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[Mephisto40]

Well I'm pretty confident that, other than some marketing, Game Pass does not fund any of the development of the first party games, why should it?

You see, that's the problem with saying Game Pass is profitable, he isn't lying, it will be, but that isn't the whole picture and that's what people have an issue with. I think Game Pass has been profitable for a while IF you take first party games out of the equation, but include those and I personally don't think its even remotely close.

Think of it this way, every time MS buys one of these huge publishers then why doesn't the Game Pass profits massively drop? they would have to start paying for the development of all of Bethesda's games for example, and soon all of Activision/Blizzard.

Because Microsoft's gaming division is basically funded by gamepass, gamepass is the only reason it isn't hemorrhaging money like every other gen

I think people are quick to forget the gaming division of microsoft has been mostly a massive failure in terms of generating revenue for Microsoft as a company

And their first party developers are part of Microsoft's gaming division

 

[Slicker than your average]

Wow considering how the gamepass evangelist and Phil fanatics have been (even play it down in this thread) this is pure comedy gold If true.

Once you own the market and have the monopoly you can easily raise prices and nobody can do shit, see Nvidia.

 

[anothertech]

Sure Phil.

Let's see those numbers now. No? Shocking.

 

[Hugare]

And actual numbers look like that.

45$ is our lowest price point, with estimated copy sales. We can't use $60, because that is impossible.

I meant sold copies

Without any idea about the number of sold copies, all of this is useless.

Where do you get the estimated copy sales?

 

[feynoob]

I meant sold copies

Without any idea about the number of sold copies, all of this is useless.

Where do you get the estimated copy sales?

Xbox store+windows store+steam.
If Xbox store can do 3.5m, 500k from windows store, and 1m from steam. That is a total of 5m copies sold.

 

[Clear]

You are desperate to spin it. Its making billions. Its profitable. Its a success. Deal with it

Hate to break to you guys, but profitable enterprises get downsized or closed all the time.

Its not just about turning a profit. Its the margin of profit vs opportunity cost.

Spending billions to make millions is not good business.

 

[SmokedMeat]

Console growth slowing is exactly why they need to keep games exclusive to their platform.

You’re not going to push Game Pass as hard if you’re still third place. More consoles sold means more subs.

 

[feynoob]

Console growth slowing is exactly why they need to keep games exclusive to their platform.

You’re not going to push Game Pass as hard if you’re still third place. More consoles sold means more subs.

That is what gamepass for.
Console exclusive are 20% of the entire console. They don't serve anything really.

What boost your console, is satisfying all kind of genre, in order to attract a large pool of users.

You gain 20m users, if you have fighting, jrpg, racing, kids games and puzzle games. Those are different genre. But adding them together would be beneficial for overall console growth.

MS needs to diversify their content first.

 

[Banjo64]

Xbox store+windows store+steam.
If Xbox store can do 3.5m, 500k from windows store, and 1m from steam. That is a total of 5m copies sold.

Considering Sea of Thieves did 5m sold on Steam very quickly, I’m not sure how anyone can doubt the sales figures are also quite good. I’d bet FH5 and possibly even Grounded are doing great.

 

[M1chl]

The concern trolling here is cringe as fuck. I won't shed a tear for trillion dollar company gaining or loosing money.

I do understand that it's valid concern in company which is at market cap of Microsoft attempted acquisition and even for that they need to be in every Consumer Electronic department, selling phones, TVs and moneyhatting every possible 3rd party at discount.

Jim Ryan sleep in front of anti-trust office somewhere in UK and people here are "show me the numbers or ur lying", well contrary to what it would did to Sony, I think MS shareholders can rest easy.

Comedy gold.

 

[Helghan]

Good for them. They took a risk, tried something new, and a lot of gamers are loving it. Hope this pushes Sony to eventually do the same.

 

[Sybrix]

Oh thank god!!!! I have had sleepless nights for the last 2 years worrying if Gamepass was profitable, i can finally sleep!

 

[SmokedMeat]

That is what gamepass for.
Console exclusive are 20% of the entire console. They don't serve anything really.

What boost your console, is satisfying all kind of genre, in order to attract a large pool of users.

You gain 20m users, if you have fighting, jrpg, racing, kids games and puzzle games. Those are different genre. But adding them together would be beneficial for overall console growth.

MS needs to diversify their content first.

I think they’ve acquired so many big name franchises that sell tens of millions of copies, that it would be foolish to put them on competing consoles.

You put Diablo, CoD, Doom, Elder Scrolls etc on PlayStation it just remains multi-platform, and nobody cares. It doesn’t get attention.
You put them exclusively on Xbox, and people will be like, I need an Xbox.

I don’t think diversifying content is as important. Look at Sony, that barely does anything besides cinematic action/adventure. Microsoft has a far more diverse catalog and they’re last place.

 

[feynoob]

Considering Sea of Thieves did 5m sold on Steam very quickly, I’m not sure how anyone can doubt the sales figures are also quite good. I’d bet FH5 and possibly even Grounded are doing great.

Which is why they can do day1 on gamepass. They have steam to cover the lost sales on the console. Anything else is a profit for them.

 

[Menzies]

It was me. I just did the $1 conversion trick for the next 50 years and tipped the scales. We're in the black y'all

 

[feynoob]

I think they’ve acquired so many big name franchises that sell tens of millions of copies, that it would be foolish to put them on competing consoles.

You put Diablo, CoD, Doom, Elder Scrolls etc on PlayStation is just remains multi platform, and nobody cares.
You put them exclusively on Xbox, and people will be like, I need an Xbox.

I don’t think diversifying content is as important. Look at Sony, that barely does anything besides cinematic action/adventure. Microsoft has a far more diverse catalog and they’re last place.

Diversifying your console is a highly important factor.
While exclusives might increase the numbers, it's the diversity content which plays a bigger role.

Xbox one failed, due to not having alot of content. Alot of Japanese games were skipping the console. Fighting games were dry at first. Xbox live gold was blocking certain f2p games, due to the online function.

All these factors led to xbox selling less consoles. That is at least 10m to 15m userbase ignoring your console.

 

[Negotiator101]

And that right there explains the CoD acquisition and why they want gamepass on Playstation so bad. At some point you reach market saturation on one device and need to expand.

That would be the dream for Phil but I can't see that happening even with COD. Fortunately for them they have a robust cloud business that should see them reach many more customers beyond console and PC.

It's worth noting though that when they start releasing their big AAA games that will sell more consoles and drive subscriptions. Starfield is going to be their key player next year. I'm expecting an enormous marketing campaign. Across PC and Xbox this game alone will generate millions of new subscribers.

 

[GHG]

No way Game Pass with over 25 million subscribers is JUST 15% of $3.61 billion for the quarter. It has to be at minimum 20%, but it's certainly higher than that.

The numbers add up as long as you don't assume every subscriber is paying full price (which they won't be).

 

[DenchDeckard]

Dont know about Forbidden West, but you are aware that TLOU Part 2 sold more than 10 million copies, right?

If that is not enough to make some profits, then holy fuck.



Maybe your "logic" you make some sense if we actually had numbers to work with instead of assumptions

I'm not actually personally questioning any of it. It's not something I lose sleep over. As long as good games keep on coming then I'm happy.

This is why I don't get this constant obsession with game pass and if its making profit, papa phil is lying etc etc.

Who should actually care? It's so boring and tiring at this point. Just hope good games keep coming and if the service dies it was great while it lasted.

 

[Chukhopops]

Because Microsoft's gaming division is basically funded by gamepass, gamepass is the only reason it isn't hemorrhaging money like every other gen

I think people are quick to forget the gaming division of microsoft has been mostly a massive failure in terms of generating revenue for Microsoft as a company

And their first party developers are part of Microsoft's gaming division

Lmao this post, you know there are actual revenue numbers in this thread?

In 2021 MS gaming revenue was almost identical to Nintendo (16.5B). Is Nintendo a failure as well?

 

[Topher]

Again, where are the receipts? Do they announce sales numbers for their games? Saying its "10-15% of revenue" is vague as fuck when you dont have the numbers.

It could be 15% of 1 million copies sold. Would that be enough to pay for dev costs? Revenue from sales is what pay for new games. So how is this not relevant?

And I agree, that leaves a lot of revenue from other sources. But are you going to tell me that having 1st party games Day One in Game Pass havent affected their sales much?

"Gears 5 sold more than 4". Ok, how much?

"Horizon 5 had 10 million players". Ok, how much from Game Pass?

They said Xbox revenue was $3.61 billion and so Game Pass revenue between $361 million and $525 million. So no, not 15 of 1 million sold. Of total revenue. Which Spencer said makes a profit.

I think certainly Game Pass has impacted game sales. That wasn't the point though. The point was dev costs and whether Game Pass would cover them. My counter was that Game Pass didn't need to since game sales and other revenues, the other 85 to 90%, are there to cover dev and other costs.

 

[Topher]

Because Microsoft's gaming division is basically funded by gamepass, gamepass is the only reason it isn't hemorrhaging money like every other gen

Game Pass is 10 to 15% of Xbox revenue.

 

[buenoblue]

I don't wanna be that guy but I need proof. Phil has a way of spinning words with giant asterisks.

 

[Mr Reasonable]

That would good point if Microsoft didn't have reputation of ruining good studios

I'm maybe not as knowledgable as you, but how far back do we have to go with these things? Phil Spencer has been head for almost a decade, how many studios have been ruined and not ruined under his leadership?

 

[Mephisto40]

Lmao this post, you know there are actual revenue numbers in this thread?

In 2021 MS gaming revenue was almost identical to Nintendo (16.5B). Is Nintendo a failure as well?

You realize Microsoft gaming division has been going longer than 1 year don't you?

Every xbox and generation up until they introduced gamepass has been generating a net loss for Microsoft, thats pretty common knowledge

It's only since gamepass was introduced that they have started making money at all, which is pretty sad when you think about it, a console and game producer that has failed at everything apart from a subscription service

 

[Clear]

Game Pass is 10 to 15% of Xbox revenue.

Which looks great until you realize that income includes all their first party output and likely all of their most loyal customers. It also probably uses some creative accounting to offload back-end costs onto their highly profitable network and cloud division.

Furthermore given that its a subscription service, income will remain linear with userbase irrespective of increases in procurement costs for content. The only way to balance this out in the long-term is to increase ARPU by either hiking sub-price or loading up on means to drive supplementary revenue streams like MTX, because as the userbase grows income per user will remain static otherwise.
This is a big deal as operating costs can and will fluctuate substantially with a constant upward trend as marketshare grows.

Its very obvious to me that the end-goal is to hook into the huge and hugely lucrative mobile sector and use their pre-existing console and PC offer to act as a value-add to drive uptake there.

 

[Jayjayhd34]

I'm maybe not as knowledgable as you, but how far back do we have to go with these things? Phil Spencer has been head for almost a decade, how many studios have been ruined and not ruined under his leadership?

If these studios are in fantastic shape then where's all games ? Nearly everything coming in the future rumoured be in development hell accept starfield and redfall

 

[Topher]

I'm not literally saying that it is lol. I'm just entertaining the crazy hypotheticals from those who THINK Game Pass has such a sole responsibility with no other help from the rest of the game division. But even in the craziest scenario, Game Pass is more than capable of helping fund first-party game development, and I'm quite confident it does more than just a bit. The margins on something like Game Pass will be high.

Well, that's just as much a hypothetical and there is no basis for it. If we are going to say it is profitable enough to fund game dev then we would have to know the margins, which we don't. Just as speculative as anything else.

Which looks great until you realize that income includes all their first party output and likely all of their most loyal customers. It also probably uses some creative accounting to offload back-end costs onto their highly profitable network and cloud division.

Furthermore given that its a subscription service, income will remain linear with userbase irrespective of increases in procurement costs for content. The only way to balance this out in the long-term is to increase ARPU by either hiking sub-price or loading up on means to drive supplementary revenue streams like MTX, because as the userbase grows income per user will remain static otherwise.
This is a big deal as operating costs can and will fluctuate substantially with a constant upward trend as marketshare grows.

Its very obvious to me that the end-goal is to hook into the huge and hugely lucrative mobile sector and use their pre-existing console and PC offer to act as a value-add to drive uptake there.

I'm not saying it looks great or not. Guy said Xbox was funded entirely by Game Pass. That isn't true. I don't know anything about the rest of what you've said here.

 

[Supple]

What a moronic question.

If it wasn't, then the developers would not put their games on the service.

There's no one holding game devs at gun point and forces their games on there if some criteria aren't met.

The cooking Simulator dev got 600.000 usd for putting their game on GP.

Also, Yakuza Studio Director Praises Game Pass, Says It Contributed Largely To Series Success In West, but I'm sure you can spin it into a negative thing.

No, they put it on Game Pass for exposure. They might recoup some development costs from Microsoft paying them, but most game developers make most of their profits on other platforms.

 

[Chukhopops]

You realize Microsoft gaming division has been going longer than 1 year don't you?

Every xbox and generation up until they introduced gamepass has been generating a net loss for Microsoft, thats pretty common knowledge

It's only since gamepass was introduced that they have started making money at all, which is pretty sad when you think about it, a console and game producer that has failed at everything apart from a subscription service

You keep mixing present and past, profit and revenue, I don’t think you have an argument at all.

How can GP be the only thing keeping their gaming division afloat if it’s only 15% of their revenue? Guess we will never know.

Which looks great until you realize that income includes all their first party output and likely all of their most loyal customers. It also probably uses some creative accounting to offload back-end costs onto their highly profitable network and cloud division.

It does not though?

Right now there are 9 MS first party games in the top 100 sellers on Steam. Literally no other publisher comes close to that.

 

[Clear]

I'm not saying it looks great or not. Guy said Xbox was funded entirely by Game Pass. That isn't true. I don't know anything about the rest of what you've said here.

I was more piggy-backing off your comment -well specifically the 10-15% figure- than addressing it.

My point being that the number looks good superfically, but if you contextualize and interrogate it... not so much.

 

[Topher]

I was more piggy-backing off your comment -well specifically the 10-15% figure- than addressing it.

My point being that the number looks good superfically, but if you contextualize and interrogate it... not so much.

Ok, but isn't anything other than what we actually know just speculation at that point?

 

[DenchDeckard]

Hate to break to you guys, but profitable enterprises get downsized or closed all the time.

Its not just about turning a profit. Its the margin of profit vs opportunity cost.

Spending billions to make millions is not good business.

Please explain to me how you spend billions to make millions and turn a profit?

Sounds like an amazing feat.

 

[Topher]

No, they put it on Game Pass for exposure. They might recoup some development costs from Microsoft paying them, but most game developers make most of their profits on other platforms.

And this is based on?

 

[Clear]

Right now there are 9 MS first party games in the top 100 sellers on Steam. Literally no other publisher comes close to that.

Sorry but I'm not counting product that was launched years before they acquired the developer or parent publisher. Because that income is going in to repaying the millions -and billions in the case of Mojang and Zenimax- spent acquiring them.

As I keep stressing, profitability versus opportunity cost is what matters when we're talking about a service.

Please explain to me how you spend billions to make millions and turn a profit?

Do you not understand the concept of opportunity cost? Margins of profitability?

It's pretty basic dude, if you are spending 50% of your operating budget on a division that only contributes to a small percentage of overall (all division) income, its pretty easy to argue that those resources and capital are not being deployed effectively for maximum benefit.

 

[Mephisto40]

How can GP be the only thing keeping their gaming division afloat if it’s only 15% of their revenue? Guess we will never know.

If it wasnt for Microsoft feeding them money for years xbox wouldnt have lasted very long at all, they stayed afloat because Microsoft kept pumping money into a failing division in the hope it would come good one day, it's not hard to figure out

 

[Topher]

If it wasnt for Microsoft feeding them money for years xbox wouldnt have lasted very long at all, they stayed afloat because Microsoft kept pumping money into a failing division in the hope it would come good one day, it's not hard to figure out

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.

 

[SaucyJack]

Nahh that same group doesn't believe him when he says positive things or when he says he plans on keeping COD on Playstation but when he says things like we may see a price increase thats gospel

Its all in how things fit into people's narrative

I think there's a happy medium here.

Phil Spencer (and Jim Ryan or any other senior exec for that matter) says things that you expect him to say, and that's cool, but it's also a central part of his job to talk up his brand/product. People taking every word at face value are as equally fanboyish as those disbelieving every word.

Personally, I would like to see gaming "journalists" provide a bit more challenge to these sorts of statements, really probe the platform holders and big publishers about what they're doing. There are industry changing innovations occurring and it's OK to ask questions.

 

[nightmare-slain]

awesome. well done MS. gamepass is great.

 

[Swift_Star]

It is known that Phil is a chronic liar, so I don’t believe him.

 

[geary]

I bet those MTX and services fees dont fund anything and go straight to Phil and Satya's pocket.

 

[PharaoTutAnchAmun]

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

 

[Mr Reasonable]

If these studios are in fantastic shape then where's all games ? Nearly everything coming in the future rumoured be in development hell accept starfield and redfall

So you're saying they're all ruined?

 

[Ozriel]

Yes, but you would think if the Series S is selling as well as we are to believe, adding half of those users to the eco system we would expect to see a boost in GP subs and not a slowdown.

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

Again, where are the receipts? Do they announce sales numbers for their games? Saying its "10-15% of revenue" is vague as fuck when you dont have the numbers.

It could be 15% of 1 million copies sold. Would that be enough to pay for dev costs? Revenue from sales is what pay for new games. So how is this not relevant?

And I agree, that leaves a lot of revenue from other sources. But are you going to tell me that having 1st party games Day One in Game Pass havent affected their sales much?

"Gears 5 sold more than 4". Ok, how much?

"Horizon 5 had 10 million players". Ok, how much from Game Pass?

Pick up enough Microsoft stock and you can ask Spencer or Nadella for detailed metrics

 

[Pelta88]

If these studios are in fantastic shape then where's all games ? Nearly everything coming in the future rumoured be in development hell accept starfield and redfall

 

[adamsapple]

I mean, sure, a couple of people in games are saying it, but I've just got this feeling that some unfounded nonsense from people with no connection to the industry at all is the right take here.

User name checks out.

Thought is debunked that halo cost half billion

I can't find a credible source outside of some unnamed german xbox fan site stating the 500 million number.

But that doesn't seem to have deterred people from running wild with it.

By "large portion of their development cost", I mean that if a first-party game is available day one on GP, the majority of GP subscribers people would not buy that game (that's the whole point and value proposition of subscribing to GP in the first place after all).

So they are letting go of those sales for subscription revenue. But the operational costs are still there, which will then have to be measured against the revenue being generated by the subscription service rather than revenue from game sales (or the revenue lost because of fewer game sales now that the game is available on GP)

Like I said to another user before, it is not just new 1P content that entices people to subscribe to game pass and increase its sub count/revenue. Off-loading the majority of development for 1P games, which are sold at retail on not just xbox but other storefronts as well makes little sense. Especially when GP is reportedly only 15% of the total gaming segments revenue. The other revenue is there for a reason.

This reminds me of the arguments some users were making before about how it'll take 70 years of game pass to make up for Activision's purchase. It is an entirely skewed mathematical proposition that makes very little sense. I think it's a very safe thing to assume game pass is profitable to them for the money they spend in the upkeep, maintenance and deals to bring games to the service versus the revenue that comes out of it.

GP revenue doesn't account for the MTX based revenue that people who play the game via GP do. So, indirectly GP might be even more than 15% of the revenue for their gaming division.

 

[Louay]

Yep, just a vague "in the future". No idea if/when it will ever happen and what will be impacted. Consoles ? Games ? Sub service ? It's nebulous for at least another year.

Besides, being profitable doesn't mean you can't increase price. See PS5 disc edition, which was reportedly profitable for Sony as of 2021. Yet they still increased the price.

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

 

[Jayjayhd34]

So you're saying they're all ruined?

I could be totally wrong but rumors do not paint good picture regarding AAA output and halo infinite also does not inspire confidence especially if really did cost 500 million. Not mention gamepass going how long not one game can match quailty of Nintendo and Sony's top games not one.

time will tell but don't think spending billions upon billion is answer to there problems.

 

[jm89]

If these studios are in fantastic shape then where's all games ? Nearly everything coming in the future rumoured be in development hell accept starfield and redfall

Leva them alone AAAA games take time to make.

 

[digoutyoursoul]

I could be totally wrong but rumors do not paint good picture regarding AAA output and halo infinite also does not inspire confidence especially if really did cost 500 million. Not mention gamepass going how long not one game can match quailty of Nintendo and Sony's top games not one.

time will tell but don't think spending billions upon billion is answer to there problems.

Better product management. It’s fine having all that money to invest, more importantly it’s how it’s spent.