Support NeoGAF

[Draugoth]

New internal documents from Microsoft's business leadership shows that Xbox has missed revenue forecasts by over $700 million.

The case file exhibit list includes one very illuminating 80-page internal Microsoft document that outlined where Xbox currently is and where it can grow. The slide deck, which was issued during Microsoft's Q3 FY22 (January - March 2023), has assigned an estimated revenue target of $17 billion for the Xbox games division. Actual results were quite different--Xbox made $16.22 billion in FY22, missing the internal target by some $780 million.

This number is still quite impressive. Microsoft's performance throughout both calendar year 2021 and 2022 was enough to beat Nintendo's revenues for the last two years in a row, despite Nintendo having the best-selling console on the market today.

 

[analog_future]

"$780 million" sounds like a shit ton until you contextualize it and realize they were aiming for $17 billion and in reality made $16.22 billion.

 

[DenchDeckard]

Already hit pre covid number in revenue this year...doing pretty well.

 

[Cert.in.Death]

 

[Riky]

$16 billion without any AAA first party games, that's pretty impressive and with the likes of Starfield coming it's only going to get bigger.
Phil said recently they are profitable now so I think they will invest more in the division.

 

[Pelta88]

 

[acm2000]

considering the lack of big system sellers in that time and the issues with stock in US and UK, im kinda surprised the total is even that high

 

[A.Romero]

They missed the mark by 5% and still beating Nintendo, it just sounds like an ambitious goal. I wonder if the late year releases will help them get better results than last year because they seem to be below the mark.

 

[SlimySnake]

Very impressive for the third place console.

Just goes to show that despite the massive hardware sales, nintendo misses the gaas money from CoD, Destiny, BF, and other big AAA releases that Nintendo misses out on. Just this year, no Dead Space, no Hogwarts, no RE4, no star wars, diablo, SF, or Dead Island 2 on the Switch.

MS is effectively in second place in the console business no matter how you try to classify the switch. Really hope the next switch is at least as powerful as a series s because otherwise, i dont see any AAA third party studio releasing games on that platform.

 

[ungalo]

Phil said recently they are profitable now so I think they will invest more in the division.

Sure, he says a lot of things.

Why won't they give us their operating income then ? It's only revenue.

 

[Schmick]

Well then..... time for Xbox to move aside and let someone else have a go at gaming.

 

[Neo_GAF]

how much does sony and what does this show you?
i think sony should calm their tits regarding activision-blizzard.
nothing lost.
they have bungie which are also a juggernaut.

 

[diffusionx]

"$780 million" sounds like a shit ton until you contextualize it and realize they were aiming for $17 billion and in reality made $16.22 billion.

Yea that’s actually a huge miss.

 

[Robb]

Xbox made $16.22 billion in FY22,

Microsoft's performance throughout both calendar year 2021 and 2022 was enough to beat Nintendo's revenues for the last two years in a row

Title sounded very negative but this seems impressive?

I guess they did miss their own target, but you’d think they’d miss it by way more than 4-5% given how poorly things seem to be going.

 

[FrankWza]

 

[ungalo]

Just goes to show that despite the massive hardware sales, nintendo misses the gaas money

I think it actually shows how profitable Nintendo is on the contrary. They don't have a massive revenue and yet they have a 4.5 billions net income. Playstation is like 26 billions revenue and less than 2 billions in operating income lol. The numbers of Nintendo are insane.

Xbox grew mechanically with the push on service and Gamepass, and they're coming back down. Plus they probably never made any profit.

 

[Chukhopops]

Very impressive for the third place console.

Just goes to show that despite the massive hardware sales, nintendo misses the gaas money from CoD, Destiny, BF, and other big AAA releases that Nintendo misses out on. Just this year, no Dead Space, no Hogwarts, no RE4, no star wars, diablo, SF, or Dead Island 2 on the Switch.

MS is effectively in second place in the console business no matter how you try to classify the switch. Really hope the next switch is at least as powerful as a series s because otherwise, i dont see any AAA third party studio releasing games on that platform.

From a gaming division revenue perspective it seems MS is now bigger than Nintendo?

Their fiscal year is calculated over different months but Nintendo reported 15.09B USD in 2022 and 16.53B in 2021.

Edit: ok just realized the article mentions it.

Is it finally time to put the « distant third » narrative behind us?

 

[OmegaSupreme]

I think it actually shows how profitable Nintendo is on the contrary. They don't have a massive revenue and yet they have a 4.5 billions net income. Playstation is like 26 billions revenue and less than 2 billions in operating income lol. The numbers of Nintendo are insane.

Xbox grew mechanically with the push on service and Gamepass, and they're coming back down. Plus they probably never made any profit.

Agreed. Nintendo isn't spending a fraction of what Sony and certainly Ms are either.

 

[tmlDan]

Title sounded very negative but this seems impressive?

I guess they did miss their own target, but you’d think they’d miss it by way more than 4-5% given how poorly things seem to be going.

It's because they're trying to make consumers and the public think they suck and are third place despite their strategy leaning away from console specific sales metrics and more into software and services

 

[Rival]

 

[GHG]

"$780 million" sounds like a shit ton until you contextualize it and realize they were aiming for $17 billion and in reality made $16.22 billion.

Margins matter.

 

[adamsapple]

Damn, guess they'll have to settle for that $16.2 billion only.

 

[Three]

If it's 2022 FY I bet this is due to Halo Infinite's failure as a live service game. They had lofty goals for gamepass subscription growth too which they never met.

 

[Badlucktroll]

 

[Drizzlehell]

Microsoft is finished.

Nintendo is finished.

Sony is finished.

Pack your bags, boys, gaming is finished. Time to pick up basket weaving.

 

[Heisenberg007]

 

[analog_future]

Yea that’s actually a huge miss.

It's 4.5% off of their annual forecast. It's not huge at all.

 

[Lasha]

Very impressive for the third place console.

Just goes to show that despite the massive hardware sales, nintendo misses the gaas money from CoD, Destiny, BF, and other big AAA releases that Nintendo misses out on. Just this year, no Dead Space, no Hogwarts, no RE4, no star wars, diablo, SF, or Dead Island 2 on the Switch.

MS is effectively in second place in the console business no matter how you try to classify the switch. Really hope the next switch is at least as powerful as a series s because otherwise, i dont see any AAA third party studio releasing games on that platform.

Nintendo misses out on the rent that Sony and Microsoft take from third parties. Nintendo's operating income is higher despite the lower revenue since it sells a shitload of first party games.

 

[Heisenberg007]

Title sounded very negative but this seems impressive?

I guess they did miss their own target, but you’d think they’d miss it by way more than 4-5% given how poorly things seem to be going.

It's neither impressive nor unimpressive.

Nintendo, despite the lowest revenue out of the 3, whips Sony's and Microsoft's ass with the highest operating profit. That's what matters the most -- not te revenue.

Microsoft earned $16.2 billion in revenue. Cool. How much did they spend to make those $16.2 billion? That's what matters.

 

[sankt-Antonio]

"philspencermeme_switch_op_pls_nerv.jpeg"

 

[Salty Popsicle]

Microsoft Xbox is a dying brand. The customers who helped the company generate $16 billion in revenue in the last quarter simply don't know it yet.

 

[Mr Hyde]

With these abysmal numbers it's clear that Xbox will close up shop within the next three months.

 

[vaibhavpisal]

It's neither impressive nor unimpressive.

Nintendo, despite the lowest revenue out of the 3, whips Sony's and Microsoft's ass with the highest operating profit. That's what matters the most -- not te revenue.

Microsoft earned $16.2 billion in revenue. Cool. How much did they spend to make those $16.2 billion? That's what matters.

MS spent a ton of money that went to game devs, they even subsidised my console hardware for me. Sounds good to me as consumer.

Nintendo earned a ton of profit, that came out of my own pocket.

It's always give and take. For what it's worth, I try to buy a ton of games monthly on xbox on top of my gamepass subscription cause I feel it's good value.

 

[Heisenberg007]

MS spent a ton of money that went to game devs, they even subsidised my console hardware for me. Sounds good to me as consumer.

Nintendo earned a ton of profit, that came out of my own pocket.

It's always give and take. For what it's worth, I try to buy a ton of games monthly on xbox on top of my gamepass subscription cause I feel it's good value.

From a consumer POV, sure. But if we are talking about the health of a business division, only revenue data (with no information on operating income) doesn't paint the full picture.

 

[diffusionx]

It's 4.5% off of their annual forecast. It's not huge at all.

In terms of financials it really is quite large. It’s not a disaster but it’s not something you just shrug and move on from. It’s a problem that needs to be figured out and analyzed.

 

[prinz_valium]

OMG Microsoft missed their revenue forecast by 4.6%
Holy shit. How could that happen.

 

[Nydius]

Is it finally time to put the « distant third » narrative behind us?

Hardly.

They‘re still a distant third in total number of consoles sold despite having a budget SKU to increase market share. Third in software attach rate. Third in mindshare.

Nintendo spends a fraction of the money Microsoft does and sees nearly the same amount of revenues. Microsoft probably spends the most money relative to revenue, which would also still put them a distant third compared to Nintendo’s and Sony’s expense-to-revenue splits.

 

[Robb]

That's what matters.

Very true!

 

[Gaelyon]

To compare, Sony Playstation revenues for 2020-21-22 are about 25, 24 and 26 billions dollars.

 

[Guerilla Munch]

don't worry xbros the barbie edition will turn everything around

 

[Lucifers Beard]

$16 billion without any AAA first party games, that's pretty impressive and with the likes of Starfield coming it's only going to get bigger.
Phil said recently they are profitable now so I think they will invest more in the division.

Yeah, I feel like this is really important context here.

Also the number $780 million to us peasants sounds huge but measured against the $16 billion they pulled in, is actually not too bad at all.

Context people. It’s important.

 

[German Hops]

Phil:

 

[Chukhopops]

Hardly.

They‘re still a distant third in total number of consoles sold despite having a budget SKU to increase market share. Third in software attach rate. Third in mindshare.

Nintendo spends a fraction of the money Microsoft does and sees nearly the same amount of revenues. Microsoft probably spends the most money relative to revenue, which would also still put them a distant third compared to Nintendo’s and Sony’s expense-to-revenue splits.

How is market share measured already? Let’s see:

• Market share represents the percentage of an industry, or a market's total sales, that is earned by a particular company over a specified time period.
• Market share is calculated by taking the company's sales over the period and dividing it by the total sales of the industry over the same period.

Time to admit it, they’re #2.

 

[NEbeast]

$16 billion without any AAA first party games, that's pretty impressive and with the likes of Starfield coming it's only going to get bigger.
Phil said recently they are profitable now so I think they will invest more in the division.

You must be paid by MS.

 

[German Hops]

You must be paid by MS.

More like, "M$", amirite?

 

[ZoukGalaxy]

*

I will try to cry tonight for Microsoft.

/s

More seriously, OUCH, with all the money and ressources they have you wonder sometimes how a company can be so blind. It's like they are now too big to be effective and productive.

 

[Roxkis_ii]

Is that mostly gamepass money? I don't imagine the Xbox consoles bring in bread like THAT.

Imagine how successful they would be if they could actually manage their studios.

 

[FritzJ92]

I think it actually shows how profitable Nintendo is on the contrary. They don't have a massive revenue and yet they have a 4.5 billions net income. Playstation is like 26 billions revenue and less than 2 billions in operating income lol. The numbers of Nintendo are insane.

Xbox grew mechanically with the push on service and Gamepass, and they're coming back down. Plus they probably never made any profit.

Nintendo is run efficiently. Low-cost hardware, that has not dropped in price. Game distribution that does not for some reason go on sale, and if it does (less than $10). Reselling the same designs with minor updates for modern prices. They are putting in low efforts with high returns, and when they put in high effort they get greater returns. Thats about as efficient as a company can go.

 

[balls of snow]

Hows that loss leader strategy working out for you ms.

 

[German Hops]

Hows that loss leader strategy working out for you ms.

I'd say pretty well, because they're about to put Sony out of business.