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[SportsFan581]

You realize that subscribers don`t have to buy the game to play it, right?

That's true. But, you still couldn't put the entirety of first-party development costs on GP, not when the service is less than 20% of your games & services revenue.

 

[adamsapple]

You realize that subscribers don`t have to buy the game to play it, right?

Game Pass subscribers spend 50% more on games than non-subscribers

The Xbox Series X/S continues to be Microsoft’s fastest-selling console ever, but what’s most interesting is how Game Pass is evolving.

metro.co.uk

What is far more notable about Microsoft’s financial report is the revelation that Game Pass subscribers play around 40% more games than non-subscribers and spend 50% more money – presumably on a mix of DLC, full-price games, and the subscriptions themselves.

Subscribers, on average, still put in 50% more money in the ecosystem compared to similar non-subscribers who game on the same ecosystems.

Just read through the thread, and concluded with a major loss of my IQ.

Was it profitable tho ?

 

[Haggard]

That's true. But, you still couldn't put the entirety of first-party development costs on GP, not when the service is less than 20% of your games & services revenue.

How about you stop turning general terms into absolutes?

 

[ErRor88]

 

[K' Dash]

You realize that subscribers don`t have to buy the game to play it, right?

I do buy games constantly, games that are not in the service I mean, I day one games that I can’t wait to play.

Hogwarts Legacy and Callisto Protocol for example.

 

[HeisenbergFX4]

Pretty impressive number for Game Pass which I don't think anyone saw coming plus it sure shook a lot of people who feels the need to downplay it

 

[Helghan]

And this is only on console and without pure XBL subscriptions? Very impressive

 

[Fitzchiv]

Me waiting to see how much profit GP generated while watching the usual suspects pretend revenue is profit.

Do you gave a gif for "me understanding penetration pricing strategy" too?

 

[Mattyp]

The Zenimax/ABK acquisitions are them purchasing an asset. Since this asset retains value it isn't going to be deducted from their balance sheets like an expense. The acquisitions will make them more profitable (as they roll the profits of those companies into their own), not less.

Fucking thank you I wasn’t the one who had to repeat this.

All these threads do is seperate the kids still living at home with no asset portfolio and basically no real fucking idea how finances work that it’s worrying.

 

[Mobilemofo]

... where's the games on Game Pass? They're... on Game Pass?

Oh, you mean the "classics" pedantry isn't your strong point eh?

 

[T0kenAussie]

the infrastructure, employees, first party game and service development and everything else surrounding such a massive project is ofc free of charge....
For the love of god stop that kindergarden math all of you.

Bruh the release a game in the normal model requires all those things too and news flash : they still sell games and mtx traditionally on their storefront

Why are all you insufferable children so bloody binary. Gamepass is a great service that gave Xbox a shot in the arm with more revenue and derisked their first party investments and incentivised them to reinvest in indies/indie promotion


It’s not coming for your digital libraries, you will still be able to purchase copies of games to your hearts content why would they throw away free money?

 

[Haggard]

Why are all you insufferable children so bloody binary

says the insufferable child that automatically assumes everything stated is to be taken as an absolute AND completely misses the point.

 

[Frank Horrigan]

How do I raise a genuine question about a service I enjoy without being labelled as a sony fan or a hater? The Nu-gaf conundrum

 

[AmuroChan]

Why do people ignore the other 82% of MS’ gaming revenue?

If GP brings 2.9bn and total revenue is 16bn then there are other revenue sources, such as selling games, platform income from 3rd party sales, etc.

All this data does is shoot down forever the idea that people get GP for free or for €1, since even if you take the highest possible sub number that’s still 116 usd per year per subscriber (without PC).

It’s nice to see some dumb arguments being removed from the discussion once in a while.

Which people are you referring to? Most gamers don't care about this stuff. And unless you're a stockholder or works for MSFT, all of this is just fodder for silly console wars.

 

[IFireflyl]

All analysis is speculation based on available data. I've built you a model based on the noted revenue and Microsoft's assertion that the software business is profitable. The infrastructure costs aren't an assumption: game pass uses Microsoft accounts and the same CDN as used by the existing storefront. How would you carve out the gamepass specific costs for utilizing existing resources?

2,900 Million is a lot of money. Gamepass alone generates more revenue than Ubisoft or Square-Enix. Profitability isn't a question. The question is the magnitude of profit.

TL;DR - I believe corporations when they say stuff while hiding figures that will corroborate their claims.

You're one smart cookie.

 

[IFireflyl]

I mean 2.5 billion revenue I highly doubt qualifies as hemorrhaging - are we thinking it’s over 5 billion a year to maintain?

I'm not making any assumptions one way or another. We do, however, know that just putting Cookie Simulator on Game Pass cost Microsoft over half a million dollars. Hemorrhaging money is a possibility. It's also possible that Game Pass is profitable, although I certainly doubt that it's already profitable.

 

[Ozriel]

I'm not making any assumptions one way or another. We do, however, know that just putting Cookie Simulator on Game Pass cost Microsoft over half a million dollars. Hemorrhaging money is a possibility. It's also possible that Game Pass is profitable, although I certainly doubt that it's already profitable.

And? That ‘half a million dollars’ for a whole year of availability is covered by monthly sub for around 40000 users.

That’s quite miniscule indeed, if that’s the scope of that they’re paying to AA or indies.

 

[Lasha]

TL;DR - I believe corporations when they say stuff while hiding figures that will corroborate their claims.

You're one smart cookie.

You're the fanboy who insists on personal attacks instead of actually focusing on what I wrote. You're delusional.

 

[IFireflyl]

And? That ‘half a million dollars’ for a whole year of availability is covered by monthly sub for around 40000 users.

If you think you made a valid rebuttal I've got a bridge I would love to sell you.

 

[adamsapple]

lol you made financials and acquisitions mean more than actual games? i seriously question if some of you even play games at all.

No, most of us like to debate about big corporations profit margins. It's a very serious subject.

 

[RespawnX]

Pretty impressive number for Game Pass which I don't think anyone saw coming plus it sure shook a lot of people who feels the need to downplay it

We know that 20% of people buy games after they played it on Game Pass (anyone in marketing would kill for such a conversion rate), we know that MTX increase more than 50% with Game Pass which for their own are most of today's transactions and we knowthat subs are increasing subsequently. Besides it's surely no coincidence that more and more games are joining the PC Game Pass. Microsoft is mounting a cash cow. We saw that coming, what we cannot yet foresee are the long-term consequences of this business model to gamers.

 

[IFireflyl]

You're the fanboy who insists on personal attacks instead of actually focusing on what I wrote. You're delusional.

Fanboy? Have you even read my posts? A fanboy is staunchly supporting their console, or staunchly attacking something that is not their console. My posts stated that we cannot know one way or another because there is not enough data to support either claim (that Game Pass is profitable or not profitable). That's not fanboyism.

And personal attacks? By saying you're one smart cookie sarcastically? You need to get off of the internet if you're triggered by that.

 

[adamsapple]

We know that 20% of people buy games after they played it on Game Pass (anyone in marketing would kill for such a conversion rate), we know that MTX increase more than 50% with Game Pass which for their own are most of today's transactions and we knowthat subs are increasing subsequently. Besides it's surely no coincidence that more and more games are joining the PC Game Pass. Microsoft is mounting a cash cow. We saw that coming, what we cannot yet foresee are the long-term consequences of this business model to gamers.

As long as all content available on a service is also available to sell at retail, I don't see a massive change in the model right now myself.

But in a couple of years, or sooner or later or whenever, we start getting content exclusive to the sub model, that's when it starts changing in notable strides, IMO of course.

 

[Schmick]

What we do know; The revenue and a statement from Phil Spencer that GP is sustainable.

 

[HeisenbergFX4]

We know that 20% of people buy games after they played it on Game Pass (anyone in marketing would kill for such a conversion rate), we know that MTX increase more than 50% with Game Pass which for their own are most of today's transactions and we knowthat subs are increasing subsequently. Besides it's surely no coincidence that more and more games are joining the PC Game Pass. Microsoft is mounting a cash cow. We saw that coming, what we cannot yet foresee are the long-term consequences of this business model to gamers.

I 100% buy games thats coming to Game Pass for a couple of reasons.

I want to show those devs more love that I truly enjoy your game plus I usually want the ultimate version of said game to get future DLC like this past Forza

 

[Lasha]

Fanboy? Have you even read my posts? A fanboy is staunchly supporting their console, or staunchly attacking something that is not their console. My posts stated that we cannot know one way or another because there is not enough data to support either claim (that Game Pass is profitable or not profitable). That's not fanboyism.

And personal attacks? By saying you're one smart cookie sarcastically? You need to get off of the internet if you're triggered by that.

I'm not triggered. You aren't a wordsmith making ripostes. Now you're talking to yourself.

 

[IFireflyl]

As long as all content available on a service is also available to sell at retail, I don't see a massive change in the model right now myself.

But in a couple of years, or sooner or later or whenever, we start getting content exclusive to the sub model, that's when it starts changing in notable strides, IMO of course.

I don't know if exclusivity is the only factor. If most people stop buying games and use the subscription model then it would have the same impact as if a game were exclusive to the subscription model. The subscription model shouldn't hurt games with micro-transactions. Single-player, non-MTX games are where I would expect to see weaknesses in the subscription model.

 

[Balducci30]

I'm not making any assumptions one way or another. We do, however, know that just putting Cookie Simulator on Game Pass cost Microsoft over half a million dollars. Hemorrhaging money is a possibility. It's also possible that Game Pass is profitable, although I certainly doubt that it's already profitable.

I dunno, all I know is that 2.9 billion is more than I expected them to be generating. You can doubt it’s profitable or not I really dgaf either way - that’s you’re own idea of things coloring your perception. Could be or could not be, it seems unlikely its losing over 50% of it’s cost but who knows we can only go off how much other companies spend for producing a similar amount and maintaining a service. Either way it’s Microsoft’s issue, I’m sure if it’s really bad they’ll stop pushing it… but I dunno I see gaming moving to these kind of services either way

 

[IFireflyl]

You:

I'm not triggered.

Also you:

You're the fanboy who insists on personal attacks instead of actually focusing on what I wrote.

Go away. I'm not going to respond to your childish posts anymore.

I dunno, all I know is that 2.9 billion is more than I expected them to be generating. You can doubt it’s profitable or not I really dgaf either way - that’s you’re own idea of things coloring your perception. Could be or could not be, it seems unlikely its losing over 50% of it’s cost but who knows we can only go off how much other companies spend for producing a similar amount and maintaining a service. Either way it’s Microsoft’s issue, I’m sure if it’s really bad they’ll stop pushing it… but I dunno I see gaming moving to these kind of services either way

Nothing is coloring my perception. I have repeatedly said that it is possible that Game Pass is profitable. I don't think it is at this point, but it's possible it is. My entire reason for posting is that there are people looking at the revenue and making claims that Game Pass is 100% profitable with absolutely no evidence to support that claim. People need to temper their expectations. They're the ones with colored perceptions. It's okay to love Microsoft. It's okay to hate Microsoft. What's not okay is spreading non-confirmed claims as if they are fact because you're biased. That's what these other posters (like L Lasha ) are doing, and they're too blind to see what they're doing.

 

[Ozriel]

If you think you made a valid rebuttal I've got a bridge I would love to sell you.

If you think paying the studio for a mere 30k copies of a reasonably well received game using the equivalent of one months sub of 40000 GPU customers is a pointer to Gamepass ‘hemorrhaging money’, then you probably bought that bridge from someone else

Not sure why you’re back for another nibble with this particular game. By page 2 of that thread, most folks already realized it was relatively peanuts

 

[IFireflyl]

If you think paying the studio for a mere 30k copies of a reasonably well received game using the equivalent of one months sub of 40000 GPU customers is a pointer to Gamepass ‘hemorrhaging money’, then you probably bought that bridge from someone else

Not sure why you’re back for another nibble with this particular game. By page 2 of that thread, most folks already realized it was relatively peanuts

*SIGH*

At no point did I say that Game Pass was hemorrhaging money. Please go re-read my post. All I said is that it's possible they are hemorrhaging money. I also said it's possible that they are profitable. The one game I have statistics on is a nothing-burger game that cost Microsoft over half a million dollars to bring to Game Pass. We don't know how much they're spending to bring AA or AAA games to Game Pass. It's POSSIBLE that their expenses are far outweighing their income. We simply don't know.

 

[Gravemind]

Huh, so you're telling me that a trillion dollar company knows how to make money through business ventures and that I shouldn't listen to the screeching and crying of forum dwellers yelling in every thread about how gamepass "isn't sustainable"?

Truly a shocking revelation.

 

[Balducci30]

You:



Also you:



Go away. I'm not going to respond to your childish posts anymore.



Nothing is coloring my perception. I have repeatedly said that it is possible that Game Pass is profitable. I don't think it is at this point, but it's possible it is. My entire reason for posting is that there are people looking at the revenue and making claims that Game Pass is 100% profitable with absolutely no evidence to support that claim. People need to temper their expectations. They're the ones with colored perceptions. It's okay to love Microsoft. It's okay to hate Microsoft. What's not okay is spreading non-confirmed claims as if they are fact because you're biased. That's what these other posters (like L Lasha ) are doing, and they're too blind to see what they're doing.

I guess I’m just confused at why you doubt or don’t think it is when we have no idea either way - like where’s that coming from. Otherwise I largely agree with you

 

[SportsFan581]

Impressive considering the consoles pay-to-play online requirement and the difference in install base.

 

[IFireflyl]

I guess I’m just confused at why you doubt or don’t think it is when we have no idea either way - like where’s that coming from. Otherwise I largely agree with you

I doubt it simply because it's so new and there has been no evidence to show a profit by Microsoft. Netflix, Spotify, and virtually every other large-content subscription models took MUCH longer to be profitable. In fact, I actually don't know if Spotify is profitable yet. But the point is that subscription models like these generally are long-term focused. They expect to lose money for many years, and then the plan is that the pendulum will swing the other way. Netflix started in 1997, and it wasn't profitable until 2006. That's almost a decade. That's what I expect to see from virtually every subscription service because step one is to lose money to get a ton of content.

 

[Ozriel]

*SIGH*

At no point did I say that Game Pass was hemorrhaging money. Please go re-read my post. All I said is that it's possible they are hemorrhaging money. I also said it's possible that they are profitable. The one game I have statistics on is a nothing-burger game that cost Microsoft over half a million dollars to bring to Game Pass. We don't know how much they're spending to bring AA or AAA games to Game Pass. It's POSSIBLE that their expenses are far outweighing their income. We simply don't know.

We certainly can’t know for sure, but There’s probably enough info to speculate. The AAA games they put on Gamepass day one seem to be strategically chosen…they won’t be paying more than $50mln for MLB, for example. And from the fact that People Can Fly says they didn’t recoup on Outriders, it’s unlikely that Gamepass payment for that game exceeded that amount. Other than that, they’ve focused on smaller AAA titles like Wo Long and games like Lies of P for day one release.

And while this report focuses on subscription revenues alone, they’re bound to be raking in extra cash from increased MTX spend on Gamepass games.

 

[Frank Horrigan]

We know that 20% of people buy games after they played it on Game Pass (anyone in marketing would kill for such a conversion rate), we know that MTX increase more than 50% with Game Pass which for their own are most of today's transactions and we knowthat subs are increasing subsequently. Besides it's surely no coincidence that more and more games are joining the PC Game Pass. Microsoft is mounting a cash cow. We saw that coming, what we cannot yet foresee are the long-term consequences of this business model to gamers.

We can't know for sure 100%, but we can take a pretty good, educated guess on where it will end. Fortunately for microsoft, the end of the rainbow is a pot of gold, for the majority of the rest of us, it's a bucket of piss.

I like Gamepass, I enjoy being able to play the B-tier games that I have loved so much over the decades. The AAA games may have the polish and shine, but the B-tier games are where the real magic happens.

That said, similar services and human psychology tell us with 95% certainty what the long-term consequences will be. Though it is impossible to discuss those consequences seriously.

 

[IFireflyl]

We certainly can’t know for sure, but There’s probably enough info to speculate. The AAA games they put on Gamepass day one seem to be strategically chosen…they won’t be paying more than $50mln for MLB, for example. And from the fact that People Can Fly says they didn’t recoup on Outriders, it’s unlikely that Gamepass payment for that game exceeded that amount. Other than that, they’ve focused on smaller AAA titles like Wo Long and games like Lies of P for day one release.

And while this report focuses on subscription revenues alone, they’re bound to be raking in extra cash from increased MTX spend on Gamepass games.

I have absolutely no issue with speculation as long as people aren't touting that their speculation is fact. People like L Lasha are telling me that it is a fact that Game Pass is profitable. My entire argument has been that we can't know for certain one way or another. It's easy for people like you to get roped into an ongoing argument thinking that I'm just being stubborn, but my goal was never to dog Game Pass/Microsoft/Xbox. My entire purpose in posting was to say that revenue only tells part of the story, and we still don't know what the other part of the story is. There's no sense in making empirical claims one way or another when we can only see half of the picture.

 

[Ozriel]

I doubt it simply because it's so new and there has been no evidence to show a profit by Microsoft. Netflix, Spotify, and virtually every other large-content subscription models took MUCH longer to be profitable. In fact, I actually don't know if Spotify is profitable yet. But the point is that subscription models like these generally are long-term focused. They expect to lose money for many years, and then the plan is that the pendulum will swing the other way. Netflix started in 1997, and it wasn't profitable until 2006. That's almost a decade. That's what I expect to see from virtually every subscription service because step one is to lose money to get a ton of content.

This comparison isn’t really apt because Spotify and Netflix have only the subscription revenue as their influx. That’s where all costs will be covered from.

Microsoft sells millions of units of software at retail and on Steam. You wouldn’t put development costs of Forza Horizon 5 on Gamepass when the game’s sold millions of units on Steam alone…over a million copies preordered before launch, for example. Ditto for Sea of Thieves with over 4 million sold on Steam alone. Much of the cost for infrastructure, salaries and other overheads are shared with other revenue sources.

It’s not an apt comparison to compare GP’s time to profitability with the likes of Netflix at all.

 

[Balducci30]

I doubt it simply because it's so new and there has been no evidence to show a profit by Microsoft. Netflix, Spotify, and virtually every other large-content subscription models took MUCH longer to be profitable. In fact, I actually don't know if Spotify is profitable yet. But the point is that subscription models like these generally are long-term focused. They expect to lose money for many years, and then the plan is that the pendulum will swing the other way. Netflix started in 1997, and it wasn't profitable until 2006. That's almost a decade. That's what I expect to see from virtually every subscription service because step one is to lose money to get a ton of content.

I think a better comparison would be something like HBO max or any of the new TV subscription services - Netflix was mailing dvds in 97 their whole strategy changed completely

 

[IFireflyl]

This comparison isn’t really apt because Spotify and Netflix have only the subscription revenue as their influx. That’s where all costs will be covered from.

Microsoft sells millions of units of software at retail and on Steam. You wouldn’t put development costs of Forza Horizon 5 on Gamepass when the game’s sold millions of units on Steam alone…over a million copies preordered before launch, for example. Ditto for Sea of Thieves with over 4 million sold on Steam alone. Much of the cost for infrastructure, salaries and other overheads are shared with other revenue sources.

It’s not an apt comparison to compare GP’s time to profitability with the likes of Netflix at all.

We're talking about whether or not Game Pass is profitable, not whether or not Microsoft/Xbox is profitable. It's absolutely fair to only look at subscription numbers and costs when that's the comparison.

 

[IFireflyl]

I think a better comparison would be something like HBO max or any of the new TV subscription services - Netflix was mailing dvds in 97 their whole strategy changed completely

The point is that subscriptions that require a ton of content (physical or digital) take time to become profitable. Especially when we're talking about a new type of content model. Netflix physical shipping was a brand new type of subscription model. Netflix streaming was a brand new type of subscription model. Spotify was a brand new type of subscription model. Game Pass was a brand new type of subscription model.

The company making the first leap takes the most losses. That's because they have to spend the time and money changing the landscape. It's far easier for a similar company to enter the playing field after the field has already been made. HBO Max and Hulu had far less work to do than Netflix. Tidal had far less work to do than Spotify. In a similar vein, future digital game subscription services will have far less work to do to enter the market because Microsoft/Game Pass did all of the work in getting the industry to accept that type of a market.

 

[Ghost of Caelid]

Lot of cash, so where's the games?

No interest?

 

[johnjohn]

Rewarding mediocrity.
If the future of gaming is quantity over quality, I weep.

The best part of Game Pass is that it offers quantity and quality.

 

[Ozriel]

We're talking about whether or not Game Pass is profitable, not whether or not Microsoft/Xbox is profitable. It's absolutely fair to only look at subscription numbers and costs when that's the comparison.

Again, that wouldn’t be sensible. Because Netflix and Spotify aren’t just tracking costs related to streaming infrastructure, but also costs for producing and acquiring content. Basically, every cost incurred in keeping the entirety of Netflix running is recovered from subscription revenue.

The point is that for Gamepass, it makes no sense to stack up 100% of first party and general costs on the GP service when much of those costs are already covered by retail sales + third party revenue.

 

[Jaybe]

Everyone having PTSD from Stadia and now worried about Game Pass’ sustainability

 

[IFireflyl]

Again, that wouldn’t be sensible. Because Netflix and Spotify aren’t just tracking costs related to streaming infrastructure, but also costs for producing and acquiring content. Basically, every cost incurred in keeping the entirety of Netflix running is recovered from subscription revenue.

The point is that for Gamepass, it makes no sense to stack up 100% of first party and general costs on the GP service when much of those costs are already covered by retail sales + third party revenue.

The question is whether Game Pass is profitable or not. I never said what the costs were that were included, and I'm not sure how you read into my statements that I am (for example) including 100% of Halo: Infinite's game cost in Game Pass' expenses.

 

[splattered]

I 100% buy games thats coming to Game Pass for a couple of reasons.

I want to show those devs more love that I truly enjoy your game plus I usually want the ultimate version of said game to get future DLC like this past Forza

Same.

A lot of people do this, yet no one wants to believe it.

 

[Dolodolo]

SO those games are not valid because you dont think they are....Good on ya!

Enjoy, well...I don't know what you enjoy to be honest...if there is something you can't find to play on gamepass.

What is my opinion?
These are literally facts.
Scorn does not have a review embargo. They had one embargo, and it ended right on the day of release. Think a good game will be reviewed on release day? And now it has been postponed, and no one knows when the reviews will be launched. It's just a fact.

Persona is an old game released in 2017. It is a fact.

AAA games from major publishers were either rarely or not included in the gamepass subscription at release. It is a fact

You don't like the facts and are you ready to turn a blind eye to them just because the Gamepass is a gift from heaven? It's not my problem

 

[Dolodolo]

Same.

A lot of people do this, yet no one wants to believe it.

We can make hundreds of guesses. But the fact remains
Most publishers don't invest their AAA blockbusters in a Gamepass subscription from day one. It's just reality and that's it
If your version were correct, that people actually buy games that come with a subscription, then the trend would be different.