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[reksveks]

Questions from me that I would like to get sense checked:

- Gaming Revenue by company?
- MAU by company?
- Consoles sold per company?

therefore a proxy for ARPU per user.

 

[Topher]

I think Scott Galloway would probably argue that he might have a point in terms of one transaction over a period of 4 months equalling 60 usd being less valuable to shareholders than 4 transactions over 4 months equalling 60 usd.

https://www.inc.com/anne-gherini/the-rise-of-rundle-a-new-trend-for-subscription-based-services.html

It's probably a twist on this, think xbox all access is the same play really.

Not sure that I think the theory is correct though.

Except MS is sharing most of that $60 of four months with a lot of other publishers and developers while they keep most of the $60 in game sales. Subscription services is about massive volume and Game Pass isn't there. Phil Spencer specifically said he wants to reach those 2 billion gamers with Game Pass and xCloud. What he is really saying is that he HAS TO reach those 2 billion games with Game Pass and xCloud. Spencer is playing the long game and he needs those game sales because they are more profitable than subscriptions at this point. That is me speculating, obviously, but Greenberg has already said Game Pass is NOT very profitable right now.

Edited: Not very profitable. Thanks Heisenberg007

 

[Heisenberg007]

Except MS is sharing most of that $60 of four months with a lot of other publishers and developers while they keep most of the $60 in game sales. Subscription services is about massive volume and Game Pass isn't there. Phil Spencer specifically said he wants to reach those 2 billion gamers with Game Pass and xCloud. What he is really saying is that he HAS TO reach those 2 billion games with Game Pass and xCloud. Spencer is playing the long game and he needs those game sales because they are more profitable than subscriptions at this point. That is me speculating, obviously, but Greenberg has already said Game Pass is very profitable right now.

not*. Source.

 

[Bernd Lauert]

Can we have an honest discussion about xbox and their gamepass strategy?

Like, their dead last in hardware sales in their BEST region
Sony and Nintendo first party are like 50 percent of all games sold
Psychonauts, despite a big push with good review scores fails to chart even in the top 20
In countries where we get sales splits its something like 80:20 in favor of ps5.
Halo is coming hot and weve yet to see updated campaign footage since last year
Their 2022 looks dire and that assuming starfield doesnt get a delay while sony and nintendo have their heavy hitters coming 2022

Is this strategy working?

Series is the fastest selling Xbox ever. Xbox revenue is the highest ever. They're doing fine. Physical game sales are only 4% of Playstation revenue btw.

 

[PropellerEar]

Only if the cost of developing for xbox is causing a sizable issue in terms of their profit margin. Also they probably prefer having two platform holders fighting for them over one.

That is not the only issue, MSFT is also devaluing their own and other publishers games with their current strategy.
While Sony bumped their 1st party games to 70$.

 

[Magnific0giganticus]

Except MS is sharing most of that $60 of four months with a lot of other publishers and developers while they keep most of the $60 in game sales. Subscription services is about massive volume and Game Pass isn't there. Phil Spencer specifically said he wants to reach those 2 billion gamers with Game Pass and xCloud. What he is really saying is that he HAS TO reach those 2 billion games with Game Pass and xCloud. Spencer is playing the long game and he needs those game sales because they are more profitable than subscriptions at this point. That is me speculating, obviously, but Greenberg has already said Game Pass is very profitable right now.

It's not profitable at all. Their last financial statement gave a hint (since they don't report anything clearly, but rather muddle everything by grouping different categories) but when it comes to their "Xbox content and services" (which isn't entirely GP) revenue increased 34% YOY. Which isn't saying much and as with all things Xbox, MS don't report profit/operating income. It's evident is not even close to profitable. Whenever they are, I trust we won't have to wonder.

 

[DarkMage619]

You're oversimplifying it. If it is just about opening multiple sources of revenue, why not put all their games on PlayStation? Xbox will still get Xbox customers as well as Gamepass subscribers, but Xbox will also sell more software via a new revenue source.

But they don't do it (rightfully so) because every decision -- chasing every revenue source -- has a cost attached to it. It's the same with retail sales and GP.

As the old saying goes, "If everything is special, then nothing is special." I feel Xbox will eventually have to pick a lane. They can't grow if they keep trying to sail in multiple boats. None of the successful companies (Xbox's direct and indirect competitors) is doing what Xbox is doing, and they all are more successful than Xbox, despite not having MS at their back to support them. Perhaps there is some validity in thinking that Xbox's strategy isn't right. Otherwise, they would be at #1, instead of companies that are 10x smaller than MS.


I was talking about Xbox's first-party software. That's why I kept using the Netflix Originals example.

Haven't you been paying attention? MS would put Game Pass on PlayStation if they could. Sony won't allow it for a multitude of reasons. Nintendo wouldn't either. Outside of Nintendo and Sony who else has been MORE successful than MS in the console gaming space? Sega? SNK? NEC? Panasonic? Xbox isn't #1 because of the numerous mistakes they made last generation. What is #1 anyway? MS has already conceded they aren't going to be pushing tons of boxes and they prefer a continuous revenue source. There are only three platform holders and two of them are firmly entrenched in their position. Pepsi isn't beating Coke so should they abandon their business? There is plenty of space in this industry for all three to find success and doing their own things. I assume you have been calling out Amazon and Google for their gaming efforts especially if you are worried about MS.

MS is in a ton of lanes. Xbox is their gaming lane and they are trying to reach gamers where they are. No other platform holder has placed more of their properties on platforms they don't own. They had made advancements in console gaming Sony and Nintendo haven't made. They have generally made this industry better and that benefits us all as gamers no matter what our preferred platform. The fact that MS is bigger than Nintendo and Sony is a benefit to gamers too. Neither Nintendo nor Sony would offer a service like Game pass giving gamers an avenue to play NEW games for a reasonable price. Gaming not being the end all for MS also allows them to take risks that actually benefit consumers than just costing them more. I like that MS isn't charging more for cross gen games. I like that MS is going to allow X1 customers to still play their newer games without forcing them to buy a new console.

You said:

While these are all certainly good options for consumers...

I care about that more than MS' or Sony' or Nintendo' bottom line. Until MS does something with Xbox that negatively affects customers, like forcing Kinect on people who don't want it, or charging $70 for this generation's games, or charging gamers for cloud saves I'll let the execs figure out how to make it work financially. If it stops being a good value I'll stop being a customer simple as that. They are working for our money and that is the way I prefer it.

 

[Topher]

It's not profitable at all. Their last financial statement gave a hint (since they don't report anything clearly, but rather muddle everything by grouping different categories) but when it comes to their "Xbox content and services" (which isn't entirely GP) revenue increased 34% YOY. Which isn't saying much and as with all things Xbox, MS don't report profit/operating income. It's evident is not even close to profitable. Whenever they are, I trust we won't have to wonder.

I meant to say not profitable.

 

[MrFunSocks]

More obvious is that people are just hoping that Double Fine's best effort to date is rewarded with sales.

Big difference between hoping and expecting. There was absolutely nothing suggesting that Psychonauts 2 would be a big sell. Nothing at all. A sequel to a terribly selling game that bankrupt the publisher releasing 16 years after the original for a previous generation console does not spell "massive seller".

 

[MrFunSocks]

not*. Source.

Game Pass itself will likely never be profitable, and it doesn't need to be. If it's run at a (for example) 10 million dollar "loss" but brings in $20 million of profit via MTX and other purchases from people that it brought into the ecosystem then it's still a net gain.

People need to get over this "Game Pass isn't profitable" thing because it's not seeing the bigger picture. It's the exact model that consoles have used (other than nintendo) for generations - sell the console at a loss but make profit from the people that buy them.

 

[bender]

Big difference between hoping and expecting. There was absolutely nothing suggesting that Psychonauts 2 would be a big sell. Nothing at all. A sequel to a terribly selling game that bankrupt the publisher releasing 16 years after the original for a previous generation console does not spell "massive seller".

We heard you the first time.

 

[MasterCornholio]

We heard you the first time.

He's more like Stewart.

 

[Kagey K]

That's fair enough. I believe they are mutually exclusive, and that's why Netflix does not release DVDs for their originals.

They absolutely do. It's fine for a company to want to get revenue from all avenues.

List of Netflix Originals Available on DVD & Blu-ray

If you're a long-time reader of this site, you know we often like to challenge ourselves with going down rabbit holes and that's exactly what we've done here.

www.whats-on-netflix.com