Support NeoGAF

[Heisenberg007]

Is there anything on how many Game Pass subscribers are new entries into the ecosystem and how many are people moving from Live Gold to GP? That would be very interesting to see.

Unfortunately, no.

I'd also be interested to see how many of those Gamepass users actually use a Xbox console, how many are on PC, and how many exclusively use xCloud. That would tell us whether consoles are still important or not, and it'd also be nice to see the QoQ or YoY growth of xCloud users to see how the industry is evolving.

Unfortunately, we keep getting surface-level and very inconsistent information from these earning calls.

 

[Evilms]

PS5 may have reached 10 million by June 30, 2021.

So, Microsoft is selling ~6.5 Xbox for each ~10 Playstation 5 sold by Sony, which is very, very good.

we'll see at the next Sony financial report

everything will depend on the stocks they put during this period

 

[TheGodfather07]

I think you missed whole point...

Considering PlayStation outsold Xbox 2,25:1 to 2,5:1 last gen and is still outselling Xbox this gen (albeit Microsoft is certainly closing the gap) and considering how many big sellers Sony had in terms of first-party in last few months (Miles Morales, TLOU 2, Ghost of Tsushima) you would think that gap in terms of revenue between Xbox and PlayStation would be much higher then 15,4b vs 24,2b.

Because that means that every customer on Xbox side is spending more in their ecosystem.

Yeah. 7 billion is huge number, but when we consider fact that Xbox One was a huuuuuge failure and PS4 was massively successful you would think that revenue difference would be higher.
It just show how non-telling number of consoles sold number really is. Because when Microsoft/Sony sold a console that is collecting dust and user is not spending on ecosystem, that is not great.

Who cares? Sony gaming division makes more money and Sony sells double the amount of consoles of Microsoft. End of story. No mental gymnastics required to make Microsoft look good.

 

[kingfey]

I didn’t even pay that much as I got cheap Gold it worked out at around $30 per year. And yes, that is how math works. What does that have to do with what I said? I’m not buying anything else on the service and with the number of games I’ll have paid for no added cost during those 3 years, they would have made a lot more money through individual purchases.

It means you paid 3 years up front. And now you are locked on the system.

While for us, this seems to be a great deal, until you realize that you can't cancel the sub. You have to wait 3 years for it to finish.

 

[AdjudicatorHead]

It means you paid 3 years up front. And now you are locked on the system.

While for us, this seems to be a great deal, until you realize that you can't cancel the sub. You have to wait 3 years for it to finish.

I think you're missing my point. The costs of those 3 years I paid for have already been offset by games which I would have bought, but didn't have to, due to having them available via Gamepass. There are several more first party MS and Bethesda games which are also due in the next 3 years which I will also play without any added costs, which I would have bought otherwise. So I'm going to spend less money in the Microsoft ecosystem than I would have, if not for Gamepass.

 

[ZywyPL]

Given all the circumstances, like entering the generation after XB1, a.k.a. MS's worst gen ever, no Series X/S launch lineup at all, supply constraints etc., that's a pretty impressive result. Once the heavy hitters like FH5 and Halo show up I expect MS to start seriously snowballing.

Xbox Series X + S had reached 6.5 million as of June 30, 2021

PlayStation 5 sold more than 7.8 million as of March 31, 2021

 

[AdjudicatorHead]

Given all the circumstances, like entering the generation after XB1, a.k.a. MS's worst gen ever, no Series X/S launch lineup at all, supply constraints etc., that's a pretty impressive result. Once the heavy hitters like FH5 and Halo show up I expect MS to start seriously snowballing.

That I can agree with, the hardware sales in particular have been doing really well, so big improvement from MS.

 

[Godot25]

Who cares? Sony gaming division makes more money and Sony sells double the amount of consoles of Microsoft. End of story. No mental gymnastics required to make Microsoft look good.

Lol. Who is doing mental gymnastics?

I just sided with thicc_girls_are_teh_best because for me it is surprising too, that revenue for Xbox division is that high compared to their competitors while they ended worst generation of their existence. And that it implies that Xbox is getting bigger chunk of money from every user then Sony.

I mean, Nintendo is selling Switch like gangbuster, they refusing to drop prices of their games, while selling 20+ million in many cases and their first-party output is best in terms of quality and quantity and they still had "only" 16 billion in revenues. Meanwhile Xbox is doomed according to many users around here because they didn't have new first party game months after new consoles released and they still managed to get to 15,4 billion.

 

[kingfey]

I think you're missing my point. The costs of those 3 years I paid for have already been offset by games which I would have bought, but didn't have to, due to having them available via Gamepass. There are several more first party MS and Bethesda games which are also due in the next 3 years which I will also play without any added costs, which I would have bought otherwise. So I'm going to spend less money in the Microsoft ecosystem than I would have, if not for Gamepass.

What matters to them, is that you paid certain amount of money, and now you are locked on their ecosystem.

By doing those 3 years, you will have to regularly open up gamepass app, and play those games. In order for you, to justify the 3 years sub.

For MS side, they have now a user who is in the service for 3 years. To them, that is great thing, as that means you aren't canceling your sub in those years. You have become a part of gamepass stats, for MS to show to developers. You will be there, until your sub expires.

 

[Ass of Can Whooping]

By doing those 3 years, you will have to regularly open up gamepass app, and play those games. In order for you, to justify the 3 years sub.

I'm pretty sure he doesn't need to do that

Unless of course Uncle Phil is going to knock on his door

 

[ZywyPL]

That I can agree with, the hardware sales in particular have been doing really well, so big improvement from MS.

Spencer did say in some recent podcast (IGN I believe?) that they have put a big order on the chips, so maybe that's why they are keeping up, and why they had a record console sales last month.

 

[kingfey]

I'm pretty sure he doesn't need to do that

Unless of course Uncle Phil is going to knock on his door

Especially if you have other systems.

My gamepass expires in Feb 2022. The only reason I have it that way, is the pc/xbox option. Otherwise, I would have it 1 month every 2-3 month, like I did in the past.

I got other games in other systems to play.

 

[kingfey]

This is revenue, not profit. Loss of revenue from one source (TP and MTX) is being set off by revenue from another source (GP).

Wouldn't that mean, the revenue has to be greater than the loss gamepass has, in order to cover other losses?

 

[Bitmap Frogs]

And you will never get them anymore. As Phil said before the gen started, they could be 'winning' the gen and they still wont release numbers anymore.
People need to forget the sales warz aspect and accept that simple hardware sales are not the 'be all and end all' for Microsoft anymore.

Considering they stopped reporting units and bundled Xbox with their Surface devices when things got rough for Xbox, I find this discourse a bit hypocritical.

 

[Ass of Can Whooping]

Wouldn't that mean, the revenue has to be greater than the loss gamepass has, in order to cover other losses?

They're not talking about profit

The "loss" is the revenue from third party which was off-set by gamepass revenue

 

[Hezekiah]

You're never getting them. Time to stop beating off that dead horse.

Closest you will get is estimates like that Zuge tweet.

Or become a big enough shareholder that you get access to the detailed Financials.

Speaking of Zhuge, he estimates that Microsoft needs over 50m subscribers before GamePass becomes profitable.

I guess we should use that as a benchmark?

 

[Mattyp]

I think you're missing my point. The costs of those 3 years I paid for have already been offset by games which I would have bought, but didn't have to, due to having them available via Gamepass. There are several more first party MS and Bethesda games which are also due in the next 3 years which I will also play without any added costs, which I would have bought otherwise. So I'm going to spend less money in the Microsoft ecosystem than I would have, if not for Gamepass.

Microsoft do not care, you’re not the norm. I pay full freight as does everyone I know, here’s a question do you think Disney would rather you buy 5 of their movies during the year or be signed up to Disney+ for the year? I buy my Sony exclusives when they hit the discount bin for $9 bucks, do you think Sony care? They care about people in their ecosystem, because me and you are outside the norm, the norm is having as many people as you can signed up to repeat billing.

There’s a reason every single trillion dollar company is moving to subscription services, the writing is on the wall.

 

[Ass of Can Whooping]

Microsoft do not care, you’re not the norm. I pay full freight as does everyone I know, here’s a question do you think Disney would rather you buy 5 of their movies during the year or be signed up to Disney+ for the year? I buy my Sony exclusives when they hit the discount bin for $9 bucks, do you think Sony care? They care about people in their ecosystem, because me and you are outside the norm, the norm is having as many people as you can signed up to repeat billing.

There’s a reason every single trillion dollar company is moving to subscription services, the writing is on the wall.

I think Disney would rather you sign up and pay the additional $35 premier access for those 5 movies

 

[kingfey]

Speaking of Zhuge, he estimates that Microsoft needs over 50m subscribers before GamePass becomes profitable.

I guess we should use that as a benchmark?

Is he counting the sub fees? If he is, then gamepass would need that much.

But gamepass isn't a netflix. Its something these analytics people need to realize. There are other forms of revenue gamepass has.

They don't check those. They always go to the sub fees like netflix, to estimate how much gamepass works.

I just hope one day, they stop with this shit estimate, and actually use what gamepass makes. The other part of revenue is what makes the sub more money. Its the sole reason why EA joined xbox, to their sub. Those mtx are sweet deal of money.

 

[AdjudicatorHead]

Microsoft do not care, you’re not the norm. I pay full freight as does everyone I know, here’s a question do you think Disney would rather you buy 5 of their movies during the year or be signed up to Disney+ for the year? I buy my Sony exclusives when they hit the discount bin for $9 bucks, do you think Sony care? They care about people in their ecosystem, because me and you are outside the norm, the norm is having as many people as you can signed up to repeat billing.

There’s a reason every single trillion dollar company is moving to subscription services, the writing is on the wall.

I think people signing up for Gamepass and not buying anything outside of the service actually is the norm, outside of enthusiast circles. I don't think that all subscribers buying loads of DLC and MTX for all of their gamepass games, instead of just moving on to another gamepass game at no added cost, is the norm, as many seem to suggest it is.

Also, I want to make something clear, I'm not saying that sub services don't make financial sense or are bad; they're generally very good for large corps that can sustain the initial growth period. I'm just arguing with people who claim gamepass won't cannibalise any other game sales on the platform. I don't agree with that. I do think it will benefit Microsoft more in the long run, to have people hooked to gamepass. But I think third party game sales will be hampered; that's my point.

 

[reksveks]

There’s a reason every single trillion dollar company is moving to subscription services, the writing is on the wall.

Talking about trillion dollar companies

 

[EdGalTBR]

Xbox Series X: U$499,90
Xbox Series X Digital: U$399,90
Xbox Series S: U$249,90

Just do it Phill.

 

[kingfey]

I think people signing up for Gamepass and not buying anything outside of the service actually is the norm, outside of enthusiast circles. I don't think that all subscribers buying loads of DLC and MTX for all of their gamepass games, instead of just moving on to another gamepass game at no added cost, is the norm, as many seem to suggest it is.

Also, I want to make something clear, I'm not saying that sub services don't make financial sense or are bad; they're generally very good for large corps that can sustain the initial growth period. I'm just arguing with people who claim gamepass won't cannibalise any other game sales on the platform. I don't agree with that. I do think it will benefit Microsoft more in the long run, to have people hooked to gamepass. But I think third party game sales will be hampered; that's my point.

It easy for people to spend money on free stuff.

We have fortnite a free game, which people spend tons of money.

The same thing could be said about gamepass. People see these games as free. And they will spend money on dlc or mtx easily.

If you buy a 70$ game, it will be harder to spend some more money on in game items. But if you have that game, at no cost, you will spend the money for the mtx in a heartbeat. The 70$ conscious isn't stopping you. So you don't feel guilty about spending the money on it.


MTX isn't only in game items. There are adds on, like car packs, battle passes, character packs, etc. These usually cost between 1$ to 10$. Its very cheap for people, so they don't feel like wasting it on games that are on gamepass.

Forza horizon 4 has alot of car packs. You have to buy those packs. If the game is on gamepass, you can justify buying those packs.

 

[Bernd Lauert]

Meanwhile, Nintendo is selling Switch like gangbuster, they refusing to drop prices of their games, while selling 20+ million in many cases and their first-party output is best in terms of quality and quantity and they still had "only" 16 billion in revenues. Meanwhile Xbox is doomed according to many users around here because they didn't have new first party game months after new consoles released and they still managed to get to 15,4 billion.

Yep, I've seen several users here already call the Series a flop, while it's the best selling Xbox console ever by a decent amount. I've even seen some concern trolling over Microsoft maybe shutting Xbox down. It's hilarious, but it's what happens when you get your gaming news from the likes of Joe Miller

 

[Heisenberg007]

Wouldn't that mean, the revenue has to be greater than the loss gamepass has, in order to cover other losses?

No, it can't be like that. Because they are only talking about revenue here, not actual operating profit.

So, to put it in numbers, suppose that Xbox service and content revenue was $15 in the last year, and it's $10 this year. But third-party revenue actually dropped to $8, but overall revenue is $10 because we got $2 from Gamepass.

This $2 increased (or off-set) the loss in revenue from $8 to $10. But this does not neceesarily mean that Gamepass is profitable, because this MS report doesn't tell us the other part of the equation, which is how many dollars MS spent on Gamepass to earn those $2. If the cost is $4, Gamepass still lost money but helped set off the revenue. How? Because they are only talking about revenue, not profit.

 

[Jemm]

I wonder how dropping the Xbox Live Gold requirement for free to play games affected the subscriptions and service income.

 

[Heisenberg007]

Yep, I've seen several users here already call the Series a flop, while it's the best selling Xbox console ever by a decent amount. I've even seen some concern trolling over Microsoft maybe shutting Xbox down. It's hilarious, but it's what happens when you get your gaming news from the likes of Joe Miller

Xbox Series console sales are pretty good so far. Even the revenue seems good in comparison to PlayStation (proportionately), despite the gap in market share.

They will have to increase the revenue super fast though, considering how big XGS has become in the last 2 years.

I'd also be interested in seeing if this revenue increase also includes Bethesda revenue? And if the 13% jump is because of that? Has anybody checked the financial reports to confirm that?

 

[mejin]

How does gamepass eats software sales?
Does it use Vodo magic, to eat those softwares?
And where does it dump the remaining, after it absorbed eating it?

Jokes aside, you clearly have no clue what gamepass goal is. So its easy to make those stupid claims.

Gamepass is just a service built in xbox console. Its main goal is to bring some form of revenue, increase game sales, and attract more customers.

Games have more chance getting sold due to gamepass.

Whether you buy the game or not, someone else will buy it.

The entire memo of gamepass, is that we have games. You have 1 year period of trial with those games. Once its expired, you have to buy those games.

There are 10-20 games added to the service monthly. That is 120-240 games a year. Your odds of you playing all those games is low. So you have no choice, but to buy them.

If people understood it this way, they wouldn't have bothered posting crap like that. As they say, ignorance is a bliss.

Oh, you are hired.

Do you at least read the post I quoted? Context is important.

 

[mejin]

It literally says offset by GP subscriptions and first party … so GP helped keeping the loss lower ..

More subscriptions means less people buying games.

 

[kingfey]

Oh, you are hired.

Do you at least read the post I quoted? Context is important.

You stated that gamepass is taking part of their 3rd party games sales. Unless you mean the actual games that are on gamepass. In that case I missed out your point. If not, then gamepass doesnt affect those sales.

This year has been meh 3rd party games. Delays after delays. The good games are coming out this holidays. Aside of hitman 3, it takes 2, there was not that big of a game. Re8 happened. The most dried out games I have experienced.

 

[kingfey]

More subscriptions means less people buying games.

That is just steep thinking.

The more subs means, more buying, as those games are exposed to a large audience.

You have to remember this. 3rd party games stays for 1 year contract. People will buy those games. There is no point for people not to buy those games, if they are leaving the service anyway.

You simply buy what you like. That is what gamepass encourages you. And you wont risk your money, on games you dont like.

 

[M1chl]

Speaking of Zhuge, he estimates that Microsoft needs over 50m subscribers before GamePass becomes profitable.

I guess we should use that as a benchmark?

So you are saying that MS spends little under 500m USD per Month on GamePass?

doubt™

 

[Fredrik]

However, I think people would actually be spending less on DLCs and expansions for games they got via a subscription service (Gamepass, PS Now, PS+) because they don't own the base game. And their expansions would be useless if their subscription ever lapses, unless they buy the game they have already played via a subscription.

Everything you spent is useless if you cancel a sub, I don’t think that is holding people back, the stuff is there just like the other 400+ games on the service once you start subbing again.

 

[Hezekiah]

So you are saying that MS spends little under 500m USD per Month on GamePass?

doubt™

I'm telling you what Zhuge's estimate is, just like how people report what his hardware sales estimates are.

It needs to be an estimate because you and I don't know what is being spent.

 

[Evilms]

Given all the circumstances, like entering the generation after XB1, a.k.a. MS's worst gen ever, no Series X/S launch lineup at all, supply constraints etc., that's a pretty impressive result. Once the heavy hitters like FH5 and Halo show up I expect MS to start seriously snowballing.

 

[M1chl]

I'm telling you what Zhuge's estimate is, just like how people report what his hardware sales estimates are.

It needs to be an estimate because you and I don't know what is being spent.

I don't however it would probably be seen, such large investment. Don't get me wrong I would like MS to spend that much, but I doubt it.

 

[kingfey]

I don't however it would probably be seen, such large investment. Don't get me wrong I would like MS to spend that much, but I doubt it.

The only way they can do it, is 3-5 AA-AAA games day1 on the service. Like mlb and outriders day1 on april.

Even that would not cost them alot, since those games would be on their store, and xbox users will buy them, whether they are subbed to gamepass or not. We have seen that with MLB and Outriders. In a sense, MS is in a perfect position to do more offers like that for cheap.

 

[Die Namek Ability]

Good, dont let Sony get complacent like the early PS3 days.

 

[Ass of Can Whooping]

The only way they can do it, is 3-5 AA-AAA games day1 on the service. Like mlb and outriders day1 on april.

Even that would not cost them alot, since those games would be on their store, and xbox users will buy them, whether they are subbed to gamepass or not. We have seen that with MLB and Outriders. In a sense, MS is in a perfect position to do more offers like that for cheap.

How much do you think Microsoft gave Square to put Outriders on gamepass?

 

[prinz_valium]

So you are saying that MS spends little under 500m USD per Month on GamePass?

doubt™

Of couse it's way below that.
Microsoft is spending just over $3bn a month for Windows, Devices (Surface, Hololens), Bing and Gaming combined.

Game Pass isn't $0.5bn a month or 15% of that.

 

[kingfey]

How much do you think Microsoft gave Square to put Outriders on gamepass?

Probably around $100m, including the marketing.

Digging into the detail, Epic paid $115m for the Borderlands 3 deal. This included a minimum guarantee of $80m, a marketing commitment of $15m, and a one-off fee of $20m. Also included are "bundled 2K deals". This involves money paid to release a couple of 2K games on the Epic Games Store for free.

This is for borderland 3 Timed exclusive, plus some freebies.

Outriders wasnt an exclusive, which makes the price little bit cheaper than borderland 3. Borderland 3 missed out steam. Which is much bigger than epic.

They also heavily marketed MLB the show for the xbox. They would have had some deals to do that, and reduce the gamepass fees. Thus saving enough money for MLB.

 

[M1chl]

Of couse it's way below that.
Microsoft is spending just over $3bn a month for Windows, Devices (Surface, Hololens), Bing and Gaming combined.

Game Pass isn't $0.5bn a month or 15% of that.

Well I was just reacting to someone claiming that they need 50m users to break even...

 

[kingfey]

Well I was just reacting to someone claiming that they need 50m users to break even...

The content that is on gamepass currently, isnt even worth that much. Most of gamepass content have been paid.

The spending of gamepass depends on the quality of games for that month. April was the most expensive for them, due to mlb and outiders. No month can top that.

 

[AdjudicatorHead]

Probably around $100m, including the marketing.

Digging into the detail, Epic paid $115m for the Borderlands 3 deal. This included a minimum guarantee of $80m, a marketing commitment of $15m, and a one-off fee of $20m. Also included are "bundled 2K deals". This involves money paid to release a couple of 2K games on the Epic Games Store for free.

This is for borderland 3 Timed exclusive, plus some freebies.

Outriders wasnt an exclusive, which makes the price little bit cheaper than borderland 3. Borderland 3 missed out steam. Which is much bigger than epic.

They also heavily marketed MLB the show for the xbox. They would have had some deals to do that, and reduce the gamepass fees. Thus saving enough money for MLB.

You're delusional if you think timed exclusivity on a PC launcher would be more expensive than making a major third party title available at launch at no added cost to Game Pass subs. At absolute best, they'd cost equal, though it would definitely rise to more if the deal includes Gamepass PC and/or xCloud.

 

[R3claimer117]

My intention isn't to 'shit it up' , everyone here knows and understands I have my bias and that I will be super critical and read into things like the absence of GP numbers. You can take my posts as insight from a perspective different to your own or however else you want to view them.

I already posted that the hardware numbers are great and I love seeing strong hardware, cause game streaming sucks.
I also never mentioned PlayStation in any previous post in this thread from what I remember.
Don't take it so personal...

that’s just the thing I have both systems and I play on both I don’t have a bias if Sony’s messing up I call them out if Microsoft’s messing up I call them out as we all should just blindly picking a side of a corporation is just not a wise move in my opinion and to just derail ever discussion with fanboy fudder is very disingenuous.

 

[oldergamer]

I think you overestimate how many people buy games, DLC or MTX for games on Gamepass. I don’t think it’s that rare. I’ve got 3 years stacked and I’ve never bought any DLC, MTX or anything. In fact, stacking 3 years of gold was so cheap that I’ve already saved more than the cost in games I didn’t need to buy - and more are coming this year and next.

I’m very sceptical of the claim that it doesn’t cannibalise revenue outside of Gamepass, to some degree at least.

Ive literally spent more on games since getting gamepass. I dont know why but i have. Its a trend ms has mentioned.

 

[kingfey]

You're delusional if you think timed exclusivity on a PC launcher would be more expensive than making a major third party title available at no added cost to Game Pass subs.

What is gamepass to you? Is it a new hardware?

Xbox sold 51m xbox one consoles. if that 40m are users, and 10m is defect, that is still not enough people subscribed to gamepass.

Any game that is on gamepass day1 would still be able to sell on the console. Unless everyone completely joins Gamepass.

In that regard, games that are on gamepass day1, would be way cheaper than timed exclusive pc.

We are talking about skipping a 120m monthly active users for that store, and go to a new store, which doesnt have enough people.

So tell me again, which one is more expensive? Epic exclusive, which blocked a 120m store from accessing the game or 18m sub service, that you can still buy the game on the store, so you arent losing any money.

 

[AdjudicatorHead]

So tell me again, which one is more expensive? Epic exclusive, which blocked a 120m store from accessing the game or 18m sub service, that you can still buy the game on the store, so you arent losing any money.

TEMPORARILY blocked a 120m store from accessing the game, so that users had to buy on another store at full price, or wait, and buy on said 120m store at a later date instead. Can you stop with this crap "it's still on the Xbox store, so they aren't losing any money" - there will have been plenty of GP users who didn't buy, who planned to buy, which Square will have missed out on, and the fee MS paid will have incorporated that reality and compensated them for that.

 

[Thirty7ven]

Ive literally spent more on games since getting gamepass. I dont know why but i have. Its a trend ms has mentioned.

Content and services are down, which tells us people are in fact not spending more.

It literally says offset by GP subscriptions and first party … so GP helped keeping the loss lower ..

Don’t forget MS’s multiplatform strategy. People forget the likes of Steam and Minecraft are contributing a lot.

And it’s hard to say GP helped, considering overall its down. We will need to see numbers from competitors to understand if GP is helping or it’s in fact creating the situation.

 

[oldergamer]

Considering they stopped reporting units and bundled Xbox with their Surface devices when things got rough for Xbox, I find this discourse a bit hypocritical.

Almost like when sony combined ps3 sales with ps2 to form a single "playstation family " in financial reporting? Yeah i find it hypocritical too.

I remember when we once saw attach rate for games. That was a good indicator how well a platform was selling to its customers