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[Godot25]

And yet Phil Spencer is talking about to increase the price of GamePass, watch Neogaf cous a topic about it will realese today. O dear

To be fair, he was talking about raising prices for....something Xbox related. Not Game Pass specifically.
They can raise prices of consoles (not likely), Game Pass (even less likely) or games (more likely)

 

[Godot25]

 

[phil_t98]

We don’t know. It would be nice to get that data as well.

But at the very least you can venture a guess based on:

1) Dev Cost Estimates

2) Retail Sales Revenue

For their titles that sell 10M+, you can easily be assured they are highly profitable. It gets less obvious for those that sell 5M or less.

For Microsoft, it’s even harder because I would not expect their retail sales to be strong since they have day and date with GamePass. It would be wrong to assume that just because one of their games doesn’t do too hot at retail that it’s automatically a bomb.

Buy shares if your that interested then

 

[Bumblebeetuna]

I’m shocked that Phil can lay out facts about GamePass and our armchair execs on GAF can still deny it and spin it negatively. I see people are grasping onto this idea that game budgets surely drain GamePass revenue. If GamePass is only a small part of total revenue, why would dev costs come from GamePass? All of these games are sold outside of GamePass. Clearly by the revenue percentage, most Xbox users still buy their games and don’t use GamePass.

It’s as stupid as saying like twelve of the top twenty most expensive movies of all time are all Disney+, so those budgets must have totally drained the Disney+ revenue and profits, ignoring theater runs and physical copies.

 

[reinking]

How many Series S consoles did you imagine they’d sold in the past quarter when you made this post? Take 50% of that and you can still easily make that fit in a slowdown

Since we don't get numbers we don't know. I guess I bought into the "Series S is selling well" a bit too much. I guess I need to lower my expectations for Game Pass growth.

 

[Ozriel]

Since we don't get numbers we don't know. I guess I bought into the "Series S is selling well" a bit too much. I guess I need to lower my expectations for Game Pass growth.

I don’t believe there’s any way to infer Series S sales from that statement.

 

[Mephisto40]

Not hard to figure out that this point you keep making isn't relevant to Game Pass profitability now either. Either way, your assertion that Game Pass was responsible for funding Xbox was just wrong.

Game Pass is the only thing keeping Xbox alive at this point, so it's not wrong is it

 

[Godot25]

Game Pass is the only thing keeping Xbox alive at this point, so it's not wrong is it

Yup.
That's why it accounted for 10-15% of Xbox revenue...

 

[adamsapple]

GP and Games, expect Starfield, FM8, Redfall $70 games

Could be, Starfield could be the first $70 xbox game.

But if that's the case, it'll make game pass look even more valuable.

Because I don't see in any scenario that they will both increase the price of games and GP at the same time or even the same window/year.

 

[Topher]

Game Pass is the only thing keeping Xbox alive at this point, so it's not wrong is it

The vast majority of Xbox revenue does not come from Game Pass. You can make whatever assumptions you want about what is keeping Xbox "alive".

 

[oldergamer]

Game Pass is the only thing keeping Xbox alive at this point, so it's not wrong is it

Me thinks the other 75% of Xbox revenue is keeping it alive.

my goodness at some of the incredibly odd takes in this thread. All reason goes out the window if its Xbox positive sounding news.

 

[DenchDeckard]

I think xbox consoles will increase in price in 2023...they will have to I think. Everything is going up.

 

[Chukhopops]

I think xbox consoles will increase in price in 2023...they will have to I think. Everything is going up.

My bet is 70 usd / 79 eur games will come first but I could be wrong.

XSS in particular will not go up in price, it sits in a nice niche with no competition doing as good at that price.

 

[thicc_girls_are_teh_best]

On what planet does that matter to consumers?

I don't care about consumers in this instance; this is just me being curious as a gaming enthusiast. I also feel some shareholders (not all) would like that particular information, it's their money that's making the stock valuation so high after all.

 

[fallingdove]

I’m shocked that Phil can lay out facts about GamePass and our armchair execs on GAF can still deny it and spin it negatively. I see people are grasping onto this idea that game budgets surely drain GamePass revenue. If GamePass is only a small part of total revenue, why would dev costs come from GamePass? All of these games are sold outside of GamePass. Clearly by the revenue percentage, most Xbox users still buy their games and don’t use GamePass.

It’s as stupid as saying like twelve of the top twenty most expensive movies of all time are all Disney+, so those budgets must have totally drained the Disney+ revenue and profits, ignoring theater runs and physical copies.

Because anyone that has worked in a leadership role at a large corporation knows exactly how creative people can be when discussing the “successes” they oversee. Accounting can be just as creative.

One way Microsoft might be polishing the penny - if Microsoft is separating acquisitions, 1P game development operating costs, cloud storage capEX, etc. from GamePass marketing expenses + how much they earn from subscriptions minus the money they pay third parties, GamePass very well could be profitable.

I will concede that GamePass is profitable (based on whatever definitions they are using) but I can’t imagine that GamePass is meeting expectations or driving the business like Microsoft was anticipating based on the continued use of $1 promos, the fact that Microsoft expects GamePass to remain a 10%
- 15% contributor to revenue, and the fact that they are already looking to increase the cost of GamePass and other services.

 

[Flutta]

MS warchest is the only thing keeping Xbox alive at this point, so it's not wrong is it

There fixed it for you.

 

[sankt-Antonio]

If they had hard numbers that show GP is generating money they would shout these numbers from the rooftop as it would be a sign to their shareholders that they are Leads in this field. That they refuse to do this tells you everything you need to know. It’s just words. Every company spins their achievements in one way or another.

 

[Bumblebeetuna]

Because anyone that has worked in a leadership role at a large corporation knows exactly how creative people can be when discussing the “successes” they oversee. Accounting can be just as creative.

One way Microsoft might be polishing the penny - if Microsoft is separating acquisitions, 1P game development operating costs, cloud storage capEX, etc. from GamePass marketing expenses + how much they earn from subscriptions minus the money they pay third parties, GamePass very well could be profitable.

I will concede that GamePass is profitable (based on whatever definitions they are using) but I can’t imagine that GamePass is meeting expectations or driving the business like Microsoft was anticipating based on the continued use of $1 promos, the fact that Microsoft expects GamePass to remain a 10%
- 15% contributor to revenue, and the fact that they are already looking to increase the cost of GamePass and other services.

Promos and price increases are normal parts of the process for these sub services. And actually, GamePass being such a small part of the revenue stream for Xbox, and their expectation of it remaining that way, makes it a lot easier to continue doing promotions and conversions. Unlike something like Netflix or Hulu, Microsoft has other, larger revenue streams for Xbox.

If people stop subscribing to Netflix or Hulu, it dramatically affects their business. If GamePass loses subscribers, Microsoft still makes lots of money when they buy games or content or Gold.

 

[KingT731]

Wouldn't be surprised if "profitable to us" is more a case of interesting accounting.

 

[DenchDeckard]

There fixed it for you.

How can it be making so much money and having the best years ever but still people think this stuff hahaha its amazing.

 

[Melfice7]

It's a good thing Phil Spencer never lies

 

[GHG]

Based on the numbers in my previous post:

Going off the mid point of those numbers (451.25 million) and an average subscriber paying $10 a month that indicates roughly 15 million subscribers which seems a bit on the low side.

If we are to believe they have subscriber numbers in excess of 20 million then the average subscriber is paying less than $10 per month (most likely closer to $7 per month on average which nets ~21.5 million subs).



Could be TTM numbers.

From an accuracy point of view we only have a single quarter to go off. Phil is saying it's 10-15% of total revenue now, so it would only make sense to apply those percentages to the most recently reported quarters data. Extrapolating across previous and future quarters will lead to inaccuracies as those percentage figures stated by Phil will ebb and flow over time.

Quoting myself to expand on this based on the data in this thread:

https://www.neogaf.com/threads/axios-microsoft-misses-xbox-game-pass-subscriber-target-for-second-year.1644081/

Assuming 25 million subscribers and a mid-point of 12.5% of total quarterly revenue, the average price people are paying is $6.

Make of that what you will.

 

[thicc_girls_are_teh_best]

Quoting myself to expand on this based on the data in this thread:

https://www.neogaf.com/threads/axios-microsoft-misses-xbox-game-pass-subscriber-target-for-second-year.1644081/

Assuming 25 million subscribers and a mid-point of 12.5% of total quarterly revenue, the average price people are paying is $6.

Make of that what you will.

Mostly agreed, but I think the actual amount GP accounts to console revenue is closer to 10%. Maybe 11% tops. MS also have XBL Gold and there are still millions of people subbed to that service, we know this enough from when they attempted to double Gold's price early last year and were met with immediate backlash (fwiw I don't think doubling Gold's price was necessarily a bad idea, but doing it immediately WAS and is something that should've happened gradually over a few years).

MS don't even talk about XBL Gold anymore because it isn't part of their plans for growth in the services markets, but it's still there, and assuming total XBL Gold users are even less than half the total XBO/Series install base (let's say around 1/3, which is similar to PS+ subs relative to PS4/PS5 sales), that's still a little over 22 million. If the ARPU is similar to PS+'s, then that's $1.145 billion.

$1.145 billion + $1.76 billion (11%) = ~ $2.9 billion which is what the leaked data from the CADE document had listed for total GamePass & XBL Gold revenue for 2021.

 

[Rambotito]

Not surprised by the "incredible growth" on the PC Game Pass side. I've been using it a lot and there's just so much to choose from. Combine that with Sony games on Steam and EGS and it's like having both consoles at the same time.

 

[FalsettoVibe]

 

[GHG]

Mostly agreed, but I think the actual amount GP accounts to console revenue is closer to 10%. Maybe 11% tops. MS also have XBL Gold and there are still millions of people subbed to that service, we know this enough from when they attempted to double Gold's price early last year and were met with immediate backlash (fwiw I don't think doubling Gold's price was necessarily a bad idea, but doing it immediately WAS and is something that should've happened gradually over a few years).

MS don't even talk about XBL Gold anymore because it isn't part of their plans for growth in the services markets, but it's still there, and assuming total XBL Gold users are even less than half the total XBO/Series install base (let's say around 1/3, which is similar to PS+ subs relative to PS4/PS5 sales), that's still a little over 22 million. If the ARPU is similar to PS+'s, then that's $1.145 billion.

$1.145 billion + $1.76 billion (11%) = ~ $2.9 billion which is what the leaked data from the CADE document had listed for total GamePass & XBL Gold revenue for 2021.

If it's 10% then the average revenue figures for gamepass are even worse (works out as $4.81 per subscriber assuming 25 million subs). If that's they case then they might well have a bit of an issue when they attempt to raise the price.

 

[thicc_girls_are_teh_best]

If it's 10% then the average revenue figures for gamepass are even worse (works out as $4.81 per subscriber assuming 25 million subs). If that's they case then they might well have a bit of an issue when they attempt to raise the price.

IMO I think it'll depend on how they increase the price. If the price increase comes with a perceived increase in value (either more features added, more content or some mix of both)..it may not go over with much blowback. Netflix increased their prices a bit and seems like they've been okay. Disney+ are raising their prices, we'll see how that goes. Apple's raising prices on Apple Music and Apple TV, but I expect that won't be an issue for their customers since they're used to paying premiums anyway.

The question is how much is GamePass actually valued by the majority of the subscription base, because that'll impact whether the price increase goes over well or not. The ARPU can give us some insight, but not everything. It doesn't tell us what specific portion of the subscription base pay at the normal rate for the service for example, or what specific means those contributing lower ARPU are subbing to the service (are they abusing free trail deals? $1 conversions from XBL Gold? Paying off their sub through MS Rewards?). How many of people of those types, when the time came to actually pay the normal price, ended up doing so, is something else only Microsoft would actually know.

If in the case of the latter, if the numbers are pretty low, a price hike combined with curtailing some of the "gimmicky" ways of paying for the service at steep discounts or effectively free, could see a sub drop and not enough people willing to pay the increased cost to make up for that. But that's all on Microsoft to figure out, honestly.

 

[ChorizoPicozo]

Sorry phill. After Hoeg's latest video....i will not 100% trust what you say. (Until you show the receipts).

 

[NinjaBoiX]

The cloud stuff could be pretty compelling if they supported it on smart tv platforms instead of just phones and web browsers.

I’m going to be buying a new TV next year, and cloud gaming definitely factors in to my purchasing decision.

I know Samsung have this gaming hub baked right into the OS, how likely is it that LG and the like will follow suit?

And would this be something modern TV’s could retroactively implement via a firmware update?

 

[GHG]

IMO I think it'll depend on how they increase the price. If the price increase comes with a perceived increase in value (either more features added, more content or some mix of both)..it may not go over with much blowback. Netflix increased their prices a bit and seems like they've been okay. Disney+ are raising their prices, we'll see how that goes. Apple's raising prices on Apple Music and Apple TV, but I expect that won't be an issue for their customers since they're used to paying premiums anyway.

The question is how much is GamePass actually valued by the majority of the subscription base, because that'll impact whether the price increase goes over well or not. The ARPU can give us some insight, but not everything. It doesn't tell us what specific portion of the subscription base pay at the normal rate for the service for example, or what specific means those contributing lower ARPU are subbing to the service (are they abusing free trail deals? $1 conversions from XBL Gold? Paying off their sub through MS Rewards?). How many of people of those types, when the time came to actually pay the normal price, ended up doing so, is something else only Microsoft would actually know.

If in the case of the latter, if the numbers are pretty low, a price hike combined with curtailing some of the "gimmicky" ways of paying for the service at steep discounts or effectively free, could see a sub drop and not enough people willing to pay the increased cost to make up for that. But that's all on Microsoft to figure out, honestly.

The main issue is something you touched on. All the aforementioned subscription services have one thing in common - the vast majority of their customers are accustomed to paying full price for the subscription. So raising the price a dollar or two per month isn't a big deal.

When you have, on average, people paying well under 50% for your subscription then you haven't even made them get used to paying the current prices. This is one of the many pitfalls of selling on price rather than on value.

Like you said, we actually don't know how much most of the current subscribers value the service due to the large delta between RRP and actual prices. Any price increase needs to coincide with a big release though, I don't see how else they can do it.

 

[StreetsofBeige]

The main issue is something you touched on. All the aforementioned subscription services have one thing in common - the vast majority of their customers are accustomed to paying full price for the subscription. So raising the price a dollar or two per month isn't a big deal.

When you have, on average, people paying well under 50% for your subscription then you haven't even made them get used to paying the current prices. This is one of the many pitfalls of selling on price rather than on value.

Like you said, we actually don't know how much most of the current subscribers value the service due to the large delta between RRP and actual prices. Any price increase needs to coincide with a big release though, I don't see how else they can do it.

Sony had free MP online for the entire PS3 era where nobody paid one penny. PS4 rolls around asking for $60 and nobody cared. PS+ paid subs are around 50M accounts. You even had dual rules at the same time. PS3 MP was still free when PS4 gamers needed to pay. Didn't seem like a problem to go from $0 to $60.

 

[GHG]

Sony had free MP online for the entire PS3 era where nobody paid one penny. PS4 rolls around asking for $60 and nobody cared. PS+ paid subs are around 50M accounts.

You're missing a key point here. PS+ existed before it became the subscription service for online gaming.

It started as a game library subscription service and then they added online gaming as a "perk" while removing the ability for people to play online games for free in non F2P games.

 

[StreetsofBeige]

You're missing a key point here. PS+ existed before it became the subscription service for online gaming.

It started as a game library subscription service and then they added online gaming as a "perk" while removing the ability for people to play online games for free in non F2P games.

50M Sony gamers arent buying PS+ for those 3 free crappy games per month. They are doing it for MP access which was free during PS3.

 

[GHG]

50M Sony gamers arent buying PS+ for those 3 free crappy games per month. They are doing it for MP access which was free during PS3.

My point is that it helps. It's called value creation, something a lot of companies will attempt to do if they suddenly start charging for something that was once free and/or when they increase the price of an existing service.

They didn't suddenly ask for people to pay for online and offer nothing in return.

 

[Badlucktroll]

Do you guys ever think they will change the metro interface of xbox to something more in line with windows 11?

 

[DenchDeckard]

Quoting myself to expand on this based on the data in this thread:

https://www.neogaf.com/threads/axios-microsoft-misses-xbox-game-pass-subscriber-target-for-second-year.1644081/

Assuming 25 million subscribers and a mid-point of 12.5% of total quarterly revenue, the average price people are paying is $6.

Make of that what you will.

I think that's pretty on the money, seems about right imo.

Isn't there multiple game pass subscriptions? Just a pc one and then ultimate? So I can see that evening it out.

 

[GHG]

I think that's pretty on the money, seems about right imo.

Isn't there multiple game pass subscriptions? Just a pc one and then ultimate? So I can see that evening it out.

These are the current pricing tiers:

 

[adamsapple]

Do you guys ever think they will change the metro interface of xbox to something more in line with windows 11?

The new interface they're testing on alpha updates looks like the game pass app on TVs.

I don't like it TBH.

 

[Gamer79]

I use it on my pc and enjoy it. Love the Forza horizon games.

 

[SF Kosmo]

I’m going to be buying a new TV next year, and cloud gaming definitely factors in to my purchasing decision.

I know Samsung have this gaming hub baked right into the OS, how likely is it that LG and the like will follow suit?

And would this be something modern TV’s could retroactively implement via a firmware update?

I mean MS could do it today for many TVs by just pushing an app out on Android TV and Fire TV platforms, or Chromecast, or a million other things. Anything that can connect to bluetooth controllers should work okay. Maybe not Roku.

 

[DForce]

How profitable is the question.

 

[thicc_girls_are_teh_best]

My point is that it helps. It's called value creation, something a lot of companies will attempt to do if they suddenly start charging for something that was once free and/or when they increase the price of an existing service.

They didn't suddenly ask for people to pay for online and offer nothing in return.

Yeah and that's what Microsoft will have to do whenever they raise GamePass prices. Time them with the release of big 1P games into the service like Starfield, or new features that clearly add more value to users.

That's another reason the XBL Gold 100% price increase failed miserably: complete increase in price with absolutely nothing of value being added. Of course the backlash was going to be severe. Not to mention rushing it all at once which made them look incredibly greedy and/or desperate (take your pick).

If I had to take a guess, the first price increase will probably be by $2 - $3/mo across the board and they'll probably introduce that Family Plan alongside it, possibly gating specific new releases to the Ultimate tier for a few months, reshuffle some of the benefits around (20% discount moved to Ultimate tier while non-Ultimate tier gives 10% discount on purchased games on the service), likely all or some of that going into effect by the time RedFall & Forza Motorsport are ready.

There are definitely going to be some pricing and structural changes to GamePass in 2023, that's a definite.

I mean MS could do it today for many TVs by just pushing an app out on Android TV and Fire TV platforms, or Chromecast, or a million other things. Anything that can connect to bluetooth controllers should work okay. Maybe not Roku.

And probably Sony TVs x3.

 

[DavidGzz]

1. The Xbox division overall is profiting even if you still think this news is disingenuous.

2. More Game Pass subs equals more engagement on Xbox or PC Game Pass=more games and or mtx sold in their ecosystem so even if Game Pass is still hemorrhaging MS money like many users have said(lol), Game Pass is still a good thing for MS overall.

The back and forth is pretty entertaining though. Not sustainable, not profitable, the only thing keeping Xbox alive, only makes up 10-15% revenue. Lmao

We need a reaction that goes from laughing to crying for Ezekiel in preparation for next year.

 

[KXVXII9X]

I wonder how much they make off of my reward points.

Speaking of, I have just enough to redeem

 

[DeepEnigma]

How profitable is the question.

 

[Pelta88]

With the layoffs at 343i and the PR of 20 Million Halo players I figured this conversation needs an update.

 

[feynoob]

With the layoffs at 343i and the PR of 20 Million Halo players I figured this conversation needs an update.

Please don't try and start console war shit.
Let this thread die peacefully.

 

[MiguelItUp]

With the layoffs at 343i and the PR of 20 Million Halo players I figured this conversation needs an update.

This really isn't necessary TBH.

 

[Men_in_Boxes]

I’m shocked that Phil can lay out facts about GamePass and our armchair execs on GAF can still deny it and spin it negatively. I see people are grasping onto this idea that game budgets surely drain GamePass revenue. If GamePass is only a small part of total revenue, why would dev costs come from GamePass? All of these games are sold outside of GamePass. Clearly by the revenue percentage, most Xbox users still buy their games and don’t use GamePass.

It’s as stupid as saying like twelve of the top twenty most expensive movies of all time are all Disney+, so those budgets must have totally drained the Disney+ revenue and profits, ignoring theater runs and physical copies.

Why do you think all the other big publishers aren't following the GamePass model?

It's either boosting revenue relative to the old model or it's dulling profits relative to the old model.

Why aren't you more skeptical of PR statements from corporate leadership?