Hendrick's
If only my penis was as big as my GamerScore!
That’s how it is in every business.
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Bernkastel
Ask me about my fanboy energy!
The next target would be mandatory Game Pass registration of every newborn child.Microsoft should expect 86% growth rate every year, which means seven billion Gamepass subscribers in ten years.
It's all in the wrist
Member
If you can't find games to enjoy on the service, there's nothing I can tell you. You're very picky.
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Clear
CliffyB's Cock Holster
This is a really interesting subject, I'd argue its probably THE most interesting topic in the business side of gaming happening right now because absolutely noone has attempted the course of action that MS has chosen for Xbox.
Its not just that they are willing to spend big to establish GamePass, its their willingness to potentially jeopardize their existing Xbox console software/hardware ecosystem by placing it behind GP in terms of business priority.
Its one hell of a pivot, and it demands scrutiny to see how its paying off for them.
Lets be objective about this; Placing their first/second-party output day#1 on GP was a ballsy thing to do, doubling down on that by investing literally billions of dollars into expanding that first party roster is an extraordinary commitment to the strategy.
What I'm getting at by saying this is missing targets -however optimistically they were set- is a big deal. When the stakes on the table are so high, there has to be a lot of attention paid to detail in the business plan. Especially where the biggest KPI's are concerned. Growth, retention, and engagement are all hugely significant, and moreover potentially volatile given the nature of the business.
At this point, growth is clearly substantially down on targets. The question then becomes how are the other two performance pillars doing?
We cannot rely on MS own PR statements to get a true picture of how the situation is panning out. They are too invested at this point to express any doubts or signs of weakness in their resolve. Because to do so would not only be demeaning but risks compounding investor skepticism.
With Halo's MP being F2P, and therefore to some degree unhooked from GP, going into the next year their line-up still seems fairly thin. Yes there are a number of already announced titles which have been delayed, but I'm not sure if any of their new acquisitions will be dropping anything massive for quite some time.
This is significant, not just for the 3 KPI's mentioned above, but because its going to force them to buy-in more product from third-party sources until their pipeline reaches readyness. This is even more expenditure and potentially even more red ink on the ledgers to explain away to investors.
GP is not bulletproof yet. Its not even proven sustainable, because if it was everyone else would be transitioning to a similar model.
To the contrary, what do we see their competitors doing? Nintendo are doing their own thing -as usual- and thriving. Sony are doing great too, and steadily expanding out onto PC and readying their second push into the VR space. The ones who seem to be doing less well are those offering similar a-la-carte services and streaming options.
Its not just that they are willing to spend big to establish GamePass, its their willingness to potentially jeopardize their existing Xbox console software/hardware ecosystem by placing it behind GP in terms of business priority.
Its one hell of a pivot, and it demands scrutiny to see how its paying off for them.
Lets be objective about this; Placing their first/second-party output day#1 on GP was a ballsy thing to do, doubling down on that by investing literally billions of dollars into expanding that first party roster is an extraordinary commitment to the strategy.
What I'm getting at by saying this is missing targets -however optimistically they were set- is a big deal. When the stakes on the table are so high, there has to be a lot of attention paid to detail in the business plan. Especially where the biggest KPI's are concerned. Growth, retention, and engagement are all hugely significant, and moreover potentially volatile given the nature of the business.
At this point, growth is clearly substantially down on targets. The question then becomes how are the other two performance pillars doing?
We cannot rely on MS own PR statements to get a true picture of how the situation is panning out. They are too invested at this point to express any doubts or signs of weakness in their resolve. Because to do so would not only be demeaning but risks compounding investor skepticism.
With Halo's MP being F2P, and therefore to some degree unhooked from GP, going into the next year their line-up still seems fairly thin. Yes there are a number of already announced titles which have been delayed, but I'm not sure if any of their new acquisitions will be dropping anything massive for quite some time.
This is significant, not just for the 3 KPI's mentioned above, but because its going to force them to buy-in more product from third-party sources until their pipeline reaches readyness. This is even more expenditure and potentially even more red ink on the ledgers to explain away to investors.
GP is not bulletproof yet. Its not even proven sustainable, because if it was everyone else would be transitioning to a similar model.
To the contrary, what do we see their competitors doing? Nintendo are doing their own thing -as usual- and thriving. Sony are doing great too, and steadily expanding out onto PC and readying their second push into the VR space. The ones who seem to be doing less well are those offering similar a-la-carte services and streaming options.
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thicc_girls_are_teh_best
Member
Good analysis, well-reasoned and rational without being toxic, I think these are points people regardless what side they fall on should be considering.
I know there are some zealot types around who'd say why is any of this a concern for us gamers, that we should just play games, but the truth is these type of things can impact our ability as gamers to play games, in this case because GamePass performance has direct ramifications on what Microsoft decides to do with the Xbox division in the future. That can affect budgeting, technical support from other company divisions (such as the Surface team and Azure), pursuits for 3P content into both GP and on the Xbox platform...all of which ends up impacting what games people on Xbox and GamePass can play, their potential quality (if budgets get cut across the board that can affect QA testing), or even if GamePass and/or Xbox as a platform continue to stay around.
And as someone who still feels it sucks that Sega (and to a lesser extent, NEC/Hudson and SNK, tho SNK never really tried competing in the mainstream console space) had to fold as a platform holder in the industry, I know how important it is to be mindful from a point of neutrality, the realities of certain market performances and business decisions a platform holder is experiencing, how those things feed into each other, etc. If there were people like ourselves around with a full-blown internet back in the '90s giving analysis on actual and potential business decisions for companies like Sega and Atari of the time, there's a chance, however slim, that maybe someone at those companies'd of seen enough of that feedback to make decisions that could've changed the course of trajectory of those companies for the better, creating a whole different history for them.
To people saying that these companies don't pay attention to the community, you don't know how wrong you are. It was gamers who spoke up against Microsoft trying to double the cost of XBL Gold out of nowhere, which got them to fold on that plan. It was gamers who called Sony out for trying to charge for a PS5 upgrade to Horizon: Forbidden West when they had promised it would be free beforehand, forcing Sony to honor their original word. If gamers make enough noise, especially in regards to bad business practices, some of these companies will listen.
But I'd like to think they also listen, maybe more subtly, to just general discussions relating to their products in general, especially those that become noteworthy topics across various spaces online. They aren't oblivious to these conversations, even if their decisions aren't driven by them primarily or at most as just tertiary influences. I don't see a reality where someone can see Microsoft missing their GamePass growth target by 30% and claim it's not a big deal, as if that also applies to Microsoft and more crucially the Xbox division, who need to produce results and one of those being to at least hit set targets. Now I've heard that the 48% target was done before Halo's delay, and some may argue the fact Microsoft/Xbox beat their growth targets in 2020 (which let's be honest, were primarily driven by COVID lockdowns) offset them missing this new target, but that's not how it really works. Maybe the Xbox division revised that figure internally after the delay, but if that were the case would not the SEC filing have mentioned this?
Look, I don't want GamePass to fail or struggle, I don't want Xbox to fail either. I don't want another platform holder needing to leave the space, because an industry with just Sony and Nintendo providing a platform ecosystem would suck sooner or later. But we also can't just pretend everything's trucking along fine or call people out as being fearmongers and 'doom-and-gloomers' just because they (well, the ones who actually are, not the console warriors and trolls) are expressing genuine concerns about future viability for GamePass sustainability and growth if things remain exactly as they are. Which, they likely won't, but we don't know too much in what ways things will change outside of some new game releases.
I have my own ideas as to what Microsoft should do and those involve some big restructurings to GamePass and taking on some other initiatives (like VR), and some other strategies. Some of those even involve easing off on GamePass some, at least as the central pillar to their strategy. However, it's completely understandable and even likely to expect Microsoft/Xbox division's own ideas are quite different from those, since they have more data to work with and can strategize around it. That all being said, if those ideas zero in on yet harder GamePass and mobile streaming pushes that feel like they come at the expense of the Xbox hardware, other sensible hardware initiatives, and game scope...well, I'll be increasingly weary about how effective those ideas can work out in practice.
And for goodness sake Xbox, plug up the damn leaks. I'm beyond tired of these insiders spoiling the surprise of genuine new game announcements by leaking details way too early. I think it's hurting some of these reveals more than helping them. And I'd also like more legit official sources to talk about and show off these games, through official means, instead of relying so much on insiders. Matt Booty seems to be making the rounds again, hopefully he does those suggestions since, well, it's kinda part of his job and all
thicc_girls_are_teh_best
Member
Arcades did start to taper off by the mid '90s but it depended a lot on what region you were in, and it wasn't a uniform impact on all types of games. In Japan for example the dropoff was much less steep, and for games like Tekken the big reason it occurred in the West for those was because the arcade versions weren't any more technically advanced the console ones. OTOH, Tekken in arcades was never a technological marvel when compared to games like VF2, or VF3 when that came out (which looked like a true generation ahead of anything that was or would be on the then-current consoles).
Also for a lot of 2D fighters you still needed an arcade to get the best version, unless you had an import-friendly Saturn and one of the expansion cartridges. However, all that said, yes the PS1 gen was the first wherein console versions of most arcade games got to "good enough" visual parity wherein the differences were usually indistinguishable for the average gamer (though I think the 5th-gen being the first with 3D as mainstream absorbed a lot of the impact that came with perception of differences; if you play PS1 Ridge Racer and the arcade original for example the visual differences are actually quite drastic and easily noticeable, but we're more accustomed to 3D as a whole these days so we can notice/"register" that more readily versus a gamer back then could).
onesvenus
Member
Good post, but it's based on a wrong premise. We don't know if they missed their targets, we know they missed executive bonuses targets, which usually are completely different.
See this post to see how those bonuses work
Clear
CliffyB's Cock Holster
I get that, but the admission is key. Because they have to appear strong until the first-party dev pipeline reaches maturity. Although generating their own content is long-term way more cost-effective and steerable than procuring it from third parties, its a lot of sunken-cost* on the lead in and if they have to spend more on top of that buying in product to get keep the GP train rolling... It places huge pressure on the first wave of titles from the expanded first party to justify their existence.
The worry is that if they don't perform to expectation. I suspect Spencer and Booty will be instructed to start shoring things up in the division. This for me is the point where the rubber really hits the road, the moment of truth because this is the point at which they get to judge the enterprise as a somewhat finished article.
Obviously, if they perform to or above expectation, the point is proven and everything should be great going forwards.
What I'm getting at is although this is all clearly part of a long-game strategy, there are key milestones to be met in order to stay in Nadella and the board's good graces. The reality is that there's no chance of failure per se, MS as a corporate entity is way to large and wealthy to be ever hurt by what the division does, however there is an ever present risk of it being deprioritized and defunded due to a lack of acceptable progress.
*Not just in terms of acquisition cost, but burn-rate keeping these studios working.
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Dave_at_Home
Member
Lots of good points about Game Pass here. As a Game Pass subscriber, as long as Microsoft keeps offering it, than I'll keep paying for it. Just need to get their shit together on killer first-party titles. Guess I'll look forward to San Andreas remaster coming soon in the meantime.
FrankWza
Member
thicc_girls_are_teh_best
Member
So what's the usual over/under percentage-wise for executive bonus targets compared to division targets? I doubt it would be 50% over, but 25% sounds reasonable.
If so then that would mean their non executive bonus target was 36%, which they would have technically beat (37%). However, it'd also mean that the executive bonus target was about 33.5% over the division target.
Only thing is, we're simply guessing on this point. It might help if we knew what weight executive bonus targets were for Microsoft's other divisions, but I think we can probably use Nadella's own salary (or CEO bonus?) rates for help on this. GamePass constitutes 5% of that, so they'd probably want to set a larger weight for the executive bonuses for growth in the GamePass area that way it's easier to hit the division's targets (helps the division in the eyes of shareholders and other members of the board) and executive bonuses (at least Nadella's) aren't hit too hard if the executive bonus percentage isn't met (since, again, GamePass only constitutes 5% of Nadella's salary).
DeepEnigma
Gold Member
WTF, MS is pro life now!
StreetsofBeige
Gold Member
Publicly announced targets are not the same as bonuses paid out to people. Internal targets are set lower than externally announced targets or Wall St analysts targets too.
Bonuses are also comprised of a lot of different factors. Each person or department has different targets, but most people will have some common company targets. But from there people will have customized targets.
1. Common company wide targets every bonused person gets
2. Regional (country level) targets
3. Department wide targets
4. Individualized targets
Even targets set internally can be different from department to department when talking about the same data.
At my current company, one part of the bonus structure is hitting an internal Net Sales target. Payout starts at if hit 90% of the target. You heard me right. If we miss by 10%, we'd get $0 on that part of the bonus structure. But if we missed by 9%, we'd still get something. The external target the company says we'll hit for Wall Street is like +5%.
But companies are different. Companies I work at have smoothed out bonus payouts where if we do great or stink, we always get something. But some peers I know at other businesses have those all or nothing kinds of structures. So they really have rigid targets. Big dud. Big reward. These kinds of places, there can be times they've got ZERO bonus. But then they have a great year and everyone gets like 35%.
Bonuses are also comprised of a lot of different factors. Each person or department has different targets, but most people will have some common company targets. But from there people will have customized targets.
1. Common company wide targets every bonused person gets
2. Regional (country level) targets
3. Department wide targets
4. Individualized targets
Even targets set internally can be different from department to department when talking about the same data.
At my current company, one part of the bonus structure is hitting an internal Net Sales target. Payout starts at if hit 90% of the target. You heard me right. If we miss by 10%, we'd get $0 on that part of the bonus structure. But if we missed by 9%, we'd still get something. The external target the company says we'll hit for Wall Street is like +5%.
But companies are different. Companies I work at have smoothed out bonus payouts where if we do great or stink, we always get something. But some peers I know at other businesses have those all or nothing kinds of structures. So they really have rigid targets. Big dud. Big reward. These kinds of places, there can be times they've got ZERO bonus. But then they have a great year and everyone gets like 35%.
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Papacheeks
Banned
I remember saying a long time ago you can’t put the cart before the horse. At this time MS is going to have to spend more money on deals to keep momentum up.
I just don’t know until halo/forza hit to see what retention and new sub numbers look like.
Until then I think this aligns to what their growth was pre-pandemic.
Big question is what is their overall goal 5 year wise for subs?
I just don’t know until halo/forza hit to see what retention and new sub numbers look like.
Until then I think this aligns to what their growth was pre-pandemic.
Big question is what is their overall goal 5 year wise for subs?
alabtrosMyster
Banned
This is not even what he said, if you play a few games a lot a service of that type makes no sense at all.
Skifi28
Member
Indeed. I (and I assume many others) have a huge backlog which I barely have time to play as it is. Paying monthly for dozens of games I'll never have the time to finish makes me nervous just thinking about it. Games disappearing from the service although logical, is also an issue. Makes you want to rush to play everything while you can, even though it's impossible.
In the end, I'd rather pay for games once in a while and have all the time in the world to finish them at my leisure. These services have amazing perceived value, but it's completely unrealistic for normal people. You just end up paying for stuff you'll never play.