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[Bloomberg] Microsoft’s Xbox Is Planning More Cuts After Studio Closings, Also Details on game pitches from Arkane & Tango before closure

NinjaScooter

NinjaScooter

Member
Oct 25, 2017
54,814
vio55555 said:
Those purchases would be accompanied by massive cuts to everything that's AA or less.



That's just not what Nadella was sold on 2-3 years ago, and I'm not sure the MSFT bean counters will see the same long-term value in that type of business. Like it's easy for us to talk about the value there as gaming fans, but Wall Street isn't going to see the value in that.

NFLX gets a huge premium over everyone else in media because of the dominance of their streaming sub numbers creating a flywheel effect devaluing their hits and misses.

That's why NFLX is worth $250-300 billion and Disney is worth <$200 billion.

Becoming a traditional 3rd party publisher is not what Nadella was sold on 2.5 years ago where they'd be paying 15-30% cuts to Sony/Nintendo and not having a robust sub business that mitigates misses.
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Nadella is not a stupid person and this was almost certainly one of the scenarios they considered when they greenlit these huge acquisitions. They stand to make MORE money by just publishing huge titles on every platform under the sun than they would by trying to support failing projects like Gamepass or Series X/S and their potential successors. If anything Nadella and the board/shareholder would probably welcome killing the Xbox hardware line. They will be selling more games, bringing in more revenue, without sinking in the kind of money it was taking to subsidize subscription services or hardware. From a share holder point of view it's a no brainer. Like this whole conversation has to be prefaced that you do understand that GamePass and Xbox hardware probably doesn't make any money for them, right?
 

Fanuilos

Avenger
Oct 27, 2017
4,220
Starlite said:
Be it irony or karma, Xbox bought Bethesda expecting them to be developing critically and commercially lauded games as they typically do, but the games that they had in the works at the time of acquisition were some of the weakest releases either studios have ever made. They were probably expecting the next Dishonored and the next Fallout/Skyrim and instead they got…well they got what they got. Can't even fall back on id or Doom because they're (probably) not even making Doom and whatever they are working on is years ago. Makes me wonder what things are looking like behind the scenes at Activision right now.

Combine that with their own weak heavy-hitter releases with Halo and Forza and nothing else, it's really not surprising they're in the state they're in. But they really only have themselves to blame. Their ability to manage studios that actually need guidance has been hilariously bad for many years.
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A comparison that came to mind was Nintendo with Zelda between Skyward Sword and BotW. It's not a perfect comparison (Nintendo would have been thrilled if SS sold as well as starfield for one), but if Nintendo behaved in the way Microsoft does they probably would have shelved the series. Which no matter how one feels about the directions of the series would have been an undeniable mistake. So to get to my point, Microsoft doesn't have that persistence that other game companies have. Sony could have closed the SSM studio after GoW Ascension, SE could have abandoned their MMO efforts with XIV's initial launch, etc. The worrying part is that things like WoW, CoD, and the other things they now own have/will misses/fall short. It's like they got into this situation without realizing that's possible, which is absurd with the resources at their disposal and how long they've been in the space.
 
LGHT_TRSN

LGHT_TRSN

Member
Oct 25, 2017
7,290
I'm not saying MS acquiring studios and deleting them is comparable to Thanos acquiring the infinity stones and deleting them...but I'm not NOT saying that either...
 
ItIsOkBro

ItIsOkBro

Happy New Year!!
The Fallen
Oct 25, 2017
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Paquete_PT

Paquete_PT

Avenger
Oct 27, 2017
5,456
NinjaScooter said:
They don't sell GamePass subs. GamePass probably dies with Xbox, or becomes some diminished thing like EA Play or Ubi+. Their future isn't GamePass. Their future is in becoming the biggest video game publisher on the planet.
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I don't think Spencer saw Gamepass endgame on console, the goal was always to have gamepass on as many screens as possible. The endgame is probably to have gamepass on every tv and screen through cloud tech. It's just a matter of managing to preserve the brand and gamepass until that's viable.
As far as being the biggest videogame publisher, there is no evidence until now that xbox management has what it takes to function at that high-level
 
jroc74

jroc74

Member
Oct 27, 2017
29,548
NinjaScooter said:
They really don't. Compare them to most other third parties and they dwarf them. FFS its Activision + Blizzard + King + Bethesda + Xbox internal + Minecraft.

They own some of the largest IP in gaming. The issue for them as a hardware company is that those games/IP didn't get that big by being relegated to the smallest platforms. So if push comes to shove you dump the platform.

Xbox's biggest obstacle right now isn't the ABK acquisition, or Bethesda, it's Xbox hardware/Gamepass.
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And reading this last line.....it would be easier to phase out hardware and Game Pass. And bask in the glory of XGS, ABK and Bethesda as a full on 3rd party publisher.

Geg said:
So instead being closed for pitching games, they were closed for shipping a completed game and being in between projects. Great lesson for the rest of the teams at xbox!
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Exactly.

NinjaScooter said:
Nadella is not a stupid person and this was almost certainly one of the scenarios they considered when they greenlit these huge acquisitions. They stand to make MORE money by just publishing huge titles on every platform under the sun than they would by trying to support failing projects like Gamepass or Series X/S and their potential successors. If anything Nadella and the board/shareholder would probably welcome killing the Xbox hardware line. They will be selling more games, bringing in more revenue, without sinking in the kind of money it was taking to subsidize subscription services or hardware. From a share holder point of view its a no brainer. Like this whole conversation has to be prefaced that you do understand that GamePass and Xbox hardware probably doesn't make any money for them, right?
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Agree.
 
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kIdMuScLe

Member
Oct 27, 2017
2,629
Los angeles
lol I'm so frustrated. I went into this generation excited about the Xbox Series. That two-tier console strategy seemed brilliant to me… a budget option and a high end option.

Now, it feels like they're totally lost. No clear direction, and as for games? For a company like Microsoft, their output is pathetic.
 
Starlite

Starlite

The Fallen
Oct 25, 2017
583
Sydle said:
The multi-plat releases had to have been decided a while back. I don't understand how Rare would have gone through the whole process on something like Sea of Thieves just recently.

I think it was much farther back that Phil, Satya and Amy were thinking of a multi-plat future, or at least one where their content is widely accessible and consumed by many more people than what the Xbox console could do alone.

Phil's email from 2020 with a proposal to buy Sega said it would all stay multi-plat.

Then Amy Hood's testimony revealed there was never a proposal to take CoD exclusive that crossed her desk when weighing the acquisition. That on top of Phil's testimony that there was no console growth modeled into the ABK deal. They had to have had those points of view back in late 2021 before committing to the deal.

My guess is that when Game Pass and xCloud didnt reach their targets in 2022, something meant to get their games in front of way more people, then they started having to think about other ways to get their current IP to make more money.
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That is a good point, these ports would've taken time to approve and develop. I do think the rate at which they release games multiplat and when Is probably being looked at with much more broader scopes now considering their struggles with sales, Gane Pass subs, and the fact they'll likely be making a non-insignificant amount of their revenue on multiplat releases anyway. It wouldn't surprise me if games designed with more of live service model like Halo release day and date on PlayStation in the future, though maybe that would be a bridge too far in terms of consumer loyalty to the existing platform.
 
Pai Pai Master

Pai Pai Master

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Oct 25, 2017
33,236
Atlanta GA
LGHT_TRSN said:
I'm not saying MS acquiring studios and deleting them is comparable to Thanos acquiring the infinity stones to delete them....but I'm not NOT saying that either...
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WHAT HAPPENED TO NINJA THEORY AND DOUBLE FINE

61f85c0fd882612961c894db_aa6.png


please no 😭
 
PlanetSmasher

PlanetSmasher

The Abominable Showman
Member
Oct 25, 2017
117,996
sazz said:
aren't Sega trying to lean into the big super mega game thing now as well

www.eurogamer.net

Sega is aiming to create a "Super Game" by March 2026

Sega is aiming to create a "Super Game" by the fiscal year ending March 2026. That's according to the company's latest …
www.eurogamer.net www.eurogamer.net
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They're trying to, but there's 0 guarantee they'll succeed at it. And Microsoft buying them to get THAT while murdering Yakuza and everything Atlus makes would be a completely ridiculous timeline.
 
NinjaScooter

NinjaScooter

Member
Oct 25, 2017
54,814
Paquete_PT said:
I don't think Spencer saw Gamepass endgame on console, the goal was always to have gamepass on as many screens as possible. The endgame is probably to have gamepass on every tv and screen through cloud tech. It's just a matter of managing to preserve the brand and gamepass until that's viable.
As far as being the biggest videogame publisher, there is no evidence until now that xbox management has what it takes to function at that high-level
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I think that was one of their endgames or potential solutions, like 2-3 years ago. But they've cooled a lot of Cloud and GamePass adoption isn't anywhere near what it once was.

If Xbox management doesn't have what it takes to function as a publisher then you bring in someone who can. That doesn't mean they don't shift in that direction. The alternative is what? Let that same incompetent management continue pouring resources and money into Gamepass? Or consoles? to what end? The writing is on the wall.
 
sazz

sazz

Member
Aug 3, 2020
4,156
London, UK
PlanetSmasher said:
They're trying to, but there's 0 guarantee they'll succeed at it. And Microsoft buying them to get THAT while murdering Yakuza and everything Atlus makes would be a completely ridiculous timeline.
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Yeah I know I wasn't being fully serious, just sounds funny to me that microsoft would see a live service crazy taxi AAAA game or whatever sega is planning and think oh yeah that sounds great for us, while ignoring 99% of what Sega is
 
Did You Like It?

Did You Like It?

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Feb 20, 2024
262
They're going to be a massive multi-platform publisher in the next two years.

They need to follow the money, and that's where it is.

No idea how GamePass factors into it though. And certainly not hardware either.
 

vio55555

Member
Apr 11, 2024
324
NinjaScooter said:
Nadella is not a stupid person and this was almost certainly one of the scenarios they considered when they greenlit these huge acquisitions. They stand to make MORE money by just publishing huge titles on every platform under the sun than they would by trying to support failing projects like Gamepass or Series X/S and their potential successors. If anything Nadella and the board/shareholder would probably welcome killing the Xbox hardware line. They will be selling more games, bringing in more revenue, without sinking in the kind of money it was taking to subsidize subscription services or hardware. From a share holder point of view it's a no brainer. Like this whole conversation has to be prefaced that you do understand that GamePass and Xbox hardware probably doesn't make any money for them, right?
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Sorry, but that's just not what any of the internal documents/communications at MSFT showed during the FTC trial: Literally everything pointed to Gamepass being the *central theme* of their goals and needing hardware to push it through 2030 in all the Microsoft documents on internal projections. Spencer himself said that Microsoft could contemplate exiting the gaming business if the hardware fails. There was no indication that they were contemplating any possible future where it all came down...

I do not believe that Microsoft is >50% likely to still be in gaming more than 1 generation past a failure of gamepass.

At that point it's just a traditional 3rd party publisher and that's not a high growth business; it's more or less stagnant. Sure they could be a AAA publisher but to what end?

Xbox with a 100+ million and growing Gamepass service and all the rest is probably worth $150 billion. The future you envision is like half that value. How are shareholders going to be happy with a shrunken 50% valued business when they were sold on the prior vision?
 
alexjimithing

alexjimithing

Member
Aug 20, 2019
737
I'm just glad to see Microsoft is gonna avoid huge bloated AAAA games like Hi-Fi Rush to focus on smaller prestige games like Fallout New Vegas 2.
 
--R

--R

Being sued right now, please help me find a lawyer
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Oct 25, 2017
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Zealuu said:
Surely he didn't
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Today, one day after Microsoft announced that it would shut down four of its games studios, Matt Booty, head of Xbox Game Studios, held a town hall to discuss the division's future goals. "We need smaller games that give us prestige and awards," Booty told employees, according to internal remarks shared with The Verge.

For some listeners on the call, it was a surprising goal: Microsoft had just shut down the Japanese developer Tango Gameworks, which was coming off the small, prestigious hit title Hi-Fi Rush.
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Cappy

Cappy

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Feb 5, 2018
146
Does Xbox leadership even know what studios make what games. How do you say something like that after closing down a studio that does just that. Make it make sense
 
NinjaScooter

NinjaScooter

Member
Oct 25, 2017
54,814
vio55555 said:
Sorry, but that's just not what any of the internal documents/communications at MSFT showed during the FTC trial: Literally everything pointed to Gamepass being the *central theme* of their goals and needing hardware to push it through 2030 in all the Microsoft documents on internal projections. Spencer himself said that Microsoft could contemplate exiting the gaming business if the hardware fails. There was no indication that they were contemplating any possible future where it all came down...

I do not believe that Microsoft is >50% likely to still be in gaming more than 1 generation past a failure of gamepass.

At that point it's just a traditional 3rd party publisher and that's not a high growth business; it's more or less stagnant. Sure they could be a AAA publisher but to what end?

Xbox with a 100+ million and growing Gamepass service and all the rest is probably worth $150 billion. The future you envision is like half that value. How are shareholders going to be happy with a shrunken 50% valued business when they were sold on the prior vision?
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That was months/years ago. Those goals change. Especially when you spend as much as they've spent. I don't think you understand how quickly these large corporations can pivot away from something, especially if it's failing. Rhetoric and empty statements from months/years ago don't really mean anything.

Like, do you think 2 years ago when they put in the offer on ABK they thought they'd be putting games on Playstation? Do you think a year ago when Hi Fi Rush came out Phil Spencer thought he'd be shutting down the studio that made it?
 
sazz

sazz

Member
Aug 3, 2020
4,156
London, UK
Cappy said:
Does Xbox leadership even know what studios make what games. How do you say something like that after closing down a studio that does just that. Make it make sense
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they look at a spreadsheet that has a row labelled 'profits in relation to X Call of Duty game', sort by low to high and saw Tango only made 0.02% money in relation to COD and pressed the detonate button
 
Fat4all

Fat4all

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Oct 25, 2017
95,181
here
NinjaScooter said:
That was months/years ago. Those goals change. Especially when you spend as much as they've spent. I don't think you understand how quickly these large corporations can pivot away from something, especially if it's failing. Rhetoric and empty statements from months/years ago don't really mean anything.
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the moment they 'owned' activision/blizzard/king, they probably shifted their entire internal strategy immediately

they now owned a mobile game company that generates hundreds of millions of dollars practically doing nothing but updates
 
ThereAreFourNaan

ThereAreFourNaan

Member
Nov 8, 2017
13,371
NinjaScooter said:
Nadella is not a stupid person and this was almost certainly one of the scenarios they considered when they greenlit these huge acquisitions. They stand to make MORE money by just publishing huge titles on every platform under the sun than they would by trying to support failing projects like Gamepass or Series X/S and their potential successors. If anything Nadella and the board/shareholder would probably welcome killing the Xbox hardware line. They will be selling more games, bringing in more revenue, without sinking in the kind of money it was taking to subsidize subscription services or hardware. From a share holder point of view its a no brainer.
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The amount they reap from console subs and xbox store sales - even in diminished form - is very significant. But lacking growth, they are forced to reevaluate how they can make money. And this I feel has pushed them into a death spiral.

Eventually they will be forced to cut the console and ecosystem, but that may be 6, 12, 18 months in the future, as they struggle (almost assuredly in vain) to try and have their cake and eat it too. To keep reaping profits from their stores while doing everything they can to sell their games everywhere else and eek higher margins out of their stuff and fire people and close studios, which will piss fans and the community off and scare them away from investing in the the ecosystem, which will eventually reach the point where the numbers are low enough to justify an exit.

Once you're in a position where further investment is unwarranted, it can only be a matter of time.
 
Starlite

Starlite

The Fallen
Oct 25, 2017
583
Fanuilos said:
A comparison that came to mind was Nintendo with Zelda between Skyward Sword and BotW. It's not a perfect comparison (Nintendo would have been thrilled if SS sold as well as starfield for one), but if Nintendo behaved in the way Microsoft does they probably would have shelved the series. Which no matter how one feels about the directions of the series would have been an undeniable mistake. So to get to my point, Microsoft doesn't have that persistence that other game companies have. Sony could have closed the SSM studio after GoW Ascension, SE could have abandoned their MMO efforts with XIV's initial launch, etc. The worrying part is that things like WoW, CoD, and the other things they now own have/will misses/fall short. It's like they got into this situation without realizing that's possible, which is absurd with the resources at their disposal and how long they've been in the space.
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In some ways it's a bit more insane than that. All of their cuts recently have almost been entirely in teams that aren't currently in full production/live service support right now.

Despite Halo Infinite's problem almost entirely being with their multiplayer suite, the campaign team is the one that got gutted just because they weren't in active development of the next campaign at the time. And Hi-Fi Rush was apparently successful, but cuts were demanded and Tango wasn't quite in production right at that exact moment so sayonara! In MS land it seems like it doesn't matter if you disappoint or even have a small success, you're only safe as long as you're too much of a headache to terminate.

You better have your next project pre-approved and immediately be in full production after you release or be in live service hell, lest you find yourself exposed at the wrong quarter and the bean counters sacrifice you to the shareholders.
 
Cappy

Cappy

Member
Feb 5, 2018
146
sazz said:
they look at a spreadsheet that has a row labelled 'profits in relation to X Call of Duty game', sort by low to high and saw Tango only made 0.02% money in relation to COD and pressed the detonate button
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Absolutely wild. "We don't need this" one day, "why don't we have that" the next.
 

vio55555

Member
Apr 11, 2024
324
NinjaScooter said:
That was months/years ago. Those goals change. Especially when you spend as much as they've spent. I don't think you understand how quickly these large corporations can pivot away from something, especially if it's failing. Rhetoric and empty statements from months/years ago don't really mean anything.

Like, do you think 2 years ago when they put in the offer on ABK they thought they'd be putting games on Playstation? Do you think a year ago when Hi Fi Rush came out Phil Spencer thought he'd be shutting down the studio that made it?
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Sure, but my point is that what you're describing isn't worth much to Xbox.

Their most valuable stuff is already multi-platform or gets most of its $ out of PC (or mobile): Minecraft, CoD, WoW, Diablo, Candy Crush...

What portion of extra $ is going to be generated on PS/Nintendo that they aren't already getting? Minecraft is multi-platform as is everything ABK. So what extra $ are you talking about, selling Fallout and Elder Scrolls on PS5-6?

Okay that maybe increases Zenimax's value a little, but where's the rest of the value that you're talking about?

Xbox and Gamepass are probably worth $30-40 billion right now. Shutting those down erases $30-40 billion in value. So where do you make up the difference? Sea of Thieves, Elder Scrolls, Fallout on PS5-6 don't do that.

If I was a MSFT shareholder, I'd say spin off the business and just get rid of it if they're going to shut down Xbox/Gamepass.
 
Reckheim

Reckheim

Avenger
Oct 25, 2017
9,598
vio55555 said:
Sure, but my point is that what you're describing isn't worth much to Xbox.

Their most valuable stuff is already multi-platform or gets most of its $ out of PC (or mobile): Minecraft, CoD, WoW, Diablo, Candy Crush...

What portion of extra $ is going to be generated on PS/Nintendo that they aren't already getting? Minecraft is multi-platform as is everything ABK. So what extra $ are you talking about, selling Fallout and Elder Scrolls on PS5-6?

Okay that maybe increases Zenimax's value a little, but where's the rest of the value that you're talking about?

Xbox and Gamepass are probably worth $30-40 billion right now. Shutting those down erases $30-40 billion in value. So where do you make up the difference? Sea of Thieves, Elder Scrolls, Fallout don't do that.
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how are you getting this number?
 
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