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[StreetsofBeige]

Where does it say they spent $17 billion?

The 17 billion figure is the expected turnover including quarter 4.

Correct.

For anyone skimming the green chart, the first column is Q1-Q3 Actuals. The right column is their FY estimate which would be Q1-Q3 Actuals + their estimated Q4. That's why that column says Budget. It's their FY forecast.

Granted, without knowing the exact details there's a small chance that FY column is actually their projection taken at the beginning of the year (their original FY budget), but I'm going to assume they updated the Budget column with 3 quarters of Actuals with only Q4 being a projection.

(Edit. It is Q1-Q3 actuals + Q4 projection. It says that in the footer)

 

[Ozriel]

If the division is performing this well with half the install base of PS5 i would say it is doing fine. Also, the other key take away seems to be Xbox hardware was making great margins. There were a lot of poeple claiming they were losing a lot of money on hardware and it doesnt look like that is the case at all.

They ARE losing money on hardware. The embedded email in the OP shows they lost > $1bn on subsidized hardware.

They’re able to cover that with software and services.

This topic is the definition of...

Accountability Margin does not equal Operating Income. That dufus from TweakTown better read a bit before spouting his console warrior nonsense.

You have no way of determining that, though. Unless you’ve worked at MS and know exactly what goes into that term?

 

[Brucey]

Phil's whole thing about Microsoft exiting gaming by 2027 if Gamepass doesn't triple its subscription or whatever is just dog and pony for the FTC. Like they are gonna walk away from 15+ billion a year cause it's "just not sustainable" LOL

Revenue!=profit.

 

[mckmas8808]

Holy shit, how much does it cost to produce a PS5? If Sony was making money per unit sold, they would be destroying Xbox in operating profit, but they aren't. I'm confused.

MS Xbox's profit isn't counting the same thing Playstation and Nintendo are counting. You can see it right there at the top of the chart in small letters.

 

[Brucey]

If the division is performing this well with half the install base of PS5 i would say it is doing fine. Also, the other key take away seems to be Xbox hardware was making great margins. There were a lot of poeple claiming they were losing a lot of money on hardware and it doesnt look like that is the case at all.

Well it was Spencer who said that...

"Today, Spencer said, Microsoft gives people choice in how much they’d like to spend if they want consoles. The company offers the $499 Xbox Series X and the less powerful $299 Xbox Series S. Microsoft subsidizes the cost to the tune of $100 to $200 per console, with the expectation that it will make the money back on sales of accessories and storefront purchases, he said. It’s up to gamers if they’d like to pay $10 or $15 per month for Game Pass subscriptions. They can also buy games outright, or play certain games for free."

Microsoft exec says gaming is 'somewhat resilient' to economic weakness

In the Global Financial Crisis, Microsoft's Xbox console business had the best calendar year to date, and Xbox content and services got a pandemic bump in 2020.

www.cnbc.com

 

[mejin]

This topic is the definition of...

Accountability Margin does not equal Operating Income. That dufus from TweakTown better read a bit before spouting his console warrior nonsense.

 

[DenchDeckard]

Is this forum just anti xbox now lol, every thread i swear

Don't know too much about finances, but we don’t know if all this is meeting MS' targets.

If both GamePass and console sales stagnate, I wonder if MS will deem a single-digit profit worth the investment.
Especially if there will be a chance that things will get worse going into next-gen, when even more people bought into Playstation's eco-system and are even less likely to make a switch.

This was talked about by Spencer in that interview a while ago.

MS themselves said they were losing a lot of money on hardware. The reason you don't see it impact, is because they are not moving as much units as the competition. The competition is outselling them 2 to 1 at this point, thus it impacts profits more.

Both companies make a lot off the MTX and store spend.

They ARE losing money on hardware. The embedded email in the OP shows they lost > $1bn on subsidized hardware.

They’re able to cover that with software and services.



You have no way of determining that, though. Unless you’ve worked at MS and know exactly what goes into that term?

Yeah, so they must both be losing a considerable amount on hardware.

This look behind the curtain is very interesting.

 

[Kagoshima_Luke]

[Nintendo has entered the chat]

 

[DeepEnigma]

Yeah, so they must both be losing a considerable amount on hardware.

This look behind the curtain is very interesting.

Initially, yes. Sony I believe finally started turning a profit on the $499 PS5, probably due to software sales and revisions, but they expect a profit dip after record profits (probably due to the $50 price cut to get to 25mil projection).

Sony Finally Turns a Profit on $499 PS5

Just after hitting 10 million PS5 sales, Sony has announced that its pricier version of the console is no longer selling at a loss. Its $399 Digital Edition, however, still has a while to go.

www.extremetech.com

Sony posts record annual profit boosted by chips and all-time high PlayStation 5 sales

Sony said it sold 19.1 million PlayStation 5 units in its fiscal year, beating its own forecast of 18 million units.

www.cnbc.com

Projected profit dip probably due to price cut in select regions,

Sony expects profit to slip despite record PlayStation 5 sales

Sony Group Corp on Friday said PlayStation 5 sales will jump by six million units this business year, but forecast its profit will slip from a record high as weaker financial services sales offset gains from gaming, music and movies.

www.reuters.com

 

[chromatic9]

So MS are competing just fine, all three are doing well and no need for anymore third party publisher acquisitions?

 

[DR3AM]

 

[DeepEnigma]

So MS are competing just fine, all three are doing well and no need for anymore third party publisher acquisitions?

[Nintendo has entered the chat]

 

[Moriarty1889]

Phil's whole thing about Microsoft exiting gaming by 2027 if Gamepass doesn't triple its subscription or whatever is just dog and pony for the FTC. Like they are gonna walk away from 15+ billion a year cause it's "just not sustainable" LOL

Very true. Phil will say anything at this point to try and win over the court ruling against the FTC. Also, spending as much as they are on publishers doesnt look to me like they will just exit gaming. GP numbers will go up of course but who knows by how much. MS are in this to make money and they know there is money to be made in this industry. We shall see going forward.

 

[Woopah]

Sonys profit margins are trash.

Is it because of the bungie acquisition eating into their profits.

A lot of that revenue is third parties' share from digital sales and microtransations, so the margin isn't as bad as it looks.

 

[StreetsofBeige]

A lot of that revenue is third parties' share from digital sales and microtransations, so the margin isn't as bad as it looks.

Perhaps if that methodology is true. That means MS and Nintendo margins are better too than stated.

It wouldnt make sense to only reduce Sony revenues because if it was that means Sony and Xbox revenue would be approaching the same which is impossible since Sony has double the consoles and gamers buying stuff.

 

[DeepEnigma]

Perhaps if that methodology is true. That means MS and Nintendo margins are better too than stated.

It wouldnt make sense to only reduce Sony revenues because if it was that means Sony and Xbox revenue would be approaching the same which is impossible since Sony has double the consoles and gamers buying stuff.

I think he means, Sony reports 100% of the 70/30 splits for revenue, MS and Nintendo do not.

 

[cebri.one]

What the fuck is an accountability margin, and if they are so profitable why they never publish that information in the quarterly earnings. Smells like a lot of bullshit.

 

[SlimySnake]

A lot of that revenue is third parties' share from digital sales and microtransations, so the margin isn't as bad as it looks.

Didnt sony had Horizon, GOW, GT7 and TLOU release last year? I expected a higher share of profits.

Like i said, the $3.2 billion bungie acquisition likely cut into their profits here. They posted $3.5 billion in profits just two years ago. That and the VR2 launch.

 

[TheThreadsThatBindUs]

Wow, $35m in revenue from GP subscriptions.

For 25m subs, that's like $1.4 per user.... Those $1 subs have been fucking abused.... LOOOOOOOL!!!

 

[DeepEnigma]

Didnt sony had Horizon, GOW, GT7 and TLOU release last year? I expected a higher share of profits.

Like i said, the $3.2 billion bungie acquisition likely cut into their profits here. They posted $3.5 billion in profits just two years ago. That and the VR2 launch.

I think that only $1.2b employee retention counts. Which is still a large number.

 

[SlimySnake]

Wow, $35m in revenue from GP subscriptions.

For 25m subs, that's like $1.4 per user.... Those $1 subs have been fucking abused.... LOOOOOOOL!!!

That cant be right.

 

[Adam_802]

Hmm looks like the Xbox division is healthy after all despite the dooming and glooming.

 

[TheThreadsThatBindUs]

That cant be right.

You're right, actually. I read it as a dollar value. When in actual fact it's saying the actual subscriber number was expected to be 35m in 2022 (i.e. budget), with actuals 24m for 2021.

That makes way more sense.

 

[Mr.Phoenix]

Haha... you guys are talking about Sony profits, a more pertinent conversation would be the fact, that if all Xbx had as its revenue, they just spent 40+ years of profits on Activision...

Or if that expense is amortized, then Xbox shouldn't be profitable for the next 8 years at a minimum.

But I guess if we stopped acting like this was a fair fight it wouldn't be fun anymore.

 

[cebri.one]

[/QUOTE]

This topic is the definition of...

Accountability Margin does not equal Operating Income. That dufus from TweakTown better read a bit before spouting his console warrior nonsense.

Pretty much, they are equating profit margin to a made up term. If they have better margins than Sony why not disclose that in quarterly earnings. This is the dumbest thing I’ve read in a while.

 

[DeepEnigma]

Hmm looks like the Xbox division is healthy after all despite the dooming and glooming.

They clearly don't need to buy up ABK and then some "to compete" then. They are doing just fine!

 

[Woopah]

Perhaps if that methodology is true. That means MS and Nintendo margins are better too than stated.

It wouldnt make sense to only reduce Sony revenues because if it was that means Sony and Xbox revenue would be approaching the same which is impossible since Sony has double the consoles and gamers buying stuff.

It would affect MS I believe (not 100% sure on that though) but wouldn't affect Nintendo since they don't include third party revenue in their figures .

Didnt sony had Horizon, GOW, GT7 and TLOU release last year? I expected a higher share of profits.

Like i said, the $3.2 billion bungie acquisition likely cut into their profits here. They posted $3.5 billion in profits just two years ago. That and the VR2 launch.

In this particular time period Sony just had TLOU and GOW. But even so, the digital sales of third party things like FIFA and COD would be a huge chunk of their revenue.

 

[nemiroff]

Wait, I thought Xbox didn't make profits for MS. What's going on here.

 

[cebri.one]

Wait, I thought Xbox didn't make profits for MS. What's going on here.

Clearly the article is aimed at people like you.

 

[F0rneus]

Why did they use operating income, net income and accountability margin in that Big Three comparison? That's three different things being compared together. It just makes no sense.

Might as well say that Sony sells more because the sky is blue.

 

[John Wick]

So wait, After all the years of talking about does Xbox make profit...Does GamePass make profit? it ends up that they are making more than Sony?
Is this real?

What told you that?

 

[SmokedMeat]

So Microsoft is beating Sony, and Nintendo is schooling both.

 

[DeepEnigma]

So Microsoft is beating Sony, and Nintendo is schooling both.

But they "need ABK to compete," totally not a unique thought position™

 

[SmokedMeat]

But they "need ABK to compete," totally not a unique thought position™

We know that’s b.s.

 

[DeepEnigma]

We know that’s b.s.

Oh come on, you're just being a phony pony, they would never ever lie, Xbox knows me really well.

 

[Astray]

Why did they use operating income, net income and accountability margin in that Big Three comparison? That's three different things being compared together. It just makes no sense.

Might as well say that Sony sells more because the sky is blue.

Because Derek has no idea how accounting and financial analysis work.

Forget apples and oranges, this is like comparing a coconut with a mangosteen and a half-eaten banana.

 

[Killjoy-NL]

They clearly don't need to buy up ABK and then some "to compete" then. They are doing just fine!

That would mean they really are actively trying to outspend Sony (and competition in general) by buying up everything because they are losing marketshare, highlighting exactly the cancerous business they are being accused of.

I don't think it's something to cheer about as gamers.

 

[coffinbirth]

Not sure what numbers here, if any, are actually accurate...but it's interesting nonetheless.
What's crazy is that ABK will be adding another $8b a year.
Will be interesting to see how much GamePass numbers grow once CoD starts hitting it Day One. WoW on console seems like a sleeping giant as well.

 

[DeepEnigma]

I don't think it's something to cheer about as gamers.

It's schadenfreude, really.

 

[Killjoy-NL]

It's schadenfreude, really.

Too bad the hardcore xbox fans are too dumb to realize that's a bad thing for everyone, especially the industry. Including them in the long run.

 

[K' Dash]

Hmm looks like the Xbox division is healthy after all despite the dooming and glooming.

imagine that...

 

[cebri.one]

Just to give another look on how great Xbox is doing, only based on revenue numbers per business and business segment operating profit for the quarters mentioned in the article.

They are the worst performing business in the worst performing MS business segment.

 

[X-Wing]

Thread is pure misinformation

 

[Hudo]

Nintendo curb stomps both with their profit margins. Interesting.

 

[DeepEnigma]

Nintendo curb stomps both with their profit margins. Interesting.

Nintendo's hardware is built to be profitable right out of the gate.

 

[Hudo]

Nintendo's hardware is built to be profitable right out of the gate.

Genius strategy.

 

[Dirk Benedict]

Nintendo curb stomps both with their profit margins. Interesting.

I was looking for the word Profit in the Dictionary a few days ago, saw the Nintendo Logo next to the definition.

 

[DeepEnigma]

Genius strategy.

For them, yes.

 

[Killjoy-NL]

Genius strategy.

Yes, but people are already saying that PS5 and Series need a Pro version for better performance.

If Sony and MS would do the same as Nintendo, people would be whining about PS5 and Series being underpowered to no end.

 

[Hudo]

Yes, but people are already saying that PS5 and Series need a Pro version for better performance.

If Sony and MS would do the same as Nintendo, people would be whining about PS5 and Series being underpowered to no end.

People will always find something to complain. Especially on Twitter and Reddit, which are just made up of people whose hobby is to complain about various things.