Azure. In fact Azure is propping up the company right now.
But that’s not the same as Gamepass and loss making.
Jaguar Victory
Member
There is also great money to be made on accessories, licensing, store revenues, app purchases, mtx, etc. The more users on the platform the more ancillary income you make from the ecosystem.
ToadMan
Member
Subscriptions are not a product - they’re a service.
Services can be defined as products and products typically include some services.
IntentionalPun
Ask me about my wife's perfect butthole
I don't think they believe they'll have 1 billion subs and never said I did.
But the combo of:
- Satya mentioning billions of gamers, referring to the mobile market
- Spencer's comments on how they don't see Sony or Nintendo as their competitors.. and outright saying they think the market is much bigger than the reach of a console (which we know to be topping out at around 100 million)
- Committing $10 billion+ to buying studios, and potentially buying Discord partly to enhance their gaming offering
Means that I really don't think 50 million is some end goal of theirs.. or even 100 million.. and they do seam to think they'll get there by way of xCloud and the mobile market.
For now it's an option.. you'd have to be not paying attention to see that it's what they believe will be the end state of Game Pass. 100's of millions of gamers using xCloud directly or accessing services hosted in Azure's xCloud Tech they plan to offer to
And you kind of missed my point about what people play on phones and how the phones are already capable of playing those games. My point being that they aren't playing games that need more power than they already have.. AKA one of the advantages of game streaming doesn't apply to what people play on phones today, nor is there a lot of evidence that increased complexity / graphics is really what will make the mobile market buy into your product. (and that same increased complexity / graphics will naturally happen for the phones themselves as their tech improves)
There's very little upside to the mobile gamers using something like xCloud, even if it worked perfectly. They currently are playing games that both play just fine, and download quickly, to their phones.
It's just a back door into creating a "platform" usable by mobile users, that's what they see cloud streaming as. It is not something MS is investing heavily in as some "add on" to a console userbase.
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LucidFlux
Member
Actually you're right, my info was out of date but this is a recent development. Apparently as of January they no longer needed to borrow, however they're still 10-15b in debt.
Regardless, my point was Netflix's insane licensing budget (and ensuing debt) is why it's taken until now for them to become profitable. Owning all the content on their platform has always been the end game.
Interfectum
Member
For sure and you see MS mimicking Netflix right now. They don't have exclusive offerings to fill up Game Pass yet so they are buying third party titles wholesale to toss on the service. When those 23+ studios start pumping out game after game you'll see MS investing a lot less into third parties besides some heavy hitters they couldn't outright buy.
SlimySnake
Flashless at the Golden Globes
Right, if Phil told Satya about 2 billion subs than clearly he was lying and would get in trouble soon. But if they can do Disney numbers 100 million, i think they will be pretty happy.
Isnt it funny that gamepass despite being a service is actually reliant on their consoles bringing in people into the xbox eco system? I mean Disney, Amazon and HBO dont need any extra hardware. They are just there on your tv.
But yes, gamepass is basically the same as the console hardware. You gotta get people into your ecosystem and then you can extract more out of them. The problem MS might run into is if Sony ends up producing amazing exclusives that sell more PS consoles than Gamepass can sell Xbox consoles. Sony is going through a drought right now with pretty much nothing special in the horizon, but a good show at E3 can change all that.
Neo Blaster
Member
My point was about how much revenue those 18 million subscribers actually bring, you're dodging the subject.
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LiquidRex
Member
Nintendo, Xbox and Ubisoft back digital-only E3 2021
E3 2021 will return this June in digital form, and has been backed by Nintendo, Xbox, Capcom, Konami, Ubisoft, Take-Two…
www.gamesindustry.biz
No Sony or Sega presence, but Konami will be present.
IntentionalPun
Ask me about my wife's perfect butthole
They've always reported operating profits.. don't think they've missed a quarter.
And all companies have debt.. even those w/ loads of free cash flow. Netflix doesn't have free cash flow as they are going into greater debt than the money they have... but.. that's normal, and does not mean they aren't "profitable."
Those investments are designed to realize future growth, hence the operating profit as you don't write down the cost of investments in a single year, you spread it out.. if they fail to reach their growth numbers they'll eventually have to write down losses, but they are continually growing.. and they also can slow investment and see where things go from there (and avoid writing down a loss.) Netflix will also optimize their spending in general, right now they are throwing big money around to buy whatever crap anyone is selling.. and only actually producing from scratch a portion of their content.. and their production is relatively new, and they are outsourcing far more than other experienced production companies would. All of those costs go down over time. As does the need for as much new content once you have a large enough 1st party base.
I'm not some business expert.. but there is a reason Netflix is a highly valuable company, it's not Wall Street being morons, it's them seeing the insane revenue and revenue growth and the amount they are spending to reach it is not some out of the ordinary spend for a company still trying to expand greatly.
ToadMan
Member
Where did I say I was wrong, I said there isn't a clear distinction between the two. Also said that that difference means nothing to the profitability of the product/service.Hehe. Ok man.
Well you’ve recognised you were wrong at least
Jaguar Victory
Member
It's a multiplier. You can put cloud GamePass on mobile, TV, etc. and still make killer money by expanding your subscription base. Expanding the audience beyond typical console sales.
If you have 5mm users paying $10 average you have 50mm a month or 600mm a year to spend on creation of or rental of content. If you have 25mm users you have 250mm a month or 3 billion a year on content.
Expand to 60mm users by expanding your audience and you generate 600mm monthly or 7.2 billion annually to fund content.
All the while you still make money on traditional sales and accessories. Scaling is the salvation.
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ToadMan
Member
Netflix not needing to borrow is (yes bizarrely) a sign of the problem.
They need to produce new content regularly and because of COVID they can’t (or at least they haven’t been). So they have cash in the bank because they couldn’t invest in new content - but it bodes badly for what happens as COVID dissipates and there’s no new
Oh and on top of that they have the continued amortisation of old content. Oh and they still have the accrued liabilities to service.
Netflix still has a lot of problems before anyone could say they’ve broken through and become a genuinely money making enterprise. For them the end of COVID is the beginning of a critical period.
ToadMan
Member
ToadMan
Member
Your reading comprehension could do some work but think this conversation has come to an unproductive end.I said you were wrong. And you doubled it down
ToadMan
Member
It was an unproductive conversation - the moment you produced a straw man that was easily dismissed.
You should’ve taken the easy way out when I gave it to you. Remember for next time huh?
SlimySnake
Flashless at the Golden Globes
Switch is the fastest selling console of all time. It breaks a new record every month. Nintendo's games are in the top 10 every month. Their revenue is $12 billion a year.As does MS in every earnings report
Microsoft's revenue $11 billion. They sold fewer xbox in 7 years than Switch did in 3 and a half years, and yet their revenue streams are almost as good as Nintendo which is doing insane sales. Why? It's not the console sales. It's definitely not their paltry first party lineup. It's XBL Gold, Gamepass, microtransactions, digital sales, and a large hardcore consumer base that plays and spends on big third party games like COD and Madden.
A couple of years ago, I saw this report that Playstation's digital revenue was more than XBox and Nintendo's digital revenue combined. I was shocked. Then i looked into it and Nintendo's digital revenue was only $1 billion whereas Microsoft was at $10 billion. Only a $2 billion difference in online revenue despite being outsold 3:1 by Playstation. That means their consumer base spends more on services, microtransactions and digital games per user than Playstation's. Their revenue isnt really that bad despite poor console sales.
ToadMan
Member
You only compared gaming revenues ...
Did you consider which company is making more profit on their gaming investment?
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