I would love to see a breakdown of this. People spend billions on game pass sure, but between the cost of running their studios and paying for third party deals I wonder how much left over is profit. If it made as much as I've heard some people claim they would not be making the moves they are.
After this week, what do you think the future of Xbox will be?
- Thread starter Typhon
- Start date
Oh OK they deserved it and Sony is stronger for it I guess?
Sony Gross Profit 2010-2023 | SONY
Sony annual/quarterly gross profit history and growth rate from 2010 to 2023. Gross profit can be defined as the profit a company makes after deducting the variable costs directly associated with making and selling its products or providing its services. <ul...
www.macrotrends.net
- Sony gross profit for the quarter ending December 31, 2023 was $8.453B, a 4.83% decline year-over-year.
- Sony gross profit for the twelve months ending December 31, 2023 was $32.850B, a 7.22% increase year-over-year.
- Sony annual gross profit for 2023 was $32.302B, a 10.95% decline from 2022.
- Sony annual gross profit for 2022 was $36.274B, a 1.73% decline from 2021.
- Sony annual gross profit for 2021 was $36.912B, a 14.41% increase from 2020.
That was revealed in the FTC vs Microsoft case. The net revenue per sub was $9.26/month, with 34 million subscribers that's a net revenue of $314 million dollars.
And they absolutely would still be making the moves they are. Gamepass subscriptions slowed to 1-2% growth year over year, which is consistent with the over all slowed growth through out the entire industry. When growth rate is lower than the rate of cost increases then that's a problem. If you can't increase the growth rate, then you have to start cutting expenses, like studios not currently developing new titles, or budgets for titles in development, in order to keep the net operating revenue up.
If growth rates don't increase this year, or if they decrease, there's going to be further layoffs all around as various studios try to reduce their operating costs.
I still don't think Gamepass takes in enough money to cover their expenditure, not with the amount of sales they lose. I know consumers love it but I still think it was a desperate gamble from them to get them out of last place that ultimately failed. Honestly it'll be years before we really know but I still think having new releases on there day one is a bad call long term. For them and the industry.
I do think going forward that Xbox is going to have to differentiate their hardware more from PS. Give me a Steam Box, either from MS or someone else that let's me play every game from MS and Sony in my living room.
If they were smart, they would keep on making/improving tool sets for PC developers. Make extensions for Unreal, license out their software IP, make more progress with improving DX. Improve Windows Server so that Google, Amazon, Dell, Dropbox, continue to use them for Cloud operations. Get money from everyone.
Heck, take it a little bit further, and pull a Valve. Make a Linux arm of Windows that resembles Windows proper to keep people from moving away from the Windows experience.
Become the biggest publisher and strong-arm competition. They can decide the fate of new store fronts, to keep Google, Apple, and the like away. Pay off EU fines. Laugh in their face when you make another trillion.
Heck, take it a little bit further, and pull a Valve. Make a Linux arm of Windows that resembles Windows proper to keep people from moving away from the Windows experience.
Become the biggest publisher and strong-arm competition. They can decide the fate of new store fronts, to keep Google, Apple, and the like away. Pay off EU fines. Laugh in their face when you make another trillion.
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That's because you're looking at it from a short term perspective, that spending 80 billion in acquisitions doesn't make sense for a service that has a net revenue of 3-4 billion a year. The ABK leaked documents though show that Microsoft is planning on a decade out level, that in order to stay in the video game business they had to pivot to being a content provider, through Gamepass, instead of a console maker. Younger generations are playing video games through their phones and tablets, with consoles and PCs as secondary devices. ABK has a large catalogue of Mobile, PC and console titles. Getting people to either subscribe to Gamepass or purchase games through their digital market and buying in game items through their stores maximizes the revenue earned through it. Of course they'll also take any revenue they can through selling on other marketplaces as well to funnel people in to purchase microtransactions as well.
Of course they hoped to have 50 million subscribers as their goal and it stalled at 34 million so they've got to make some adjustments in how many people really want a subscription service, but overall they're gambling billions as a way to stay in the video game business through content ownership and access to it.
when it comes to the console (hardware) market, it will become more and more irrelevant.
as a third-party publisher, it will always be an important player, due to the plethora of IPs MS onws.
so, for me, the same.
I like Game Pass for what it is, but I can't see myself buying another Xbox machine ever again.
as a third-party publisher, it will always be an important player, due to the plethora of IPs MS onws.
so, for me, the same.
I like Game Pass for what it is, but I can't see myself buying another Xbox machine ever again.
I used to be skeptical but now I am sure Phil is no longer in control and the thing that makes more sense is them becoming like an american SEGA. I don't see how they turn this one around
They're just Activision going forward.
I get you're banned for trolling over the course of multiple posts, but for others looking at this and agreeing, if a 10% decline in gross profit in one specific year without looking at any context is "collapsing", then what is the 14% increase? Ascending beyond mortal being?Oh OK they deserved it and Sony is stronger for it I guess?
Sony Gross Profit 2010-2023 | SONY
Sony annual/quarterly gross profit history and growth rate from 2010 to 2023. Gross profit can be defined as the profit a company makes after deducting the variable costs directly associated with making and selling its products or providing its services. <ul...
If they're not collapsing shouldn't a 10% decline be a >0% increase?
- Sony gross profit for the quarter ending December 31, 2023 was $8.453B, a 4.83% decline year-over-year.
- Sony gross profit for the twelve months ending December 31, 2023 was $32.850B, a 7.22% increase year-over-year.
- Sony annual gross profit for 2023 was $32.302B, a 10.95% decline from 2022.
- Sony annual gross profit for 2022 was $36.274B, a 1.73% decline from 2021.
- Sony annual gross profit for 2021 was $36.912B, a 14.41% increase from 2020.
I feel like so many people don't factor in how much it costs to release a console.
So many posts saying "They'll just keep making hardware, but won't prioritize it!". Sure, if releasing a console was free...
Like lets do some napkin math. They said they are losing $200-$100 on each Xbox Series sold, for simplicity's sake, let's assume $150. That's $4.5 billion they are burning on the Xbox Series. Just in selling them as-is.
Not taking into account what it takes to R&D a console... Or for you to set up contracts and get them manufactured, and distributed.
With Xbox leaving physical behind, as well as basically exiting south America and Europe, and their abysmal Asia sales, I can't imagine a new Xbox would do even as well as the Xbox Series.
Which then goes into, is it worth it for them to take the hit on console sales? If no, you are looking at the next Xbox costing like $700-$800, where a PlayStation or Nintendo console might be $400-$500. With all that considered, how many consoles are we thinking they will sell?
So they end up selling less than the Series consoles, at what point does the cost of porting games by third parties become questionable? How much more are they going to have to pay for GamePass deals? MS would end up having to throw around a lot more money to not have people abandon a console that might struggle to get 10 million units sold.
So yeah, if you could release a new console without paying anything, I am sure MS would continue to release consoles indefinitely, just to keep a foot in the door... But that isn't this reality.
So many posts saying "They'll just keep making hardware, but won't prioritize it!". Sure, if releasing a console was free...
Like lets do some napkin math. They said they are losing $200-$100 on each Xbox Series sold, for simplicity's sake, let's assume $150. That's $4.5 billion they are burning on the Xbox Series. Just in selling them as-is.
Not taking into account what it takes to R&D a console... Or for you to set up contracts and get them manufactured, and distributed.
With Xbox leaving physical behind, as well as basically exiting south America and Europe, and their abysmal Asia sales, I can't imagine a new Xbox would do even as well as the Xbox Series.
Which then goes into, is it worth it for them to take the hit on console sales? If no, you are looking at the next Xbox costing like $700-$800, where a PlayStation or Nintendo console might be $400-$500. With all that considered, how many consoles are we thinking they will sell?
So they end up selling less than the Series consoles, at what point does the cost of porting games by third parties become questionable? How much more are they going to have to pay for GamePass deals? MS would end up having to throw around a lot more money to not have people abandon a console that might struggle to get 10 million units sold.
So yeah, if you could release a new console without paying anything, I am sure MS would continue to release consoles indefinitely, just to keep a foot in the door... But that isn't this reality.
Yeah I think they're effectively finished so far as console hardware goes.
And in that instance, I'm done with any console that isn't Nintendo.
And in that instance, I'm done with any console that isn't Nintendo.
Consoles have been loss leaders for a long time now. An Xbox gets people into the Microsoft ecosystem. Maybe a future Xbox will break even on manufacturing costs instead of being sold at a loss. Even if it's just a glorified gaming PC with the Xbox brand on it, I don't see a future where they don't have some sort of console.
They are about to be the largest gaming publisher around, and they will make tons of money selling games on all platforms, including their own. Their numbers may be down on hardware sales, but they are still making money. Restructuring will happen, but Microsoft will be just fine. A company as large as they are has the flexibility to experiment and weather any bad choices. As long as it doesn't become a massive drain on their resources they aren't going anywhere.
They are building a 115 billion dollar super computer server farm hooked up to a nuclear reactor for AI training. They are killing it lately, the games division is just one glorified PR branding campaign for them. One that's actually making them money.
They are about to be the largest gaming publisher around, and they will make tons of money selling games on all platforms, including their own. Their numbers may be down on hardware sales, but they are still making money. Restructuring will happen, but Microsoft will be just fine. A company as large as they are has the flexibility to experiment and weather any bad choices. As long as it doesn't become a massive drain on their resources they aren't going anywhere.
They are building a 115 billion dollar super computer server farm hooked up to a nuclear reactor for AI training. They are killing it lately, the games division is just one glorified PR branding campaign for them. One that's actually making them money.
OP
OP
Horrifying. I don't care if it's an SMR, the last thing we need are tech companies operating nuclear reactors. You think these fucks care about regulations? They'll find ways to cut corners.
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Luckily I don't think they are controlling/building the reactor, but yeah, the coming techno-feudalism reality is quite concerning. It's all moving too fast for governments and regulators to follow or keep up with.
It really depends on how quick Microsoft above the Xbox division realize their contract bullshit is not sustainable in creative development.
Many of the moves from Xbox has been attempting to work around that, but that's coming to an end if you're cutting teams because they managed to be the very few to get software out while not being large enough to sustain multiple projects to cycle through. At some point, you're going to run out of those studios that can fill the gaps of those larger and far more costly teams who can't get a game out the door as their talent is gutted every 6-17 months.
And no, I don't think CoD or King properties will be enough. Not just on the level of chasing ever growing profits, but each of these "assets" will likely also need to show profit within certain periods. The time where one game can fund 3-5 more in the interim is coming to an end. Not because it can't happen or isn't sustainable, but because the powers-that-be don't want that. Everything outside of the PR stockholder buzz word of the hour project will have to pull its weight and more to satisfy growth.
GamePass will need to adapt, but I doubt they'll abandon it. It's possible that first party titles, while still Day 1, may move to an opt-in at launch pay structure to see some returns. Effectively a discount to storefront offerings that also lock-folks into the ecosystem. Disney+ attempted this and failed, but depending on the pricing it might be effective for Xbox in lessening the sunk cost, and thus burden on studios/devs, to offer them in the first place. It's just will the video game audience want to trade consumer-friendly-ness for potential sustainability? Because right now I can't see them able to walk back Day 1 first party entirely.
Xbox division will struggle to survive even if the Phil Spencer's and Matt Booty's are kicked out the door, because their actions have been in response to the "needs" of the overall company and its shareholders. The purchasing attempts and subscription model was inevitable with what was being asked and trends both within and outside the company. Even in dropping hardware and having new suits taking the reins, they'll still be in the situation of not getting projects out the door to consumers often enough for what they're putting in.
Many of the moves from Xbox has been attempting to work around that, but that's coming to an end if you're cutting teams because they managed to be the very few to get software out while not being large enough to sustain multiple projects to cycle through. At some point, you're going to run out of those studios that can fill the gaps of those larger and far more costly teams who can't get a game out the door as their talent is gutted every 6-17 months.
And no, I don't think CoD or King properties will be enough. Not just on the level of chasing ever growing profits, but each of these "assets" will likely also need to show profit within certain periods. The time where one game can fund 3-5 more in the interim is coming to an end. Not because it can't happen or isn't sustainable, but because the powers-that-be don't want that. Everything outside of the PR stockholder buzz word of the hour project will have to pull its weight and more to satisfy growth.
GamePass will need to adapt, but I doubt they'll abandon it. It's possible that first party titles, while still Day 1, may move to an opt-in at launch pay structure to see some returns. Effectively a discount to storefront offerings that also lock-folks into the ecosystem. Disney+ attempted this and failed, but depending on the pricing it might be effective for Xbox in lessening the sunk cost, and thus burden on studios/devs, to offer them in the first place. It's just will the video game audience want to trade consumer-friendly-ness for potential sustainability? Because right now I can't see them able to walk back Day 1 first party entirely.
Xbox division will struggle to survive even if the Phil Spencer's and Matt Booty's are kicked out the door, because their actions have been in response to the "needs" of the overall company and its shareholders. The purchasing attempts and subscription model was inevitable with what was being asked and trends both within and outside the company. Even in dropping hardware and having new suits taking the reins, they'll still be in the situation of not getting projects out the door to consumers often enough for what they're putting in.
Oh OK they deserved it and Sony is stronger for it I guess?
Sony Gross Profit 2010-2023 | SONY
Sony annual/quarterly gross profit history and growth rate from 2010 to 2023. Gross profit can be defined as the profit a company makes after deducting the variable costs directly associated with making and selling its products or providing its services. <ul...
If they're not collapsing shouldn't a 10% decline be a >0% increase?
- Sony gross profit for the quarter ending December 31, 2023 was $8.453B, a 4.83% decline year-over-year.
- Sony gross profit for the twelve months ending December 31, 2023 was $32.850B, a 7.22% increase year-over-year.
- Sony annual gross profit for 2023 was $32.302B, a 10.95% decline from 2022.
- Sony annual gross profit for 2022 was $36.274B, a 1.73% decline from 2021.
- Sony annual gross profit for 2021 was $36.912B, a 14.41% increase from 2020.
No, because...and stay with me here, this is important-
The gaming industry and tech as a whole enjoyed a massive boom during COVID and that boom is not sustainable when everyone is suddenly allowed to go back outside.
There is nothing Sony OR MS OR Nintendo could do to avoid this, a decline from peak COVID years is inevitable. Shareholders who expect infinite growth no matter what might be clutching their pearls, but this was a matter of when, not if.
Looking at a slight decline off of back to back record breaking boom years and claiming "collapse!" is asinine.
What does "we kind of know" mean as it pertains to PlayStation? It sounds… quite uncertain, but if the execs actually know all of this then why would they wait? There has to be something missing here. It can't be as simple as repeating the "Sony needs to adopt the MS strategy" narrative that we were fed for years and years, given how everything has shaken out.