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[Papacheeks]

Obviously there are one off deals that are great. Look at that list of games under $5. I did get Witcher 3 on PC during a sale for somewhere around $30. Steam is consistently the cheapest place to buy games and thinking otherwise is suspect to me. That's not even taking in consideration places like CD keys where you can buy keys for close to half off on the day of release.

I have been a steam member since Half life 2. YES you can go to CD keys and get cheap games but sometimes they are out of keys for those games per region.

PSN and Steam are 100% legit and never run out of keys like CD KEYS and Green man gaming which I also shop on. In 2015 though the same year witcher 3 came out, PSN had the cheapest price for that game during Black friday period.

Also take into account steam is larger than PSN by a fuck ton because it's on a open platform, and been around much longer to develop.

But PSN is defintley doing work and on a good sales day has better deals on bigger AAA games that can be stacked with ps+ discounts. Not saying PSN beats steam straight up, but they do come really close. And that will continue as more third parties like amazon, gamestop sell digital codes for console games.

 

[Pjsprojects]

I guess it is. Sony made ¥529bn on PSN last year ($4.6bn)

Ouch digital is very big for both but Sony is killing it.

 

[hanspampel]

Ouch digital is very big for both but Sony is killing it.

while that is true, Network sales for Sony includes PS+ subscriptions
the digital transactions figure from Microsoft is just digital transactions (full game downloads, add on content and MTX) without Xbox Live gold subscriptions


Network sales for Sony this quarter could reach $2bn imho (or at least close to it)

 

[KawabataSan]

while that is true, Network sales for Sony includes PS+ subscriptions
the digital transactions figure from Microsoft is just digital transactions (full game downloads, add on content and MTX) without Xbox Live gold subscriptions

How do you know it doesn't include gold?

 

[ethomaz]

Fuck me youre right...
But does that mean I count as 2 users? My console AND the app?

You count like one... you need to login in Xbox Live from any device in the period to be counted one time... if you log in in all devices doesn't matter unless it is a different account.

 

[hanspampel]

How do you know it doesn't include gold?

it's the difference in accounting. xbox live gold is a service and the revenue is deferred over the lifetime of the subscription, just like office 365 and now also a major part of windows 10 revenue. even though the latter one ist different and basically "creative accounting"

the wording transaction lead me to believe it's not included. they are very specific, when mentioning those special metrics.
they also talked previously about xbox live transactions growth and membership separately in the Q10 fillings

• Gaming, including Xbox hardware and Xbox software and services, comprising Xbox Live transactions, subscriptions, and advertising (”Xbox Live"), video games, and third-party video game royalties. 

edit: here is a statement from Amy Hood also clarifying what

This marks our first billion dollar quarter in digital transactions for our gaming business through our Universal Store across Windows 10 and Xbox One.

 

[StrongBlackVine]

it's the difference in accounting. xbox live gold is a service and the revenue is deferred over the lifetime of the subscription, just like office 365 and now also a major part of windows 10 revenue. even though the latter one ist different and basically "creative accounting"

the wording transaction lead me to believe it's not included. they are very specific, when mentioning those special metrics.
they also talked previously about xbox live transactions growth and membership separately in the Q10 fillings

Educated guess, but still a guess.

 

[hanspampel]

Educated guess, but still a guess.

i am 99,99% sure
anything else just doesn't make any sense. $1bn including xbox live gold would also not be a great number you should brag about.
xbox live gold ist also not a digital only transaction, as you can buy physical prepaid cards

 

[SmoothRunningGun]

More maus.

 

[TKM]

it's the difference in accounting. xbox live gold is a service and the revenue is deferred over the lifetime of the subscription, just like office 365 and now also a major part of windows 10 revenue. even though the latter one ist different and basically "creative accounting"

And why wouldn't PS+ also be deferred over the life of the subscription?

 

[hanspampel]

And why wouldn't PS+ also be deferred over the life of the subscription?

it is probably!? (i'm not familiar with Japanese accounting)
but the network SALES they report are different

the term sales and transactions is already totally different

and maybe you get me wrong, xbox live subscription (without some deferred part, and including deferred parts from the past) is obviously in the total $3.6bn figure. just not in the special $1bn digital transaction milestone they announced

 

[SOR5]

Do people even know why they're mocking MAU anymore or is it just like a running joke thing now?

500,000 active users actively subscribed and engaging in content vs 500,000 boxes sold and just sitting there

Please tell me which is more profitable, if you chose the latter you've got no idea about business. Its not even a Microsoft thing, friggin tons of tech businesses measure their profitability by daily/monthly users.

 

[Elios83]

Bad for hardware (declining sales with lower prices) good for software also considering PC.
Nothing surprising, it was expected and forecasted by them in October.

 

[netBuff]

Do people even know why they're mocking MAU anymore or is it just like a running joke thing now?

500,000 active users actively subscribed and engaging in content vs 500,000 boxes sold and just sitting there

Please tell me which is more profitable, if you chose the latter you've got no idea about business. Its not even a Microsoft thing, friggin tons of tech businesses measure their profitability by daily/monthly users.

People are mocking MAUs because MAU is a 100% useless metric. Me opening the Xbox app to change Windows settings counts as an active Xbox Live user. It doesn't tell you anything about people actually buying or subscribing to content using their Xbox Live account. It's a typical example of the kind of useless metric companies like to include in their shareholder reports because the numbers sound good.

 

[Flux]

Do people even know why they're mocking MAU anymore or is it just like a running joke thing now?

500,000 active users actively subscribed and engaging in content vs 500,000 boxes sold and just sitting there

Please tell me which is more profitable, if you chose the latter you've got no idea about business. Its not even a Microsoft thing, friggin tons of tech businesses measure their profitability by daily/monthly users.

It's a running gag. Of course everyone knows activity is better than flat console sales. It's the mentality that it's not besting playstation therefore it's dead that's more annoying.

 

[hanspampel]

People are mocking MAUs because MAU is a 100% useless metric. Me opening the Xbox app to change Windows settings counts as an active Xbox Live user. It doesn't tell you anything about people actually buying or subscribing to content using their Xbox Live account.

it's not. you also have retention rate and ARPPU and / or ARPU
but only an active user is a potential customer that could buy something. if you're not active, you can't and won't buy anything and Microsoft can't convince you to buy anything with an offer

MAU and DAU is one of the, or even the most important metric for game publisher and several other digital businesses today

 

[QuikNez]

Fuck gaming.... Azure is a beast.... machine learning FTW

Nice job MSFT

 

[Minions]

One day I hope we can get paid subscriber numbers. I'd be really interested to see how gold subs compare to PS Plus subs. All the numbers seem to roll free accounts into the numbers to make the totals larger though.

 

[dracula_x]

it's not. you also have retention rate and ARPPU and / or ARPU
but only an active user is a potential customer that could buy something. if you're not active, you can't and won't buy anything and Microsoft can't convince you to buy anything with an offer

MAU and DAU is one of the, or even the most important metric for game publisher and several other digital businesses today

Mao and Dao

 

[LukasTaves]

People are mocking MAUs because MAU is a 100% useless metric. Me opening the Xbox app to change Windows settings counts as an active Xbox Live user. It doesn't tell you anything about people actually buying or subscribing to content using their Xbox Live account. It's a typical example of the kind of useless metric companies like to include in their shareholder reports because the numbers sound good.

Not anymore because in the newer builds the gaming settings are now in the settings app, so you no longer have to log in.

But, no one keeps opening the app over and over to change settings. If that was all that was behind that number it would drop like a rock by now, and not show a steady increase in monthly usage.

 

[rokkerkory]

People are mocking MAUs because MAU is a 100% useless metric. Me opening the Xbox app to change Windows settings counts as an active Xbox Live user. It doesn't tell you anything about people actually buying or subscribing to content using their Xbox Live account. It's a typical example of the kind of useless metric companies like to include in their shareholder reports because the numbers sound good.

So mau is up and so is revenue. No correlation?

 

[Prototype Viktor]

I didn't realize they count mobile in their MAU numbers

 

[hanspampel]

I didn't realize they count mobile in their MAU numbers

age of empires castle siege will finally come to android

 

[Outrun]

MS kicking some ass.

Good for them.

 

[Hockeymac18]

They are counting Windows 10 and mobile platforms..

There is the trick.

And that's a problem because?

 

[Cynn]

Not surprised at the digital boost. Im still all digital this gen. Big live numbers too.

MS is in good shape then? Obviously no where near the monster ps4, but good nonetheless seemingly?

Yes, they're doing fine. The PS4 being a huge success doesn't make Xbox a failure. Just not first place.

 

[Liabe Brave]

Sales down YoY is not surprising, considering the 360 was probably still selling well in some markets.

What markets? In the 360's best markets--the US, UK, Mexico, Australia--the transition to Xbox One has been pretty thorough. (That's why the new console is still ahead of the old one launch-aligned.) The loss of 360's weak markets shouldn't make much difference to Xbox as a whole. If it did, then Microsoft wouldn't have stopped producing their old machine.

Keep in mind that "We're down because we didn't sell the old product anymore" is an admission that they're failing to convert their old userbase to their new offering. It's not a healthy sign--just like it wasn't back when Sony said it during the PS3 era.

I guess it is. Sony made ¥529bn on PSN last year ($4.6bn)

No, that was in 2015. And why just give the number for the whole year? In holiday 2015, Sony made ~$1.32b on PSN. The numbers for 2016 holidays will be reported in a few days, but the previous two quarters were up ~34% YOY. That would equate to PSN revenue of ~$1.77b in the holidays.

Is the Xbox division likely profitable right now?

Absolutely, they have to be.

For the holiday quarter, very likely. But for the fiscal year, it's much less definite.

$3.5 billion dollars in revenue, hmmm I dont know, hmmm very concerned about this

Your attempt at snark shows you don't actually know what to compare this number with. In fact, it's lower than last year, which was lower than the year before. Not by much each year, but it does mean that Xbox as a whole is gradually earning less and less money. This is despite their userbase growth. Do you think that's a concerning trend, or not?

Not bad for Xbox One tbh, it still doing well pretty much like 360 no?

It depends how you compare. In unit sales, One still exceeds 360 (I'd guess it will fall behind in early 2018). In terms of income, there are two answers. My estimates based on the financial info Microsoft has released show the Xbox One platform as barely profitable so far (in the low nine figures). That's far worse than the division was doing in the years preceding One's launch.

But it's far better than the years of the 360 launch, which were an epic disaster of billions lost. If Microsoft didn't abandon ship then, they're unlikely to now.

 

[FinaruDensetsu]

Do people even know why they're mocking MAU anymore or is it just like a running joke thing now?

500,000 active users actively subscribed and engaging in content vs 500,000 boxes sold and just sitting there

Please tell me which is more profitable, if you chose the latter you've got no idea about business. Its not even a Microsoft thing, friggin tons of tech businesses measure their profitability by daily/monthly users.

I don't really get what your strawman comparison means. If they announced 500k consoles sold how does that mean they are just sitting there? I'm pretty sure at least some of those consoles are you know, getting used to play games and whatnot. You know as in people are buying games to play on the thing.

 

[4Tran]

So mau is up and so is revenue. No correlation?

MS kicking some ass.

Good for them.

Gaming revenue is actually down about $100 M. Whether that's good enough or not is up to the question, but Xbox is probably not kicking ass. I would imagine that Greater Microsoft needs better performance out of the unit though.

 

[Purest 78]

Didn't this quarter include the S? If so how is it possible Xbox sold less?

 

[4Tran]

It depends how you compare. In unit sales, One still exceeds 360 (I'd guess it will fall behind in early 2018). In terms of income, there are two answers. My estimates based on the financial info Microsoft has released show the Xbox One platform as barely profitable so far (in the low nine figures). That's far worse than the division was doing in the years preceding One's launch.

But it's far better than the years of the 360 launch, which were an epic disaster of billions lost. If Microsoft didn't abandon ship then, they're unlikely to now.

Good post. It should be noted though that Microsoft is in a vastly different position strategically now than they were back in the 360 days. Back then, they were still intent on taking over the living room and willing to incur losses to see that happen. Nowadays, Xbox has to survive on its own accord, and they don't have any champions up high any more.

Didn't this quarter include the S? If so how is it possible Xbox sold less?

The different flavors of Xbone sold less well than the previous year's Xbones + 360s.

 

[jroc74]

The only numbers that are really relevant to One are the software revenue and the # of LIVE users, and even those are bumped up by Win10 players.

It would seem that opening up their games as true multiplatform releases with PC is helping the bottom line.

This is interesting.

So even if they dont sell as many consoles as Sony they could still be fine.

 

[hanspampel]

Good post. It should be noted though that Microsoft is in a vastly different position strategically now than they were back in the 360 days. Back then, they were still intent on taking over the living room and willing to incur losses to see that happen. Nowadays, Xbox has to survive on its own accord, and they don't have any champions up high any more.


The different flavors of Xbone sold less well than the previous year's Xbones + 360s.

More personal Computing made $2.5bn profit this quarter. Most of that profits come from windows and gaming (xbox)
Amy hood also made a comment in the conference call when she was asked about improvements' and mix in gross margin.

It's not long ago, that bing still lost money (don't remember the exact quarter, have to look it up again)

And while surface is premium hardware It's still hardware with low margins and profits

 

[Liabe Brave]

This is interesting.

So even if they dont sell as many consoles as Sony they could still be fine.

Depends what you mean by "fine". They're probably in no danger of shutting down. But despite what other people might tell you, the Xbox division is making very little income overall. The $2.5b profit for the segment it's in is mostly from Windows, with additions from Bing advertising, PC accessories, and Mojang. (Bing has been profitable for years now.) Then throw in some small contributions from Surface and Xbox.

 

[Deputy Moonman]

Depends what you mean by "fine". They're probably in no danger of shutting down. But despite what other people might tell you, the Xbox division is making very little income overall. The $2.5b profit for the segment it's in is mostly from Windows, with additions from Bing advertising, PC accessories, and Mojang. (Bing has been profitable for years now.) Then throw in some small contributions from Surface and Xbox.

And do you have receipts? How do you know? Just curious.

 

[Liabe Brave]

And do you have receipts? How do you know? Just curious.

For a baseline, I looked at XBox starting when we know they were successful, and liable to be highly profitable: the peak of the 360 era. As with any such analysis of a large corporation, granular detail is often not available. The total numbers below are based directly on the financial data, but include lots of estimates by me and are thus very subject to error.

However, I do feel that as a whole my estimates are quite plausible, and they're based in the numbers we do have. I haven't noticed other interpretations explained in much detail, so if there's further data to be taken into account I'd be happy to see it. Here's a rough version of how I came to my conclusions:

FY11 (ending June 30, 2011)
For this FY, Xbox was within the Entertainment and Devices Division (EDD). This segment included the complete video game business: all hardware, all software, and all Xbox LIVE. The non-Xbox elements were Mediaroom and Windows Phone. As Phone had recently launched, these two made up a very small portion of the segment.
EDD operating income was $1.3b. Xbox would have been the major contributor to this, as its revenue increased $2.7b and costs increased $1.8b YOY.
Total Xbox operating income estimate: +$1.1b

FY12 (ending June 30, 2012)
Xbox remained in EDD, where Skype had replaced Mediaroom in the non-Xbox elements. It and Windows Phone were much larger contributors by this time.
EDD operating income was +$380m. Xbox revenue was very slightly down, and R&D costs slightly up.
Total Xbox operating income estimate: +$850m

FY13 (ending June 30, 2013)
XBox remained in the EDD, alongside Skype and Windows Phone.
Total segment operating income was +$848m. Xbox revenue was down $950m YOY, but costs were down about $700m.
Total Xbox operating income estimate: +$600m

FY14 (ending June 30, 2014)
Microsoft restructured their segments this year. Xbox hardware, Xbox LIVE subscriptions, and non-first-party software were moved to the Computing and Gaming Hardware (CGH) segment. Non-Xbox elements in the same segment were Surface hardware and PC accessories.
Xbox LIVE sales and first-party software were separated to the Devices and Consumer Other (DCO) segment. Non-Xbox elements predominated in that segment, including Windows and Windows Phone Stores, Bing and display advertising, Office 365 Consumer, and physical Microsoft Stores.
CGH operating income was +$892m. Surface hadn't yet taken off, but PC accessories would've been significant. The Xbox elements of the segment had +$1.7b in revenue but also +$2.1b in cost of revenue YOY.
Xbox CGH income estimate: -$500m
DCO operating income was +$1.8b. First-party software revenue declined by $213m, while Bing ads and Office 365 Consumer grew $1.1b (partially offset by $541m increase in cost of revenue).
Xbox DCO income estimate: +$500m
Total Xbox operating income estimate: $0

FY15 (ending June 30, 2015)
The structure from the previous year continued, with gaming revenue split in CGH and DCO.
CGH operating income was +$1.8b. All the increase was due to Surface. Xbox revenue decreased $385m, and cost of revenue stayed about the same.
Xbox CGH income estimate: -$875m
DCO operating income was +$2.0b. This included $531m increase of LIVE revenue YOY, with cost of revenue increasing $372m. First-party software revenue increased $367m (due to Mojang), while cost of revenue increased $194m.
Xbox DCO income estimate: +$830m
Total Xbox operating income estimate: -$45m

FY16 (ending June 30, 2016)
Microsoft restructured again this year, coalescing many segments. The whole video game business--including all hardware, software, and LIVE--was reconsolidated inside the More Personal Computing (MPC) segment. However, it shares the segment with all Windows products and licensing, all devices (Surface, phones, and PC accessories), and Bing advertising. It's an enormous segment, representing nearly half of Microsoft's total revenue.
MPC operating income was +$6.1b. Gaming revenue increased $132m YOY, and cost of revenue seems to have decreased.
Total Xbox operating income estimate: +$150m

 

[hanspampel]

Mojang is part of the xbox / gaming segment

Pc accessories is part of the surface / devices segment (that also includes phone sales, wich are down 80% yoy)

Bing is profitable since FY16Q1.
5 quarter in a row (including this one)
So one year, not several years

Surface was profitable for the first time in FY15Q1, because that is used to estimate devices & consumer hardware profitablility

 

[Deputy Moonman]

snip

Dude mad props for getting that post out so quickly lol. If the numbers are true, it definitely shows just how much the xbox one launch and PR disaster impacted sales. Although the positive trend in the last year is a good sign, even if it's not an impressive number. I feel like the xbox division is in a pivotal year where they really need to get some momentum going. Whether that is with the scorpio or from some new IP's I don't know.

 

[JaggedSac]

It depends how you compare. In unit sales, One still exceeds 360 (I'd guess it will fall behind in early 2018). In terms of income, there are two answers. My estimates based on the financial info Microsoft has released show the Xbox One platform as barely profitable so far (in the low nine figures). That's far worse than the division was doing in the years preceding One's launch.

Mind sharing your estimates and methodology?

Edit: Thanks, I see you did above.

 

[Kazuo Hirai]

nvm

 

[Prototype Viktor]

Lb with them numbers. Even tho everything is a ballpark when stuff is shuffled around constantly

 

[Samanosuke Akechi]

Not too shabby considering the most high profile game cancellation of all time happened last week.

 

[hanspampel]

I see one big mistake probably made. Just because the cost of goods increased by a bigger amount than the revenue grew, the overall total or gross margin is not negative. Just became lower...

Some news outlets made the same mistake.
http://attackofthefanboy.com/news/microsoft-didnt-lose-400-million-xbox-one/

 

[JaggedSac]

I see one big mistake probably made. Just because the cost of goods increased by a bigger amount than the revenue grew, the overall total or gross margin is not negative. Just became lower...

Some news outlets made the same mistake.
http://attackofthefanboy.com/news/microsoft-didnt-lose-400-million-xbox-one/

Yeah, I would definitely like to see the exact math on how he arrived at that -$500m amount.

 

[Hockeymac18]

Not too shabby considering the most high profile game cancellation of all time happened last week.

Of all time?

 

[LukasTaves]

For a baseline, I looked at XBox starting when we know they were successful, and liable to be highly profitable: the peak of the 360 era. As with any such analysis of a large corporation, granular detail is often not available. The total numbers below are based directly on the financial data, but include lots of estimates by me and are thus very subject to error.

However, I do feel that as a whole my estimates are quite plausible, and they're based in the numbers we do have. I haven't noticed other interpretations explained in much detail, so if there's further data to be taken into account I'd be happy to see it. Here's a rough version of how I came to my conclusions:

FY11 (ending June 30, 2011)
For this FY, Xbox was within the Entertainment and Devices Division (EDD). This segment included the complete video game business: all hardware, all software, and all Xbox LIVE. The non-Xbox elements were Mediaroom and Windows Phone. As Phone had recently launched, these two made up a very small portion of the segment.
EDD operating income was $1.3b. Xbox would have been the major contributor to this, as its revenue increased $2.7b and costs increased $1.8b YOY.
Total Xbox operating income estimate: +$1.1b

From the wording, revenue considering only the xbox grew 2.7 billion or 48%, which puts the total revenue in something bigger than that, and the 1.8 billion cost while also being what increased yoy, is for entire division.

And that was like you said the quarter where they launched windows phone and made a huge deal with Nokia. That didn't contribute much to revenue, but it most definitely did for the costs, specially since Ms took a billion write off from win mobile 6.5 (the precussor of windows phone) which was a stop gap until they were able to get WinPhone 7 ready. Or even the Nokia deal.

Looking at back reports we know that:

- 360 reached a profitable point with its hardware sales many quarters before that. So every console was sold at a profit back then.
- Same for accessories
- Live revenue was already over 1 billion/year
- 360 sold tons of games with an insane 8.9 attach rate during that quarter
- The cost of 3rl were long gone already


And that was an year where they sold almost 14 million consoles and over 10 million kinects up to that point.

There's no way it made just 1 billion in profit considering all that, the software sales alone probably made more money than that.

 

[anothertech]

They are counting Windows 10 and mobile platforms..

There is the trick.

And the spin is back.

 

[Bitch Pudding]

In the future MS is going to care much more about how much digital revenue and subs they can get, they don't really care where you play them m.

Correct for office and mobile apps, not correct for Xbox games. They want you to play those on their own ecosystems. And they still want to distribute games from other publishers on their platforms.

Yes, under certain circumstances they publish games like Minecraft on other platforms, but this is the exception from the rule.

 

[Samanosuke Akechi]

Of all time?

lol it's a quote someone made on here last week about scalebound. The person referred to it as the most high profile cancellation of all time.

 

[Milly Osworth]

Is Minecraft included in the 3 billion revenue?