Support NeoGAF

[hydrophilic attack]

He has more accurate info then Nadella? Sorry but this is quite ridiculous, CEO's, especially in companies like MS are fully up to date with profit/loss of its products.

This is Nadella's quote that he was commenting on:

Our gaming business now is more than $9 billion and growing profitably. The gaming world is growing faster than ever before from gameplay across multiple devices, to the explosive growth in streaming and eSports, to new subscription services and mixed reality scenarios...We launched...new services (Mixer and Xbox Game Pass) to broaden our reach and enrich our gaming experience, both of which are off to a very strong start.

(source)

Like Thurrott said, note how he never said that Xbox is profitable. "$9 billion" refers to revenue and "growing profitably" could mean whatever. It is certainly a statement that is fashioned to make people think that Xbox is profitable, though.

Still, Thurrott may still be wrong. But he is a well respected tech journalist (lol) specifically respected for his reporting on Microsoft. So I thought it would be interesting to share.

He's talking about since day 1 the xbox brand has not turned a profit yet. All in all

I don't think so. When you consider the context of Thurrott's quote, which was a comment on Nadella's comments on quarterly earnings, it is clear that he isn't talking about whether cumulatively Xbox has made a profit since the beginning, but rather about whether Xbox has ever made a profit at any moment in time.

 

[capitalCORN]

If Microsoft don't turn around the Xbox division soon they'll go bankrupt!

 

[Toki767]

Thats not really the issue, Nadella knows the numbers, every detail, unless you believe he basing it on the same info MS release to the public, i hope thats not what your implying.

They have some of the best minds in the world assessing and forecasting, he's fully aware of what profit is lol.

The only thing being called out is the "growing profitably" term which could mean anything.

Obviously Nadella knows if they're really profitable.

 

[hydrophilic attack]

If Microsoft don't turn around the Xbox division soon they'll go bankrupt!

you're right, they probably won't, lol

 

[Jumeira]

This is Nadella's quote that he was commenting on:



(source)

Like Thurrott said, note how he never said that Xbox is profitable. "$9 billion" refers to revenue and "growing profitably" could mean whatever. It is certainly a statement that is fashioned to make people think that Xbox is profitable, though.



I don't think so. When you consider the context of Thurrott's quote, which was a comment on Nadella's comments on quarterly earnings, it is clear that he isn't talking about whether cumulatively Xbox has made a profit since the beginning, but rather about whether Xbox has ever made a profit at any moment in time.

Means achieving profit which is growing. I dont see the inferred obfuscation

 

[DataBased]

What a strangely formatted article. On the topic of the part you quoted, is it similar to amazon where they dump all their profits into expansion?

 

[tearsintherain]

I mean they could probably fire a bunch of people and the division would turn profitable as it coasts on hardware and software sales, but instead they keep a fairly big group running working on stuff for the future.

Don't forget all that crazy stuff like the TV studio, TV integration, etc that seems to have been quietly dropped and phased out over the years. The vision for the xbox one was originally THE home living room compute device that replaces all your other smart devices, but amazon fire, chromecast, and just Smart TVs have more or less obliterated that idea.

Its a bit ironic, I think now with more people streaming and mobile integration there COULD have been a working idea of a device at home that streams and DVRs everything for you, for home or mobile consumption, but MIcrosoft has sort of poisoned that well for themselves.

Now the xbox one X is just a really powerful gaming console, and Microsoft's whole vision is really muddied and a bit confusing with game anywhere with a PC or an xbox one, and if you buy digitally you can play anywhere and we don't care what device you use, but we can't really convince any other publisher to go along with this idea so its just our first party games and maybe one or two other titles, and oh we're drastically reduced our first party titles so its just like... Forza right now. The X is $500 and super powerful, whats that you can make an even more powerful PC, well yeah but the reason you want an X is 4k you see...

I'm sure it'll come together eventually but the X is a hard sell against Sony's message, which is just "Here's our video game console, here is a stream of exclusive games you can only play on it, we also have a $400 VR device if you want with more exclusive games."

 

[Kolx]

This is Nadella's quote that he was commenting on:



(source)

Like Thurrott said, note how he never said that Xbox is profitable. "$9 billion" refers to revenue and "growing profitably" could mean whatever. It is certainly a statement that is fashioned to make people think that Xbox is profitable, though.

Still, Thurrott may still be wrong. But he is a well respected tech journalist (lol) specifically respected for his reporting on Microsoft. So I thought it would be interesting to share.



I don't think so. When you consider the context of Thurrott's quote, which was a comment on Nadella's comments on quarterly earnings, it is clear that he isn't talking about whether cumulatively Xbox has made a profit since the beginning, but rather about whether Xbox has ever made a profit at any moment in time.

Could "growing profitably" mean that the loses are decreasing with time? if your loses decreased by 30 million or your profit grow by 30 million it has the same meaning. It's just the point of reference that is different.

 

[entremet]

Aren't the numbers public? MS is a public company unless they're hiding it with funky accounting.

 

[The Real Napsta]

360 days they had to be making bank.

 

[Nightengale]

Means achieving profit which is growing. I dont see the inferred obfuscation

I've previously assumed profitability, but I've used a similar wording before for "loss margin reduction growth"

Growing profitably can also be used to say "we're still making losses, but our loss margin are reducing alongside our growth in revenue, so sooner or later we'll cross the threshold into actual profitability."

 

[Pokemaniac]

I mean, thought this was kind of an open secret. This is one of the bigger arguments people tend to use in favor of Microsoft dropping/selling the division.

 

[Toki767]

360 days they had to be making bank.

If you don't count the RRoD stuff, yeah.

 

[Jumeira]

I've previously assumed profitability, but I've used a similar wording before for "loss margin reduction growth"

Growing profitably can also be used to say "we're still making losses, but our loss margin are reducing alongside our growth in revenue, so sooner or later we'll cross the threshold into actual profitability."

Ok, that makes sense, thanks for explaining.

 

[Kilrogg]

Crap, I used to have this old NeoGAF post where someone posted a chart of Microsoft losses over the years during the XBox and XBox 360 eras. At that point in time, it basically showed that the whole Xbox division was essentially a gaping 5 billion-dollar hole.

Sadly it appears I've lost it. Anybody know what I'm talking about?

 

[CaviarMeths]

The phrase "growing profitably" isn't at all ambiguous. It is growing in a profitable way. It is expanding in a way that generates more money than it costs. What's not to get?

 

[hydrophilic attack]

Means achieving profit which is growing. I dont see the inferred obfuscation

No, that is not how adverbs work.

"Growing profitably" means growing (term usually used to refer to revenues) in a profitable way. A better guess for what that would mean is:

Could "growing profitably" mean that the loses are decreasing with time? if your loses decreased by 30 million or your profit grow by 30 million it has the same meaning. It's just the point of reference that is different.

 

[Kolx]

I mean they could probably fire a bunch of people and the division would turn profitable as it coasts on hardware and software sales, but instead they keep a fairly big group running working on stuff for the future.

Don't forget all that crazy stuff like the TV studio, TV integration, etc that seems to have been quietly dropped and phased out over the years. The vision for the xbox one was originally THE home living room compute device that replaces all your other smart devices, but amazon fire, chromecast, and just Smart TVs have more or less obliterated that idea.

Its a bit ironic, I think now with more people streaming and mobile integration there COULD have been a working idea of a device at home that streams and DVRs everything for you, for home or mobile consumption, but MIcrosoft has sort of poisoned that well for themselves.

Now the xbox one X is just a really powerful gaming console, and Microsoft's whole vision is really muddied and a bit confusing with game anywhere with a PC or an xbox one, and if you buy digitally you can play anywhere and we don't care what device you use, but we can't really convince any other publisher to go along with this idea so its just our first party games and maybe one or two other titles, and oh we're drastically reduced our first party titles so its just like... Forza right now. The X is $500 and super powerful, whats that you can make an even more powerful PC, well yeah but the reason you want an X is 4k you see...

I'm sure it'll come together eventually but the X is a hard sell against Sony's message, which is just "Here's our video game console, here is a stream of exclusive games you can only play on it, we also have a $400 VR device if you want with more exclusive games."

Most people only play the big 3rd party games on their consoles. If MS can show the big games running noticably different on the X then they might have a good success with the console. I already have multiple people who are planning on buying the X, and they were gaming mostly or exclusively on PS4.

 

[¡HarlequinPanic!]

paging hoo-doo, nynt, etc.

 

[Uno Venova]

Aren't the numbers public? MS is a public company unless they're hiding it with funky accounting.

Don't they mix Xbox profits in with Windows 10, Minecraft, and other gaming related divisions?

 

[LiquidSolid]

I mean they could probably fire a bunch of people and the division would turn profitable as it coasts on hardware and software sales, but instead they keep a fairly big group running working on stuff for the future.

Don't forget all that crazy stuff like the TV studio, TV integration, etc that seems to have been quietly dropped and phased out over the years. The vision for the xbox one was originally THE home living room compute device that replaces all your other smart devices, but amazon fire, chromecast, and just Smart TVs have more or less obliterated that idea.

Its a bit ironic, I think now with more people streaming and mobile integration there COULD have been a working idea of a device at home that streams and DVRs everything for you, for home or mobile consumption, but MIcrosoft has sort of poisoned that well for themselves.

Now the xbox one X is just a really powerful gaming console, and Microsoft's whole vision is really muddied and a bit confusing with game anywhere with a PC or an xbox one, and if you buy digitally you can play anywhere and we don't care what device you use, but we can't really convince any other publisher to go along with this idea so its just our first party games and maybe one or two other titles, and oh we're drastically reduced our first party titles so its just like... Forza right now. The X is $500 and super powerful, whats that you can make an even more powerful PC, well yeah but...

I'm sure it'll come together eventually but the X is a hard sell against Sony's message, which is just "Here's our video game console, here is a stream of exclusive games you can only play on it."

You mean like closing down studios and cancelling AAA games?

Looking at what's happened to Xbox's first party lineup over the last few years, it's pretty clear they're operating at a significantly lower budget than they have in the past.

 

[EdgeXL]

Could "growing profitably" mean that the loses are decreasing with time? if your loses decreased by 30 million or your profit grow by 30 million it has the same meaning. It's just the point of reference that is different.

"Our gaming business is now more than $9 billion and growing profitably."

Our gaming business is... more than $9 billion

Our gaming business is... growing profitably

I take that to mean that while there have certainly been faceplants within the Xbox business, it is now in a position where it can begin to be profitable.

 

[hydrophilic attack]

The phrase "growing profitably" isn't at all ambiguous. It is growing in a profitable way. It is expanding in a way that generates more money than it costs. What's not to get?

Well that could just as well mean that the extra revenue they are getting compared to before (which is a portion of their total gaming revenue) is higher than the costs incurred to achieve that portion of their revenue. But it doesn't necessarily mean that their total gaming revenue is higher than their total gaming costs.

If gaming was profitable for Microsoft, why not just come out and say "Xbox is currently profitable"

 

[Nyoro SF]

I thought this was common knowledge, but perhaps some people didn't know. It's not too big of a deal as it's Microsoft we're talking about, but yeah, Microsoft has burned a ton of money to stay in pace with each generation.

 

[Trogdor1123]

Link isn't working for me, I assume the mean total over the entire life of the division and not yearly correct? They don't care about the old sunk costs now.

 

[Suzushiiro]

Them not being profitable now makes sense- they stumbled pretty hard out the gate with the DRM and higher price point, they've most likely had to sell at a loss for most of the gen just to not get totally crushed by Sony, they've had all sorts of trouble with their internal studios (including having two big projects- that Fable game and Scalebound- being mismanaged into cancellation,) and the simple fact that they have the smaller install base means they get fewer third-party sales than anyone else.

But MS is a huge corporation and thus is perfectly willing to burn more money if they think it'll be worth it in the super-long term.

 

[hydrophilic attack]

Them not being profitable now makes sense- they stumbled pretty hard out the gate with the DRM and higher price point, they've most likely had to sell at a loss for most of the gen just to not get totally crushed by Sony, they've had all sorts of trouble with their internal studios (including having two big projects- that Fable game and Scalebound- being mismanaged into cancellation,) and the simple fact that they have the smaller install base means they get fewer third-party sales than anyone else.

well, not fewer than nintendo, to be fair

 

[Nightengale]

Link isn't working for me, I assume the mean total over the entire life of the division and not yearly correct? They don't care about the old sunk costs now.

The way it's stated means it's still not profitable TODAY.

 

[semiconscious]

Theyve changed the way the game is played for sure. And if Microsoft reported more info in their financials we'd be able to tell just how profitable (or not profitable) Xbox is. If it weren't profitable I don't see why MS would do it.

amazon has pretty much never been profitable. there're reasons, nowadays, for corporations to do unprofitable stuff ...

 

[Floody]

Does he mean overall it's not been profitable or never once had a profit? If the latter, that's kinda crazy consider peak 360 with Gold subs. As me wondering how a console business could ever be profitable even.

 

[Chobel]

Interesting, any idea how exactly MS is taking these huge losses?

And c'mon people, Paul Thurrott isn't some random ignorant internet guy lol. He knows his stuff, he's not talking about the sum of all profits/losses since og Xbox.

 

[Aters]

Microsoft as a whole needs some major restructuring. I don't know how that company is profitable period.

The hell are you talking about? MS is doing pretty well lately as a company.

 

[hydrophilic attack]

amazon has pretty much never been profitable. there're reasons, nowadays, for corporations to do unprofitable stuff ...

well, aside from the tax reasons you are implying, we should consider the advice from the tres comas man about the benefits of being pre-revenue

ROI, man

 

[Chris1]

If gaming was profitable for Microsoft, why not just come out and say "Xbox is currently profitable"

Phil Spencer said exactly this in an interview with Ryan McCaffrey a while ago.

He was asked if the Xbox one console was profitable. Phil dodged the question and said the Xbox division was profitable.

 

[border]

Since the turn of the century, has Playstation even been profitable overall? PS2 had a few years where they weren't eating heavy losses but those got wiped out by PS3.

I'm not even sure if there's a way to measure Xbox since the numbers there have been consistently mixed with other categories. Not to mention that their "Gaming Division" now includes Minecraft/Mojang who having been printing money for years.

 

[ElBoxyBrown]

Microsoft as a whole needs some major restructuring. I don't know how that company is profitable period.

Surface line? Windows 10? Office subscriptions?

 

[Bobnob]

MS must be init for the long game? Loss now profits later.

 

[hydrophilic attack]

Phil Spencer said exactly this in an interview with Ryan McCaffrey a while ago.

He was asked if the Xbox one console was profitable. Phil dodged the question and said the Xbox division was profitable.

mind posting a link with time stamp

so this can be settled once and for all (yeah right) lol

 

[ChronotriggerJM]

The og Xbox absolutely bleed money, so it doesn't really surprise me. I'd imagine the brand itself is probably currently profitable, but given the time taken, and it's current standing, I certainly wouldn't call it a success in any real metric.

 

[Dyle]

Over the lifetime of the Xbox brand? Definitely a net loss

Year over year? They probably made it into the black in 2016 and 2015, maybe 2014 and 2013 off the 360's legs.

Growing profitably seems like a real bad turn of phrase to use, and I would guess they're using it to mask disappointing sales by more or less pointing out that they've cut spending to get to that point. I wonder where the Xbox division will be at this point next year after the One X has had 8 months on the market, will Nadella call it "growing profitably" or just "growing"?

 

[Unknown Soldier]

I'm pretty sure most people have suspected this for years. It's why Xbox is never broken out as a separate category in financial statements but always rolled into divisions with other unrelated things. MS has been obfuscating financial results for unprofitable (read: not Windows, Office, Azure) aspects of the company like this for decades.

 

[hydrophilic attack]

welp, should this thread still be open in one hour, i shall return to it after game of thrones, lol

 

[samar11]

we knew this right?

Accorting to this guy they are profiting lol

I say it in every MS thread about exclusive software. They don't need to do anything. They are just following a different path.

Just because they are not Nintendo and Sony, doing things the traditional ways or ways you may not necessarily like doesn't mean they need to change. That just means their ecosystem isn't for you.

They are killing it right now in terms of their profit margins and investments.

I game on PS4 and am looking to pick up a Switch later because MS turned me off with their decision making years ago, but that's just my view on their path. That doesn't mean my viewpoint is the general law or proves they are doing anything wrong for the vast majority of userbase that sticks with them.

 

[Chris1]

mind posting a link with time stamp

so this can be settled once and for all (yeah right) lol

Nope I listened to it when it happened which was in.. 2015 maybe early 2016? Definitely before the s launched. I'm also in bed right now so I'm not gonna try hunt for it on my phone

But it was around half way through the interview if I remember correctly

Edit: he was talking about at that point in time. Not since the beginning of Xbox.

 

[gogogow]

Crap, I used to have this old NeoGAF post where someone posted a chart of Microsoft losses over the years during the XBox and XBox 360 eras. At that point in time, it basically showed that the whole Xbox division was essentially a gaping 5 billion-dollar hole.

Sadly it appears I've lost it. Anybody know what I'm talking about?

From Neogaf member Psychotext.

Updated with Microsoft 2nd Quarter 2010 FY earnings
http://www.microsoft.com/msft/earnings/fy10/earn_rel_q2_10.mspx

Updated with Nintendo / Sony 3rd Quarter 2010 FY earnings
http://www.nintendo.co.jp/ir/pdf/2010/100128e.pdf
http://www.sony.net/SonyInfo/IR/financial/fr/09q3_sony.pdf

	   Sony		    Nintendo	      Microsoft	        Total
Y/E 1998     $902,811,090   $1,023,333,867                      $1,926,144,957
Y/E 1999   $1,102,563,557   $1,301,350,000                      $2,403,913,557
Y/E 2000     $722,738,949   $1,368,207,547                      $2,090,946,497
Y/E 2001    -$449,776,290     $677,576,000                        $227,799,710
Y/E 2002     $629,101,056     $895,872,180   -$1,135,000,000      $389,973,237
Y/E 2003     $935,569,253     $834,333,333   -$1,191,000,000      $578,902,586
Y/E 2004     $627,195,212     $993,161,303   -$1,337,000,000      $283,356,515
Y/E 2005     $419,888,799   $1,056,056,202     -$539,000,000      $936,945,001
Y/E 2006      $69,129,058     $774,478,055   -$1,339,000,000     -$495,392,887
Y/E 2007  -$1,970,923,859   $1,914,666,388   -$1,969,000,000   -$2,025,257,471
Y/E 2008  -$1,079,994,103   $4,322,637,887      $426,000,000    $3,668,643,783
Y/E 2009    -$664,313,787   $5,691,428,301      $169,000,000    $5,196,114,515

Y/E 10Q1    -$413,541,667     $420,843,750      $312,000,000      $319,302,083
Y/E 10Q2    -$653,333,333     $710,655,556      $375,000,000      $432,011,111
Y/E 10Q3     $210,629,750   $2,087,904,452               N/A               N/A

Total				
	     $387,078,407  $24,072,504,822   -$6,157,000,000   $16,004,049,028
				
Full Year Average
	     $103,665,745   $1,737,758,422   -$1,001,857,143      $914,270,499

Profitable Years				
			8		12		   2		    10
				
Non Profitable Years				
			4		 0		   6		     2
				
Average in Loss Year				
	  -$1,041,252,010              N/A   -$1,251,666,667   -$1,260,325,179
				
Average in Profit Year				
	     $676,124,622   $1,737,758,422      $333,000,000    $1,389,625,094

...and a handy note suggested by Stumpokapow:


...and another:


...and another:



(backtrack link for my info)

 

[Uno Venova]

Finding evidence of the Xbox division being profitable should not be this hard to find.

 

[Yearsoflurking]

Comment makes no sense is he referring to xbox as the entirety of it's divisions history or the xbox one. If it's former businesses don't run like that; if it's the later the business
Should either be sold or closed. I find it hard to believe the xbox one isn't turning profits

 

[YuriLowell]

Microsoft as a whole needs some major restructuring. I don't know how that company is profitable period.

Enterprise licesneses for office/server/azure.

 

[Leafhopper]

I mean there is a reason every other year you hear that MS wants to shut the Xbox Division down.

Not exactly always a made up rumor.

Microsoft as a whole needs some major restructuring. I don't know how that company is profitable period.

Ever hear of Windows? I hear it's popular.

360 days they had to be making bank.

To some degree yeah.

 

[Soul of the Beast]

So that's why they aren't super motivated in investing more triple-A exclusives.