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Xbox profits revealed in new FTC leak (Update: margins are not operating profit, article was misinformative)

StreetsofBeige

Gold Member
Where does it say they spent $17 billion?

The 17 billion figure is the expected turnover including quarter 4.
Correct.

For anyone skimming the green chart, the first column is Q1-Q3 Actuals. The right column is their FY estimate which would be Q1-Q3 Actuals + their estimated Q4. That's why that column says Budget. It's their FY forecast.

Granted, without knowing the exact details there's a small chance that FY column is actually their projection taken at the beginning of the year (their original FY budget), but I'm going to assume they updated the Budget column with 3 quarters of Actuals with only Q4 being a projection.

(Edit. It is Q1-Q3 actuals + Q4 projection. It says that in the footer)
 
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Ozriel

M$FT
If the division is performing this well with half the install base of PS5 i would say it is doing fine. Also, the other key take away seems to be Xbox hardware was making great margins. There were a lot of poeple claiming they were losing a lot of money on hardware and it doesnt look like that is the case at all.

They ARE losing money on hardware. The embedded email in the OP shows they lost > $1bn on subsidized hardware.

They’re able to cover that with software and services.

This topic is the definition of...

television-alert-fake-news-jmynk0usil8v84ai.gif


Accountability Margin does not equal Operating Income. That dufus from TweakTown better read a bit before spouting his console warrior nonsense.

You have no way of determining that, though. Unless you’ve worked at MS and know exactly what goes into that term?
 

Brucey

Member
If the division is performing this well with half the install base of PS5 i would say it is doing fine. Also, the other key take away seems to be Xbox hardware was making great margins. There were a lot of poeple claiming they were losing a lot of money on hardware and it doesnt look like that is the case at all.
Well it was Spencer who said that...

"Today, Spencer said, Microsoft gives people choice in how much they’d like to spend if they want consoles. The company offers the $499 Xbox Series X and the less powerful $299 Xbox Series S. Microsoft subsidizes the cost to the tune of $100 to $200 per console, with the expectation that it will make the money back on sales of accessories and storefront purchases, he said. It’s up to gamers if they’d like to pay $10 or $15 per month for Game Pass subscriptions. They can also buy games outright, or play certain games for free."

 

DenchDeckard

Moderated wildly
Is this forum just anti xbox now lol, every thread i swear

Don't know too much about finances, but we don’t know if all this is meeting MS' targets.

If both GamePass and console sales stagnate, I wonder if MS will deem a single-digit profit worth the investment.
Especially if there will be a chance that things will get worse going into next-gen, when even more people bought into Playstation's eco-system and are even less likely to make a switch.

This was talked about by Spencer in that interview a while ago.

MS themselves said they were losing a lot of money on hardware. The reason you don't see it impact, is because they are not moving as much units as the competition. The competition is outselling them 2 to 1 at this point, thus it impacts profits more.

Both companies make a lot off the MTX and store spend.

They ARE losing money on hardware. The embedded email in the OP shows they lost > $1bn on subsidized hardware.

They’re able to cover that with software and services.



You have no way of determining that, though. Unless you’ve worked at MS and know exactly what goes into that term?

Yeah, so they must both be losing a considerable amount on hardware.

This look behind the curtain is very interesting.
 

DeepEnigma

Gold Member
Yeah, so they must both be losing a considerable amount on hardware.

This look behind the curtain is very interesting.
Initially, yes. Sony I believe finally started turning a profit on the $499 PS5, probably due to software sales and revisions, but they expect a profit dip after record profits (probably due to the $50 price cut to get to 25mil projection).


Projected profit dip probably due to price cut in select regions,
 
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Phil's whole thing about Microsoft exiting gaming by 2027 if Gamepass doesn't triple its subscription or whatever is just dog and pony for the FTC. Like they are gonna walk away from 15+ billion a year cause it's "just not sustainable" LOL
Very true. Phil will say anything at this point to try and win over the court ruling against the FTC. Also, spending as much as they are on publishers doesnt look to me like they will just exit gaming. GP numbers will go up of course but who knows by how much. MS are in this to make money and they know there is money to be made in this industry. We shall see going forward.
 
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StreetsofBeige

Gold Member
A lot of that revenue is third parties' share from digital sales and microtransations, so the margin isn't as bad as it looks.
Perhaps if that methodology is true. That means MS and Nintendo margins are better too than stated.

It wouldnt make sense to only reduce Sony revenues because if it was that means Sony and Xbox revenue would be approaching the same which is impossible since Sony has double the consoles and gamers buying stuff.
 

DeepEnigma

Gold Member
Perhaps if that methodology is true. That means MS and Nintendo margins are better too than stated.

It wouldnt make sense to only reduce Sony revenues because if it was that means Sony and Xbox revenue would be approaching the same which is impossible since Sony has double the consoles and gamers buying stuff.
I think he means, Sony reports 100% of the 70/30 splits for revenue, MS and Nintendo do not.
 

SlimySnake

Flashless at the Golden Globes
A lot of that revenue is third parties' share from digital sales and microtransations, so the margin isn't as bad as it looks.
Didnt sony had Horizon, GOW, GT7 and TLOU release last year? I expected a higher share of profits.

Like i said, the $3.2 billion bungie acquisition likely cut into their profits here. They posted $3.5 billion in profits just two years ago. That and the VR2 launch.
 

DeepEnigma

Gold Member
Didnt sony had Horizon, GOW, GT7 and TLOU release last year? I expected a higher share of profits.

Like i said, the $3.2 billion bungie acquisition likely cut into their profits here. They posted $3.5 billion in profits just two years ago. That and the VR2 launch.
I think that only $1.2b employee retention counts. Which is still a large number.
 
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Mr.Phoenix

Member
Haha... you guys are talking about Sony profits, a more pertinent conversation would be the fact, that if all Xbx had as its revenue, they just spent 40+ years of profits on Activision...

Or if that expense is amortized, then Xbox shouldn't be profitable for the next 8 years at a minimum.

But I guess if we stopped acting like this was a fair fight it wouldn't be fun anymore.
 

cebri.one

Member
[/QUOTE]
This topic is the definition of...

television-alert-fake-news-jmynk0usil8v84ai.gif


Accountability Margin does not equal Operating Income. That dufus from TweakTown better read a bit before spouting his console warrior nonsense.
Pretty much, they are equating profit margin to a made up term. If they have better margins than Sony why not disclose that in quarterly earnings. This is the dumbest thing I’ve read in a while.
 
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Woopah

Member
Perhaps if that methodology is true. That means MS and Nintendo margins are better too than stated.

It wouldnt make sense to only reduce Sony revenues because if it was that means Sony and Xbox revenue would be approaching the same which is impossible since Sony has double the consoles and gamers buying stuff.
It would affect MS I believe (not 100% sure on that though) but wouldn't affect Nintendo since they don't include third party revenue in their figures .
Didnt sony had Horizon, GOW, GT7 and TLOU release last year? I expected a higher share of profits.

Like i said, the $3.2 billion bungie acquisition likely cut into their profits here. They posted $3.5 billion in profits just two years ago. That and the VR2 launch.
In this particular time period Sony just had TLOU and GOW. But even so, the digital sales of third party things like FIFA and COD would be a huge chunk of their revenue.
 

Astray

Member
Why did they use operating income, net income and accountability margin in that Big Three comparison? That's three different things being compared together. It just makes no sense.

Might as well say that Sony sells more because the sky is blue.
Because Derek has no idea how accounting and financial analysis work.

Forget apples and oranges, this is like comparing a coconut with a mangosteen and a half-eaten banana.
 

Killjoy-NL

Member
They clearly don't need to buy up ABK and then some "to compete" then. They are doing just fine!
That would mean they really are actively trying to outspend Sony (and competition in general) by buying up everything because they are losing marketshare, highlighting exactly the cancerous business they are being accused of.

I don't think it's something to cheer about as gamers.
 

coffinbirth

Member
Not sure what numbers here, if any, are actually accurate...but it's interesting nonetheless.
What's crazy is that ABK will be adding another $8b a year.
Will be interesting to see how much GamePass numbers grow once CoD starts hitting it Day One. WoW on console seems like a sleeping giant as well.
 

cebri.one

Member
Just to give another look on how great Xbox is doing, only based on revenue numbers per business and business segment operating profit for the quarters mentioned in the article.

They are the worst performing business in the worst performing MS business segment.
K6pOB9E.jpg
 

Killjoy-NL

Member
Genius strategy.
Yes, but people are already saying that PS5 and Series need a Pro version for better performance.

If Sony and MS would do the same as Nintendo, people would be whining about PS5 and Series being underpowered to no end.
 

Hudo

Member
Yes, but people are already saying that PS5 and Series need a Pro version for better performance.

If Sony and MS would do the same as Nintendo, people would be whining about PS5 and Series being underpowered to no end.
People will always find something to complain. Especially on Twitter and Reddit, which are just made up of people whose hobby is to complain about various things.
 
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