Support NeoGAF

[ToTTenTranz]

- Investment so far: $75B
- 25 million subscribers
- let's say $120/year each
- new employees (Bethesda + Activision Blizzard): 12 000
- Earlier Xbox Games Studios employees: ~1000 (I think?)
- Cost per employee per year: shall we say $80K? Probably a lot more due to infrastructure and equipment, not just salaries, but let's stay at $80K.


Profit structure:
25 million * 120 = $3B / year

Cost structure:
- $75B investment
- Employees: 13000 * 80K / year = $1B / year


Profit / year = $3B / year - $1B / year = $2B / Year.

Time to recoup investment if 25M people only use gamepass at current prices: 38 years.
If 50M people only use gamepass at current prices: 19 years.


Edit: because some people fail at reading I needed to put bold on some text.

 

[Nikana]

- Investment so far: $75B
- 25 million subscribers
- let's say $120/year each
- new employees (Bethesda + Activision Blizzard): 12 000
- Earlier Xbox Games Studios employees: ~1000 (I think?)
- Cost per employee per year: shall we say $80K? Probably a lot more due to infrastructure and equipment, not just salaries, but let's stay at $80K.


Profit structure:
25 million * 120 = $3B / year

Cost structure:
- $75B investment
- Employees: 13000 * 80K / year = $1B / year


Profit / year = $3B / year - $1B / year = $2B / Year.

Time to recoup investment if 25M people only use gamepass at current prices: 38 years.
If 50M people only use gamepass at current prices: 19 years.

You need to add other revenue they will get like MTX from games.

 

[Fredrik]

Now all MS has to do is buy Sony and put their games on PC-Gamepass, too.

Then I`d never have to bother buying a console again or pay more than 10 bucks for a game.....
Ah, one can dream.

Would need Nintendo to be there too.

But honestly, now I want Sony to be hyper aggressive, competition is good for the hobby and things are going a bit too far right now imo… The Activision Blizzard deal must be the biggest thing this industry has ever seen. Like what else could compare? Makes the Bethesda deal seem small

 

[dorkimoe]

Not yet.

Honestly I’d be ok with it. I didn’t have to buy a handful of $60 games

 

[Nitty_Grimes]

 

[Bernkastel]

Logically speaking, why not make every WOW subscriber into a gamepass subscriber.

They didn't give us ESO plus either.

 

[Ozriel]

That shit is 1 dollar every 3 months.... Like cmon. And I've still only played maybe 3 gamepass games in 2 years

Shame your gaming tastes are so niche. Basically admitting you dislike racing games, dislike shooters, dislike platformers, RPGs, strategy games and only play AAA games.

Because really, the sheer diversity of genres on Gamepass is staggering.

 

[rofif]

Shame your gaming tastes are so niche. Basically admitting you dislike racing games, dislike shooters, dislike platformers, RPGs, strategy games and only play AAA games.

Because really, the sheer diversity of genres on Gamepass is staggering.

I try games.. sure.
I finished gow5, 12 minutes, exo one, The Forgotten City and Halo Infinite.... tried forza games always.
It's not my fault much of the stuff is crap and I don't play games I don't like.

 

[MScarpa]

Logically speaking, why not make every WOW subscriber into a gamepass subscriber.

You bet your sweet ass that will happen.

 

[Buggy Loop]

- Investment so far: $75B
- 25 million subscribers
- let's say $120/year each
- new employees (Bethesda + Activision Blizzard): 12 000
- Earlier Xbox Games Studios employees: ~1000 (I think?)
- Cost per employee per year: shall we say $80K? Probably a lot more due to infrastructure and equipment, not just salaries, but let's stay at $80K.


Profit structure:
25 million * 120 = $3B / year

Cost structure:
- $75B investment
- Employees: 13000 * 80K / year = $1B / year


Profit / year = $3B / year - $1B / year = $2B / Year.

Time to recoup investment if 25M people only use gamepass at current prices: 38 years.
If 50M people only use gamepass at current prices: 19 years.

Oh gosh, you’re right! I’m really worried for Microsoft now.

Spoiler

/s if it wasn’t obvious

 

[Tams]

Not jazzed about this.

I think it devalues games and further entrenches the idea that every as a service is just fine. And I reckon we're going to see a decline in quality like with video streaming, where the shit that doesn't perform well can just be hidden.

But hey, maybe I'm a Luddite. Though not really as I'm hardly going to set the Gamepass servers on fire, but I'm not going to subscribe.

 

[Hendrick's]

I can't wait for the playstation game pass competitor

They won't have any games left to add to the service by the time they get around to it.

 

[Nikana]

I try games.. sure.
I finished gow5, 12 minutes, exo one, The Forgotten City and Halo Infinite.... tried forza games always.
It's not my fault much of the stuff is crap and I don't play games I don't like.

 

[Hendrick's]

- Investment so far: $75B
- 25 million subscribers
- let's say $120/year each
- new employees (Bethesda + Activision Blizzard): 12 000
- Earlier Xbox Games Studios employees: ~1000 (I think?)
- Cost per employee per year: shall we say $80K? Probably a lot more due to infrastructure and equipment, not just salaries, but let's stay at $80K.


Profit structure:
25 million * 120 = $3B / year

Cost structure:
- $75B investment
- Employees: 13000 * 80K / year = $1B / year


Profit / year = $3B / year - $1B / year = $2B / Year.

Time to recoup investment if 25M people only use gamepass at current prices: 38 years.
If 50M people only use gamepass at current prices: 19 years.

 

[Ozriel]

I try games.. sure.
I finished gow5, 12 minutes, exo one, The Forgotten City and Halo Infinite.... tried forza games always.
It's not my fault much of the stuff is crap and I don't play games I don't like.

A great number of games on Gamepass are a far cry from ‘crap’.

Octopath Traveler arrived on Gamepass day one with home console release. The Yakuza series is on there. I don’t see the Ori games in that list. Don’t see Psychonauts 2. Nothing from EA Play’s catalogue.
Hades launched into Gamepass when it hit the home consoles after switch exclusivity.

Throw in MLB, Outriders, The Ascent and others and you’ll find there’s a rich, diverse library. Which is why it’s puzzling you say you could only play 2-3 games.

 

[GHG]

A great number of games on Gamepass are a far cry from ‘crap’.

Octopath Traveler arrived on Gamepass day one with home console release. The Yakuza series is on there. I don’t see the Ori games in that list. Don’t see Psychonauts 2. Nothing from EA Play’s catalogue.
Hades launched into Gamepass when it hit the home consoles after switch exclusivity.

Throw in MLB, Outriders, The Ascent and others and you’ll find there’s a rich, diverse library. Which is why it’s puzzling you say you could only play 2-3 games.

I see a lot of "home console", he's primarily a PC gamer.

No need to advertise.

 

[Snake29]

Would need Nintendo to be there too.

But honestly, now I want Sony to be hyper aggressive, competition is good for the hobby and things are going a bit too far right now imo… The Activision Blizzard deal must be the biggest thing this industry has ever seen. Like what else could compare? Makes the Bethesda deal seem small

Very small and for me personally, better franchises then AB. Other then CoD, i have never been interested in their franchises.

There are publisher with far more interesting games to pick up. 70 billion doesn’t give you better games if Sony might pick up a publisher far more interesting franchises.

 

[R6Rider]

Great service, been a sub for ages now. Once tried, there is no going back

I have tried it once and currently don't have it, so I guess you're wrong.

 

[DenchDeckard]

- Investment so far: $75B
- 25 million subscribers
- let's say $120/year each
- new employees (Bethesda + Activision Blizzard): 12 000
- Earlier Xbox Games Studios employees: ~1000 (I think?)
- Cost per employee per year: shall we say $80K? Probably a lot more due to infrastructure and equipment, not just salaries, but let's stay at $80K.


Profit structure:
25 million * 120 = $3B / year

Cost structure:
- $75B investment
- Employees: 13000 * 80K / year = $1B / year


Profit / year = $3B / year - $1B / year = $2B / Year.

Time to recoup investment if 25M people only use gamepass at current prices: 38 years.
If 50M people only use gamepass at current prices: 19 years.

I didn’t realise they stopped selling games And only have gamepass now.

 

[too much eslim]

At what time do we expect new games MS games to only be available via a Game Pass subscription and to no longer be purchasable separately?

Never. That's something only fannoys and conspiracy theorists believe.

 

[too much eslim]

That shit is 1 dollar every 3 months.... Like cmon. And I've still only played maybe 3 gamepass games in 2 years

Broaden your horizon then. You are choosing not try out new experiences.

 

[twilo99]

It honestly doesn’t matter anymore.

A $70b purchase makes GamePass a 20 year investment.

Can you break those numbers down for me?

I figured game pass was a 5-6 year project for MS but $70b is actually serious money so I guess they are indeed going after it for real

 

[Ozriel]

I see a lot of "home console", he's primarily a PC gamer.

No need to advertise.

I’m using ‘home console’ to differentiate between PS/Xbox and the Switch.

He’s already a Gamepass subscriber, so It’s illogical for you to accuse me of ‘advertising’. Best to follow the conversation before jumping in.

 

[twilo99]

I can’t believe they haven’t raised the price of gamepass. It’s a fucking steal.

Not yet... maybe in 2-3 years

 

[phil_t98]

- Investment so far: $75B
- 25 million subscribers
- let's say $120/year each
- new employees (Bethesda + Activision Blizzard): 12 000
- Earlier Xbox Games Studios employees: ~1000 (I think?)
- Cost per employee per year: shall we say $80K? Probably a lot more due to infrastructure and equipment, not just salaries, but let's stay at $80K.


Profit structure:
25 million * 120 = $3B / year

Cost structure:
- $75B investment
- Employees: 13000 * 80K / year = $1B / year


Profit / year = $3B / year - $1B / year = $2B / Year.

Time to recoup investment if 25M people only use gamepass at current prices: 38 years.
If 50M people only use gamepass at current prices: 19 years.

also doesn't factor in people still buying the games

 

[Andodalf]

25 Mil and we haven't even seen the first exclusive game from the vast majority of the studios they've bought in the past 3 years.

 

[SteelCurtain 59]

- Investment so far: $75B
- 25 million subscribers
- let's say $120/year each
- new employees (Bethesda + Activision Blizzard): 12 000
- Earlier Xbox Games Studios employees: ~1000 (I think?)
- Cost per employee per year: shall we say $80K? Probably a lot more due to infrastructure and equipment, not just salaries, but let's stay at $80K.


Profit structure:
25 million * 120 = $3B / year

Cost structure:
- $75B investment
- Employees: 13000 * 80K / year = $1B / year


Profit / year = $3B / year - $1B / year = $2B / Year.

Time to recoup investment if 25M people only use gamepass at current prices: 38 years.
If 50M people only use gamepass at current prices: 19 years.

You do realize they still have an asset they value at close to $70 billion, right? It doesn't magically disappear once they buy it, they don't need to "recoup the investment"

 

[draliko]

i love how all the fortune 500 ceo grace us with their insane management skill, posting on neogaf... god this place is full of armchair everything, daveloper, ceo, soldiers, artits, everyone except gamers...

 

[DustQueen]

- Investment so far: $75B
- 25 million subscribers
- let's say $120/year each
- new employees (Bethesda + Activision Blizzard): 12 000
- Earlier Xbox Games Studios employees: ~1000 (I think?)
- Cost per employee per year: shall we say $80K? Probably a lot more due to infrastructure and equipment, not just salaries, but let's stay at $80K.


Profit structure:
25 million * 120 = $3B / year

Cost structure:
- $75B investment
- Employees: 13000 * 80K / year = $1B / year


Profit / year = $3B / year - $1B / year = $2B / Year.

Time to recoup investment if 25M people only use gamepass at current prices: 38 years.
If 50M people only use gamepass at current prices: 19 years.

This math is retarded.

 

[Esppiral]

I don't think NeoGAF can handle that much MS news, please stop.

 

[Cert.in.Death]

Can you break those numbers down for me?

I figured game pass was a 5-6 year project for MS but $70b is actually serious money so I guess they are indeed going after it for real

Simple math exercise: start with 100 million monthly users spending $10/month (there is variation at $10 and $15 tiers and prices may go up over time adjusting for inflation and costs, but nobody knows what will happen so it’s fruitless to speculate).

For argument’s sake, at 100m users you earn $1bn per month, $12 billion in revenue per year. It takes 7 years to get to $84bn to cover the costs of investment. But adjusting for expenses and let’s say it is 25% of revenue ($3bn per year), the profit after taxes is roughly between $6bn - $8bn.

That means on the low end it takes 14 years to cover the acquisitions and you get 6 years to profit (roughly 40% of initial investment, which is markup premium MS has agreed to pay).

 

[Beer Baelly]

 

[reksveks]

bad maths and missing the picture in this thread

 

[Ozriel]

At what time do we expect new games MS games to only be available via a Game Pass subscription and to no longer be purchasable separately?

Never

 

[Lognor]

I see a lot of "home console", he's primarily a PC gamer.

No need to advertise.

No need for you to defend him either. yeesh

 

[Adam_802]

Imagine not being part of that 25M.....lol

 

[Stuart360]

Not jazzed about this.

I think it devalues games and further entrenches the idea that every as a service is just fine. And I reckon we're going to see a decline in quality like with video streaming, where the shit that doesn't perform well can just be hidden.

But hey, maybe I'm a Luddite. Though not really as I'm hardly going to set the Gamepass servers on fire, but I'm not going subscribe.

Netflix tv shows have some of the biggest budgets ever for TV. And they have made $100mil films and just dropped them on their service (like That Red Notice i believe it was called).
The quality of Netflix tv series and films is nothing to do with budgets.

 

[ToTTenTranz]

Simple math exercise: start with 100 million monthly users spending $10/month

You don't start with 100 million users because Gamepass never had 100 million users. There are 25 million right now.

And many of those 25 million aren't even paying those $10 / month. Some of those are $1-per-3-months subscriptions ($0.33 /month), some are 3-years-Gold-converted-to-Gamepass-for-$120 - like me - ($3.33 /month until 2025), some are even using VPN to buy Gold on the Turkish store for like $30/year to make it even cheaper.

When do you expect Microsoft to have 100 million users? Gamepass has been a great deal for consumers since it released in 2017. But even during the excellent conditions of the pandemic, with government-enforced isolation periods and people stuck in their houses, Gamepass rose 66% in the last 15 months.
With a ~53% growth per year, it'll take until April 2025 to reach 100 million subscribers. Assuming all these purchases compensate for a general decrease in videogame/electronics expenditure if/when people get to leave their houses.


The Average Joe isn't going to panic after reading these news today and start subscribing Gamepass tomorrow for $10/month. Today's news will create an impact if/when they see the next COD not releasing on Steam or their PS4/PS5, and that's expected for 2023.
GAF seems to love assuming everyone just knee-jerks into changing consoles and PC storefronts when X happens, but that's just not reality.

You do realize they still have an asset they value at close to $70 billion, right? It doesn't magically disappear once they buy it, they don't need to "recoup the investment"

"They don't need to recoup the investment". That's new.
These aren't paintings and sculptures. This is money from Microsoft investors/shareholders going into Activision Blizzard investors/shareholders. They invest X money with the expectation to receive X+Y money in the future.
Microsoft isn't doing charity for your sake.

 

[Hendrick's]

The swarm grows

 

[MOTM]

Looking forward to all the people who were adamant it was 30 million and it was not a lie and he did know the figures either eating that crow or accepting that Microsoft has lost 1 in 6 of it's subscribers in just 4 months.

The biggest publisher in the world is going first party and that’s your reaction

 

[MOTM]

That's true. Maybe we will get some Activision content soon on Game Pass as a part of this deal? With Bethesda they put a ton of content on Game Pass after the acquisition was finalized, but it looks like Doom Eternal did come to Game Pass shortly after the acquisition was first announced. I could be up for some Call of Duty! Haven't played any COD games since the PS3 days!

Same here, will finally play a COD game since Modern Warfare

 

[chonga]

The biggest publisher in the world is going first party and that’s your reaction

No, it is my reaction to news unrelated to the acquisition. You're in the wrong thread for acquisition talk.

 

[Robb]

That’s a lot of people!

I can only see it increasing, especially considering the Bethesda and ActivisionBlizzard deals.

 

[MonarchJT]

- Investment so far: $75B
- 25 million subscribers
- let's say $120/year each
- new employees (Bethesda + Activision Blizzard): 12 000
- Earlier Xbox Games Studios employees: ~1000 (I think?)
- Cost per employee per year: shall we say $80K? Probably a lot more due to infrastructure and equipment, not just salaries, but let's stay at $80K.


Profit structure:
25 million * 120 = $3B / year

Cost structure:
- $75B investment
- Employees: 13000 * 80K / year = $1B / year


Profit / year = $3B / year - $1B / year = $2B / Year.

Time to recoup investment if 25M people only use gamepass at current prices: 38 years.
If 50M people only use gamepass at current prices: 19 years.


Edit: because some people fail at reading I needed to put bold on some text.

wtf ahahah that's not exactly how it works hahahaha and how big companies invest. They didn't lose 70b. They have a company worth 70b which is now calculated in Microsoft's assets. Your calculation would be fine for a small town bar

 

[YukiOnna]

- Investment so far: $75B
- 25 million subscribers
- let's say $120/year each
- new employees (Bethesda + Activision Blizzard): 12 000
- Earlier Xbox Games Studios employees: ~1000 (I think?)
- Cost per employee per year: shall we say $80K? Probably a lot more due to infrastructure and equipment, not just salaries, but let's stay at $80K.


Profit structure:
25 million * 120 = $3B / year

Cost structure:
- $75B investment
- Employees: 13000 * 80K / year = $1B / year


Profit / year = $3B / year - $1B / year = $2B / Year.

Time to recoup investment if 25M people only use gamepass at current prices: 38 years.
If 50M people only use gamepass at current prices: 19 years.

I don't think this is how investment recoup works in finance and accounting...

 

[THE DUCK]

That shit is 1 dollar every 3 months.... Like cmon. And I've still only played maybe 3 gamepass games in 2 years

Right, all 25 million are at $1. Please. I bet at this point less than 10% of the current subs are promo priced. I don't know how to break it to you, but most gamers aren't on the forums frantically checking for how to convert gold to gamepass deals, nor are they cancelling after the $1 deal.
Just this weekend my cousin was telling me how he had signed up months ago for $1 expecting to stay for only an month and yet he is still on it.

And your lack of playing game pass games just tells me you aren't really a gamer. Subscribed to game pass for 2 years and played 3 games is proof of that.

 

[MacReady13]

At what time do we expect new games MS games to only be available via a Game Pass subscription and to no longer be purchasable separately?

According to many here that will NEVER happen, but that will be the future. Lock everything away on gamepass so you can only play their games on their service. This is the future many want apparently.

 

[THE DUCK]

I don't think this is how investment recoup works in finance and accounting...

I didn't double check the math, it seems fuzzy, but aren't you also forgetting all of the add on and regular sales of Activision games which would be in the billions?

 

[DaGwaphics]

You need to add other revenue they will get like MTX from games.

Helps that the studios they've bought are still selling games traditionally too.

 

[THE DUCK]

According to many here that will NEVER happen, but that will be the future. Lock everything away on gamepass so you can only play their games on their service. This is the future many want apparently.

I don't see this as very likely, they can have their cake and eat it too the way it is.