Aug 23, 2018
2,456
It's real revenue, but it's not real *growth*. You see a lot of people in this very thread saying "record revenue this quarter", but that's revenue they bought. They're also going to get record revenue *next* quarter, because ABK will finally be on the books.

We won't be able to, at least for a little while, look to revenue numbers in services and games for evidence of "is Microsoft's strategy working". The numbers just aren't comparable from year to year as Microsoft is going out there and paying money to buy revenue. We want to know "is Microsoft's bet on subscription working for them", and it's very hard to tell if they paying 7.5 billion to add, what, 300-500 million in revenue from Starfield in this quarter.

It is real growth though. Lol are you saying sales from acquired studios shouldn't count toward any type of revenue or revenue growth metrics? Then we should start discrediting a lot of fiscal reports from more companies than just Microsoft.

Games like Starfield are the very reason they acquired Bethesda. They have owned Zenimax studios for almost 3 years and delayed Starfield at least once. And the fact that it was the *most successful Bethesda game launch ever* is kind of proof that the strategy is working.

But I guess it doesn't count because "they bought it"
 
Oct 27, 2017
8,025
They are.

Biggest publisher by revenue on Android with King.

Biggest 3rd party game for the next 10 years on PlayStation (Probably) with the yearly COD

Microsoft is becoming one of the main 3rd parties across the board with the ABK acquisition.

Nadella doesn't care where the money comes from just keep it flowing.

They want game pass on PlayStation and switch.

Xbox is becoming more and more a service. The hardware is a side hustle.
Great post, I hope they keep making consoles though, at least for the next couple of gens.
 
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vixolus

vixolus

Prophet of Truth
Member
Sep 22, 2020
57,770
It's real revenue, but it's not real *growth*. You see a lot of people in this very thread saying "record revenue this quarter", but that's revenue they bought. They're also going to get record revenue *next* quarter, because ABK will finally be on the books.

We won't be able to, at least for a little while, look to revenue numbers in services and games for evidence of "is Microsoft's strategy working". The numbers just aren't comparable from year to year as Microsoft is going out there and paying money to buy revenue. We want to know "is Microsoft's bet on subscription working for them", and it's very hard to tell if they paying 7.5 billion to add, what, 300-500 million in revenue from Starfield in this quarter.
As long as that total and content+services revenue is increasing and the margins on that revenue is also good, that's good for the business. Revenue this quarter is not revenue "they bought" as it's been like 10 quarters since the ZeniMax acquisition so the YoY is valid. You could say that for Q1 FY22 instead, but not this one.

As I've said multiple times in this thread, the record revenue/best quarter statistics aren't really meaningful directly after a merger. But looking at expected values vs. actuals are a good indicator, which Xbox basically beat by double this quarter.
 

RayCharlizard

Member
Nov 2, 2017
3,121
All that would do is make PC players irate, not force them to buy Xboxes.

I can't even imagine the media firestorm that would occur if a Bethesda game, a staple of PC gaming, skipped the platform.

Also given that PC was the best selling platform for Starfield, Microsoft would be losing money from such a move.
But as far as driving the Xbox platform it would have been a better move. If they just want to make more money:

Then why don't they just release on Playstation as well?

And that's kind of my point. They'd sell more Xbox consoles if Starfield was an Xbox exclusive. If their goal isn't to have a big boost in console sales, then they release the game to other platforms. That's why I'm saying I don't see why they would be worried about hardware revenue being down with their current business goals. Revenue isn't zero, it's just down. It seems like that's the logical trend if you're saying "you can play our games anywhere" because you're also saying "you don't have to buy an Xbox." That's been a key marketing point for years. You can't have your cake and eat it too, as it were.

Hardware is where they have a successful store. On Windows they certainly make most of their sales on Steam. You are arguing for Microsoft to go third party.

I asked why they wouldn't make their games exclusive if they wanted to move more hardware. I'm not arguing for them to go 3rd party. It doesn't make sense to me that it doesn't make sense to everyone else why hardware revenue would be down or why that isn't what they've been moving towards for a while.
 
Oct 25, 2017
9,690
I don't want to be rude, but your post highlights exactly what I'm talking about. Why is hardware revenue the "one tangible metric" we should use and not Services and Subscriptions revenue to assess the health of their business and ecosystem? Especially when (and I feel like this should be the important part) they have internally and externally been very loud about shifting their business strategy to getting their games (I.e software and subscriptions) in the hands of as many people as possible via as many devices as possible.

And not sure I understand the reasoning behind ignoring revenue growth due to publisher acquisitions. Starfield was a huge revenue driver for them in the form of GamePass subs and sales. It's still real revenue

I never said hardware revenue is the be all end all of the health of the division I said it's the most tangible metric because it's revenue based on two sku's of hardware, and we get corresponding hardware numbers in many regions. With content and services we don't have the game pass numbers so it's a less tangible metric, not that it's less important. If we got quarterly game pass numbers everyone would rightly focus on those.

Yes revenue is revenue, but are we supposed to be really "impressed" like you're implying next quarter when it's the biggest revenue for Xbox ever because of Activision. It's kind of a "no duh" but what's more meaningful IMO are the Game Pass subscription numbers going up and by how much and hardware sales. Which is what I think represents what Xbox is as an ecosystem at the moment.
 

Mr_F_Snowman

Member
Oct 27, 2017
4,005
Why would they be separate, and why should they be separate? Bethesda, and now ABK, are part of xbox. It would be weird to not include them.

Sure that's what I expected....... but then I don't understand why you'd expect anything else or claim its the healthiest the business has ever been? Is your only quantifier of health a higher revenue number every year?

It doesn't actually tell you anything about the health of their hardware business which, if anything, is doing relatively awful but I guess now they have bigger revenues to hide behind? Awesome.

But I guess from an investor point of view it doesn't matter. The number just has to go up doesn't matter how you get there.

From an enthusiast gamer who would quite like xbox hardware to stick around and grow so maybe Sony are less awful it's a bleaker picture.
 

GulfCoastZilla

Shinra Employee
Member
Sep 13, 2022
7,207
This thread hurts my brain to read

Best non-holiday quarter ever with almost $4B in revenue. High margin Software and Subscription revenue at an all time high. Low margin hardware down slightly.Revenue beat expectations.

This place harps on console sales like it 2001. The resistance to understanding the type of business Xbox has been steering toward for almost a decade is baffling. Unless it's just console warring.
Been saying you can't measure success by console sales anymore. Microsoft changed the way we view success. It's not 2001 anymore.
 

maabus1999

Banned
Oct 26, 2017
9,325
For a post COVID quarter in a very inflationary/high interest rate environment, it was very impressive, no matter the low hardware sales. The guidance was also very good as well, with them forecasting a pretty stellar holiday as well.
 
Jun 5, 2023
2,783
This thread hurts my brain to read

Best non-holiday quarter ever with almost $4B in revenue. High margin Software and Subscription revenue at an all time high. Low margin hardware down slightly.Revenue beat expectations.

This place harps on console sales like it 2001. The resistance to understanding the type of business Xbox has been steering toward for almost a decade is baffling. Unless it's just console warring.
I could understand if people said they personally weren't convinced or they needed more information
But the moment any numbers come out, or fits a negative narrative they are trying to convince everyone "Actually Xbox is dying and they're going to exit the publisher market." The true warring is being so attached to a game company. Xbox could hypothetically go under tomorrow. I'd be disappointed but I'd just move into the next company that meets my gaming needs. I will never be "concerned" about MS sales numbers. They literally pay people to do that, and they damn sure don't look worried.
 
Oct 27, 2017
8,025
Yes revenue is revenue, but are we supposed to be really "impressed" like you're implying next quarter when it's the biggest revenue for Xbox ever because of Activision. It's kind of a "no duh" but what's more meaningful IMO are the Game Pass subscription numbers going up and by how much and hardware sales. Which is what I think represents what Xbox is as an ecosystem at the moment.
Edit: Ignore my post, misread your comment. Sorry
 

Ascenion

Prophet of Truth - One Winged Slayer
Member
Oct 25, 2017
10,431
Mecklenburg-Strelitz
If that's the end goal can someone explain the lack of benefit to going fully 3rd party?
The end goal is not to exit hardware at all. The biggest driver of engagement with Xbox services is the console. You give up the console and you're giving up all of your pure revenue. I'm not sure why folks think Microsoft doesn't care about hardware. No one goes out and buys a 70 billion dollar publisher that doesn't care about hardware. Everything they've done is in service to game pass sure, but game pass exists in service to the console. Sure console sales are down, and yes that's bad, but after 2022 I get it. But 2023 was good for first party and 2024 looks better. Things should pick up.
 

open_mouth_

Member
Nov 1, 2017
141
Next gen, Microsoft should add Switch 2 as a supported platform so their releases mostly hit XB / PC and Switch 2. Switch 2 gets the inferior ports so the diehards would still want to have an XB or PC to play the high res versions but MS gets loads of additional sales from a platform that will likely hit 100m+ worldwide units again on top of their own 60m+ platform while excluding their only true competitor (PS). Gamepass remains exclusive to XB/PC/Cloud since Nintendo wouldn't allow it.

COD / Minecraft -> all platforms
Everything else -> XB / PC / Switch 2

MS would hit that $30b target in no time.
 

ToadPacShakur

Prophet of Truth
Member
Oct 25, 2017
3,496
Why are we even talking about Xbox getting out of hardware, did yall see the PC hardware numbers, both for this quarter what they expect next quarter?
 

Gavalanche

Prophet of Regret
Member
Oct 21, 2021
19,140
The end goal is not to exit hardware at all. The biggest driver of engagement with Xbox services is the console. You give up the console and you're giving up all of your pure revenue. I'm not sure why folks think Microsoft doesn't care about hardware. No one goes out and buys a 70 billion dollar publisher that doesn't care about hardware. Everything they've done is in service to game pass sure, but game pass exists in service to the console. Sure console sales are down, and yes that's bad, but after 2022 I get it. But 2023 was good for first party and 2024 looks better. Things should pick up.

I think if consoles sales don't pick up and they continue to make mad bank with CoD being everywhere, there will be serious questions asked about releasing more games elsewhere. I think Xbox will always do hardware - it's just one way to get people into the ecosystem. However, there's no reason why they couldn't at least release GAAS on more platforms.

CoD and Minecraft show that a multi platform strategy works. Microsoft can have their cake and eat it too.
 

THE210

Member
Nov 30, 2017
1,548
Any word on the Xbox stick? I really think that's what would move the subscription numbers in a major way
 

kickz

Member
Nov 3, 2017
11,395
Wow, so Starfield the most hyped game other than GTA6 didn't move hardware units....

Time for them to buy Rockstar next.
 

Deleted member 158819

Sep 19, 2023
2,257
Been saying you can't measure success by console sales anymore. Microsoft changed the way we view success. It's not 2001 anymore.
This only makes sense if Microsoft was wildly successful in gaming. You can't change how we measure success when you in fact are barely even successful.
 

Deleted member 158819

Sep 19, 2023
2,257
Yes so it was out for less than a month in the quarter.. We already have the September data showing it moved a lot of consoles.
Only in the US right? I would think people would buy in preparation for Starfield (I know I got my Series S in preparation).
 

Alexandros

Member
Oct 26, 2017
18,074
I guess so. I am a bit confused about their strategy. They like to yell from on high that you don't need an Xbox console to engage with their ecosystem and yet they made Redfall, Starfield and future Bethesda games Xbox/PC exclusives to get people to buy their hardware presumably?

I see this question asked a lot, it was also asked a lot when Sony decided to port its games to PC. It will probably get asked again if/when Sony shortens or eliminates the gap between console and PC releases. It's understandable that people ask it, as the console business was built on exclusives and assigns a great deal of importance to them. Why then are console makers abandoning that strategy or why are they inconsistent with it?

In short: they are catering to different markets. The console market and PC market are sufficiently different that different strategies are required. The console market responds to exclusive games, the products offered are similar enough, so exclusives are deployed to sway customers. The PC market doesn't respond to exclusives (as Epic also found out), the products offered are different enough, so exclusives aren't useful in bringing in new customers. More accurately, the number of customers they would bring in is dwarfed by the amount of potential customers they wouldn't be able to reach with a full exclusive strategy.

Look at it this way. Microsoft and Sony have been in the market together for 20+ years. In that time, the total amount of 'HD' consoles sold each generation has remained more or less stagnant, even though first-party games were fully exclusive. Gaming as a whole has exploded in popularity and revenue generated but console hardware sales haven't grown accordingly, which suggests that the console market has hit the limit of customers who are willing to buy a dedicated 'HD' gaming console.

At that point, Xbox and Playstation probably had a similar thought. "Ok, we've been trying to get these fuckers to buy a console through exclusives and subsidized hardware for two decades. What now?". And they both decided that they need to cater to those customers beyond the console, hence the PC releases (to cater to PC gamers) and streamimg (to cater to mobile gamers). There is a sea of potential customers who aren't willing to buy a console and both Sony and Microsoft have to adopt a different strategy for that market if they are to grow beyond the confines of console gaming.

Microsoft is more aggressive and does day-one releases on both PC and streaming because they have less to lose, selling 5 million less consoles isn't going to make much of a difference in their console business. Sony is understandably more hesitant but I believe the thought process that led them to start releasing games on PC will also push them to shorten the gap between console and PC releases and take streaming more seriously.
 

Deleted member 158819

Sep 19, 2023
2,257
Xbox Series consoles saw a single-digit percentage growth

Source: https://www.vg247.com/starfield-best-selling-game-september-2023-us-npd

So it did move consoles. Dont know how many units that is. US only
Yeah, seems to just be in the US.
This was driven by PS5, with sales of Sony's console up 175% over the same period last year. There were still strong stock shortages of PS5 in September 2022.

Nintendo Switch sales were down 28% compared with last September, while Xbox Series S and X sales are down 35% for that four-week period.
www.gamesindustry.biz

Console and PC game sales fall in Europe during September | European Monthly Charts

Video game sales across Europe were down in September compared with the year before, according to the latest figures fr…
You serious with this?
Why wouldn't I be? Why would we redefine what success looks like in an industry that even Microsoft recognizes they're struggling at. They're not doing too hot on console, they say Game Pass is stagnating, and cloud is barely worth investing in and we're going to use their definition of "success"?
 

Flame Lord

Member
Oct 26, 2017
2,820
Yeah, seems to just be in the US.

www.gamesindustry.biz

Console and PC game sales fall in Europe during September | European Monthly Charts

Video game sales across Europe were down in September compared with the year before, according to the latest figures fr…

Why wouldn't I be? Why would we redefine what success looks like in an industry that even Microsoft recognizes they're struggling at. They're not doing too hot on console, they say Game Pass is stagnating, and cloud is barely worth investing in and we're going to use their definition of "success"?

The definition of success is money, Sony doesn't consider PlayStation successful because it moves units, it's because moving those units makes them money. Xbox is behind as far as console units are concerned, but they're still making money, maybe not the most, but enough to continue and invest more. For example, Sony is the clear market leader, but they still have begun releasing their games on PC (eventually). They bought Bungie without a guarantee that their games will be exclusive, and they've even got their own subscription service. I don't think they would do all that if they saw MS as unsuccessful.
 

Poimandres

Member
Oct 26, 2017
7,002
Why wouldn't I be? Why would we redefine what success looks like in an industry that even Microsoft recognizes they're struggling at. They're not doing too hot on console, they say Game Pass is stagnating, and cloud is barely worth investing in and we're going to use their definition of "success"?

I mean, the ultimate measure of success is your profitability right? There are plenty of interesting metrics and ways to speculate about what things mean for future directions, or identify issues that will ultimately impact profitability but that's what it really boils down to.
 

Deleted member 158819

Sep 19, 2023
2,257
The definition of success is money, Sony doesn't consider PlayStation successful because it moves units, it's because moving those units makes them money. Xbox is behind as far as console units are concerned, but they're still making money, maybe not the most, but enough to continue and invest more. For example, Sony is the clear market leader, but they still have begun releasing their games on PC (eventually). They bought Bungie without a guarantee that their games will be exclusive, and they've even got their own subscription service. I don't think they would do all that if they saw MS as unsuccessful.
I mean, the ultimate measure of success is your profitability right? There are plenty of interesting metrics and ways to speculate about what things mean for future directions, or identify issues that will ultimately impact profitability but that's what it really boils down to.
I'm talking about the user that said you can't measure success by console sales anymore and that Microsoft changed that. Microsoft absolutely did not change that just because they want to look better to investors while showing little to no hardware growth.
 

Antrax

Member
Oct 25, 2017
13,484
If that's the end goal can someone explain the lack of benefit to going fully 3rd party?
Until somewhere like the EU actually cracks the marketplace open on all devices, having hardware is to their benefit just from taking 30% of every dollar spent there. That's 30% of every V-buck, shark card, COD skin, FIFA MTX, etc... for doing literally nothing*.

Until they can put GamePass on competing hardware, they'll have a box. Doesn't necessarily mean they have to prioritize selling boxes though (as clearly software can still put up numbers regardless). The metric I've talked about before that MS knows (and I would love to peak at) is spend-per-MAU broken out by Game Pass users and non-GP users (including some regression stuff on spend around the time a non-GP user became a GP user). Game Pass isn't really Netflix (all sub money), it's more like Amazon Prime (sub money + drives spend elsewhere on the platform). Given the gaming investments that have been greenlit, I assume that GP users spend more money on the platform than non-GP users. Could do a pretty clean comparison within a title like GTA5 or Fortnite to see how the playerbase spends.



*okay, maintaining the store isn't literally nothing but it's not that much relative to the revenue
 

Flame Lord

Member
Oct 26, 2017
2,820
I'm talking about the user that said you can't measure success by console sales anymore and that Microsoft changed that. Microsoft absolutely did not change that just because they want to look better to investors while showing little to no hardware growth.

I wouldn't say it was entirely them, but they partially did? Why would investors care about hardware or software if money is being made? Why is Sony trying so hard to have a breakout GaaS game if hardware was all that mattered? Why release games on PC? Why have a subscription service?
 

Deleted member 158819

Sep 19, 2023
2,257
I wouldn't say it was entirely them, but they partially did? Why would investors care about hardware or software if money is being made? Why is Sony trying so hard to have a breakout GaaS game if hardware was all that mattered? Why release games on PC? Why have a subscription service?
Is money being made and if so, how much? Last I checked, Xbox does not report profit (hell, they don't even report revenue). We rely on Microsoft's own reporting on what stats "matter" to determine how successful they are or not, the only thing that we can even use to gauge their "success" compared to other platform holders is indeed console sales which is hidden behind growth rates instead of numbers. Their software revenue is about to increase 50% next quarter, that's not because Xbox all of a sudden is doing amazing, it's because they bought a company and integrated their largely mobile revenues with their own.

I never said hardware was all that mattered. I said I'm not going to look at Microsoft, who hasn't been doing the hottest in gaming for the past decade, to determine what success in gaming looks like. In terms of what Sony is doing, they revolve everything they do around their console because to them hardware is indeed the most important thing (just like it is with Nintendo). They release games on PC years after they release on their console, their subscription service is mostly additive to their business (like Microsoft says Game Pass is going to be) and it's basically exclusive to their console, Sony's GaaS game initiative is largely about extracting more revenue from their console base that isn't growing. Just because Sony and Microsoft are aligned in some of their initiatives doesn't mean that hardware still isn't the most important thing and saying that it basically doesn't matter anymore because Microsoft says so is odd.
 
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vixolus

vixolus

Prophet of Truth
Member
Sep 22, 2020
57,770
Until somewhere like the EU actually cracks the marketplace open on all devices, having hardware is to their benefit just from taking 30% of every dollar spent there. That's 30% of every V-buck, shark card, COD skin, FIFA MTX, etc... for doing literally nothing*.

Until they can put GamePass on competing hardware, they'll have a box. Doesn't necessarily mean they have to prioritize selling boxes though (as clearly software can still put up numbers regardless). The metric I've talked about before that MS knows (and I would love to peak at) is spend-per-MAU broken out by Game Pass users and non-GP users (including some regression stuff on spend around the time a non-GP user became a GP user). Game Pass isn't really Netflix (all sub money), it's more like Amazon Prime (sub money + drives spend elsewhere on the platform). Given the gaming investments that have been greenlit, I assume that GP users spend more money on the platform than non-GP users. Could do a pretty clean comparison within a title like GTA5 or Fortnite to see how the playerbase spends.



*okay, maintaining the store isn't literally nothing but it's not that much relative to the revenue
FWIW Microsoft only takes like 12-20% of V bucks sales because publishers like Epic, Activision, EA negotiated more favorable returns for themselves. It's still something but not as great as 30.

It wasn't clear if it was limited to cloud, but the leaked chats said Epic was split at 12/88 and MS was basically at break even running fortnite in the cloud to users.
 

bitcloudrzr

Member
May 31, 2018
14,854
I wouldn't say it was entirely them, but they partially did? Why would investors care about hardware or software if money is being made? Why is Sony trying so hard to have a breakout GaaS game if hardware was all that mattered? Why release games on PC? Why have a subscription service?
But of course you can see the divergence of strategies, as they are still prioritizing the console as the focus of their games and services. That does not mean they cannot expand their sub, produce GAAS, or sub service. Both leaders of these divisions have come out and said the console buyer is their most valuable customer, for reasons we have discussed at length. This of course does not mean their division is unsuccessful, but losing more of their most valuable customer is not the right trajectory.

The problem is people think just because GP and xCloud are big bets, they somehow will succeed in the future as a foregone conclusion. Same as saying just because they will have a large stable of games eventually, people will come, without considering that we have no idea if those games will catch on. I certainly hope they can turn it around because the last thing we need is less competition in the console hardware space.
 

Deleted member 158819

Sep 19, 2023
2,257
The problem is people think just because GP and xCloud are big bets, they somehow will succeed in the future as a foregone conclusion. Same as saying just because they will have a large stable of games eventually, people will come, without considering that we have no idea if those games will catch on. I certainly hope they can turn it around because the last thing we need is less competition in the console hardware space.
This. Same thing with their mobile/universal store play. Seems like people think it's a surefire thing when we've already seen them struggle to get any significant Game Pass growth and cloud gaming is hardly used.
 

tgrfawcett

Member
Oct 25, 2017
742
Utah
Genuine question, but do hardware numbers really mean anything for Xbox when, by all accounts, they have yet to offer a regular release pace of console exclusive titles? Wouldn't hardware numbers be more telling in a year or two?

Starfield is great, but it's one game. Surely for a consumer looking at picking up an Xbox they'd be more interested in waiting until there is more in the box and a known release schedule to engage with. Call of Duty is the obvious example of a series that could help move consoles with its regular release schedule (should exclusive or beneficial content be coupled with the ownership of the system). Phil Spencer said as much in July that Starfield being great wouldn't suddenly make everyone buy an Xbox. Becoming a reliable publisher though, that would surely help.
 

dreamlongdead

Member
Nov 5, 2017
2,674
The hardware situation is dire, but the overall revenue seems OK I suppose.


It will be interesting to see how the ABK acquisition affects Xbox.
 

bitcloudrzr

Member
May 31, 2018
14,854
Genuine question, but do hardware numbers really mean anything for Xbox when, by all accounts, they have yet to offer a regular release pace of console exclusive titles? Wouldn't hardware numbers be more telling in a year or two?

Starfield is great, but it's one game. Surely for a consumer looking at picking up an Xbox they'd be more interested in waiting until there is more in the box and a known release schedule to engage with. Call of Duty is the obvious example of a series that could help move consoles with its regular release schedule (should exclusive or beneficial content be coupled with the ownership of the system). Phil Spencer said as much in July that Starfield being great wouldn't suddenly make everyone buy an Xbox. Becoming a reliable publisher though, that would surely help.
A consumer may as well pick up the competing system, if they need to wait four to five years into an eight year gen for a regular release pace of exclusives.
 

Chippewa Barr

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Aug 8, 2020
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Microsoft guidance

Total: mid to high 40's growth
Content and Services: mid to high 50's growth

What that results in

Total: ~$7B (2022 was $4,758,000,000. Growth is between 1.45x and 1.5x)
Content and Services: ~$5.3B (2022 was ~$3,380,000,000. Growth is between 1.55x and 1.6x)
This would leave hardware with $1.7B which is the most of any holiday quarter this gen (Current peak is ~$1,587,000,000 in 2021)
Mid double digits percentages (~40/50%) is insane, in any division/company - Jesus!

At Microsoft it's even more pronounced.