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cw_sasuke

Member
Oct 27, 2017
26,401

Erm thats the truth ?
Regardless of what you think of that statement - stuff like this would be more impactful if he said this when the Xbox was the best selling console. Ofc he is gonna downplay the importance of hardware sales when they cant compete on that level.

Not saying he is wrong or right....but come on.
 

Newlove

Member
Oct 28, 2017
617
England
Xbox had to change strategy since they cannot compete with Sony on traditional level.
Makes sense for them.

Is it that black and white though? Is 'traditional level' as sustainable? I don't think its a counter to evolve strategy. It just makes sense and where the money is these days - subscription services and (+in-)game purchases. Sony's strategy is very similar with PSN and you'll see that become more clear with next gen.
 

Peru

Member
Oct 26, 2017
6,134
I don't want to stream to a phone, I want to stream to a laptop, a tablet, a tv and so on. Is that possible?
 

ArmGunar

PlayStatistician
Member
Oct 30, 2017
6,527
He is right and it's not bad at all for MS
They can't compete with traditional hardware sales

Now they are pushing into PC, new hardware console + very mainstream people with xCloud, that's a very good strategy
It's expanding Xbox and especially Xbox Store and transactions made in it
 

Xando

Member
Oct 28, 2017
27,360
Depends on the company - for MS and their lackluster hw sales this gen pushing for services is obv. the best choice.
They have the servers and infrastructure to eat up alot of costs that other companies couldnt - same for something like GamePass.
Console hardware margin is so small it hardly makes sense to bank on hardware sales to make big profits. Sony realized this aswell this gen and Nintendo is also starting to realize services are where you make the money.
 

MillionIII

Banned
Sep 11, 2018
6,816
Because they don't make a lot of money just from the hardware but when you have a huge install base it is easier to sell software and services, they are betting hard on gamepass to be their money maker so we will see if it can rival the traditional software selling methods.
 

Basarili

Member
Oct 27, 2017
1,434
Haarlem
I don't know how you all view it, but when they talked about their next-gen console and not showing anything. It seemed like pre-e3 was only bluff or talk, while everything Microsoft announced was the same as Sony did before E3. Sony even showed a demo of the loading times.

Or ... Microsoft is holding back things on purpose....
 

Invoker

Chicken Chaser
Member
May 29, 2019
257
as always people forget that without selling you the hardware MS cant get 3rd party royalties and money from GOLD (which are the 2 most important things for xbox right now)

That's why they are announcing a next gen console and lauching game pass on PC.
Not to mention the XCloud.
This gen was hard for Xbox.
The damage done by Don Mattrick at the start of the gen will haunt the Xbox one till the end, and the best that they can do was/is support the Xbox one install base.
Support that I said, is grabbing money with services.
 

CarterTax

Member
Oct 25, 2017
709
Why would they?
Maybe they prefer to lead the competition into thinking that it is not doing well (by not providing any numbers which according to a lot of users of this forum is an indication of failure) so they can serve up a nasty surprise a few years later.

Why wouldn't they?

If Gamepass is doing so well then what's the point of being obtuse about how well it's doing? What would be the point of 'serving up a nasty surprise?'

It seems more likely that since MS is not the market leader in terms of hardware sales they have to downplay the importance of hardware sales (even though hardware pushes services), and extol the virtues of Gamepass, all the while not indicating how well that business is doing in quantifiable numbers. So he basically just says a lot of words to say nothing.
 

dotyoureyes

Alt Account
Member
Jun 11, 2019
488
He has some good points but he is also deflecting because his company is not selling near as many consoles. Console sales are still the biggest driver. He would be singing a different tune if they were in Sony's position.

If it is about revenue and profit...console sales help big time there.
 

cw_sasuke

Member
Oct 27, 2017
26,401
Console hardware margin is so small it hardly makes sense to bank on hardware sales to make big profits. Sony realized this aswell this gen and Nintendo is also starting to realize services are where you make the money.
No one says that hardware sales are EVERYTHING when it comes to console buisness - but you really think that Sony would make as much money on PSN right now if they hadnt sold 100m PS4 consoles but Xbox like sales ? Or that Nintendo would have record software sales on Switch if it sold like the WiiU ?

Come on...software sales and service numbers will benefit from high hardware numbers.
 

Deleted member 18951

User requested account closure
Banned
Oct 27, 2017
5,531
Give us that 1-2 combo of Anaconda and Lockhart. Give consumers a choice as to how they jump into next gen. I'll be day one on Anaconda for sure! :)
 

Jroc

Banned
Jun 9, 2018
6,145
It's true, but fighting with people on the internet about your favourite company's profit margins just isn't the same. Think of the Gamers Phil!
 
Feb 26, 2018
2,753
That's why they are announcing a next gen console and lauching game pass on PC.
Not to mention the XCloud.
This gen was hard for Xbox.
The damage done by Don Mattrick at the start of the gen will haunt the Xbox one till the end, and the best that they can do was/is support the Xbox one install base.
Support that I said, is grabbing money with services.
And how thats disputes my point? On PC they will still loose 30% from 3rd party and GOLD subs. And dont forget that PC is far more saturated with other subscription services. They dont need to worry about other 30 sub services on their own hardware
 

Xeontech

Member
Oct 28, 2017
4,059
So xcloud will be a paid monthly service.

Or you can buy scarlet and stream games for free. Sounds like a great plan in theory. Though the upload speeds are usually quite limited from someone's home.

I feel like they should just stop downplaying the console sales thing. Obviously the tune would be 180 opposite if they were selling over 2 to 1 hardware against the competitor.
 

Apathy

Member
Oct 25, 2017
11,992
I mean, the people that but your box are going to be the market that must likely subscribes to your services to use other places so they can play what they already have someplace else. Those that don't own your box are going to be less likely to go for the subs. You'll always get some but I think they are overestimating who's going to get services.
 

Deleted member 176

User requested account closure
Banned
Oct 25, 2017
37,160
Why? They have the only service on the market and Streaming is going to be niche....I think some of you think Pr is more important then it is.
Because they already have a functioning version of what Google and Microsoft are constantly referring to "the future of entertainment" or whatever. If they used the same language but then added on "and it's already here on playstation" they could make the others look really bad. Like the existence of psnow kind of invalidates everything Phil says here.
 

Xando

Member
Oct 28, 2017
27,360
I wonder what he would say if Xbox sold 100m+ units.
He would still be saying this as profit margin on consoles is small.

No one says that hardware sales are EVERYTHING when it comes to console buisness - but you really think that Sony would make as much money on PSN right now if they hadnt sold 100m PS4 consoles but Xbox like sales ? Or that Nintendo would have record software sales on Switch if it sold like the WiiU ?

Come on...software sales and service numbers will benefit from high hardware numbers.

If they put their services on iOS,Android, Windows, Xbox, TVs and maybe other console he doesn't need a 100m seller because he'll have a install base of many more.
 

gofreak

Member
Oct 26, 2017
7,736
Though hardware sales make selling services like PS+/Gold very easy, which make a fuck load, without much cost nowadays I'd imagine.

Everyone is ultimately after soft revenue - that's where the margins are - but Microsoft has obviously not been as successful as they would like in capturing soft revenue with bespoke hardware. So it seems they're shifting strategy and embracing a wider range of hardware - both a wider range of their own hardware than is traditional, as well as PC and perhaps beyond - in order to get a slice of the soft revenue available on all those targets combined. It makes sense from a business point of view.

The risk is in knock-on effects for their brand. If it is has, to date, been built around a sense of premium, and is now zagging toward a broader focus on a range of targets, that could have knock on effects for their content, and thus for the perception of their positioning vs competitors who may continue to take hard steps 'up' with new generations of software built around new generations of hardware. If you are confident you can continue to sell large enough volumes of hardware to create substantial and growing levels of 'soft' revenue, you can afford to continue to make full transitions and make hardware resets, with the knock on benefit for the 'premiumness' of your content and the ratcheting up of its sophistication each gen. MS is seemingly moving away from that model, so they need to be careful about managing their brand in that shift.
 
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dotyoureyes

Alt Account
Member
Jun 11, 2019
488
Because they already have a functioning version of what Google and Microsoft are constantly referring to "the future of entertainment" or whatever. If they used the same language but then added on "and it's already here on playstation" they could make the others look really bad. Like the existence of psnow kind of invalidates everything Phil says here.
I thin you are over thinking PR, most people don't care or even know, Streaming is not going to be big for awhile.
 

Deleted member 176

User requested account closure
Banned
Oct 25, 2017
37,160
I thin you are over thinking PR, most people don't care or even know, Streaming is not going to be big for awhile.
PR is important. Even if you don't think it's going to be important for a while, you can just completely shutdown competitors by saying "oh, we've had that for years" when they unveil all of their new stuff.
 

AmFreak

Member
Oct 26, 2017
2,506
Console hardware margin is so small it hardly makes sense to bank on hardware sales to make big profits. Sony realized this aswell this gen and Nintendo is also starting to realize services are where you make the money.
None of them ever "banked on hardware sales to make big profits" quite the contrary - outside of this gen the norm was to loose money on hardware.
More hardware -> more software/more peripherals/more services.
 

jon bones

Member
Oct 25, 2017
26,030
NYC
The .NET, Windows & Xbox divisions have been very forward-looking lately - hell I code VS on a Mac now. Wild.

As someone who works in IT, and has a business degree this makes a lot of sense in 2019. Even Apple is looking for growth in services, not hardware.

Bummer that the "gamer tribalism" still messes up interesting discussions about the industry.

None of them ever "banked on hardware sales to make big profits" quite the contrary - outside of this gen the norm was to loose money on hardware.
More hardware -> more software/more peripherals/more services.

Right - I think Nintendo is maybe the only company who tried to make a profit on hardware.
 

Golvellius

Banned
Dec 3, 2017
1,304
Why wouldn't they?

If Gamepass is doing so well then what's the point of being obtuse about how well it's doing? What would be the point of 'serving up a nasty surprise?'
The point is preventing the competition from starting something similar for as long as possible, especially if the service is doing well.

It seems more likely that since MS is not the market leader in terms of hardware sales they have to downplay the importance of hardware sales (even though hardware pushes services), and extol the virtues of Gamepass, all the while not indicating how well that business is doing in quantifiable numbers. So he basically just says a lot of words to say nothing.
That sounds like your conclusion is that Game Pass is not doing exactly well. If that's your impression, then maybe it is Sony's impression as well. But if it is actually doing outstandingly well, then why not try to keep this (false) impression up for as long as possible? If I were Phil, I would continue to say nothing with a lot of words for quite some time.
 

dotyoureyes

Alt Account
Member
Jun 11, 2019
488
The point is preventing the competition from starting something similar for as long as possible, especially if the service is doing well.


That sounds like your conclusion is that Game Pass is not doing exactly well. If that's your impression, then maybe it is Sony's impression as well. But if it is actually doing outstandingly well, then why not try keep this (false) impression up for as long as possible? If I were Phil, I would continue to say nothing with a lot of words for quite some time.

Do you know this for sure? I thought it was said Game pass adoption was below MS expectations?
 
Feb 10, 2018
17,534
I don't know how you all view it, but when they talked about their next-gen console and not showing anything. It seemed like pre-e3 was only bluff or talk, while everything Microsoft announced was the same as Sony did before E3. Sony even showed a demo of the loading times.

Or ... Microsoft is holding back things on purpose....

I'd imagine both are, don't want to show there full Hand.
 

monmagman

Member
Dec 6, 2018
4,126
England,UK
Even though I don't game on Xbox I'm so glad they found a solid direction for Xbox because it was looking pretty grim mid-gen for them.The fact they have re-ignited that fire under Xbox will push Sony harder next gen......and that's great for everyone.
 

Deleted member 2379

User requested account closure
Banned
Oct 25, 2017
1,739
Do you know this for sure? I thought it was said Game pass adoption was below MS expectations?

All indications I've seen are that it is exceeding their expectations as well as publishers expectations regarding sub counts and incremental tail revenue to third parties from having a much larger player base to buy DLC.

It's why we are seeing more and more games get added in that are closer to the initial release date.

Gamepass has been a runaway success and MS is doubling down for a reason.
 

IIFloodyII

Member
Oct 26, 2017
23,991
Everyone is ultimately after soft revenue - that's where the margins are - but Microsoft has obviously not been as successful as they would like in capturing soft revenue with bespoke hardware. So it seems they're shifting strategy and embracing a wider range of hardware in order to get a slice of the soft revenue available on all those targets combined. It makes sense from a business point of view.

The risk is in knock-on effects for their brand. If it is has, to date, been built around a sense of premium, and is now zagging toward a broader focus on a range of targets, that could have knock on effects for their content, and thus for the perception of their positioning vs competitors who may continue to take hard steps 'up' with new generations of software built around new generations of hardware. If you are confident you can continue to sell large enough volumes of hardware to create substantial and growing levels of 'soft' revenue, you can afford to continue to make hard hardware resets, with the knock on benefit for the 'premiumness' of your content and the ratcheting up of its sophistication each gen. MS is seemingly moving away from that model, so they need to be careful about managing their brand in that shift.

On a side note, I do wonder where this leaves MS with VR, or VR for Xbox specifically. It might not gel with the strategy of getting their software to as many targets as possible.
Xbox don't seem interested in VR at all, I think the only way it get's to Xbox is through some 3rd party VR headset getting Xbox support, XB1 is probably too under powered for it to be worth it for the VR Platform holders currently.
 

xolsec

Member
Feb 18, 2018
1,685
Oook... but with more hardware sold there's more money to be made (see Sony's revenue for 2018)
 

Cthulhu_Steev

Member
Oct 27, 2017
2,389
Why would they?
Maybe they prefer to lead the competition into thinking that it is not doing well (by not providing any numbers which according to a lot of users of this forum is an indication of failure) so they can serve up a nasty surprise a few years later.

It wouldn't be a 'nasty surprise ' for MS to boast about sales, they just need to sell more than Sony/Nintendo for a month or two and they'll soon let us know.
 

Eoin

Member
Oct 27, 2017
7,103
If they really are eating the cost to game stream that's cool.
There's no cost to console streaming. You're playing your games on your Xbox through your internet connection.

The service that will be a cost to Microsoft is xCloud, and I don't think anyone expects xCloud to be a free service.

For example, Gamepass could just have easily been a TV service.
I don't think it could be. One of the reasons why Game Pass (and similar services) have been able to ramp up quickly has been that the games industry has managed, over the past few decades, to mostly minimise regional obstacles. TV hasn't progressed to that point and competition for exclusive content in that area is intensifying. Microsoft can go to publishers and put together a service that brings the world a list of hundreds of games that's mostly the same across every country. They couldn't do that for TV. Even market leaders like Netflix can't do that for TV.

Xbox had to change strategy since they cannot compete with Sony on traditional level.
Makes sense for them.
Microsoft did have to change strategy, yes. However, new technologies and new market realities mean that they'd have changed strategies anyway. Even if Microsoft had won this generation and sold 150m Xbox Ones, their strategy for next generation would look very similar to their current strategy for next generation.

The same is true for Sony. The PS4 will outsell the Xbox One by a huge number. Sony will still change their strategy to accommodate other market shifts.

Sony really needs to talk up psnow more
I agree. It's a service that I'm increasingly preferring to PlayStation Plus. For all the talk about xCloud and Stadia, they're still just ramping up to do what Sony are already doing. However, Sony have allowed themselves to be perceived as the third-place player in a market where they're the only company with an existing product. That's a little understandable if there's some kind of big overhaul coming to PlayStation Now as part of the generational transition and the swap to Azure, and I'm sure they'll want to talk more about PlayStation Now when that happens, but they could afford to do a bit of that talking now instead.
 

Jade1962

Banned
Oct 28, 2017
4,259
Things we are good at are important things we aren't good at are not important. They don't seem to be out grossing sony in gaming revenue and nintendo is right on their heels as far as revenue. Greater hardware sales generally leads to more overall software sales and subscription sales. Doubt they wouldn't want to sell 100 million Xboxes as well as 100 million gamepass subscriptions to phone users.

Also he just described remote play. Why is the gaming press acting like this is some new innovation? I can currently play all my ps4 games from my vita whenever I travel for free. And hopefully people take note that he says they are putting X1 blades in their datacenters.