LukasTaves
Member
They are never put full win10 (with desktop) on their only successful device they have that can be locked to only have access to their store.
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Analyst DFC: 'Question is not if Microsoft will exit the game business, but when'
- Thread starter chadskin
- Start date
LordRaptor
Member
Okay, so let's be clear; overall PC sales are going down, but PC gaming is increasing in numbers.
What we are seeing in the market is people who have been effectively missold PCs over the years moving to devices that suit their purpose better - namely tablets. This is a market correction; these are sales that would otherwise be a netbook (which is now basically obsolete as a concept).
People will play games on any device that is capable of playing games, even scientific calculators. PC gaming is increasing because people are buying PCs just to play PC games; whether that's people at the high end who want console AAA experiences at 1080p/60fps moving from consoles, or whether thats people at the low end wanting a deeper experience and graduating from Clash Of Clans or Angry Birds to Civilization and Kerbals Space Program doesn't actually matter, because they are all Pc gamers.
LordBaztion
Member
So, "analyst" assumes are consoles are bought mostly because of exclusives while people plays mostly on PCs and that people not willing to buy a console for $300 will wait to buy one at $500.
Typically console manufacturers only exit the market when they run out of money, and can no longer make massive capital investments in new platforms or spend enough on marketing to compete. Sega stopped making Dreamcasts because they were running huge deficits with no way to catch up and no third parties to prop them up.
Microsoft has the largest warchest of all three companies. It's bizarre to me that like 70% of people think they will be the first to leave. They can weather multiple failures and keep going without breaking a sweat. Staying in this business costs them very little in terms of their bottom line.
Sony is probably 2 big failures away from simply having to bow out. That is kinda the danger in this business.
Nintendo will never leave the game business, but the console market may not be for them ultimately. They certainly have the money to keep making systems, but at some point they may have to realize that they destroy the value of their IPs by chaining them to progressively smaller and smaller userbases.
Microsoft has the largest warchest of all three companies. It's bizarre to me that like 70% of people think they will be the first to leave. They can weather multiple failures and keep going without breaking a sweat. Staying in this business costs them very little in terms of their bottom line.
Sony is probably 2 big failures away from simply having to bow out. That is kinda the danger in this business.
Nintendo will never leave the game business, but the console market may not be for them ultimately. They certainly have the money to keep making systems, but at some point they may have to realize that they destroy the value of their IPs by chaining them to progressively smaller and smaller userbases.
Shrennin
Didn't get the memo regarding the 14th Amendment
Yeah, if Microsoft was even considering leaving the console business, there would be no way Microsoft would approve two different models of Xbox consoles, one of which is an "elite" version likely to be very pricey and powerful.
Microsoft has always taken losses on hardware, this is why the new strategy makes sense for them -- they don't care if a consumer gets an Xbox or PC, they will cater to both audiences as they just want everyone into the ecosystem.
DryvBy
Member
I don't think Sony sees it that way. It seems more reasonable the entire Neo/Scorpio thing is spawned from Microsoft needing to do something with their system to at least hit 1080p this gen. This caused Sony to lose the "best running/looking system on the market" bullet point.
Or it has to do with ATI cards coming out now that are drastically cheaper that support VR. I'm sure continuing with the other cards they were both using would have been more expensive/dumb. But I'd rather have just had a shorter life cycle these gens than incremental updates, if that's the console future.
If a division is losing money left and right, they can continue to lose money and try to "win" or they can turn their focus on the Xbox brand as a service (more Windows, less hardware).
michaelius
Banned
Didn't they just cancel a bunch of f2p projects ?
Tatsumi Oga
Banned
Do these analysts forget that Xbox One is doing pretty well? Sure it's no PS4 numbers, but still pretty decent for sure. And while they don't have as many first party studios as Sony, they still do have several exclusives left. This E3 showed us that they got plenty of games coming this year and next year and on top of that they announced two new consoles for the "Xbox One family".
Yeah.....they are getting out of the gaming bizz for sure.
Yeah.....they are getting out of the gaming bizz for sure.
LordRaptor
Member
If the high level goal for the Xbox Project was to stop Sony being a dominant force in the living room and acting as a replacement PC that doesn't run Windows, then no, the Xbox One is not doing very well being outsold by something like 2 to 1.
And further questions are raised as to if "what box is in HDMI slot 1" is even a battle MS should be fighting now everyone on the planet has their own screen, and more than 97% of those screens are not running Windows.
That would be almost completely unprecedented in this business, for a company with tens of millions of users to just bow out in favor of other opportunities. When Sega and Atari left, it was because the money was just completely gone and they couldn't launch another console even if they wanted to. When Panasonic and Phillips left it was because they had no real hope of salvaging their platform that had already failed to achieve any kind of critical mass.
While it's not inconceivable that Microsoft could abandon Xbox, it would pretty much take a failure on the level of the 3DO to make that happen. While the Xbox One might not be performing at the level they want it to, they aren't just going to shrug their shoulders and give up on the entire market and one of their most valuable consumer brands.
Keep telling yourself that. Microsoft is aiming to reach the largest possible pc userbase, so expect these game to scale all the way down to low tier. There are many many countries where pc is the number one way to game, and to those users, amd the users like me who don't buy pc parts but still have a decent rig, there's a lot of people who will gladly not buy a redundent console in favor of a different steam like thing. Microsoft knows the xbox market caps at 30-40 mill, its the pc market they want, and as soon as the pc store can stand on its own, they will get out of the console business. I'm 100% convinced their scorpio is their send-off to the living room.
This will not be popular with the XBox fans on this board. I know quite a few people who work for MS in software and networks. In addition I have quite a bit invested in MS as a shareholder. The XBox is a sore subject with most within MS, and especially with the upper management. That whole division is in fact. The only product pulling its weight is the Surface. There has been a lot of talk about getting rid of all those groups, as MS is mainly focused on services these days. I don't think they will, but this isn't just fan boy drivel either. If they could actually sell it I think they would, but no one is interested last I heard. It isn't really a very profitable market - gaming in general. I think MS is basically stuck with the XBox unless it can become enticing to another buyer. But they have to actually start showing a profit soon as well
Why would you launch a most likely money losing console to regain market share just to "send it off". Makes absolutely no sense what so ever. MS realizes the PC gamer and the console gamer are two different experiences and markets. They are catering to both, because they want a presence in both. The walled garden of a console is huge for MS in cross promoting Windows 10. MS isn't leaving.
Dude, there's no point in even attempting this. The flood of these threads here is ridiculous. The narrative is being pushed so hard that some people seem constipated.
Not to mention that if MS did in fact leave the console market, it would leave a massive gapping hole in the industry.
So they are just going to throw away 30-40 million potential customers if they get a good presence going on the Windows App/Game store? How does that even make sense? Why would you completely abandon one market rather than work in both? Even Valve is trying (albeit poorly) to get into the living room, and Steam dominates the PC scene.
All of their recent moves have been towards making the console market more stable and sustainable over the long term, not towards cutting out once the magical day arrives that the Windows Store can compete with Valve.
SneakersSO
Member
Getting out of the gaming bizz? nah, not at all. Getting out of the hardware biz? Honestly, that doesn't sound super far-fetched. All of the moves they made at E3 removed the 'need' for an Xbox. As for how well its been selling - X1 hasn't had a great year, to be sure. It remains to be seen how this year is going to shake out for them; I expect the slim will pull in some good numbers for the summer, but lets see how long that'll be maintained for going into the holidays.
These moves to reposition Xbox into a software brand instead of a hardware brand seem to be coming up from on high.
I've always maintained that healthy console sales, even with the console market shrinkage we have seen, should be able to pull in 8-10 million units sold to consumers per year, minimum. I honestly don't know if I see the Scorpio hitting that in its first 12 months of being on the market, especially without any exclusive software to sell it. Interesting times for Xbox hardware coming up, indeed.
Lasthope106
Member
I honestly can't wait until the day where all games are hardware agnostic, and I will just have Steam, PSN, Nintendo, Microsoft networks.
The Albatross
Member
I voted:
Microsoft, Sony, Nintendo, not because I think Nintendo is more successful than either of those two, but because Microsoft and Sony have other methods outside of videogames at turning a profit and staying in existence. Videogames are a facet of Microsoft's business, and while videogames are one of the few successful facets of Sony's business, Nintendo relies purely on videogames, and so saying they'd be 'out of the game business' means they'd be out of business, and I don't think they're going to go out of business.
But in reality I do not think that Microsoft is getting out of the game business. It's ridiculous at this point.
Consider this, Xbox Live has 48million active subscribers as of January 2016. Microsoft is in the big data business, it's why they just bought LinkedIn for many billions of dollars, to get data from their subscribers to more effectively market and create their products. Xbox Live is a tremendous asset for Microsoft in data collection... It reveals app, media, and gaming metrics for likely over 50million households, with a very targeted market of evergreen consumers.
Microsoft isn't going to ditch that data anytime soon, when data is becoming the cornerstone of their business.
Microsoft, Sony, Nintendo, not because I think Nintendo is more successful than either of those two, but because Microsoft and Sony have other methods outside of videogames at turning a profit and staying in existence. Videogames are a facet of Microsoft's business, and while videogames are one of the few successful facets of Sony's business, Nintendo relies purely on videogames, and so saying they'd be 'out of the game business' means they'd be out of business, and I don't think they're going to go out of business.
But in reality I do not think that Microsoft is getting out of the game business. It's ridiculous at this point.
Consider this, Xbox Live has 48million active subscribers as of January 2016. Microsoft is in the big data business, it's why they just bought LinkedIn for many billions of dollars, to get data from their subscribers to more effectively market and create their products. Xbox Live is a tremendous asset for Microsoft in data collection... It reveals app, media, and gaming metrics for likely over 50million households, with a very targeted market of evergreen consumers.
Microsoft isn't going to ditch that data anytime soon, when data is becoming the cornerstone of their business.
Aren't they just above 20 mill? that's not that great IMO.
I don't think they're leaving though
HawksWinStanley
Member
lol this.
That's the beauty of making a stupid article like this. Give no perspective on timeframes and leave everything open ended and you can't lose. If you're wrong then people have long forgotten the article and if you're right you get to say, I C4LL3D 1T!!!!!!1!!". Just dumb.
DryvBy
Member
They wouldn't be giving up on the entire market because the Xbox brand would be what they just call gaming in general. Phones, PCs, tablets, etc.. I could see them doing a Steam box that's just a PC for the living room they just call an Xbox. I don't think they'll continue making a traditional Xbox console at all in the next installment of systems. It's evident in their push for Windows 10 (even pirated copies of Windows 8 were weclomed into the W10 family), their comments on making everything play nice together, their push for a one stop shop, and even pushing Windows apps to the Xbox.
They're not removing the Xbox brand; they're re-shifting it into the PC direction with streamlined phone and tablet integration. I wouldn't be shocked if we get different branded Xboxes in the future like we did Steam boxes.
Chezzymann
Member
My compeltley unqualified opinion is that consoles will become irrelevant by becoming more and more like PCs (expecially with these incremental upgrades now) and eventually the vast majority of 'hardcore' gamers will switch to PC, this is when PC gaming will be at its peak popularity for a number of years, and then the traditional gaming audience will very gradually over the course of time become a more and more niche thing the point where its not really mainstream anymore. Aka mobile future of doom. But probably not until like 2030 or something.
Dyson Industries
Banned
Gaming? No. Hardware? Absolutely. You'd have to blind not see where things are going. Play Anywhere is their future, and the what-are-we-doing announcement of the S and Scorpio demonstrates that they're trying to hedge bets.
The countdown is on.
Announcing a new piece of hardware and then making it redundant by the end of the same conference does not come across as a wise move. They have hamstrung the sales of new 1st and 3rd party titles on their console for the next 18 months as anyone on the fence is going to continue to wait and see what Scorpio offers.
Thinking that they can offset this somehow via the Windows 10 store is nothing but wishful thinking too. Microsoft will, at best, get a continual trickle of sales of their 1st party software on the Windows 10 store, but nobody who is interested in enthusiast PC gaming is going to use their storefront over the likes of Steam or GOG for 3rd party games. As a result, 3rd parties will rapidly reach the point where they don't see a business case for supporting the separate UWP format (and separate update submissions process) required for the W10 store over the massive majority of users on rival services, and will simply support the services where their customers are. Microsoft's thinking on this seems to be that they can present a combined W10+XB1 userbase as a massive addressable market for 3rd parties if they adopt UWP, but this is a pipe dream in the face of the combined marketshare of non-W10 platforms for gaming.
I really don't see a viable future path for Xbox to grow on its current trajectory, because it doesn't seem like any of their actions are going to turn around the business to the point where it's contributing to Microsoft's aims.
They would have been better served by bringing their app ecosystem in line with Apple and Google's ahead of the inevitable Surface Phone, rather than kludging the likes of Tomb Raider and Quantum Break into a container format that enthusiasts were inevitably going to balk at. Likewise, some kind of "Surface X" variant of their tablet range positioned around media/gaming would serve them better than a slimmer Xbox that they were going to scare customers away from with better hardware anyway.
Thinking that they can offset this somehow via the Windows 10 store is nothing but wishful thinking too. Microsoft will, at best, get a continual trickle of sales of their 1st party software on the Windows 10 store, but nobody who is interested in enthusiast PC gaming is going to use their storefront over the likes of Steam or GOG for 3rd party games. As a result, 3rd parties will rapidly reach the point where they don't see a business case for supporting the separate UWP format (and separate update submissions process) required for the W10 store over the massive majority of users on rival services, and will simply support the services where their customers are. Microsoft's thinking on this seems to be that they can present a combined W10+XB1 userbase as a massive addressable market for 3rd parties if they adopt UWP, but this is a pipe dream in the face of the combined marketshare of non-W10 platforms for gaming.
I really don't see a viable future path for Xbox to grow on its current trajectory, because it doesn't seem like any of their actions are going to turn around the business to the point where it's contributing to Microsoft's aims.
They would have been better served by bringing their app ecosystem in line with Apple and Google's ahead of the inevitable Surface Phone, rather than kludging the likes of Tomb Raider and Quantum Break into a container format that enthusiasts were inevitably going to balk at. Likewise, some kind of "Surface X" variant of their tablet range positioned around media/gaming would serve them better than a slimmer Xbox that they were going to scare customers away from with better hardware anyway.
The problem is that their Windows phones and tablets are getting absolutely steamrolled, and not a great market for games anyhow.
On PC they are up against Steam, and companies like EA/Ubi/Activision might not even want to put their games on the Windows Store.
Consoles are the one area where they are actually pretty evenly matched against their competitors. It's also the one area where they aren't facing deeply, deeply entrenched competition. Not to mention that they are raking in countless millions from XBL Gold subscriptions, and they will have to kiss all that money goodbye on the PC.
SneakersSO
Member
They aren't? Sony & Nintendo have proven that to be completely false. Considering the supreme advantage they had last-gen, the fact that both the PS3 caught up, and that they weren't able to convert the strides they had made into Sony territories last gen into X1 sales this gen show just how stacked things are against them.
They are going to need to drastically increase sales in ROTW if they want to stay in this game. That is what is killing them. The only territory they are anywhere close to even in is NA, and they have tried drastically these last 2 years to close that ever-increasing gap. In fact, I think the only reason Xbox has been allowed to stick around to this point is because they were the most popular hardware brand within MS. If MS does in fact pull the trigger on a Surface Phone & buys into the notion that Surface is now their most popular hardware brand, I dunno if they'll continue to maintain Xbox as a hardware brand & instead reposition them into a software & service brand, which they've been doing in greater strides this last year anyway.
Insane Metal
Gold Member
Lol, love the poll 
It does make sense because the 'walled garden' is still in the budding phase. They can't simply afford downtime on the brand, so the scorpio will be used as a transitional tool while their store comes into fruition. How are consoles amd pc different if they offer the same experience? You'd be suprised how many people have a pc hooked up to their living room for streaming / gaming.
Ultimately they have a much better chance competing against Sony/Nintendo than they do Steam or Android/iOS.
Why would would leave the console space, where they are capable of taking in a 30-50% market share, in favor of the PC/mobile arena where they are struggling to eke past 2-5% market share?
LordRaptor
Member
The mistake they are making is thinking that they are in competition with Steam et al.
They are not. They should not be acting like they are.
They own the platform that Steam, Battle.net, Origin etc are located on; they are in competition with Apple and Google.
It is in their longterm interests to present Windows as a viable choice for gaming by supporting game producers, not to try and carve PC gaming up into a tier system of internal competition between "Games on the W10 stire" and "Games everywhere else".
Sephiroth_VII
Member
That... is a very mixed bag of an article. They were directly comparing the number of PCs sold to the number of consoles sold this generation. It doesn't make much sense when discussing the high-end gaming market.
Because they're a Windows OS company and they think that is a more natural fit for their products and services.
SneakersSO
Member
MS has never been a company that continues to pursue something unless they have a clear path to ultimately become the market leader. Unless they have some drastic plans to reposition the Xbox brand, not the X1 mind you - the Xbox brand itself, in territories that aren't the US & UK, then they have no chance of ever becoming the market leader again, unless Sony screws the pooch again.
The fact is though, there is far more money with healthier margins to be by turning the Xbox branch into a software & services division instead of focusing on hardware. It'll cost them way more to sell & maintain that 30-50% than it would to just provide a platform that software is sold on.
Maintenance
Member
They should think like that, but I'm not sure they are doing that right now. If they can they will disrupt the other stores, no doubt about that (just look at UWP).
Microsoft's problem is that the cost of maintaining this 30-50% marketshare in the console market is massive for a relatively small return (compared to the likes of Apple/Google's return on their storefronts).
Unfortunately the solution they have decided on is to make even the likes of Steam and Battle.net competitors rather than allies.
This seems like kind of a false premise to me. I'm sure we can all name a number of Microsoft products that have absolutely no hope of becoming a market leader but continue to see support. Use Bing to find examples.
I guess what I'm missing here is where does all this vague "software and services" money come from? They can't even sell Windows OS to consumers anymore. They don't get any cut from Steam/Origin/Battle.net and the Windows Store is not really viable. Xbox Live will not survive a transition to the PC space as a paid service -- the only "service" they get a decent revenue stream from would go away. How exactly does Microsoft make better money on "PC software and services" than in the console space?
bitbydeath
Gold Member
In business if you're looking to sell you have to make your product as attractive as possible to make the most money, so that argument doesn't really work.
Furthermore the S will replace the current model and will save MS money.
I don't know what MS are planning to do and wouldn't be surprised if MS don't really know either post the PC merger.
michaelius
Banned
They have billions to gain if windows 10 store becomes dominating source of pc software and another crap load of money from advertising and data mining windows 10 users to use in their own big data collection.
Selling few licenses of OS to people so they can play play games is pocket cash compared to that (and they will still get it from new pc sales)
LordRaptor
Member
Yes, I know.
PC gaming should absolutely not be under the remit of the Xbox division.
They have repeatedly shown they do not know what they are doing.
MS do sell Windows though. Even while they were offering free upgrades to existing customers they were selling new copies.
So just selling copies of Windows is a revenue stream. It's also one that's made them billions of dollars in profit.
As for other gaming services revenue - why don't they offer a service worth paying for? Crazy, I know.
Seems like that would engender more goodwill than using monopoly power to try and force people into paying for something that is sub-standard compared to the free competition or by providing a storefront that does not meet even basic functionality standards and expect people to just hand over a revenue share.
e:
Except that is literally never going to happen.
Movalpolos
Banned
Makes me wonder if the whole "Play anywhere" initiative is damaging their relationship with physical retailers like Gamestop.
So right...
To say that Microsoft might leave the console makes space for greener pastures makes sense at the most basic level, but not if those greener pastures are so vague and nonexistent.
"Oh they can still sell Windows to make money.....and maybe invent some kind of service that people will pay for." They don't need to leave Xbox to continue selling Windows licenses, nor can they really just invent some kind of service/subscription model that will suddenly rival the size of the Xbox Live userbase.
Personnally I think Sony is making a mistake thinking that way more people than they exist care about the console power relative to PC.
SneakersSO
Member
Because, at the end of the day, their OS is still the no.1 developed on platform & supported platform when it comes to PC gaming, and they still the largest platform for game development to occur on. They could absolutely begin adding license fees for PC software sales that run on Windows should they want to. There is an absolute truck ton they can leverage by having a PC digital software storefront that they are curating & supporting. Various other market sectors larger than gaming would respond to that.
DryvBy
Member
Their hardware is, yes. But that store front can come to Android and possible Apple. Amazon has had a separate storefront for Android for a couple of years now.
LordRaptor
Member
I guarantee you that the $100-$200 per copy of Windows sold is worth more to MS as a company than whatever marginal gain - if any - they receive from each Xbox 1 sold.
There are a myriad of services they could sell, either individually or bundled into a subscription fee; dedicated game servers, cloud saves, ventrilo / mumble servers, hosted tournaments, free old games such as EA vault offers, they would still have their accessories business... there are a myriad of services they could sell, because there are a myriad of services PC gamers already pay for.
How are they going to begin collecting license fees from Windows software vendors? What leverage do they have against Steam and the larger publishers? How does this not begin a pretty massive civil war amongst PC publishers? Why close one walled garden just to open up another one and engender a ton of ill will in the process?
Moreover though, what precludes them from doing this while simultaneously supporting a console? I don't see why it has to be an either/or proposition.
slavesnyder
Member
Those countless millions are a flying fart compared to what other MS business units earn (OS, azure, office, whatever)
I'd even say those XBL millions are the only thing to keep the Xbox division above the surface.
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