Xbox Game Pass generated $2.9b revenue in 2021

Mattyp

Gold Member
Most people won’t buy and have gamepass, thats the whole point of the service I guess. I mean I bought Stray and had it on PSplus, you also buy when you also have Gamepass because the devs make more money, but most people wont buy when they have the service.

I guess it all depends on A.) How much the game cost to make? And B.) How much are platforms like MS and Sony paying them to have them Day 1 and also later to be on their subscription service?

So in a year, Diablo, COD, Starfield, Redfall, Scorn? Im guessing some of these are costing more than 200m and some less than 100m, Some more or less etc.

Maybe someone should do the maths. How much do MS, Playstation pay for PS+ and Xbox Gold monthly games? How much do the 1st party games cost?
How much for 3rd party Day1 titles on subscription service and how much for titles not day 1?

And I guess, how much do these services cost to maintain, servers, staff etc, I have no idea if these things need much money after they are made

They could give away the biggest hitters (CoD, Minecraft, Diablo) on every platform for free without game pass and still turn a profit. The MTX on these kind of games is what will pay for the service of every other game.

CoD alone brings in billions, it subsidises the cost of other SP only titles and bringing loss titles to GP.

People aren’t looking at the entire picture of what Activision means for Microsoft either. There’s a reason OW2 is free.

When people argue in here “But Microsoft won’t make any money on X title” they don’t need to. The entire gaming group makes money as a whole pulling more people to gamepass, they know some titles won’t make money but those titles attract people who might not be attracted to CoD and every other mainstay.

It’s the exact same avenue every streaming service is taking, but Microsoft realise like Disney buying up the largest fish will always set you on the best path for future profit.

They’re downplaying the shit out of everything now while this merger goes through, but after that it’s off to the shops again if some deals aren’t already sitting on the back burner.
 

Topher

Gold Member
Not when you regard revenue and profit numbers, which is what this thread is about, Microsoft is legally bound to include all their business practices when reporting financials. Xbox is part of that.

This thread is specifically about Game Pass revenue. Microsoft is not legally bound to report revenue or profit from Game Pass. Revenue was revealed during Brazil's investigation. Microsoft has a whole reporting $70b profit isn't really relevant since we don't know if Game Pass contributed to that.
 
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Haggard

Banned
It's amazing how often this has to be said.
The only thing amazing about this is how many people just repeat that bullshit and obviously have not the slightest clou how company finances work.

Microsoft don't need to make up the cost. They purchased an asset, which goes on their balance sheet. The value of that asset doesn't disappear just because Microsoft own it.

 
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Haggard

Banned
Explain it then. Your post is too vague. Educate us. Are you saying that MS does need to make back the $70bn?
I´m saying that you guys have no fucking clue how accounting works. MS has enough reserves and income from enough other sources to not go under even if activision immediately implodes but this downright retarded idea of "equivalent trade" you guys seem to have in your heads is ridiculous.
 

Schmick

Member
I´m saying that you guys have no fucking clue how accounting works. MS has enough reserves and income from enough other sources to not go under even if activision immediately implodes but this downright retarded idea of "equivalent trade" you guys seem to have in your heads is ridiculous.
I've always seen it as MS having $70bn in cash that is doing nothing other than earning interest and the value of that $70bn is subject to inflation.

MS buying Activision with that $70bn turns that money into an asset that earns more than the what the interest would give them and also the potential to grow that asset and earn even more.

No need to be a dick about it though. This is a gaming forum after all fanboys all over the place.
 

Haggard

Banned
No need to be a dick about it though. This is a gaming forum after all fanboys all over the place.
yeah, sorry if I came on a bit strong.
Still, this whole idea of "asset keeps value no money lost" makes me really question if some people have literally lived under a stone since the dawn of the economy....
Could be a misunderstanding, too, as people tend to talk and interpret in black and white on internet boards...I sure hope so.
 
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DaGwaphics

Member
The only thing amazing about this is how many people just repeat that bullshit and obviously have not the slightest clou how company finances work.




Are you saying that purchasing assets is viewed as expenses while also increasing the companies value, would be amazing from a loophole standpoint if true. Case in point there was no write down of MS's purchase of Nokia in 2014. That happened in 2015 when they shuttered that department (dissolving the value of that asset). Unless MS completely destroys ABK as an asset there will never be a write off for the $70b purchase, just a move from cash to asset, that is all.

 

FireFly

Member
yeah, sorry if I came on a bit strong.
Still, this whole idea of "asset keeps value no money lost" makes me really question if some people have literally lived under a stone since the dawn of the economy....
Could be a misunderstanding, too, as people tend to talk and interpret in black and white on internet boards...I sure hope so.
I was talking about the value of the asset "disappearing", which would be required for Microsoft to need to make up the full value. I wasn't trying to say that Activision under Microsoft would be worth the same as Activision as a separate company.
The value changes because the revenue model that gave Activision it's value will be destroyed by GP.
Yes, but it won't be zero.
 

Topher

Gold Member
I was talking about the value of the asset "disappearing", which would be required for Microsoft to need to make up the full value. I wasn't trying to say that Activision under Microsoft would be worth the same as Activision as a separate company.

I think this is a pretty good article explaining how it affects the balance sheet and income statement:

 
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Haggard

Banned
just a move from cash to asset, that is all.
If only we had a word to describe trading money for things and some way of keeping track of money transfers.
I was talking about the value of the asset "disappearing", which would be required for Microsoft to need to make up the full value. I wasn't trying to say that Activision under Microsoft would be worth the same as Activision as a separate company.
Agreed. Once again a misunderstanding based on black/white interpretation I guess. My bad.
 
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DaGwaphics

Member
If only we had a word to describe trading money for things and some way of keeping track of money transfers.

I'm no accountant obviously, but still it looks like the total assets line should remain balanced unless MS themselves think they have woefully overpaid. In the future there may be some kind of depreciation, who knows. But, any way you look at it ABK should maintain the majority of its value unless MS badly damages that division or CoD just dies out in popularity. Though they did pay a premium on the stock price, so, I'm sure that figures in somewhere.

 

Haggard

Banned
I'm no accountant obviously, but still it looks like the total assets line should remain balanced unless MS themselves think they have woefully overpaid. In the future there may be some kind of depreciation, who knows. But, any way you look at it ABK should maintain the majority of its value unless MS badly damages that division or CoD just dies out in popularity. Though they did pay a premium on the stock price, so, I'm sure that figures in somewhere.

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Well, MS paid a ~40% premium on the stock price and will have to either deplete ~70% of their total cash reserves for this deal or create long running liabilities.
Even for a company like MS that`s a sizable investment and quite a few billions to go until break even.
That being said, AB makes~60%+ of their profits with MTX and DLC, so they`re probably a perfect fit for the GP model.
 

DaGwaphics

Member
Well, MS paid a ~40% premium on the stock price and will have to either deplete ~70% of their total cash reserves for this deal or create long running liabilities.
Even for a company like MS that`s a sizable investment and quite a few billions to go until break even.
That being said, AB makes~60%+ of their profits with MTX and DLC, so they`re probably a perfect fit for the GP model.

I think it was only like a 15 or 16% premium on the day they announced the deal, but yeah the stock price has declined a bit since.
 

HeisenbergFX4

Gold Member
Collin dropping FACTS!

But why do I care if its profitable right now?

I will be the very first to admit I do not know how monster business bottom lines work as I can only go by what I know.

I started investing into properties about 20 years ago and one of my first larger investments (for me) was a quadplex condo in a college town that we remodeled and rent out even to this day.

The building was in fairly poor shape and at the time really only had money to remodel one of the 4 living spaces to start generating revenue which in turn allowed us to remodel the rest

Were we profitable early on?

Not at all but that revenue helped us build and reinvest in our future

Probably not even close to the same analogy though when it comes to big business bottom lines
 

twilo99

Member
Impressive numbers. Gamepass is a necessity for me. Best subscription service I’ve ever had.

Its actually too good to be honest ... there are just too many good games on there and its overwhelming.

I don't even know what happens if that activision bs goes through
 

DaGwaphics

Member
Collin dropping FACTS!

That dudes opinion does not a fact make, developer or not. LOL

When you look at the Ark deal and the rumored numbers with GoTG etc. and you put that in context of what they are bringing in it seems reasonable to believe they are fine where they are at. As soon as you start binging potentially lost sales (which are and would always remain a complete unknown since you'd never know how many copies you could have sold or what you would have done in MTX without GP in the mix) it starts to not be a serious discussion. The primary costs for MS are whatever it costs them for the content, the literal day-to-day operation of the service itself, and potentially the development of first-party content, that's what decides if the service is profitable or not. Not whether or not they could have earned more via traditional sales, that's a matter of choice of business plan and not an issue of profit/loss for GP itself.
 
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So the studios and IP of Activision are worth $0? If they sold off Activision they wouldn't even get $1 for it?
id buy that for a dollar GIF


But why do I care if its profitable right now?

I will be the very first to admit I do not know how monster business bottom lines work as I can only go by what I know.

I started investing into properties about 20 years ago and one of my first larger investments (for me) was a quadplex condo in a college town that we remodeled and rent out even to this day.

The building was in fairly poor shape and at the time really only had money to remodel one of the 4 living spaces to start generating revenue which in turn allowed us to remodel the rest

Were we profitable early on?

Not at all but that revenue helped us build and reinvest in our future

Probably not even close to the same analogy though when it comes to big business bottom lines
The profitability argument is weird. Is that what gamers are most concerned about really? How about if the service has good games or is a fair price? We care only about profit now? If the service is not profitable and ends does that change the value it added to gamers? Since we have no idea what the profits are let's focus on what I'd assume gamers would care about and that's games. I heard ABK games will be added to the service. That sounds great for gamers right?
 
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SlimySnake

The Contrarian
This just makes me angry.


$2.5 million is pennies compared to what they make. They should be going out there and getting every single AAA game out there. You dont have to buy Activision for $75 billion. Simply paying them 100x more than what you paid for Ark would do. But they dont want to spend $250 million for CoD or $100 million for Elden Rings. For $50 million for Callisto Protocol and Gotham Knight.

Just like XBL Gold and PS+, all this money goes into lining up their pockets. They all release fewer games than they did in the PS360 era. They did not increase the size of their teams for next gen development. They simply pocketed all the extra cash from PS+ and XBL, and now they are doing it with PS+ premium and gamepass.

How monthly let alone yearly gamepass owners can be ok with seeing MS make billions by offering pennies on the dollars to devs and refusing AAA games on day one for an entire year is beyond me. The bs excuse that sony's marketing deals are stopping games like RE8 and RE4 from going on gamepass is ridiculous considering they can clearly afford to outbid sony for the marketing deals. They literally spent $83 billion just now. You cant spend another $20 million in marketing deals before you pay them a few million more for day one gamepass?

Guardians was $5 million 4 months after launch. How much could they have been asking for a day one release? 10x more? Thats still just $50 million. They have 25 million monthly users. Thats $250 million in revenue. 1/5th of it cant go into a big AAA game? GTFO. I am so fed up with this crap and how these companies continue to get MORE profitable by offering gamers fewer games. And we all stan for them like they are on our side....
 

bender

What time is it?
The mechanics of the business model are fascinating and why we should have the discussion. Either end of the spectrum (viability vs concern trolling) trying to shut down the discussion related to profitability is fucking stupid.

But why do I care if its profitable right now?

As a consumer of the product, you shouldn't. Reap the benefits of Microsoft being in costumer acquisition mode.
 

DaGwaphics

Member
This just makes me angry.


$2.5 million is pennies compared to what they make. They should be going out there and getting every single AAA game out there. You dont have to buy Activision for $75 billion. Simply paying them 100x more than what you paid for Ark would do. But they dont want to spend $250 million for CoD or $100 million for Elden Rings. For $50 million for Callisto Protocol and Gotham Knight.

Just like XBL Gold and PS+, all this money goes into lining up their pockets. They all release fewer games than they did in the PS360 era. They did not increase the size of their teams for next gen development. They simply pocketed all the extra cash from PS+ and XBL, and now they are doing it with PS+ premium and gamepass.

How monthly let alone yearly gamepass owners can be ok with seeing MS make billions by offering pennies on the dollars to devs and refusing AAA games on day one for an entire year is beyond me. The bs excuse that sony's marketing deals are stopping games like RE8 and RE4 from going on gamepass is ridiculous considering they can clearly afford to outbid sony for the marketing deals. They literally spent $83 billion just now. You cant spend another $20 million in marketing deals before you pay them a few million more for day one gamepass?

Guardians was $5 million 4 months after launch. How much could they have been asking for a day one release? 10x more? Thats still just $50 million. They have 25 million monthly users. Thats $250 million in revenue. 1/5th of it cant go into a big AAA game? GTFO. I am so fed up with this crap and how these companies continue to get MORE profitable by offering gamers fewer games. And we all stan for them like they are on our side....

Long-term I think buying the content creators is the smarter move over the marketing and one off-deals. These subscriptions will work best with a heavy percentage of owned content. Plus, MS may just feel that they would need to overpay to get the biggest games on there day one. Why would you pay $150-$200m for something that will be on the service for 6 months or a year when you could spend that same amount (or maybe just a bit more) and have something that can be part of the library forever with no additional royalty costs? Not to mention in six months (or maybe 18 if Sony is doing their thing) they might be able to add this same third-party content for substantially less.
 
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IFireflyl

Member
Anti-Gamepass people's argument about sub plans and profits falls apart when many popular sub plans out there are losing money.

Spotify has never made profits ever. They still lose money even to this day. The service is still around and the songs keep growing. Gamepass has the backing of MS who have fully funded all Xbox stuff for 20 years and given what they do now are even more aggressive than ever. So for GP doom and gloomers, the only point they can harp on is that MS doesn't disclose full P/L statements for their GP sub plan, so they assume it's a doom and gloom scenario.

The goal posts already moved. It used to be GP is a bad service of $1 sales. Now that GP does $2.9 billion, notice how they all shut their mouths about sales and now focus on profits, which will always be undisclosed based on MS's transparency. They assume not disclosing it mean it's bad. But Sony doesn't disclose full financial statements for their PS+ service either, nor does even Apple for their 5 key product segments.... Macs, Phones Tablets, Watches, Services. The only Profit info you will ever see from Apple in decades worth of Wall St numbers is. You never know. Maybe Apple loses money on Watches.

Products profit
Services profit
Total profit

You wont see how the 4 hard goods profits split out as they combine it into one bucket. It doesn't mean the financials bad. They just dont want to disclose it to that granular detail. It's like every public income statement compacted into like 10 lines of data, when in reality something like costs can literally be like 40 lines of different costs which an employee wou'd see.

First, while I don't support Game Pass (because I prefer to buy and own the game instead of having a subscription where a game can be removed at any time) I am not an anti-Game Pass person.

Second, the point about other subscription services taking many years to profit, or not profiting at all after many years (looking at you, Spotify), was exactly what I was trying to get across. I never said that Microsoft not profiting off of Game Pass was good, bad, or neutral. I just said it's possible that they're not profiting yet, and the history of subscription services is the reason I doubt that Game Pass is profitable this early in its life.

The problem here is that there are staunchly pro-Game Pass individuals who are arguing that Game Pass is profiting due to the revenue announcement. It's okay to speculate that there may be a profit. It's not okay to tell people that it is a fact that Game Pass is generating a profit. We simply don't have the data to prove that there is or is not a profit from Game Pass. That was my entire point, but people like O Ozriel are dead-set on making me out to be a crazy anti-Game Pass lunatic because I said (to a completely different user) that revenue is not the same thing as profit, and since we don't know the outgoing expenses we can't definitively say that Game Pass is generating a profit for Microsoft. That shouldn't be a divisive comment because it's a 100% factual claim. But here we are.
 

SlimySnake

The Contrarian
Long-term I think buying the content creators is the smarter move over the marketing and one off-deals. These subscriptions will work best with a heavy percentage of owned content. Plus, MS may just feel that they would need to overpay to get the biggest games on there day one. Why would you pay $150-$200m for something that will be on the service for 6 months or a year when you could spend that same amount (or maybe just a bit more) and have something that can be part of the library forever with no additional royalty costs?
Long term yes. But you have 25 million monthly subscribers paying $15 a month, $180 a year and what do they have to show for in 2022? A bunch of B games, 6 month old AAA games and indie trash? The entire selling point of gamepass was day one AAA games. Its why increasing subs was so important so they could get to that high $250 million a month CONSISTENT revenue that would allow them to pay $200 million for that one big AAA game every month while offering smaller games like Ark on the side.

Again, the entire point of these subs is consistent revenue which is supposed to pay for those $200 million games. If you have to go out and invest $83 billion then the model is either busted or you are doing it for other reasons. But those reasons dont benefit your monthly customers in the long term or the short term. They are still sitting here since 2020 having played only two AAA titles on day one. Halo and Forza. That $180 * 3 for two AAA games in 3 years. When they promised one every month.
 

DaGwaphics

Member
Long term yes. But you have 25 million monthly subscribers paying $15 a month, $180 a year and what do they have to show for in 2022? A bunch of B games, 6 month old AAA games and indie trash? The entire selling point of gamepass was day one AAA games. Its why increasing subs was so important so they could get to that high $250 million a month CONSISTENT revenue that would allow them to pay $200 million for that one big AAA game every month while offering smaller games like Ark on the side.

Again, the entire point of these subs is consistent revenue which is supposed to pay for those $200 million games. If you have to go out and invest $83 billion then the model is either busted or you are doing it for other reasons. But those reasons dont benefit your monthly customers in the long term or the short term. They are still sitting here since 2020 having played only two AAA titles on day one. Halo and Forza. That $180 * 3 for two AAA games in 3 years. When they promised one every month.

I would never say the "The entire selling point of gamepass was day one AAA games" especially not from third parties, how many of those have they even had? 4 or 5 in the lifetime of the service or something like that. You'd certainly like to see at least a couple big first-party projects per year (I believe they've said their target was four), but the delays hurt this year in that regard for sure. Next year and subsequent years should be better, assuming we can avoid workplace disrupting pandemics and nuclear war going forward.

A ton of great games have come to GP this year. Titles like the new Plague Tale and Scorn, or the Two Point games etc. are really what the service is built on. Not to mention the great games added once they are a bit older, those don't become trash after a certain date.
 
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SlimySnake

The Contrarian
I would never say the "The entire selling point of gamepass was day one AAA games" especially not from third parties, how many of those have they even had? 4 or 5 in the lifetime of the service or something like that. You'd certainly like to see at least a couple big first-party projects per year (I believe they've said their target was four), but the delays hurt this year in that regard for sure. Next year and subsequent years should be better, assuming we can avoid workplace disrupting pandemics and nuclear war going forward.

A ton of great games have come to GP this year. Titles like the new Plague Tale and Scorn, or the Two Point games etc. are really what the service is built on.
the starfield and redfall delays shouldve forced them to go out and pay $250 million for games like Elden Ring and especially Callisto. Plagues Tale is an indie game at best. I just dont think people pay $180 million for games like that. At least I dont.

ER sold 16 million units with the vast majority selling on PS5 and PC. Assuming Xbox versions sold 4 million, thats $240 million. Less than one month revenue for gamepass. Shouldve been a day one title.
 

IFireflyl

Member
I guess completely misrepresenting what I said in a strawman argument is much easier than admitting you made a misguided analogy.

Apparently, Me pointing out that comparisons to Netflix and Spotify arent apt means 'revenue = profit'.

Cheers anyway.

I didn't make a misguided analogy. It's my own personal reasoning based on the only comparable/similar large-content subscription services. And as I said to you previously, I never said it's a 1:1 comparison. I never compared how long it took Game Pass to become profitable to how long it took Netflix or Spotify to become profitable. It's impossible for that comparison to be made until we know that Game Pass is profitable, and we don't have that information.

I responded to a completely different user about why I personally don't believe that Game Pass is profitable yet. You then tried to argue with me for no other reason except to prove that I have to be wrong and you have to be right. You can disagree with me all you want, but don't argue with me over my own opinion (which I'm not forcing upon anyone, and I only provided it when directly asked by someone who wasn't you). You're behaving like a child. Go take a time out or something.
 
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PaintTinJr

Member
Is this just a single number - or is there more numbers to show a year on year trend of revenue?

I initially looked at the big number and immediately thought that seems really good for even 30m users - all paying on average around the $100 per year. But then I remembered how it has been described the way subs at $1/£1 can be stacked for 6(?)years and I then started to wonder if the revenue is for the year it is paying for, or the year it paid by the customer. If the latter, then could be offsetting a few years where the current customer base is contributing $0/£0 in those years - and only new subs were contributing
 
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