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Spencer: Game Pass is very, very sustainable right now as it sits and it continues to grow
phil_t98
#SonyToo
Admit it, your just pissed Xbox is doing well for a bit
MacReady13
Member
What would they like him to say- that it's NOT sustainable and it is losing money? FFS these "journo's" are hopeless. Phil Spencer saw the ass whooping Xbox was receiving from Playstation during the PS4/Xbox One era so he decided to be the "Netflix of gaming" and create Game Pass. Hence why he continuously says he isn't competing with Playstation or Nintendo anymore, cause they CAN'T!
Ev1L AuRoN
Member
ClosBSAS
Member
What are u concerned about? Seriously...that Ms is going to drop off the face of the earth cause gamepass is not sustainable according to you? Jesus, Michael Peachter is more optimistic than most of you in This thread.
DeepEnigma
Gold Member
Just relax. Imagine you are at the beach. Here.....
zaanan
Banned
Which beach? I am trying! You put tres bueno beaches there senor!
sircaw
Banned
I bloody well-tried ffsYou are supposed to be looking at the beach
thicc_girls_are_teh_best
Member
Your choice of words describing it as a "narrative" (carrying the connotation almost analogous to conspiracy, the way you contextualize it with your posts) kind of shows paranoia on this subject, my dude.
Besides if you want numbers, while I'm not an insider or shareholder or have access to their financials (just like yourself and probably everyone else ITT), I at least try to give them benefit of the doubt and do some math of my own, using other case examples as references, to see in what way the things they're saying could be true.
Are those official numbers? No. But they have a pretty high probability of being close-to-accurate. If Phil or anyone at Xbox were outright lying about their numbers, we'd see them reflected in financial reports. Did you forget that GamePass is operated under the Xbox division, and didn't that division have record revenue for the past fiscal year? Common sense would tell you that its revenues factor into the Xbox division's overall revenue.
mckmas8808
Mckmaster uses MasterCard to buy Slave drives
I personally don't think GamePass itself needs to be profitable. I even think the goal is for it to basically break even or losing a tiny bit of money in order to pull people into the Xbox Ecosystem.
Why do you confuse having a conversation about the video games industry on a video game forum me "going after a CEO"? I don't think GamePass is a failing service, so why are you attributing that to me? The one thing we do know is GP isn't profitable right now. But that's not a big issue at the moment.
Sustainable also doesn't mean it's making a profit. Which at the moment, IT DOESN'T NEED TO!
Yes MS is happy with GamePass and that's good. Some of us are interested in the business of videogames and not concerned if something is viewed as "Console Wars". Phil's omission was all that we needed. If it was profitable, he'd just say so.
mckmas8808
Mckmaster uses MasterCard to buy Slave drives
The word "narrative" for me doesn't equal conspiracy. I'm using the term narrative, more inline with PR speak or marketing. Everyone does it. It's way he keeps saying the Xbox brand isn't competing with Playstation anymore, when he knows darn well that isn't true. I understand why he's creating that narrative though. It's good for the Xbox brand to create their own lane of expectations going forward that's divorced from the other traditional key players.
And for point two, I don't think Phil lied about GamePass because he didn't exactly say anything specific. Yes, the Xbox division had record revenue, but it didn't lend to a profit from what I remember. We all know GP cost alot of money to create and maintain so that needs to be part of the conversation too.
It's a bit hard on this topic to get a good grip (not arguing about gamepass not being a profit) but just want to say that losses per consoles would need to be accounted for when looking at the decreased margin.
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Punished Miku
Member
If he had used 3 "very"s then I'd believe him. But notice that he only said "very, very."
That's the sound of uncertainty my friends.
That's the sound of uncertainty my friends.
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Topher
Gold Member
Very very very true
Panajev2001a
GAF's Pleasant Genius
I am not upset, Xbox and devs doing great and gamers benefiting in the long term would not be a bad thing but nice fishing attempt mate
.Let’s see how you twist it and put words in my mouth I guess
.
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Kssio_Aug
Member
I am not upset, Xbox and devs doing great and gamers benefiting in the long term would not be a bad thing but nice fishing attempt mate
Let’s see how you twist it and put things in my mouth I guess
IntentionalPun
Ask me about my wife's perfect butthole
I agree Netflix is a terrible comparison.
But amazon prime + prime video isn't great either lol
People just incessantly have this need to compare, and really to try to equate things.
GamePass is it's own unique thing; closest thing to it is PSNow. Difference being marketing and day one releases.
That's it.. other totally different forms of media also having some concept of "subscription services" or "streaming" is really just not all that related. Recurring revenue is the model.. but XBLG and PSN+ have had that model for ages too.
So has the New York Times for over 100 years.. it's a subscription.. media service!! Along with a sub, they also sell the same products separately!!! See how that works?
Yes Prime + Prime Now is CLOSER since amazon also sells movies, not just streams them.. and MS is more like amazon than Sony.. but it's still an analogy that falls flat pretty quickly IMO.
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SlimySnake
Flashless at the Golden Globes
I am seeing a lot of what I consider to be pretty disturbing posts trying to shut down this discussion. As if discussing the sustainability of Gamepass or VR or Onlive or F2P games is somehow tabboo and immediately warrants bans for console warring.
I call it disturbing because I saw the same thing over at era where it started off small with bans for topics that triggered fanboys, but then immediately turned into ANY and ALL criticism of Sony, Microsoft and Nintendo. It became an unbearable place where you had to look over your shoulders because you knew guys like Mr Fun Socks would lament that mods haven't banned anyone in this thread for discussing the literal topic of this thread. Absolute nonsense.
The worst part about this is that if the service is NOT sustainable. If it is NOT profitable then it's not the gamepass detractors who would suffer, but the people who love gamepass and Xbox. Especially Xbox party. The entire reason why you are fan of Xbox in the first place. MS just invested billions into Zenimax studios. What happens if Gamepass continues to miss internal projections? What happens if MS one day decides fuck it, I'm out. Who stands to lose the most? Definitely not Bo_Hazam. Companies have had failed endevours. MS had one just a gen ago with Kinect and TV. Execs CAN read the market wrong. Harvard Business analysts CAN make mistakes. It is entirely acceptable to discuss the topic of the service being sustainable.
My opinion? MS is all in. They are not going anywhere. No one spends $11 billion on Mincecraft and Zenimax if they have one leg out the door. You can see Google with Stadia. They did not acquire anyone worth a damn. They didnt give a shit about first party or exclusives? They were not serious. MS even before Zenimax was in a very strong position. I also dont think it costs that much to get games. The fact that they havent gotten big games like Battlefield, RE8, and Far Cry on Day one tells me that they are trying to stay under budget instead of spending big like Netflix did in its early days. They are playing it safe so I dont see this worst case scenario of them unable to sustain the level of growth required to get new content on a regular basis.
I call it disturbing because I saw the same thing over at era where it started off small with bans for topics that triggered fanboys, but then immediately turned into ANY and ALL criticism of Sony, Microsoft and Nintendo. It became an unbearable place where you had to look over your shoulders because you knew guys like Mr Fun Socks would lament that mods haven't banned anyone in this thread for discussing the literal topic of this thread. Absolute nonsense.
The worst part about this is that if the service is NOT sustainable. If it is NOT profitable then it's not the gamepass detractors who would suffer, but the people who love gamepass and Xbox. Especially Xbox party. The entire reason why you are fan of Xbox in the first place. MS just invested billions into Zenimax studios. What happens if Gamepass continues to miss internal projections? What happens if MS one day decides fuck it, I'm out. Who stands to lose the most? Definitely not Bo_Hazam. Companies have had failed endevours. MS had one just a gen ago with Kinect and TV. Execs CAN read the market wrong. Harvard Business analysts CAN make mistakes. It is entirely acceptable to discuss the topic of the service being sustainable.
My opinion? MS is all in. They are not going anywhere. No one spends $11 billion on Mincecraft and Zenimax if they have one leg out the door. You can see Google with Stadia. They did not acquire anyone worth a damn. They didnt give a shit about first party or exclusives? They were not serious. MS even before Zenimax was in a very strong position. I also dont think it costs that much to get games. The fact that they havent gotten big games like Battlefield, RE8, and Far Cry on Day one tells me that they are trying to stay under budget instead of spending big like Netflix did in its early days. They are playing it safe so I dont see this worst case scenario of them unable to sustain the level of growth required to get new content on a regular basis.
Definitely think it's closest comparative service is psnow (does psnow give discounts on ps store purchases?)
Don't think the amazon comparison is perfect but think it's the closest one we have outside of ps now. Fundamentally the GP service is to try and increase other revenue streams within the ecosystem. That's the goal of Amazon Prime. Prime Video doesn't really massively have that same appeal imo.
thicc_girls_are_teh_best
Member
And there's part of the issue. It's kind of not a secret that people have used the term "PR" to describe Phil over the years with a negative connotation, suggesting they're all talk and no action. You may not be specifically intending that yourself in this instance, but that's the baggage it carries after years of being in-fashion. To the same degree, I almost never saw people describe claims by various Sony executives as PR speak even if in some cases that's part of what they were doing.
Mark Cerny's presentation for example, yes it had a lot of information in it but part of it was also PR for the PS5 and a form of presenting it to viewers at home, a form of marketing. But people who pointed this out back at the time were more or less dogpiled, even if they weren't saying it was the totality of his presentation. For another example only more recently have some people started labeling guys like Jim Ryan or even Herman Hulst as pushing a "narrative" or implying they're just doing PR speak (which, again, kind of belittles their roles), but most of the people doing that are a vocal minority of fanboys angry over Sony wanting to support PC more going into the near future.
Xbox division definitely had profit; Microsoft only mentioned (in the Epic vs Apple trail) that they didn't make money off the console hardware itself. Which may or may not be true. If they don't, though, then for the Series systems we can understand the reason being due to potential lack of undersupply to recoup through hardware sales R&D, production, distribution and marketing costs for the hardware units themselves, as well as the fact that they are new platforms and those tend to be sold at a loss. For XBO, they probably cut into revenue and profit margins on the units themselves to shift numbers during the particularly bad period (2016 - 2018), and probably didn't manufacture a huge sum of One X systems.
But that is wholly separate from the division as a whole because they are still earning their 30% from 3P software sales, similar to Sony and Nintendo. They're still selling lots of 1P software, generating lots of money from MTX and DLC content sales, etc. There's a reason why their record fiscal year revenue was only $500 million behind Nintendo's FY 2020 ($16 billion), despite the common narrative by some extreme types that the brand is dying or bleeding money. Yes, they aren't generating as much revenue as PlayStation but then again neither is Nintendo, and both are still bringing in net profit (Nintendo in particular bringing in even more than Sony despite lower revenue totals).
So as far as GamePass is concerned, whatever operational costs it incurs that eat into its revenue, seemingly isn't enough to prevent the Xbox division from gaining net annual profits.
Those were apparently projections for executive bonuses, not the service itself.
Anyway the problem isn't that people question the sustainability or financial metrics of GamePass, that has never been the issue. At least, not for myself. The problem is that a good number of folks continue to be concerned with asking the same questions over and over again, almost every time word from an official source or close connects state something positive insofar as GP sustainability/finances etc., and don't bother to do their own research or try running some basic numbers of their own to back up their line of questioning or talking points.
And honestly, that continuous cycle starts to get annoying, because it feels like some are just having the conversation simply to have the conversation, to keep certain ideas around the service around regardless if they can be debunked. If someone says "Well there's no way they can sustain x amount of subscribers for a whole year", and then we can turn to almost any other subscription service's stats to see that THOSE services do in fact sustain an x amount for a year, why else would that someone, provided this proof, then turn around to say "Yes but that doesn't count this is different!" other than to desire continuation of being dismissive towards the service itself?
What's going to lead that individual to think that factors which work similarly for so many other subscription services, suddenly don't work for this one specific service that just happens to be GamePass, other than wanting to prop up a narrative that's convenient for them in their head even if the reality shows the probability of that very same narrative being true is almost close to zero?
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sainraja
Member
Quoting for emphasis.
IntentionalPun
Ask me about my wife's perfect butthole
Well I disagree with this a bit. Gamepass is far more built for direct profit than amazon prime is. It's just not built for as much direct profit as Netflix has to be.
But the price, once the dust settles.. is $9.99 a month.. $14.99 a month if you want to play online. The trick to sub services is content acquisition costs do not go up as your userbase scales. You don't have to buy more content to service 100 million subs compared to 10 million subs. So you spend X amount, and then get past a threshold, and then it's just a matter of ever-increasing or maintaining a high sub count.. and you can focus on getting content acquisition costs DOWN as your sub numbers go up, you can actually potentially get even better contract terms for 3rd parties.
The fact games have MTX makes this an even more lucrative proposal for MS.. because if they have 100 million subs, 3rd parties w/ MTX laden games will be itching to throw their games on the service.. and MS will be paying far less... same with games with DLC coming out. In the mean time, MS pads the content catalog with 1st party.
It's designed to profit.. that shouldn't be discounted. Either should the other revenue streams.. but again, that's why these attempts to form an analogy really should just be made at the surface level. People who try to look at Netflix's actual financials for instance, or the trajectory of the service, or their debt, etc. as if that matters to GamePass (or PSNow, or Ubisoft+) are just wasting time.
thicc_girls_are_teh_best
Member
How is it a waste of time when it's literally using hard data to try and substantiate a point of discussion?
If a CEO comes out and says that a part of their business is sustainable, it's assumed they mean this in financial terms. So at the very least we can make inferences on how this financial sustainability comes about looking at that division's other financials and extrapolating from there. However, there is no issue in looking at financials or other metrics of a similar type of service from another company which are available, seeing how those numbers probably break down, and inferencing some potential parallels between those and the ones of something we want to try having a more detailed account of.
It's literally the next logical step to take. If you're going to put out a theory, hypothesis etc. it's always better to try using some hard data to substantiate them. If some of that is not available in the means you'd like, then try extrapolating some from what data is available using some common-sense logic and reasoning skills. If you can find some numbers of metrics analogous to the ones you are "testing" to find out in terms of the theory/hypothesis/etc. then all the better, there's nothing wrong with using those as a reference point as long as you don't present your own conclusions as official. You can claim they're factual, and potentially accurate, but they can't be claimed official in this type of case unless the entity that actually owns the property in question provides data which can support/verify them.
There's nothing wrong with some educated guessing or using relevant reference data to substantiate a point of discussion.
IntentionalPun
Ask me about my wife's perfect butthole
Did you read that sentence? I'm saying people looking at NETFLIX's financials, and trying to use that to predict things about gamepass is a waste of time.
kingfey
Banned
I agree with this part.
Gamepass is like the old netflix, during the dvd era. But now, netflix is all digital.
ToTTenTranz
Banned
It would have been mighty hard for the Xbox division to not have record revenue in the first fiscal year after they bought an entire AAA publisher with all its dev houses and IPs for $7B.
thicc_girls_are_teh_best
Member
Well that's something I did in an earlier post and no, I disagree that it's a waste of time to do so. The point of referencing the Netflix data isn't to say that is exactly analogous to GamePass's situation, but to serve as an example that can be scaled down to present a possible scenario for GamePass that fits in line with Phil's statements and fits in line with the Xbox division's provided financial metrics as a whole, as a possible scenario with favorable probability.
And at the end of the day it is still unofficial theory/hypothesis/speculation, no one is trying to pass it off as definitive proof of official GamePass financial numbers, only as a means of further substantiating their own point of discussion. Since a purpose is served in that sense, it's far removed from being a waste of time.
That's true, there's no doubt of that. And television/film streaming as a whole picked up massively compared to physical the past two years. While gaming is also trending digital, it's not to as big a degree (though it saw massive uptick last year favoring digital).
Even if GP has more in common with the older Netflix model vs. the current one ,that doesn't render references to the service as it is now invalid. Just keep that other knowledge in the back of the head and apply it appropriately.
Are you implying that MS's revenue figures were mostly due to the Zenimax studios they acquired? Because a common talking point was that Bethesda, Arkane etc. were missing sales targets and their games weren't selling as well as beforehand. I don't even remember Bethesda releasing too much of note in 2020, although they had ESO and F'76 content updates and subscription increases I'm sure.
Even this year, whatever revenue the Zenimax studios have generated in terms of DOOM Eternal DLC, ESO/F'76 subs and DLC, and Deathloop is smaller than what MS's pre-Zenimax acquisition studios have done FY '21 between their releases, player subscriptions (for games like Sea of Thieves), DLC etc., and both of those pale in comparison to 3P software content sales on the platform (and MS's cut from those sales).
So the Zenimax purchase (for now) factors a lot less in their FY results than you seem to think.
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kingfey
Banned
Until gaming is all digital, comparing it to netflix now is useless.
amazon Prime movie is best example. You can buy the movies, and watch it using sub.
kingfey
Banned
add that to no 1st party release for a long time, since releasing xseries. Gamepass helped their revenue.
MacReady13
Member
I see many people on here go on about game preservation. IF Game pass ends up becoming all digital and only allows people to play games off game pass, and Microsoft don't do physical releases anymore, how will game preservation work?
purvispisgah
Member
It's very possible that MS could consider the service a huge success while not having traditional metrics that would make NeoGAF members believe the service is successful. If this is true, what benefit would Microsoft derive by divulging such metrics?
kingfey
Banned
License.
Every game has that. You cant play old gen games on new gen, because of that. Digital, or no digital, its all depend on whether the license holder wants the game on those platforms.
MS stopped their BC, because of those license.
So I dont see any problem there. old PC games will be dead, if MS changed windows operating code.
DaGwaphics
Member
Certainly is a lot of different ways that companies can earn from games, that's for sure. Nothing exemplifies that more than some of the biggest earners literally being F2P.
Kssio_Aug
Member
I'm not sure if I understood what you mean. Game Pass is already all digital. Physical games have nothing to do with Game Pass. And the issue of game preservation is also more related to digital vs physical games than game pass.
I really don't see them stopping people to buy games that are included on game pass, on their Xbox systems. And even if they did such a thing (which I don't believe in the slightest) people could still buy these games out of their platform.
I mean, why would they stop someone to pay 60/70 dollars for a single game, if they want to?
mckmas8808
Mckmaster uses MasterCard to buy Slave drives
Come on
thicc_girls_are_teh_best
, be honest. The Jim Lyin post are real. And I'm one of those people criticizing him from time to time, because he does PR speak more and worse than Phil Spencer. It kinda sounds like you're saying PR a main part of the customer facing part of their job....And maybe I read their quarterly report wrong then about the Xbox profit part.
ToTTenTranz
Banned
No, I'm implying its record revenue growth is mostly due to them acquiring Bethesda, because their revenues were added to the Xbox division's revenues.
Zenimax's revenue up to the sale was around $440M per year, so ~$110M per quarter.
I think there might be some misconception between revenue and operating profit here.
Thoughts on PC? Or do you think Microsoft will lock games purchase behind gamepass? Might have missed an assumption.
Bethesda sale completed in March 2021; the growth was largely before that.
The difficulty will be removing the covid-19 effect.
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sircaw
Banned
Does it make sense, to keep it quiet, if it's such a success, that's the real question?
i just find it very surprising.
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DaGwaphics
Member
I don't think MS gives specifics regarding profits with any of the different divisions. Isn't that the way it is? If yes, it would cut against the grain for MS to do something different with the gaming division.
sircaw
Banned
i am not sure about other divisions, for me personally, i only follow the gaming divisions of companies like Sony and Microsoft.
I am really interested to see how Gamepass is going to affect the industry in the long term, hence why i want to see as much detail as possible
A very successful service." successful service "
Sorry what was that? Oh. Banned.
Thoughts and prayers.
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MacReady13
Member
Nope. Haven't missed anything. We are, in this thread, talking about Xbox and Gamepass so i'm not talking PC. And yes, I do think eventually Microsoft will lock their games behind gamepass. That is a future I don't want.
kingfey
Banned
Because whatever gamepass makes, goes back to it, or cover xbox costs.
Think of it like Amazon shopping. It shows as a loss lead. But still grows everyday. Because everything it got, goes back to amazon shopping. Its why you see Amazon food store. Its reinvesting in to the business.
/cdn.vox-cdn.com/uploads/chorus_asset/file/19316793/EGgJV_amazon_s_revenue_versus_profit_versus_free_cash_flow_.png)
"Amazon intentionally posts low profits because it takes the vast majority of the money it earns and invests it right back into the company so that it will profit all the more in the future. Its business model, once reviled on Wall Street, has spurred numerous other companies like Uber and WeWork to emulate Amazon and forgo profits for the sake of growth — though many of these companies haven’t really proved that they could ever be profitable."
Bernd Lauert
Banned
That revenue growth number includes console sales. If you do that with Xbox, you'll also see revenue growth. At least try to compare the same thingRevenue growth versus operating income. Operating income implies subtracting expenses, and in that sector Microsoft's report hampers the effect of Gamepass' expenses by including Windows sales income in the "Personal Computing" bracket. However they do mention an increase in expenses form that side.
Sony had a YoY revenue growth in Q2 of 27.5%, but operating income decreased like you said because they only stopped selling the PS5 at a loss sometime in late July / early August. And they don't have the worldwide sales of the world's leading consumer O.S. for PCs to hide that.
DaGwaphics
Member
I hadn't noticed that, good catch.That revenue growth number includes console sales. If you do that with Xbox, you'll also see revenue growth. At least try to compare the same thing
Bonfires Down
Member
It's very, very, very concerning.