Yeah thats where I remembered hearing it. Seems like the hardware itself just did around as well as it did last year, which had no major first party console exclusive, thanks to more units being available and the new black Series S launch
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Microsoft FY24 Q1 Earnings - (Software up 13%, Hardware down 7%, Best Q1/Non-Holiday Quarter for Xbox)
- Thread starter vixolus
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Yeah thats where I remembered hearing it. Seems like the hardware itself just did around as well as it did last year, which had no major first party console exclusive, thanks to more units being available and the new black Series S launch
i mean they spent 8 billion a few years ago to get this "best quarter".
their revenue will go up and up as long as they keep acquiring studios and publishers.
we can still talk about how gamepass subs or console hw isn't doing as good as they want.
It's valuable to MS. PC Gamepass is their biggest growth opportunity right now. And it's safe to assume that the Spike In GP subscriptions around Starfield Launch was PC heavy.
The store definitely hasn't seen the technical improvements it needs. I wonder if they won't shift towards Blizzards tech.
Did a bit more research for a response I wrote up in the Xbox OT on ABK revenues and profit compared to PlayStation (if Xbox reported numbers instead of growth, I would've used them). There are some differences, like operating income (does not include investing in outside firms, taxes, and interests expenses) vs net income (includes all cost, which actually makes ABK numbers even more impressive and closer to PS), but I still think it's worth comparing.
ABK FY2022 (ended December 31, 2022)
Revenue: $7.53B
Net Income: $1.51B
Profit Margin: 20%
ABK FY2021 (ended December 31, 2021)
Revenue: $8.80B
Net Income: $2.70B
Profit Margin: 31%
PlayStation FY2022 (ended March 31, 2023)
Revenue: $26.92B
Operating Income (includes Bungie acquisition): $1.85B
"Profit" Margin: 6.87%
PlayStation FY2021(ended March 31, 2022)
Revenue: $20.7B
Operating Income: $2.6B
"Profit" Marign: 13%
I thought this would be an interesting deep dive into the largest (former) third party publisher vs the largest* platform holder. People often bring up how Microsoft would never throw away their 30% cut that being a platform grants them in favor of going multi-platform but if Microsoft-owned ABK is anything to go by, being a major publisher can generate PlayStation-level profits (I doubt Xbox's profit is anywhere close). Either way, like I said it's not entirely comparable but it is interesting to see how the narrative of being a platform holder generating 30% on everything isn't all that it's hyped to be unless you're only looking at revenue, where Sony and Microsoft seem to report 100% of third party sales to be revenue.
ABK FY2022 (ended December 31, 2022)
Revenue: $7.53B
Net Income: $1.51B
Profit Margin: 20%
ABK FY2021 (ended December 31, 2021)
Revenue: $8.80B
Net Income: $2.70B
Profit Margin: 31%
PlayStation FY2022 (ended March 31, 2023)
Revenue: $26.92B
Operating Income (includes Bungie acquisition): $1.85B
"Profit" Margin: 6.87%
PlayStation FY2021(ended March 31, 2022)
Revenue: $20.7B
Operating Income: $2.6B
"Profit" Marign: 13%
I thought this would be an interesting deep dive into the largest (former) third party publisher vs the largest* platform holder. People often bring up how Microsoft would never throw away their 30% cut that being a platform grants them in favor of going multi-platform but if Microsoft-owned ABK is anything to go by, being a major publisher can generate PlayStation-level profits (I doubt Xbox's profit is anywhere close). Either way, like I said it's not entirely comparable but it is interesting to see how the narrative of being a platform holder generating 30% on everything isn't all that it's hyped to be unless you're only looking at revenue, where Sony and Microsoft seem to report 100% of third party sales to be revenue.
EA FY2023 (ended March 31, 2023)
Revenue: $7.43B
Operating Income: $1.33B
"Profit" Margin: 18%
EA FY2022 (ended March 31, 2022)
Revenue: $6.99B
Operating Income: $1.29B
"Profit" Margin: 16.15%
I honestly suspect that Xbox's profits aren't that far off from EA. Going third party is not something that is completely unimaginable just because they get 30% cuts on Xbox store IMO.
Sorry, was using net income for EA as I jumped to the first document stupidly. OI probably is better.
Suspect xbox profit margin would be have been lower margin that EA previously especially using content and services. I am not sure how much more scalable it is as a publisher.
While having subs in PC is a large benefit for MS, having users feast off the Xbox store from transactions (DLC, Skins, etc) in other games is only possible through selling more hardware. The stronghold Steam has on user spending habits are much larger than what MS can penetrate through their offer in "Look at what you can play for a monthly fee." Its a larger hill to climb to convert spending habits of PC users to move away from Steam and use the Windows store instead. I mean look how much thats working for Epic?
I don't have data to back this next statement up, but PC users probably treat PC Game Pass as a side benefit for them as much as PS feels about their PC strategy. Its a bonus, but not the focus. And until there is a gamepass/steam integration, the adoption rate for PC can only go so high within the realms of people being ok with subscriptions.
I don't have data to back this next statement up, but PC users probably treat PC Game Pass as a side benefit for them as much as PS feels about their PC strategy. Its a bonus, but not the focus. And until there is a gamepass/steam integration, the adoption rate for PC can only go so high within the realms of people being ok with subscriptions.
That's a fair point. I think being a platform holder can be more scaleable if they were able to sell consoles but right now they're struggling at that which just increases the opportunity cost of keeping so many games exclusive to the platform.
It's been among their biggest growth opportunities for almost a decade. I don't see how bringing Activision and Blizzard onboard will change whatever's causing Microsoft's executive dysfunction, whether it be internal politics between Xbox and Windows, project mismanagement, or whatever else.
On that topic; what Blizzard tech? I don't think there's anything notable about Battle.Net's inner workings beyond how it lets you play WoW's opening areas while the rest of it downloads, something the Microsoft Store seems to actually support already going by the Master Chief Collection. In all likelihood, the only thing there is to find from paging through Battle.Net's source code is a lesson in reinventing the wheel.
Blizzard has mastered the advanced space magic that allows them to do impossible things like have games that download and run properly!
I've heard (indirectly) that battle.net was a bit annoying to work with when they had to start adding new games to it during the Activision push. It was never designed as any kind of 3rd party store and doesn't have the same kind of infrastructure for developers behind it in the way Steam does.
Not only did Activision start releasing on Steam again, Blizzard has started doing it (for the first time literally ever). Activision never bothered to port most of their own games to Battle Net. Only the last few CoDs and one (1) Crash Bandicoot game released on the platform. Those are the only non-Blizzard games on there. The latest Crash game didn't launch there. ABK clearly does not have an apetite for making it the one-stop-shop for their own games, and I certainly don't think Microsoft is going to start using it as an end point for theirs, and I firmly agree that they won't be interested in using it's technology as a basis for anything.
I'm kinda 50/50 as to whether I think Battlenet will be retired as a launcher in the next five years. I think it is clear that it's a dead end, but there's a lot of instituation inertia with existing products on it. I guess if we start seeing them migrate more ongoing Blizzard titles to Steam, and probably also the Xbox windows store, then that will be a sign they might be thinking of giving it the ol' Bethesda.net treatment.
In my experience, the Microsoft store is unusable as a serious video game store. I had to reinstall windows just to be able to play games that I paid for.
There are countless examples of departments and teams within Microsoft failing to support each other, this is just the latest case.
If Xbox can decouple their distribution business from the Windows store, they'd have a much better chance at convincing PC used to skip the middle man .ABK already has a platform is more widely used than the Windows store for gaming.
I keep seeing people hoping for Xbox to start using Battle.Net, but it's never happening. Using the Windows Store is the point, they want to have their own app store on Windows, and for it to be part of a bigger "universal store" that spans different devices. They've been trying to make that happen since 2012, first with UWP across Windows Phone, Surface, Xbox, and PCs in 2012, and soon it'll be with third-party clients that span across other companies platforms.
It's never been about getting into PC gaming for it's own sake. Microsoft wants games to prop up a garbage app store that, by all rights, should have died when they ceased development for UWP.
I think one of the main reasons why it was cancelled was that it would've been too expensive to manufacture.
Era in general won't like this but the reality is the market you're describing (traditional console sales) is capped, more or less, so a lot of earnings reports are going to be moving focus to other things. We just got out of a generation that essentially proves it. If the PS4 and the Switch both hit a ceiling, no investor would believe any company promising major growth beyond that in hardware sales. The best market conditions available produced around 120-130M unit sales. There won't be a 160M console for a long time (if ever) so the growth has to come from somewhere else.
- Microsoft is going for PC, mobile, and subscription revenue. Likely an app store play overall, especially if Apple has to open up
- Sony is going for GAAS titles and cross-media opportunities (synergy with their film/TV wing, already working with Uncharted, TLOU). Wouldn't be surprised to see an anime play here with Sony IP since they have Crunchyroll
- Nintendo hasn't done much here yet, but probably they will. One of Phil's leaked emails said that Nintendo wasn't feeling much growth pressure at the time, but that could change as their board changes. All publicly-traded companies need to grow eventually, after all.
I don't think Era would disagree with you tbh. Jim Ryan and Phil Spencer have both talked about how consoles are capped out.
With Nintendo, I wonder what they're going to do with Switch 2 to grow. It's one thing to go from Wii U bombing to Switch exploding versus a very successful Switch to a very successful Switch 2. There's going to have to be some other growth vector Nintendo pursues, maybe getting hella third party support and making Nintendo more competitive with PlayStation/Xbox is their play next gen.
Like I said earlier, even if Sony's GaaS initiative was booming and they were pulling in ABK money from it but their hardware was declining, Era would have the same reaction, which I think is a fair reaction. If you we want to talk about the "biggest" things in gaming, the forum would be dedicated to mobile games and live service games.
I'm not "hoping" Xbox uses battle.net. I'm wondering if MS gaming will leverage it to create a gaming store on PC.
They wanted a universal store- in 2012. They have a completely different strategy now, which includes selling software and services via different platforms. Since then windows phone and UWP have died. Potentially having a gaming store on IPhone and Android is a world away from what they were attempting back in 2012 - it shouldn't be lumped together for the sake of your argument.
The desire to push developers to distribute apps through the Windows store is effectively dead. As such, there no reason to use MS first party titles to prop the Windows store up- which is part of reason they starting shipping on Steam.
Generally speaking, an Xbox gaming store on PC that will co-exist with Xbox stores on Apple and android would be more in line with what appears to be the current strategy.
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The Mario movie is one of the more notable examples of one of the platform holders tapping into other mediums.
Either way, I don't think any of this really negates the importance of thriving in the hardware space. Sony's massive revenue from subscriptions, doubling down on GAAS, hits like TLOU show - all of these relate, deeply, to their success selling PS4 and PS5 units. Similarly, Game Pass growth being slower than otherwise expected over the past couple years almost definitely relates to Xbox's struggles generating momentum with Series sales. I'm not sure that there exists a near future world where Xbox, Sony, or Nintendo kill it across all the important metrics while languishing on the hardware side of things. Aside from the obvious ways that's a sign of weakness in itself (e.g., Xbox losing mindshare gains it made during the 360 era), these platforms are still central points of their respective ecosystems.
When Sony announces a quarter of impressive PS5 sales, that's not exciting just because of the nice bit of extra hardware revenue, but because it's a pretty sure sign of their core business thriving overall. Even though the game has changed, it'll be a pretty stellar turnaround if Xbox manages to get Series sales on a better track as well.
Lack of marketing investments in EU surely doesn't help if you have a radicated brand loyalty.
It's up to Ms trying something here
I linked an article from 2022, when Microsoft was about to acquire ABK, where Microsoft makes a statement saying they want a universal store.
Microsoft is working on ‘universal Xbox store’ to compete with Apple and Google
The company’s plan has been detailed in filings as its purchase of Activision Blizzard is being investigated
www.independent.co.uk
Here's another quote from around the same time, where president Brad Smith calls it an app store, rather than just a game store.
Microsoft Wants To Create A 'Universal' Store That Works On Any Device
Console, PC, mobile... and more?
www.purexbox.com
And this ties into a set of principles they released at the same time for this new store. That said, the article does draw a line between the Microsoft Store on PC and their "next generation game store".
Adapting ahead of regulation: a principled approach to app stores - Microsoft On the Issues
Today we’re announcing a new set of Open App Store Principles that will apply to the Microsoft Store on Windows and to the next-generation marketplaces we will build for games, in part to address Microsoft’s growing role and responsibility as we seek regulatory approval for our acquisition of...
blogs.microsoft.com
So... Maybe they are making a new games store separate from the Microsoft Store. Or maybe they're centering these statements on games since they were made in context of the ABK acquisition. They've been making updates to the Windows Store client over the last year to advertise Gamepass within it, after these statements, so at the very least I can't see them decoupling the two. (1, 2)
I linked an article from 2022, when Microsoft was about to acquire ABK, where Microsoft makes a statement saying they want a universal store.
Microsoft is working on ‘universal Xbox store’ to compete with Apple and Google
The company’s plan has been detailed in filings as its purchase of Activision Blizzard is being investigated
Here's another quote from around the same time, where president Brad Smith calls it an app store, rather than just a game store.
Microsoft Wants To Create A 'Universal' Store That Works On Any Device
Console, PC, mobile... and more?
And this ties into a set of principles they released at the same time for this new store. That said, the article does draw a line between the Microsoft Store on PC and their "next generation game store".
Adapting ahead of regulation: a principled approach to app stores - Microsoft On the Issues
Today we’re announcing a new set of Open App Store Principles that will apply to the Microsoft Store on Windows and to the next-generation marketplaces we will build for games, in part to address Microsoft’s growing role and responsibility as we seek regulatory approval for our acquisition of...
So... Maybe they are making a new games store separate from the Microsoft Store. Or maybe they're centering these statements on games since they were made in context of the ABK acquisition. They've been making updates to the Windows Store client over the last year to advertise Gamepass within it, after these statements, so at the very least I can't see them decoupling the two. (1, 2)
I linked an article from 2022, when Microsoft was about to acquire ABK, where Microsoft makes a statement saying they want a universal store.
Microsoft is working on ‘universal Xbox store’ to compete with Apple and Google
The company’s plan has been detailed in filings as its purchase of Activision Blizzard is being investigated
Here's another quote from around the same time, where president Brad Smith calls it an app store, rather than just a game store.
Microsoft Wants To Create A 'Universal' Store That Works On Any Device
Console, PC, mobile... and more?
And this ties into a set of principles they released at the same time for this new store. That said, the article does draw a line between the Microsoft Store on PC and their "next generation game store".
Adapting ahead of regulation: a principled approach to app stores - Microsoft On the Issues
Today we’re announcing a new set of Open App Store Principles that will apply to the Microsoft Store on Windows and to the next-generation marketplaces we will build for games, in part to address Microsoft’s growing role and responsibility as we seek regulatory approval for our acquisition of...
So... Maybe they are making a new games store separate from the Microsoft Store. Or maybe they're centering these statements on games since they were made in context of the ABK acquisition. They've been making updates to the Windows Store client over the last year to advertise Gamepass within it, after these statements, so at the very least I can't see them decoupling the two. (1, 2)
Reading all of these quotes, to me it's seems like at this point, Xbox wants Games stores, not a universal App Store that also sells games.
They made some minor enhancements to the windows store specifically to put Gamepass front and center, because that's the only means of pushing PC Gamepass currently.
I could absolutely see them decoupling the two because the shittiness of the windows store directly impacts their ability to grow PC Gamepass, and will dramatically hamstring their ability to capitalize on COD and Blizzard PC earnings.
I'm sure Windows likes the idea of using Xbox to prop up their otherwise useless App Store. But I don't see why Xbox wouldn't want to do their own thing, nor do I see why MS wouldn't want Xbox to be able to maximize returns on their latest investments.
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