You’re reading the graph wrong. MS does not disclosing operating profit for Xbox.
That's not my fault, then. It's theirs for making such a stupid graph. They'll disclose operating profit for much bigger divisions but not gaming? And shareholders see no problem in this?
So basically the graph is selectively showing pertinent information and obfuscating other information that should otherwise be expressly communicated in the same graph. Do they have schizophrenics making these for them?
PALWORLD has been such a slapping success that Microsoft has decided they don't even need employees to helm their own studios anymore. They are the proud supporters of the 'Better' Pokemon Company. Layoffs for everybody and Phil can use the savings to buyout Pocket Pair.
Going by their Twitter statement, Pocketpair would vehemently refuse any offer from Microsoft to be acquired. Some people care about more than just money. You know, things like integrity & values and whatnot
Sorry thick.. the green and red is the total revenue bucket broken out to cogs and gross profit. It stops allocating by division after the revenue bucket.
That's not what you posted! and were insulting that I can't read your mind....
Yes you are reading it wrong. All the lines feed into one big pot of revenue they are just ordered by size of revenue. Then the one total revenue figure separates out into gross profit and cost of revenue without attributation of where those costs are coming from.
Stop tracing the pretty colors and read the actual descriptions lol. Do you really think that Azure, Office, and Windows somehow magically doesn't have cost of revenue?
Edit: And if you follow it to the right, you cannot with a straight face tell me that the Xbox division does not have operating costs, pay taxes, or spend in R&D.
Okay then, suppose you all are right. How much profit do you
realistically think the Xbox division, with a revenue of only $3.98 billion that quarter, contributed towards the $22.3 billion? And keep the following things in mind:
1) Xbox hardware has on average been taking ~ $200 loss each system sold
2) The only big software release in that quarter was Starfield, in the final month, and going by Steam estimates the game probably "only" did ~ 3 million max on the platform within September, or $180 - $240 million in software revenue.
3) Sales of Starfield on Xbox were likely at best half of Steam sales, so another $150 million in revenue
4) Game Pass subs on console have stagnated even before 2023 arrived
5) Any Steam sale of software factors out a 30% cut to Valve which isn't reflected in Microsoft's Xbox revenue
6) Salaries, bonuses, pensions, coverage plans etc. for all employees at the Xbox/Microsoft Gaming division have to be factored out from
whatever the revenue is
...I could probably go on, but regardless....
Again, what realistic amount do you think Xbox contributed to the net profits of MS that quarter? Let's even assume
EVERY Game Pass subscriber has GP Ultimate; that's $1.35 billion in revenue before factoring out the costs; if MS spend $1 billion a year in licensing costs for Game Pass, then that would automatically drop the Game Pass number down to $1.1 billion...and that doesn't factor in costs for running & maintaining the servers, or reflect the real makeup of subscribers (Ultimate, PC GP, Xbox GP, GP Core, and various people getting discounts on their sub via cheap trails or buying subs off CD Keys etc.). Realistically you're looking at more like $900 million that quarter, then shave off say 25% for those getting discounts on the sub bringing it down to $675 million as a realistic profit margin on Game Pass that quarter...and that number is probably still too high.
So you have that, and we know they're losing money on the hardware of the consoles...they probably make money off the peripherals but probably not that much, then you have software profits but keep in mind even games like Sea of Thieves generally move their numbers at lower prices on Steam, which makes up the majority of its sales, and MS pays Valve a cut of that revenue no matter what. Games like Sea of Thieves are also the exception when it comes to MS games moving numbers and MTX at a reasonable pace; for every SOT you've got at least 3 RedFall-like situations of games essentially dead or stagnant in sales or add-on revenue content (Forza Motorsport, Halo Infinite, Gears 5, Pentiment, HiFi Rush etc.). Even adding them together you wouldn't get massive revenue numbers. Also since this quarter was up to end of September, you can't include ABK titles in the revenue reported for the time, so that means no COD, no Diablo IV, no World of Warcraft etc.
So I'll ask one more time, what is the realistic amount of profit you think Xbox contributed to MS's net profits that quarter? And this is also assuming their accounting practices are 1:1 with a company like say Sony...which we
know they aren't. That's why a lot of people ran with the "Xbox makes more profit than PlayStation" FUD that Derek initially posted before he realized you couldn't directly compare the numbers of the two brands because of differing accounting practices, hence he removed that info and disowned it. Didn't stop a lot of folks from running with it anyway, though :/
