sublimit
Banned
You guys are so hang on to this stupid fight that everyone's missing the true beauty of the thread _ Tom Warrior called out by other Ms fanboys for stating that GP is not profitable
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Game Pass is not profitable yet - Tom Warren
- Thread starter Rolla
- Start date
Bert Big Balls
Member
What DO Xbox make a profit on?
Jaguar Victory
Member
Oh no. I guess I'll just keep playing these GamePass games then..
Starbuck2907
Member
All you folks know that even Netflix wasn’t making a profit (unless you don’t count certain expenses/debt) until about 4 or 5 months ago right? https://www.nytimes.com/2021/01/19/business/netflix-earnings-debt.html.
if Gamepass isn’t profitable now, it will be eventually, Probably not too long from now. But there’s a lot of other reasons to suppor Gamepass. It’s a great promotional tool and increases sales and devs get paid per install for back catalog (old) games that were basically dead in the water so far as revenue generation goes.
if Gamepass isn’t profitable now, it will be eventually, Probably not too long from now. But there’s a lot of other reasons to suppor Gamepass. It’s a great promotional tool and increases sales and devs get paid per install for back catalog (old) games that were basically dead in the water so far as revenue generation goes.
John Wick
Member
The problem is they can't!
John Wick
Member
Lol random twitbag eh? He was the man when he was saying positive things about Xbox and negative things about Sony.so 1 random unknown twitbag and yet none of us in GAF, mkay
As predicted in earlier post lmfao.....
Jemm
Member
Nothing new here.
The question is, are we talking about a) if the service profitable/sustainable enough to support itself or b) net profits
a) Sustainability means that the service makes back what MS invest in the Game Pass (3rd party deals)
b) Net profits means how much is left after reinvesting the income
I believe that Game Pass makes enough profits to be sustainable (as MS have said), but not net profits (what Tom is referring to), since everything it produces is reinvested into it.
Some people also mentioned the development costs, Zenimax-purchase etc. I don't think these should be included in Game Pass expenses, as they should be counted in Xbox's (or even Microsoft's, when talking about studios) expenses as a whole as Microsoft still sells the games, too.
Game Pass isn't their only source of income and never will be, it is just an option. However, if those expenses were included in these Game Pass calculations, then it wouldn't be sustainable, either.
The question is, are we talking about a) if the service profitable/sustainable enough to support itself or b) net profits
a) Sustainability means that the service makes back what MS invest in the Game Pass (3rd party deals)
b) Net profits means how much is left after reinvesting the income
I believe that Game Pass makes enough profits to be sustainable (as MS have said), but not net profits (what Tom is referring to), since everything it produces is reinvested into it.
Some people also mentioned the development costs, Zenimax-purchase etc. I don't think these should be included in Game Pass expenses, as they should be counted in Xbox's (or even Microsoft's, when talking about studios) expenses as a whole as Microsoft still sells the games, too.
Game Pass isn't their only source of income and never will be, it is just an option. However, if those expenses were included in these Game Pass calculations, then it wouldn't be sustainable, either.
ANIMAL1975
Member
That's what i meant lol, wasn't talking about us...so 1 random unknown twitbag and yet none of us in GAF, mkay
longdi
Banned
Lol random twitbag eh? He was the man when he was saying positive things about Xbox and negative things about Sony.
As predicted in earlier post lmfao.....
i have no idea who he is.
though obviously the attempted egging and trying to generate concerns aint working here. Everyone who is a GP'asser, dont care less about this.
PlayStaytion
Member
Gp service wasn't intended for short-term profit, they wanna as many people as possible to get their hands on their games and other 3rd party titles cause the truth is there are many hidden gems that went down to drain without sub services actually, they just ignore 100 reviews out there cause they haven't tried them therefore didn't care.
Schmick
Member
Lets be realistic, when do you think Xbox would double the price.... now? when the status of the games catelog is as you have described. No.
It'll be years.... when Xbox with have released a steady flow of first party games.
Beside this is hypothetical... i just cannot see Gamepass doubled in price for the duration of this gen.
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Outrunner
Member
Suckers
Bojanglez
The Amiga Brotherhood
Sustainable might not even mean breaking even for Gamepass, if you accept the definition of the word to be "able to be maintained at a certain rate or level" then it could mean that MS is able to maintain the product at a certain rate of loss (in order to grow the user base).
Either way I don't know what people are worried about, devs seems to like the deals they are getting, customers are happy and MS is happy. I suspect that like many of these products, the profits will come when the user base hits a certain threshold, so it is all planned in. The trick will be MS keeping the quality of content coming at a rate just good enough to keep people from questioning it.
The cynic in me thinks that MS may be secretly not too disappointed that almost all of their announced AAA games will only become available once all the people on the $3 a month stacked rate (or whatever it was) are paying full price
TwiztidElf
Member
When they're the monopoly and crank the prices up. This is the long game we keep getting told about.
They were salivating at the thought of it. To see it layed out like this, it's a party. I'm sure people using it (i don't) and people making decisions at MS are really preocupied with what some armchair analyst on a forum think. It's a new world for sure.I thought these threads were banned? I mean, look at the tag applied to the OP!
Absolutely chock-full of the regular Sony crew too!
Not really. You get extra discounts and access to a big library of games you can try with a low cost of entry. If you buy games you like, you can easily end up saving money overall.
SaucyJack
Member
Netflix is interesting. After borrowing $15 billion to build their content library and reaching 200 million subscribers they’ve achieved a brief period of sustainability BUT its come with compromises, their subscription price creeps ever upwards and the content they provide has been rebalanced, they’ve always favoured quantity over quality but even that seems to be going downhill.
And after all that, Hollywood has cottoned on to the model and they’re going to have their lunch eaten in the coming years by Disney+ et al.
Gamepass may not need to go external for financing, but they still need to make their business case.
IMO for Gamepass to be sustainable it needs:
- a lot more subscribers paying somewhere close to the sticker price
- to retain those subscribers over time
- to increase the price
- to reduce the cost of content (quantity over quality)
- to increase the monetisation of the ”free” content i.e. DLC and MTX (hence HALO Infinite being described as a platform for the next 10 years)
Banjo64
cumsessed
Or 3. They will eventually stop the big third party deals for games like The Witcher 3, GTA V, Red Dead 2, Monster Hunter World, Resident Evil 7, Outriders, Control, Destiny etc and will instead rely on whatever their 20+ studios can output (alongside any future studio/publisher acquisitions) and they will supplement this with day one indies. I’d wager if they are still losing money on Game Pass, their Steam sales have clawed back or even surpassed this amount.
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Papacheeks
Banned
i have no idea who he is.
though obviously the attempted egging and trying to generate concerns aint working here. Everyone who is a GP'asser, dont care less about this.
People with thoughtful insight on the industry and it's viability and lasting/longerm effects on studios do. But go ahead and enjoy your cheap subscription. Once the variety or signing of third party games changes and prices increase then you'll understand. The bigger issues is the so called " new metric" MS says they look at for gamepass. ANd too me it has to be something similar to how streaming services like netflix gauge audience interaction with content.
To me thats the bigger talking point. On top of that many Analysts know streaming services are market growers not money generating. Reason is the amount of spending you have to do is insane. Microsoft has got a giant road ahead of them like a 10+ year road that has to show growth or your going to see drastic changes in the type of content you see on the service.
If this was such a thing, Nintendo would have done it in tehe 90's like sega did with sega channel. Sony and Nintendo dont need to base their entire platform around this because they have good growth in their paltforms without it and actually make a good amount of profit. MS was literally on the verge at one point spinning off the division entirely. So to show growth and get the capital neeeded for that growth the service rout was their only choice.
Men_in_Boxes
Snake Oil Salesman
That's true though.
Papacheeks
Banned
Yea, and where is that? Grounded? A game that's like a 100 titles on steam that are survive like ark, the forest, rust? SO far all it's done is MS is giving checks to who ever wants money upfront for their game, and because Gamepass price is so attractive and so many games get highlighted they are seeing a lot more traffic.
I would argue though if the games I listed and all the other's from that Survive genre and all the indies found on steam were all on gamepass I think developers would not see such increase in traffic in their game. Because the library would be flooded with games in similar genre's. WHich is what is a issue on steam and why developers are seeing people actually buy their games because of gamepass.
Growth is more important than profit for a tech project and seeking immediate profits stunts growth potential. You create the incentives for using a service first if you have the bankroll to do so.
Stadia would certainly still be in active development if it had picked up a significant userbase, regardless of the P&L.
Stadia would certainly still be in active development if it had picked up a significant userbase, regardless of the P&L.
Papacheeks
Banned
Most current streaming services are not profit makers, they are growth makers. Netflix literally with all the spending they do for deals, creating new content they make close to zero in actual net profit. But because their user base is over 100-200 million they show growth which reflects in their NASDAQ. WHich is where people are making money.
Streaming services makes your stock less volatile in high highs and low lows. The only way Microsoft makes money is through streaming. If they reach 100 million + and half of those if not more are streaming using xCloud which is pie in the sky, then their servers will be more sought after by companies like amazon's AWS. Which is where a lot of amazon's billions come from.
Microsoft makes office and owns it, so they get money from that on top of server like azure, OS, and at some point xCloud servers similar to AWS is used for streaming services.
Thats where you make money.
Why any of this matters is, if they dont see those insane amount of number growth, then obviously changes will be made in getting more subscribers or having the ones be more engaged with their games. And that goes into what gets green lit, what gets signed.
And when spread sheets for gamer interaction is used as a barrometer then your going to see more MTX, F2P, multiplayer type of games and less like Hellblade and the likes.
Money/Growth dictates everything. Days gone sold well, but to Sony the issues of its development with possible internal issues with the studio among alumni with it being a 6+ year project didn't offset as well as they liked. Like they sold 5.5 Million. How many of those were at $59.99? That game was heavily discounted in less than 4 months.
I think a lot of the issue many of us here have in all honesty, is the way Microsoft is trying to build the xbox brand back up. Throwing tons of money at a wall seeing what can be bought, and what alligns to the bigger companies content plans. Instead of like Falcon said" Do the work". They know it would cost double the investment because of time, and probably would not show growth on a spread sheet compared to a service that was being abused for 1$, and cheap deals.
Doing the work means getting their studios in order with correct people culturally, that come from the oldschool Xbox days. Nintendo and Sony's DNA is totally different than MS's. Sony comes from Entertainment which is why all their studios feel like film studios interms of a purely art outlook. And the studios they make deals with for exclusivity are either brands they have been associated with for a long time, or is a developer that alligns with the core foundations that Playstation is all about.
Case in point Returnal. I can't stress that game enough. It literally makes me feel like I'm back playing a PS1 game which back then were more about the play than the cinematic part. Like I get METAL GEAR SOLID/ FF7 vibes from the addicted nature of playing it.
But MS comes from enterprise, and unless they literally ripped people out and got rid of people, and changed studio dynamics, your going to see similar results. I hope playground games, and the likes really hit it out of the park. But there's just something about the DNA of xbox currently that feels like it's missing and been missing for a long ass time.
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Strange how the usual vermin arent asking for this thread to be closed as theres a gamepass catch all thread....cant think why they would see this one any differently.....
Also strange how the very same vermin question everything Warren says about their beloved PS`s, yet here he is, held up as some kind bastion of the truth because he`s denigrating the MS console. Fucking idiots.
Also strange how the very same vermin question everything Warren says about their beloved PS`s, yet here he is, held up as some kind bastion of the truth because he`s denigrating the MS console. Fucking idiots.
Outrunner
Member
Oh boy. Such an emotional reaction to this thread. Did you feel personally attacked by it? Tell us, where does it hurt?
Shmunter
Member
Needs to be reframed. Core fans take interest in their hobbies sustainability and all manner of inside baseball. Casuals don’t care how the sausage is made and just consume.
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akaFullmetal
Member
Now we have confirmation, we've had numerous back and forths with people saying it wasn't profitable but arm chair investors claiming it was. It just made sense with 1$ deals being offered over and over and it was to get Gamepass in peoples hands but they would have to take a hit on profits for it. When that was pointed out, fanboys just plugged their ears and said nope.
now that we have this confirmed, we can move on to when it is it going to be profitable, if ever? Who knows, but as of now with how it is , it isn't and was pretty easy to see. I just don't know why some people try to defend it?
Edit : Or maybe this isn't confirmation?
now that we have this confirmed, we can move on to when it is it going to be profitable, if ever? Who knows, but as of now with how it is , it isn't and was pretty easy to see. I just don't know why some people try to defend it?
Edit : Or maybe this isn't confirmation?
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Heisenberg007
Gold Journalism
Possible, but that will open another can of worms. You need to have AAA third-party content on such services. MS doesn't have the kind of pedigree as Sony and Nintendo does when it comes to first-party games. Yes, Starfield and Fallout and Gears will make a lot of noise, but they won't dominate news when the next Zelda or Mario or God of War drops.
Look at the dilemma Netflix is in. They are bleeding cash, despite making a profit. More importantly, their cost per subscriber has increased (which I think is an equally important metric). Now if they scale back content (first-party or third-party), they risk losing subscribers. If they scale up content to gain more subscribers, their cost per subscriber will increase even more, resulting in a net loss once again.
And that's after having what 200+ million subscribers? It's not easy at all.
Heisenberg007
Gold Journalism
So you don't have your own opinion or any points whatsoever? You think it is sustainable and profitable because MS executives think it is profitable, despite data and evidence pointing otherwise? And then you point fingers at me, claiming that I am generating concerns when you have absolutely nothing as a rebuttal other than having 'faith' in MS executives?I dont have to disagree.
The master chiefs at MS already does it for me.
They believe it is sustainable, profitable and continues to invest in GP. The service has immense user satisfaction, growing and growing, more games are being added. We are all happy. What's the problem?
It's like why concern now that sony is selling ps5 hardware at a loss, when ps4 was not. oh dear, if sony cant hit the same numbers, how will they recoup or sustain
The same executives who ran Skype into the ground from 668 million active users to 40 million active users, brought down Nokia from a market leader into oblivion, made a bad call on Mixer, and could never compete with and beat a 10x smaller company (Sony) even after 20 years?
Yeah, well done, but I don't share your optimism.
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Jemm
Member
Who should we trust, if not the executives, when there is no other source - except our guesses?
What data/evidence that says otherwise do we have exactly?
yazenov
Member
Imagine being this butt hurt over a subscription service.
Bryank75
Banned
Kokoloko85
Member
Exactly what Ive been saying all this time.
And the one Aquisitions MS makes with IP’a they had nothing to do with buiding. Doom, Elder Scrolls etc. The more its gonna depend on what MS and Gamepass does. Many IP’s will have smaller budgets/Die while others will get more.
Another reason I dont want MS buying Sega, they had nothing to do with Sega’s IP and then they will control them...
Kokoloko85
Member
True but I guess the Vermin that thought Gamepass was profitable and laughed/argued with anyone who thought it was different should be be told
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Just having a plan doesn't guarantee success. I'm sure they had a plan for Mixer too and a plan for GFWL.
The metrics are simple, build a sizable subscription base. See how high you can take price, see how low you can take game budgets and releases, see how you can increase subscribers from other devices. Third party and first party analyse how you can further monetise those who are subscribed, likely through MTX since you aren't competing for sales.
These are the ways you cut costs and increase profits. It's shifting the market towards the free to play model but not free to play.
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The Pleasure
Member
Gamepass is like a mormon coming to my door every few days.
longdi
Good sir. Have you heard about our lord and savior, gamepass? It was created four years ago by the creator, Phil Spencer. Have some of our literature. With gamepass, you will be saved. From greedy third party gaming companies. Also, you will be admitted to xbox live gold with your subscription.
If you don't convert to gamepass, you will be sent to Neogaf, in the lake of Sony and Nintendo where you will be forced to pay for each game by its cruel master,
EviLore
longdi
Good sir. Have you heard about our lord and savior, gamepass? It was created four years ago by the creator, Phil Spencer. Have some of our literature. With gamepass, you will be saved. From greedy third party gaming companies. Also, you will be admitted to xbox live gold with your subscription.
If you don't convert to gamepass, you will be sent to Neogaf, in the lake of Sony and Nintendo where you will be forced to pay for each game by its cruel master,
EviLore
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Heisenberg007
Gold Journalism
- MS does not share data that shows profitability.
- MS does not even share a plan -- a target # of subscribers -- that shows what numbers they need to hit to become profitable.
- MS wants to emulate Netflix, but Netflix only earns small profits if they scale down content production. Otherwise, their growth has slowed down and their cost per subscriber has increased considerably. Their debts are also out of hand. They are also leaking cash flows. So MS's inspiration isn't doing that hot either, and they have ~200 million subscribers. MS has ~20 million subscribers.
- No gaming subscription in the history of the gaming industry surpassed 50 million subscribers. If MS does, it will be a record.
- But even at 80 million subscribers, Gamepass will return roughly $13 billion to MS. PlayStation operating expenditures are roughly $20 billion. This shows that $13 billion isn't going to be enough, and that's not even including the xCloud server costs -- which would be huge.
- But Xbox also has 2x more studios and more employees than PlayStation, so their game dev costs and employee expenditures will also be more than PS. So that $20 billion would likely look like $30-$40 billion.
- To cover the expenditure of $40 billion, Microsoft will need 220 million subscribers. Yes, there will be other revenue sources but there will also be other expenditures.
Edit: Some more context:
- At $40 billion -- ignoring other revenues and other expenditures -- MS would still be breaking even, not making any profit. For comparison, Sony hit ~$3.5 billion profit last year and will easily surpass $4 billion in profits this year.
- $40 billion may seem excessive but that's the cost of scaling aggressively. And MS has already incurred these expenses with all those studios and game development. But their revenue sources haven't scaled up.
- Other revenues mean game sales, MTX, sales %.
- Other expenses mean loss on hardware sales, xCloud server costs, Gamepass deals, partnerships, second-party game development, timed exclusivity, etc.
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longdi
Banned
My opinion is GP is great, a game changer. More gamers will jump in. Every GP'assers are loving it.
MS is going to sustain it. It will be profitable in the future. Subs prices will of course go up.
AAA games will be on GP day 1.
Stop being so worrisome over things you have no internal data or idea or vision.
Just stop making old assumptions of doom and gloom.
Skifi28
Member
SteelCurtain 59
Member
If Game Pass was profitable right now that would be a huge failure for Microsoft, they're in user growth period, they're trying to get a massive subscriber count, every $ of income from Game Pass (and more) should be reinvested in Game Pass at this point until they've hit a sustainable number (whatever that number is, 30 mil? 50 mil? 100 mil? etc.). Microsoft of all companies can afford to lose money on Game Pass for several years of user acquisition until it's a sustainable service.
Also, I think people don't seem to understand the economics of a subscription service, while there is certainly some increase in costs, costs do not scale "that much" with more subscribers, you're still going to be investing in a similar amount of new content, whether you have 100 subscribers or 100 million, because you want more subscribers and you need to retain your current subscribers. However, revenue DOES scale with subscriber count, so every subscriber they get is basically an increase in revenue without an increase in cost, so they just need to keep on increasing their subscriber count. They don't need a massive price increase to be profitable, sure I could see a netflix style $1-$2 increase in monthly cost somewhere down the road, but all a massive price increase would do it tank their subscriber count.
The way Game Pass will become profitable will be by increasing subscriber count, not by a sizable price increase (honestly that would probably lose them money by all the subscribers they'd lose). And the only way I see massive reduction in investment of new content is if Game Pass stops growing short of the "sustainable" size and they need to reduce costs. But Game Pass can become massively profitable even if they continue spending at the same aggressive level they're spending right now, that's why subscription services are so popular, they have the potential to make WAY more money
Also, I think people don't seem to understand the economics of a subscription service, while there is certainly some increase in costs, costs do not scale "that much" with more subscribers, you're still going to be investing in a similar amount of new content, whether you have 100 subscribers or 100 million, because you want more subscribers and you need to retain your current subscribers. However, revenue DOES scale with subscriber count, so every subscriber they get is basically an increase in revenue without an increase in cost, so they just need to keep on increasing their subscriber count. They don't need a massive price increase to be profitable, sure I could see a netflix style $1-$2 increase in monthly cost somewhere down the road, but all a massive price increase would do it tank their subscriber count.
The way Game Pass will become profitable will be by increasing subscriber count, not by a sizable price increase (honestly that would probably lose them money by all the subscribers they'd lose). And the only way I see massive reduction in investment of new content is if Game Pass stops growing short of the "sustainable" size and they need to reduce costs. But Game Pass can become massively profitable even if they continue spending at the same aggressive level they're spending right now, that's why subscription services are so popular, they have the potential to make WAY more money
Klayzer
Member
I'll never understand how people can become so invested in a company, that the mere thought of discussion (positive or negative) throws them into a rage. It wasn't earth shattering news to most.