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[dem]

I think Microsoft is paying far less to put games on Gamepass than people think.

I mean... you only have to look at what epic spends to put out free games.

 

[Ozriel]

Yeah, cause companies especially big companies are faultless and the most trustworthy sources. "very, very sustainable" is a nice "professional business analysis" for the stupid, I guess....

How about you expand on the "useless numbers" and why growth and sustainability dont fall into this category.

Spencer challenged you and other naysayers to do some quick napkin math using the subscriber count and estimates for subscriber tiers.

you’ve lazily done none of that, and are basing your argument on “they must be lying. I’m sure of it” and “Phil Spencer is a known liar”

Awaiting your quick math. And no, it isn’t logical to assume every Gamepass subscriber is on the $1 trial or getting Turkish cards from Eneba

 

[Sosokrates]

Uhhh, what is overhead and having to pay out content providers already on there with the pay per time played model.

They don't pocket the full sub amount every month.

Its not going to be as big of payments as some people think, sales drop off a cliff after a few months and Microsoft will have data which shows gamepass actually increases in game spending and game sales.

 

[DeepEnigma]

Its not going to be as big of payments as some people think, sales drop off a cliff after a few months and Microsoft will have data which shows gamepass actually increases in game spending and game sales.

What are you even arguing?

All I said was the silly napkin math isn't all profits like suggested. Overhead is real.

 

[Chukhopops]

I think Microsoft is paying far less to put games on Gamepass than people think.

I mean... you only have to look at what epic spends to put out free games.

Yep, Epic paid 11M to GIVE all those games:

There’s no way it costs MS more than 150M per month to push +/-20 games per month on GP.

But people will never accept it.

 

[kingfey]

Yeah, cause companies especially big companies are faultless and the most trustworthy sources. "very, very sustainable" is a nice "professional business analysis" for the stupid, I guess....

How about you expand on the "useless numbers" and why growth and sustainability dont fall into this category.

I will still take their words, over kids who whine about other plastic box, and boost their own plastic box.

There was something called movies. Which we used to buy it from blockbuster. Where are they now? dead in the pile of things that have been killed, same thing for cable tvs.

Guarentee revenue are in the long form of sustainability. Your selling games can end up easily with bad games, loss interest, and studios getting bought, studios getting shutdown, gaming costing alot to make, and games costing alot to buy it. These are factors why sub model is sustainable.

Its better to have a system, which makes 300m a month, guarentee, than selling games normally. How many last of us 2, god of war, spiderman, halo, forza are there every month, every year? Unless you release AAA quality games like those every month, good luck earning that money.

Gamepass at 15$ for 20m is $300m a month. This type of service is increasing every year. in 4 years, you will end up with 60m users. That is $900m a month. We can debate how much people pay that money, but when you see that money, you will know why this kind of model is sustainable, and much better than selling games.

 

[SlimySnake]

Firstly your maths is bad. Second, you post this shit every single time this topic comes up and each and every single time you're told what you're saying is nonsense and illogical.

The entire month revenues of Game Pass are not spent on just one fucking game. It is spent on multiple games. Multiple games launch each month on the service. Further more you're just accounting for launch units. You're completely disregarding any future sales that are lost because your logic is attributing the future month's subs to some other future game.

If you wanted to silo it month-by-month you need to compare the monthly revenue against lost sales for the lifetime of all games launched that month.

The math was off by $20 million. $155 million vs $175 million. Like someone else mentioned, some subs are at $15 million a month. It evens out anyway. Why make a big deal about a minor math error?

And I literally said that even if they pay Ubisoft $100 million to put Far Cry 6 on the service three months after release, they would still have money to spend on other games.

In the Netflix model, launch month vs future sales dont matter. They are paying up front. You can see it with the deals they sign. They paid Rian Johnson $400 million for two knives out movies. They dont give a shit about launch month views or views 10 years down the line. The purchase price is what matters and they have a $19 billion yearly budget to pull it from.

MS has a set budget too. If MS foresees 25 million users by the end of the year, they know exactly what their gamepass budget is going to be. They can then allocate the money based on that. They know Halo and Forza will fill up November and December. They can then spend extra on months like January. This is not rocket science.

 

[AddictedProxy]

Spencer challenged you and other naysayers to do some quick napkin math using the subscriber count and estimates for subscriber tiers.

you’ve lazily done none of that, and are basing your argument on “they must be lying. I’m sure of it” and “Phil Spencer is a known liar”

Awaiting your quick math. And no, it isn’t logical to assume every Gamepass subscriber is on the $1 trial or getting Turkish cards from Eneba

Why should I pull out numbers out of my ass?
We dont have any numbers outside of peak subscription numbers microsoft choses to share and thats the whole point.

Im not sorry that Im not drinking the kool aid.

 

[kingfey]

Pretty much the math i was just doing, it sounds like a very profitable business model when you have the power to attract a good number of subscribers. Some additional thoughts/corrections though:
if we assume 25% of them being 1$ subs, we get $5million dollars for them, not 25.
Theres also the ultimate sub that costs 15$/month instead of 10.

So if we take those into consideration we actually have something like:
$5million + somewhere between $150million and $225million, aka still impressive numbers. So the point stands.

The issue here is knowing how much of that money actually goes to their pockets, how much do they have to pay the developers/pubs who keep or put their games there.

20 games usually cost like 20-40m. unless its day1. usually these have certain players played numbers. All would be around 100m. There is also that xbox live.

 

[chonga]

You are making a math error here.

5m at 1$ is 5m, while 15m at 10$ is 150m, total of 155m. You also need to account the gamepass ultimate.

5m at 1$ gamepass ultimate, 5m at 10$ normal gamepass, and gamepass pc, 10m at 15$ gamepass ultimate. total would be 5+50+150=205m.

hope this helps.

Keep in mind Ultimate includes Gold. People will be subbing to GPU instead of Gold + GP. For those people the additional revenue to MS, at least for UK pricing, is only £5 per month vs. the £8 per month of a normal GP sub.

 

[akaFullmetal]

I'm still sceptical since we haven't been seeing numbers lately. But if it works it works, I still fear a major price increase is coming.

 

[Max Payne’s Baretta]

Microsoft just Posted 20Bs of profit in a single Quarter, they dont need the concern.

 

[kingfey]

Why should I pull out numbers out of my ass?
We dont have any numbers outside of peak subscription numbers microsoft choses to share and thats the whole point.

Im not sorry that Im not drinking the kool aid.

Because you are ignoring what the 1$ deal is. Unless you make unlimited accounts, there is no way, you can have 1m at 1$.

The 1$ also have a timer. Once that timer runs out, you will get charged 15$, Which most people who say 1$ ignore it.

Even if you dont pay for gamepass, you still need to pay for xbox live. Most gamepass users are xbox players. There is no point in doing that 1$ deal over and over.

 

[kingfey]

Keep in mind Ultimate includes Gold. People will be subbing to GPU instead of Gold + GP. For those people the additional revenue to MS, at least for UK pricing, is only £5 per month vs. the £8 per month of a normal GP sub.

Xbox live is like unwanted child in these discussion. People ignore it, when it suits their narrative.

 

[AddictedProxy]

I will still their words, over kids who whine about other plastic box, and boost their own plastic box.

There was something called movies. Which we used to buy it from blockbuster. Where are they now? dead in the pile of things that have been killed, same thing for cable tvs.

Guarentee revenue are in the long form of sustainability. Your selling games can end up easily with bad games, loss interest, and studios getting bought, studios getting shutdown, gaming costing alot to make, and games costing alot to buy it. These are factors why sub model is sustainable.

Its better to have a system, which makes 300m a month, guarentee, than selling games normally. How many last of us 2, god of war, spiderman, halo, forza are there every month, every year? Unless you release AAA quality games like those every month, good luck earning that money.

Gamepass at 15$ for 20m is $300m a month. This type of service is increasing every year. in 4 years, you will end up with 60m users. That is $900m a month. We can debate how much people pay that money, but when you see that money, you will know why this kind of model is sustainable, and much better than selling games.

So many assumptions so little facts and logic. You are all over the place.
If it was a guaranteed moneymaker for businesses how come other companies dont flock to it? Not like gamepass launched yesterday.

 

[Concern]

Oh Phil, you really had to use that S word didn't you?


Now look what you did

 

[Sosokrates]

What are you even arguing?

All I said was the silly napkin math isn't all profits like suggested. Overhead is real.

Yeah overhead is real, but $100-300 million per month is not peanuts, how many games are added to gamepass a month? Most are older tiles, if you take the yearly revenue of being in the region of $1.5 - 3 billion you can get A lot of 3rd party and 1st party content for $1 billion.

 

[SlimySnake]

Kids here argue what big companies, with professional business analysis worked on.

Its why I dont take this site seriously.

Big companies get trends wrong all the time. Wallstreet is a prime example of this. They hire all kinds of math nerds and still failed to see the sub prime mortgage crisis. Watch The Big Short and see how few people saw the crash coming, and were still laughed out of rooms.

I am bullish on the success of the gamepass model, but it's insane to suggest that we cant talk about it because we were not at the board meetings. And it's also doesnt help that MS wont reveal numbers. It only serves to make people question the sustainability of their model. Especially in light of news that they missed their internal targets by 37%.

Here are a couple of questions Id like Phil to answer:

• What is the revenue of Gamepass subs?
• How much did Avengers Cost?
• How much did Day 1 titles like Outriders and MLB cost?
• What would it take for games like Battlefield and Far Cry to show up on day one? Because the math at the moment suggest they are there already.
• So whats the hold up?

Everyone from Amazon to Netflix announces the revenue they earn or the deals they make. $200 million to creators of westworld. $300 million to Game of Thrones showrunners. $500 million for fucking Seinfeld almost 25 years after it aired. Everyone announces these numbers in press releases proudly. Look at how much we are spending to GET YOU AAA CONTENT. So why cant Microsoft do the same?

Their revenue numbers are phenomenal. $15 billion vs $17 billion in a year when Nintendo sold 28 million consoles. So clearly Gamepass is a huge factor here. There is really no need to be super secretive. Their monthly users have continued to increase which leads me to believe that their returning customers arent the $1 a month paying cheapskates like me. So it's not like 15 out of the 20 million gamepass users are $1 subs.

 

[Dr Bass]

Uhhh, what is overhead and having to pay out content providers already on there with the pay per time played model.

They don't pocket the full sub amount every month.

Also people forgetting you have to pay salaries on all the studios they now own. Like all those Zenimax companies are “free” now. Some weird stuff in this thread. Phil saying it’s “sustainable” (that’s not even close to saying it breaks even people), others saying MS has hundreds of millions of dollars to “buy content” every month, completely ignoring what “current costs” are. Then others saying they love GP because they get so much and hardly spend anything. None of these statements add up with each other at all. All of the conversations around Xbox become pathological.

 

[CatLady]

Saw the title and figured a certain group of GAF members would be triggered and enraged and I was not disappointed. We got as far as the third post before they started building a:

 

[MightySquirrel]

I don't know if it's in fact profitable ..yet, but I'm certainly grateful for the service.

 

[FunkMiller]

No receipty… no trusty!

C’mon Phil… you can’t just drop little nuggets like that without backing them up.

 

[OmegaSupreme]

I'm still sceptical since we haven't been seeing numbers lately. But if it works it works, I still fear a major price increase is coming.

It'll happen. They just recently tried to increase the cost of gold.

 

[jakinov]

I don't know why people think it's not sustainble.It's probably not expensive for Microsfot to make deals with third-parties. There's also no reason why as you add more subscribers you have to ssignficantly increase how much you spend on content. At some point every subscribers is added with minimal cost. And as time goes by the backlog of games has a lot of value to it too. Lots of people pay for HBO Max and Disney+ continously despite very little new content. There's also additional revenue streams at play such as DLC and MTX.

It might not be as profitable as directly selling games. However, Micrtosoft is a platform owner and will make money back jsut by having people thoroughly using the ecosystem, whether it's paying for gold, ad impresionss, royalties of other games, accessorie sales, etc.

 

[chonga]

The math was off by $20 million. $155 million vs $175 million. Like someone else mentioned, some subs are at $15 million a month. It evens out anyway. Why make a big deal about a minor math error?

And I literally said that even if they pay Ubisoft $100 million to put Far Cry 6 on the service three months after release, they would still have money to spend on other games.

In the Netflix model, launch month vs future sales dont matter. They are paying up front. You can see it with the deals they sign. They paid Rian Johnson $400 million for two knives out movies. They dont give a shit about launch month views or views 10 years down the line. The purchase price is what matters and they have a $19 billion yearly budget to pull it from.

MS has a set budget too. If MS foresees 25 million users by the end of the year, they know exactly what their gamepass budget is going to be. They can then allocate the money based on that. They know Halo and Forza will fill up November and December. They can then spend extra on months like January. This is not rocket science.

I didn't make a big deal of it. I simply told you it was wrong in one sentence. That's not making a big deal of something.

As I just posted to the person who you mention, it does not even out because you are forgoing Gold revenue in GPU sub. If you remove the Gold element of GPU then you would on a like-for-like basis be receiving less revenue for GP on a GPU sub user vs. a Gold + normal GB sub user.

You have entirely misunderstood, as per usual, what is being said. You are talking about lost sales. You are saying that they can put a title like Forza on GP and still make the money they would have if it wasn't on GP and just sold it at $60 a pop.

This is of course the ultimate goal for GP, but they're not there yet. If they were, they'd be shouting about that and not using sustainability phrasing.

Crucially you are isolating it on a monthly basis. You are saying in Month 1 Game X launches and we lose x million in sales, but nevermind the monthly subs cover it. Then you'll be in to Month 2 and Game Y and saying the same thing and likewise for Month 3 with Game Z.

But games do not just sell at launch. There will be lost sales Game X in Months 1, 2 and 3. So where are you clawing back the lost revenue for that? Because in your logic Month 2 revenue is covering Game Y's loses and so on.

This is why I am saying to you you need to look at ALL the lost revenue. Not just 1 month's worth.

 

[The Eradicator]

Says person with 0 MS shares while MS shareholders are enjoying seeing the share price go through the roof.

I own Microsoft shares. I hardly would say it's "going through the roof". They had a nice month. You're also acting like the stock price of MS is ONLY concerned with Xbox, which is a fraction of their overall business.

 

[kingfey]

Big companies get trends wrong all the time. Wallstreet is a prime example of this. They hire all kinds of math nerds and still failed to see the sub prime mortgage crisis. Watch The Big Short and see how few people saw the crash coming, and were still laughed out of rooms.

I am bullish on the success of the gamepass model, but it's insane to suggest that we cant talk about it because we were not at the board meetings. And it's also doesnt help that MS wont reveal numbers. It only serves to make people question the sustainability of their model. Especially in light of news that they missed their internal targets by 37%.

Here are a couple of questions Id like Phil to answer:

• What is the revenue of Gamepass subs?
• How much did Avengers Cost?
• How much did Day 1 titles like Outriders and MLB cost?
• What would it take for games like Battlefield and Far Cry to show up on day one? Because the math at the moment suggest they are there already.
• So whats the hold up?

Everyone from Amazon to Netflix announces the revenue they earn or the deals they make. $200 million to creators of westworld. $300 million to Game of Thrones showrunners. $500 million for fucking Seinfeld almost 25 years after it aired. Everyone announces these numbers in press releases proudly. Look at how much we are spending to GET YOU AAA CONTENT. So why cant Microsoft do the same?

Their revenue numbers are phenomenal. $15 billion vs $17 billion in a year when Nintendo sold 28 million consoles. So clearly Gamepass is a huge factor here. There is really no need to be super secretive. Their monthly users have continued to increase which leads me to believe that their returning customers arent the $1 a month paying cheapskates like me. So it's not like 15 out of the 20 million gamepass users are $1 subs.

There is no fail for the wallstreet. Those guys are crooked as fuck. They wanted to bucket it for themselves. as for other business, you are right.

The model plan for digital service is proven by netflix. They started during a time, where physical movies were strong. And now we have netflix, which is giant, movies are getting bought online digital (netflix model), and now gaming services.

Its why I dont question this model. There is desire for it, hunger for it. Selling has limits to it. The person who can capitalize this business plan, will become the next netflix.

Nintendo shouldnt be brought to this table. Their games are always 60$, no matter what, aside of sales. Even mario kart 8 is 60$. Sony revenue come up from mtx. Fortnite made billions from MTX. Sony gets 30% cut from every mtx sold. Every f2p game, every dlc sold is extra money to them. That is where hardware numbers comes in to play.

For your question, I would like MS to answer to us. But their eyes are on investors. They dont care sharing those data with us.

 

[reksveks]

Everyone from Amazon to Netflix announces the revenue they earn or the deals they make

Apple doesn't reveal apple TV subs afaik and amazon is also notoriously bad at reveal sales numbers.

Especially in light of news that they missed their internal targets by 37%.

37%?

Target was 48%
Actual was 37%

No? Its a bad miss if you do it relative but as mentioned, over the two years, it was on track.

I would like more data personally but it isn't particularly unique for the big 3.

 

[kingfey]

So many assumptions so little facts and logic. You are all over the place.
If it was a guaranteed moneymaker for businesses how come other companies dont flock to it? Not like gamepass launched yesterday.

Gamepass was 2017. 4 years ago. This model exist for a long time.

This is EA play. 5$ service from their games.
August 11, 2014 (Xbox One) January 12, 2016 (Microsoft Windows) July 24, 2019 (PlayStation 4)

Your facts comes from netflix.

Netflix was in the same position as gamepass. People laughed at netflix. They dethrones blockbuster, and now are a gaint industry.

 

[MonarchJT]

BS, they are not releasing the figures because that thing is not sustainable without tanking your profit margins. But well, the holiday season is coming and they need the shilling articles.

i prefeer to listen to Phil Spencer instead of a random on a forum that sfamous for hating on everything Xbox

 

[MOTM]

I own Microsoft shares. I hardly would say it's "going through the roof". They had a nice month. You're also acting like the stock price of MS is ONLY concerned with Xbox, which is a fraction of their overall business.

Don’t believe you one single second. Otherwise you wouldn’t be here bitching about Xbox figures which is in your own words "a fraction of their overall business"

 

[StealthGoblin]

It’ll be interesting if it is sustainable when more and more 1st party content games costing 10s or 100s of million go on there for ‘free’ and the people who would normally buy that game, won’t.

 

[SenjutsuSage]

Head of Xbox Phil Spencer just singlehandedly just dashed the hopes of anybody hoping that millions of people were paying $12 for an entire year of Game Pass.

 

[Bkdk]

Hopefully they will acquire command and conquer from EA and warcraft from blizzard, also bring back dustin browder for command and conquer generals 2 when they acquire the franchise.

 

[PropellerEar]

$10 per month per subscriber. 15 million subcribers * 10 dollars = $150 million.

What am I missing?

Netflix works the same way. They have 200 million subscribers and earn around $25 billion a year. That's $2 billion a month * 12 months = $24 billion.

Where did the $25 million with your numbers come from?

 

[Lognor]

Glad to hear it's sustainable. Hopefully that means the prices won't go up in the short term. My subscription expires in the middle of 2022 and I'd love to be able to load up another 3 years for pennies. But even if that deal goes away I'll pay full price. It's well worth it.

 

[oldergamer]

Put the full info in a quarterly report then!

you must think he's lying

 

[purvispisgah]

How many of the people that appear to really care about the profitability of GamePass are Microsoft shareholders?

For everyone else, why do you care so much?

 

[oldergamer]

Show us the receipts then Phil. All you do is talk.

Updates on Gamepass numbers, profit made, and software sold are enough to shut us concerned folks up. Less talking and more showing.

... and you are? I don't know why you feel entitled to that sort of information.

 

[Sosokrates]

It’ll be interesting if it is sustainable when more and more 1st party content games costing 10s or 100s of million go on there for ‘free’ and the people who would normally buy that game, won’t.

I think the attach rate of gamepass will scale similarly to game sales through out the generation, especially when they drop there megatons, like starfield, avowed,perfect dark, fable, Indiana jones, doom, etc

 

[reksveks]

Personally I don't understand 100% percent what is sustainable but if it's breaking even with just the revenue of the subs, MS are laughing out of their arses at the moment. If it's that they have seen increased platform revenue on xbox and that's covering the cost of GP, i think that they would still be really happy.

I wouldn't worry too much about it as a MSFT shareholder, I would be more interested in seeing if Microsoft gets any bigger new cloud users off the back of them licensing out GPT3.

 

[Skifi28]

They need more incentives for people to sub. I want every month of gamepass to come with Phil's personal signature.

 

[FF:Enhanced_Reality]

Sustainable, not profitable

 

[Ezquimacore]

some people really want xbox to fail, that's the "I don't want to be better, I want you to fail" mentality. Xbox has the best services and that's what matters!

 

[Magic Carpet]

I can stop going door to door asking strangers if they have heard about the story of Gamepass.

 

[BigLee74]

Of course, half of GAF knows better than Phil. Thread did not disappoint.

 

[Pull n Pray]

Of course he would say this, like any other pr talking head

Executives at public corporations can get in a lot of trouble for making false statements on financial matters. It's difficult to separate Game Pass profitability from Xbox profitability as a whole, but Microsoft has stated more than once recently that Xbox is profitable.

That guy is full of shit, we all know this.

Every since he got the boss job at xbox the brand has been going downhill.. its worse now than ever before. Its all one big lie, they've been loosing money for decades, xbox and microsoft are about to go bankrupt because of all this bullshitting Spencer has been doing for so long.

Satire or real?

 

[The Eradicator]

Don’t believe you one single second. Otherwise you wouldn’t be here bitching about Xbox figures which is in your own words "a fraction of their overall business"

Sorry, but I do own stock in MS. You sound ridiculous. What am I "bitching" about? That's a fact that Game Pass is a fraction of their business. Get over the fanboyism. Lol

 

[Guilty_AI]

It’ll be interesting if it is sustainable when more and more 1st party content games costing 10s or 100s of million go on there for ‘free’ and the people who would normally buy that game, won’t.

i don't think that matters much really. Profitability aside, another advantage of the model that i don't see people discussing a lot is how it can bring in profits in a far more consistent manner.

They know exactly how many subscribers they have at any given moment and the type of sub they're paying. In all they can make a very good prediction of how much they'll earn the next few months and invest accordingly - not to mention this revenue won't fluctuate as much as traditional models. They probably know way better than normal publishers how much money they can sink in their first party games.

Even if every single person who goes on to play said game does so through gamepass, it doesn't matter because the money they spend developing games is money they spent guaranteeing users keep their subs active, as well as bringing in new subbers.

 

[SenjutsuSage]

Sustainable, not profitable

I get the feeling you think you made a point here. You didn't. Anyway. Halo time!