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Axios: Microsoft's Phil Spencer: Activision deal "well beyond anything I’ve ever done"

reksveks

Member
No, for Sony these are both revenues, money that Sony gets.
Sony clearly defines for physical sales, it's just their cut but for digital they don't so not sure that's correct. They are getting the full 100% of digital sales in their revenue, the costs will come out later in the accounting.

If it is 250 in profit and they got 3000 in OI, that's 8.33% right?
 
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kingfey

Banned
So that's profits instead of revenue.

Aka ~250m in profit vs 25bn in revenue. (last year their OI was closer to 3bn).

That's my understanding of their reporting.
You are correct. Last year, they had around 3b profit.

But people here keep mixing revenue to profits.
 

yurinka

Member
Sony clearly defines for physical sales, it's just their cut but for digital they don't so not sure that's correct. They are getting the full 100% of digital sales in their revenue, the costs will come out later in the accounting.

If it is 250 in profit and they got 3000 in OI, that's 8.33% right?
I don't know what you are trying to say.

For any CoD game sold physically or digitally for PS during a year and for any microtransaction, dlc, season pass etc of any CoD game including the yearly ones and Warzone during a year there is a revenue generated, what people pays, mentioned as 'net bookings' by ABK. Sony gets a cut of this revenue generated. Around 60-70% of the game copies sold are digital, and huge percent of the revenues generated by these games, specially F2P like Warzone aren't from sales but instead from dlc/iap/passes. A huge majority of the revenue of CoD is digital, and Sony gets a 30% of it. Can't remember the % for phisical games but as I remember is bigger. To make it easier we assume that Sony gets 30% of the revenue generated by the game.

This is estimated to be around $250/year in revenue that Sony gets from the CoD series. Then there are $25B in revenue generated by Sony's gaming division. So 1%.

The $3B generated by CoD in 2020 wasn't operative income, was net bookings (revenue from both digital and phisical):

"Net bookings, according to Activision, are "an operating metric that is defined as the net amount of products and services sold digitally or sold-in physically in the period, and includes license fees, merchandise, and publisher incentives, among others, and is equal to net revenues excluding the impact from deferrals."
https://www.ign.com/articles/call-of-duty-franchise-has-earned-3-billion-over-the-last-12-months

Note: the net bookings definition for other companies like Take 2 is the same.

"Operating income is an accounting figure that measures the amount of profit realized from a business's operations, after deducting operating expenses such as wages, depreciation, and cost of goods sold (COGS).

Operating incomealso called income from operationstakes a company's gross income, which is equivalent to total revenue minus COGS, and subtracts all operating expenses. A business's operating expenses are costs incurred from normal operating activities and include items such as office supplies and utilities."
https://www.investopedia.com/terms/o/operatingincome.asp

The $3B is the amount of money that players paid to buy CoD games, DLC, IAP or passes during a year. Not the profit for Activision after substracting the costs of development and marketing of the game, Sony's cut and so on.
 
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adamsapple

Gold Member
Yes, they say said that when talking about their plan for the future Bethesda games. As an example who said their strategy for the Bethesda games will be 'first or better on Xbox' was the Xbox Chief of Finantials Operations, someone who I assume knows what they will do with their money. We'll see if a year or so after release they are released on PS or not, because these, or some of these may be games to be released "first" on Xbox.

And we'll have to see if Elder Scrolls VI isn't released day one on PS.

This is the mootest of moot points. They have clarified as clearly as they can without doing an all caps tweet regarding Starfield since that's what people were asking for the most, Redfall doesn't have that kind of interest so people aren't really questioning it and TES VI is so far off that there's no point in asking about it now.

And unlike the Deathloop or Ghost Wire PR, there's no indicator like *won't be available on any other console till 1 year*.


When it was pointed out to Greenberg that by saying “launching exclusively” it could be interpreted as a timed exclusive, Greenberg replied: “We have tried to be as clear as possible, not a timed exclusive, this is simply where the game is being made.”

I thought we had already come to terms with the fact that future Bethesda/Zenimax games most likely aren't coming to PS, but I guess some are still holding hope by twisting PR words like pretzels.
 
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DaGwaphics

Gold Member
I don't know what you are trying to say.

For any CoD game sold physically or digitally for PS during a year and for any microtransaction, dlc, season pass etc of any CoD game including the yearly ones and Warzone during a year there is a revenue generated. Sony gets a cut of this revenue generated. Around 60-70% of the game copies sold are digital, and huge percent of the revenues generated by these games, specially F2P like Warzone aren't from sales but instead from dlc/iap/passes. A huge majority of the revenue of CoD is digital, and Sony gets a 30% of it. Can't remember the % for phisical games but as I remember is bigger. To make it easier we assume that Sony gets 30% of the revenue generated by the game.

This is estimated to be around $250/year in revenue that Sony gets from the CoD series. Then there are $25B in revenue generated by Sony's gaming division. So 1%.

The $3B generated by CoD in 2020 wasn't operative income, was net bookings (revenue from both digital and phisical):

"Net bookings, according to Activision, are "an operating metric that is defined as the net amount of products and services sold digitally or sold-in physically in the period, and includes license fees, merchandise, and publisher incentives, among others, and is equal to net revenues excluding the impact from deferrals."
https://www.ign.com/articles/call-of-duty-franchise-has-earned-3-billion-over-the-last-12-months

Note: the net bookings definition for other companies like Take 2 is the same.

"Operating income is an accounting figure that measures the amount of profit realized from a business's operations, after deducting operating expenses such as wages, depreciation, and cost of goods sold (COGS).

Operating incomealso called income from operationstakes a company's gross income, which is equivalent to total revenue minus COGS, and subtracts all operating expenses. A business's operating expenses are costs incurred from normal operating activities and include items such as office supplies and utilities."
https://www.investopedia.com/terms/o/operatingincome.asp

What he was getting at is that 100% of all digital sales is included in the total revenue figure. That line represents every penny they collected from everywhere. The % paid to publishers and payment processors, etc. get deducted later.
 
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Ozriel

Member
PS sales and revenue from warzone is roughly 70%. in line, with the console split.

Source?

They could put Starfield on PC, MAC, Ouya and iPad. Doesnt mean they are not locking out the biggest console base. That is a FACT. I cannot believe we are arguing about semantics.


You could Go to xbox.com/play to play Starfield on your PlayStation 5. Or you could, if Sony put a web browser in their console.
Shouldn’t you be petitioning Sony to include such basic functionality that’s been in every Sony home and handheld console since the PS3?
 

Ozriel

Member
Starfield is shaping up nicely? What is starfield? Would love to see some gameplay and a deep dive into its specifics.

They’ve provided more than enough info for you not to be asking “what is Starfield” on a video games enthusiast site.

See, this is why a reliance on console warring and snark tends to prevent one from learning anything. Concept art, blog posts, CGI trailers etc can do a lot of world-building.

You’ll get your gameplay deep dive in due course.
 

Kagey K

Member
If Sony is happy with thier revenue and software, I say that's good enough.

Let them continue doing what they are doing. Jim Ryan got it right, just keep holding the course.

What could go wrong?

I like this short sighted attitude. It's all about the here and now. Fuck the future.

It should be admired.
 
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recursive

Member
They’ve provided more than enough info for you not to be asking “what is Starfield” on a video games enthusiast site.

See, this is why a reliance on console warring and snark tends to prevent one from learning anything. Concept art, blog posts, CGI trailers etc can do a lot of world-building.

You’ll get your gameplay deep dive in due course.
What a nonsense post. We don't play concept art and CGI trailers. Put your shield down warrior. I mentioned nothing about consoles.
 

ZywyPL

Gold Member
No, Xbox never dominated any generation. PS2 destroyed the original Xbox and the other ones on their generation.

X360. In the long run many people only see those 80 vs 85M consoles sold, but those 5M extra on Sony's part are far from definition of "dominating". But it was X360 that lead the entire generation with innovation, it was what shaped today's market, while Sony has been just catching up with PSN, Trophies, PS+, PS Move etc. while still never been able to catch up with stuff like cross-game party chat people wanted so much during that gen.

And while RROD did cost MS a bit over 1B$, Sony lost around 3-3,5B in total due to early PS3 models manufacturing costs. Then there's paid online on X360 part vs free PSN, Kinect was also much more successful than PS Move. I mean, Sony's results during 2006-2013 period speak for themselves:



And many people call it "winning"...
 

yurinka

Member
X360. In the long run many people only see those 80 vs 85M consoles sold, but those 5M extra on Sony's part are far from definition of "dominating". But it was X360 that lead the entire generation with innovation, it was what shaped today's market, while Sony has been just catching up with PSN, Trophies, PS+, PS Move etc. while still never been able to catch up with stuff like cross-game party chat people wanted so much during that gen.

And while RROD did cost MS a bit over 1B$, Sony lost around 3-3,5B in total due to early PS3 models manufacturing costs. Then there's paid online on X360 part vs free PSN, Kinect was also much more successful than PS Move. I mean, Sony's results during 2006-2013 period speak for themselves:



And many people call it "winning"...
Yes, as I said Sony had this insane loses due to PS3 pricing being too expensive and on top of that even being way more expensive (plus had insane R&D costs as can be seen). And yes, MS spent $1B to replace RRODed consoles but other than that the 360 was also generating loses (but not that big as PS3) with a similar curve but a year or two before than PS3 because 360 was released 1 or 2 years before.

And well, if you get the same graph for MS you'll also notice that MS did lose even more money with the OG Xbox than with 360. The MS gaming division had several billions of operating loses since it started to the point stakeholders asked to shut down the division. MS later added non-gaming devices in the same division to make the operating profit/loss of their division look better and at some point they did stop sharing it and, if they did it I assume it was because they weren't proud of it. Right now this operating profit/loss for MS should be fun having these 80B on acquisitions plus many AAA games being given away day one and the costs of all these teams.

Regarding what we were talking about yes, PS outsold MS selling consoles in all the generations, which is what is commonly known of 'winning a generation'. The difference in the other generations was pretty huge but in the PS3 one was very small. Notice that this is different to you personally liking more a console of the other for each generation.

And regarding with some things like "Sony catching up with Move" it's the same than with xCloud/PS Now, Play Anywhere/Crossbuy and so on. Sony did it first. Kinect was the reaction to the previously released Sony Eyetoy. In the same way the xCloud and Gamepass are the reaction to the previously released Sony's PS Now, and that Play Anywhere was the MS reaction to the previous Sony's Crossbuy. Move was an accesory for Eyetoy that Eyetoy had in development since its first early prototypes publicly shown back in 2000 (there's some video around internet showing it, it had a way bigger colored ball because the prototype of the PS2 camera had a lower resolution than the PS3 one).

Regarding trophies, PSN features or PS+ it's true that MS started them before (PS2 had a modem and online multiplayer games but was only optional and wasn't broadly used) or were better until the end of the PS3 gen or so, when after a period catching up, Sony reached a similar status, starting the next gen as somewhat equivalent.
 
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Leyasu

Gold Member
I don't know what you are trying to say.

For any CoD game sold physically or digitally for PS during a year and for any microtransaction, dlc, season pass etc of any CoD game including the yearly ones and Warzone during a year there is a revenue generated, what people pays, mentioned as 'net bookings' by ABK. Sony gets a cut of this revenue generated. Around 60-70% of the game copies sold are digital, and huge percent of the revenues generated by these games, specially F2P like Warzone aren't from sales but instead from dlc/iap/passes. A huge majority of the revenue of CoD is digital, and Sony gets a 30% of it. Can't remember the % for phisical games but as I remember is bigger. To make it easier we assume that Sony gets 30% of the revenue generated by the game.

This is estimated to be around $250/year in revenue that Sony gets from the CoD series. Then there are $25B in revenue generated by Sony's gaming division. So 1%.

The $3B generated by CoD in 2020 wasn't operative income, was net bookings (revenue from both digital and phisical):

"Net bookings, according to Activision, are "an operating metric that is defined as the net amount of products and services sold digitally or sold-in physically in the period, and includes license fees, merchandise, and publisher incentives, among others, and is equal to net revenues excluding the impact from deferrals."
https://www.ign.com/articles/call-of-duty-franchise-has-earned-3-billion-over-the-last-12-months

Note: the net bookings definition for other companies like Take 2 is the same.

"Operating income is an accounting figure that measures the amount of profit realized from a business's operations, after deducting operating expenses such as wages, depreciation, and cost of goods sold (COGS).

Operating incomealso called income from operationstakes a company's gross income, which is equivalent to total revenue minus COGS, and subtracts all operating expenses. A business's operating expenses are costs incurred from normal operating activities and include items such as office supplies and utilities."
https://www.investopedia.com/terms/o/operatingincome.asp

The $3B is the amount of money that players paid to buy CoD games, DLC, IAP or passes during a year. Not the profit for Activision after substracting the costs of development and marketing of the game, Sony's cut and so on.
So in the grand scheme of things, when Microsoft pulls COD from PlayStation, the amount of money left on the table is not that much.
 

dcmk7

Member
If Sony is happy with thier revenue and software, I say that's good enough.

Let them continue doing what they are doing. Jim Ryan got it right, just keep holding the course.

What could go wrong?

I like this short sighted attitude. It's all about the here and now. Fuck the future.

It should be admired.
Judge Judy Reaction GIF
 

yurinka

Member
So in the grand scheme of things, when Microsoft pulls COD from PlayStation, the amount of money left on the table is not that much.
It would still be a lot of money (around $250-300M/year in revenue lost for Sony and around $850-$1B/year in revenue lost for MS) but yes, what Sony would lose compared to the amount of yearly revenue that Sony makes ($25B/year) it's only a tiny portion.

Specially considering Sony is growing in basically all their areas, their revenue will also grow so that growth would compensate that small lose.

Activision Blizzard revenue in PC and Xbox will dramattically drop once they put all their games on Gamepass specially the new ones day one: instead of paying them at full price players most players will only get it on GP for a much cheaper price split between many games. We'll have to see if for MS is also ok to lose on top of it all that ~1B/year of PS revenue that mainly comes from CoD game sales/dlc/iap/passes in a move that basically wouldn't negatively affect their direct competition, wouldn't help them to highly increase their market share or revenue. In fact they would gain a small amount of market share but would be losing almost $1B/year and each new CoD wouldn't be protitable anymore because they would have missed all PS revenue + most Xbox and PC game sales and would have to live mostly with Xbox+PC dlc/iap/passes (+separated from them CoD Mobile, which itself generates $1B+/year).

Spencer said they want to keep CoD on PS and ABK and MS said to their investors and regulators that they want to follow the Minecraft example with the ABK communities/IPs, which is to release all post acquisition console games, dlc and updates of that IP in the consoles where they already were before the acquisition, even if that includes consoles not owned by MS.
 
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Ozriel

Member
What a nonsense post. We don't play concept art and CGI trailers. Put your shield down warrior. I mentioned nothing about consoles.


You asked “what is Starfield”. That’s covered to some extent by the media already released. How’ve you now moved goalposts to “ how is the gameplay?” 😂
 

Ozriel

Member
It would still be a lot of money (around $250-300M/year in revenue lost for Sony and around $850-$1B/year in revenue lost for MS) but yes, compared to the amount of yearly revenue that Sony makes ($25B/year) it's only a tiny portion.

Specially considering Sony is growing in basically all their areas, their revenue will also grow so that growth would compensate that small lose.

Activision Blizzard revenue in PC and Xbox will dramattically drop once they put all their games on Gamepass specially the new ones day one: instead of paying them at full price players most players will only get it on GP for a much cheaper price split between many games. We'll have to see if for MS is also ok to lose on top of it all that ~1B/year of PS revenue that mainly comes from CoD game sales/dlc/iap/passes.


Your analysis is flawed, since A substantial part of that revenue you cite comes from Warzone. Which - along with its sequel - will still remain on PlayStation.
The discussion really is around the usual annual releases or stuff like Overwatch 2.
You’re also not factoring in the fact that keeping COD exclusive, or adding it to Gamepass would bring in a decent chunk of customers. If sales on console drop, to be replaced by an additional 5 million people paying MS $10 a month, that could easily be seen as a very decent trade-off.

We’ve seen with Bethesda that Microsoft is more interested in Gamepass subscriber growth than ‘leaving money on the table’.


Spencer said they want to keep CoD on PS and ABK and MS said to their investors and regulators that they want to follow the Minecraft example, which is to release all post acquisition console games, dlc and updates of that IP in the consoles where it already was before the acquisition even if not owned by MS.

When was that ever said that they want to keep all previously multiplatform IP as lifetime multiplatform titles? You imagine Elder Scrolls 6 will not be exclusive ?
 
Sony gaming business continues being profitable and MS gaming business will be way more unprofitable
There is no reason to think that MS gaming business unprofitable. (of course if you start including expenses like 70b acquisition it might look as such), but by itself - it is not (even with Game Pass)

Yes, they say said that when talking about their plan for the future Bethesda games. As an example who said their strategy for the Bethesda games will be 'first or better on Xbox' was the Xbox Chief of Finantials Operations, someone who I assume knows what they will do with their money. We'll see if a year or so after release they are released on PS or not, because these, or some of these may be games to be released "first" on Xbox.

And we'll have to see if Elder Scrolls VI isn't released day one on PS.
Yeah, that's the lost cause. One of the remaining believers that Bethesda games are coming to Playstation:messenger_tears_of_joy:

What a nonsense post. We don't play concept art and CGI trailers. Put your shield down warrior. I mentioned nothing about consoles.
Except it wasn't CG and they clearly stated in the video in the very beginning - alpha in-game footage. (in comparison to Gran Turismo where people are running around with replays trying to sell them as true gameplay graphics) :messenger_tears_of_joy:
 
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yurinka

Member
Your analysis is flawed, since A substantial part of that revenue you cite comes from Warzone. Which - along with its sequel - will still remain on PlayStation.
The discussion really is around the usual annual releases or stuff like Overwatch 2.
You’re also not factoring in the fact that keeping COD exclusive, or adding it to Gamepass would bring in a decent chunk of customers. If sales on console drop, to be replaced by an additional 5 million people paying MS $10 a month, that could easily be seen as a very decent trade-off.
This $10/month, which the reality is that it will be smaller due to $1 for new customers, $1 to upgrade from Gold, free months of PC GP, cheaper prices in cd key stores, cheaper prices in other countries, refunds and chargebacks, taxes and online transaction cots etc. won't be revenue for that yearly CoD. Will be revenue split between tons of games and the GP service itself. That yearly CoD will receive way less revenue per user from GP than these $10. And even if would be $10 or even $15, these are way less than a full price sold unit would have generated at PC, Xbox or PS.

Plus on top of that, not everyone who played CoD on PS will join GP/Xbox/PC. Many (or most) of them pretty likely will remain on PS playing other games, or if in addition to owning a PS they also have an Xbox or gaming PC, pretty likely many of them already have GP. So they may earn a few million subs for GP but they would be losing way more customers they had on PS.

And regarding microtransactions/dlc/passes on PC and Xbox for the console CoD games, which now would be their main revenue source, will generate less revenue per user than before because if the average player buys a couple of games per year, with Gamepass will be distracted with the flood of new games so will be less engaged with CoD/will spend less time with CoD/so will spend less on DLC/mtx/passes.

So if they make the future yearly CoD Xbox console exclusive and put them day one on GP:
-They'll lose all their PS revenue, which is half of what their generate
-They'll lose the game sale revenue of a huge portion of the Xbox and PC units from people who will play it on GP instead of buying it
-The revenue it would generate from its proportional part of GP subs will be way smaller than the one it generated with sales
-The average revenue per user for mtx/iap/passes will be smaller
-Before each one of these games provided a great profit, now would generate a great loss

And yes, I also think Warzone and Warzone 2 will remain in PS. In addition to all the future yearly CoD if Microsoft, ABK and Spencer do what they said they will do and if they want to keep getting profits from these games.

We’ve seen with Bethesda that Microsoft is more interested in Gamepass subscriber growth than ‘leaving money on the table’.
All Zenimax games, dlcs and updates released since the acquisition have been released on PS (plus the upcoming Ghostwire Tokyo).

In theory Starfield, Redfall and ES6 will be console exclusive, but the Xbox CFO said that their strategy for Bethesda won't be to make them exclusive but instead 'first or better' on Xbox. So maybe a year or so after release they say that decided to change their mind and to port them to PS5. It wouldn't be the first or second time Sony or MS does this.

When was that ever said that they want to keep all previously multiplatform IP as lifetime multiplatform titles? You imagine Elder Scrolls 6 will not be exclusive ?
They said it multiple times, that their plan with Mojang/Zenimax/ABK acquisiton wasn't to remove franchises/games/IPs/communities from other platforms, that they were going to keep supporting their communities/franchises where they already are, that their strategy for Bethesda wasn't to make them exclusive but instead 'first or better' on Xbox (so multiplatform or timed exclusives), that with ABK they were going to keep doing it and mentioned Minecraft as example, Phil saying that they wanted to keep CoD on PS, etc.

I imagine that most future games from big IPs from Mojang, Bethesda and ABK will continue releasing on PS as MS said, even if a few of them -particularly the Bethesda ones that the Xbox CFO was mentioning- will be "first or better" on Xbox. Meaning that some will be timed exclusives and a couple of these timed exclusives could be Starfield and Elder Scrolls 6.

I think 'minor' IPs from 'minor' studios like Ninja Theory, Obsidian, Arkane or Double Fine could be full console exclusive as older MS IPs, like Halo or Gears.
 
All Zenimax games, dlcs and updates released since the acquisition have been released on PS (plus the upcoming Ghostwire Tokyo).
For legacy and contractual obligations games - yes. But just I like mentioned before - you are a lost cause here. Guess when you see during next years when those games are not coming to Playstation you will be able to understand.
 
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yurinka

Member
There is no reason to think that MS gaming business unprofitable. (of course if you start including expenses like 70b acquisition it might look as such), but by itself - it is not (even with Game Pass)
I obviously include the over $80B spent on acquisitions because that money doesn't magically appeared out the air.

But even without counting it, AAA games are so fucking expensive and to almost give them away for a big majority of their copies means that they are highly decreasing the revenue related to the acquisition of the game. From $60 to a handful dollars per month split between hundreds of games on GP.

And moving from a place where on average a player bought a couple of games per year to a place where the player has access to hundreds of games and gets several cool ones every month makes that player to spend less time on each game, which means to spend less DLC/IAP/passes there per user.

And even when the game isn't their, MS pays this 3rd party the good chunk of money to compensate the lost sales related to include the game day one on GP.

And obviosly there are huge costs from thousands of employees, server costs, marketing and so on. For sure, I think their gaming division is unprofitable and that is the reason of why they don't show its operative income/profit/loses.

For legacy and contractual obligations games - yes.
They never said that their plans to keep supporting games on other platforms were only limited to the ones with crontractual obligations. One thing was to keep supporting them and another one was to honor their obligations.

By honoring contractual obligations they mean the signed timed console exclusives (like Deathloop or Ghostwire Tokyo) will be as signed or marketing deals (potentially of handful pending games maybe already published, maybe to be published) they have signed will be honored, marketing deals with -at least in the case of the REVillage one- things like mandating that the game not only had to be released full featured and day one PS but also that it couldn't be on a rival game subscription for 15 or 16 months.

Do you really think games like Minecraft Story Mode, Minecraft Dungeons or Quake Remastered were released due to contractual obligations? Why would they lie to their investors and regulators in legal documents? Why would the Xbox CFO lie saying that they don't plan the Bethesda games exclusive but instead that their strategy is 'first or better' on Xbox? And which are the timed exclusive Bethesda ones?
 
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But even without counting it, AAA games are so fucking expensive and to almost give them away for a big majority of their copies means that they are highly decreasing the revenue related to the acquisition of the game. From $60 to a handful dollars per month split between hundreds of games on GP.
It is debatable. The economics of Game Pass includes recurring revenue, includes revenue from various purchases (even when people are subscribed to Game Pass they still buy games, DLCs and MTX). So broad statements like "it is not profitable" does not work. We know that Phil clearly stated that they are not losing money on Game Pass (or somethng similary). So theya re not losing money. That's all we need to know.

And obviosly there are huge costs from thousands of employees, server costs, marketing and so on. For sure, I think their gaming division is unprofitable and that is the reason of why they don't show its operative income/profit/loses.
Costs for employees and servers are irrelevant as all platform holders have them (though for MS it is cheaper due to owming Azure).
 
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kingfey

Banned
This $10/month, which the reality is that it will be smaller due to $1 for new customers, $1 to upgrade from Gold, free months of PC GP, cheaper prices in cd key stores, cheaper prices in other countries, refunds and chargebacks, taxes and online transaction cots etc. won't be revenue for that yearly CoD. Will be revenue split between tons of games and the GP service itself. That yearly CoD will receive way less revenue per user from GP than these $10. And even if would be $10 or even $15, these are way less than a full price sold unit would have generated at PC, Xbox or PS.
When will you stop with this fake information? Honestly, at this point, you are trying to reach something with fake level of information.
What you described also applies to every subscription service around the world. Every subscription service does 1 month free. That doesnt mean they lose money. It means they are gaining new subs, who will stay.
Another key point you are still ignoring is the ability to buy games. Unlike movie streaming content, you can actually buy the games that are on gamepass. Nothing stop people from doing that. As long as that option exist, they dont lose money, instead they gain more money.


You have to understand this key point. MS didnt spend that much money to be Cozy friend with playstation. They are very serious with their subscription service. If they put their games on that device, they cant increase gamepass numbers, because people wont subscribe to them. They do not care about selling their games at 70$ on playstation. They care about bringing those players in to their ecosystem, or gamepass pc at least. They want full ride on this bus.
Every purchase they made, would geared toward increasing gamepass numbers. Every upcoming games from bethesda and activision would be exclusive, in order to increase those numbers. Because at the end game, they would make insane amount of money from those monthly recurring money.
 
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I obviously include the over $80B spent on acquisitions because that money doesn't magically appeared out the air.
The money also doesn't simply disappear into thin air. That's why it's not smart to include it.
But even without counting it, AAA games are so fucking expensive and to almost give them away for a big majority of their copies means that they are highly decreasing the revenue related to the acquisition of the game. From $60 to a handful dollars per month split between hundreds of games on GP.
Depends on the game. FH5 for example outsold FH4 despite Gamepass.
And moving from a place where on average a player bought a couple of games per year to a place where the player has access to hundreds of games and gets several cool ones every month makes that player to spend less time on each game, which means to spend less DLC/IAP/passes there per user.
Sony is nice enough to provide us stats regarding this. I think last year it was something like an average of 150 dollars spent per year per PSN user. Gamepass isn't that far off and DLC and the sporadic game purchase will take care of the rest. Very smart people at Microsoft have crunched these numbers, I'm pretty sure they've taken everything into account.
And obviosly there are huge costs from thousands of employees, server costs, marketing and so on. For sure, I think their gaming division is unprofitable and that is the reason of why they don't show its operative income/profit/loses.
Do you also think that Office, Windows and Azure are not profitable? Because Microsoft doesn't show operative income for those either.
 

yurinka

Member
Depends on the game. FH5 for example outsold FH4 despite Gamepass.
I highly doubt it. Source?

Gamepass isn't that far off
Source?

Do you also think that Office, Windows and Azure are not profitable? Because Microsoft doesn't show operative income for those either.
I don't know if they are profitable or not. But I'm 100% sure that their gaming division isn't. And if the yearly CoD ever stops being released on PS and are put day one on GP I'm also pretty sure they will generate loses instead of profit.
 

kingfey

Banned
I don't know if they are profitable or not. But I'm 100% sure that their gaming division isn't. And if the yearly CoD ever stops being released on PS and are put day one on GP I'm also pretty sure they will generate loses instead of profit.
Give me the source for that.
 
I highly doubt it. Source?
https://wccftech.com/forza-horizon-5-set-a-new-forza-franchise-launch-month-sales-record-says-npd/

Judging by monthly charts, it also outperformed FH4 in the UK.
You need a source for Gamepass not being far off 150 dollars a year? Pick an average monthly cost and multiply by 12.
I don't know if they are profitable or not. But I'm 100% sure that their gaming division isn't. And if the yearly CoD ever stops being released on PS and are put day one on GP I'm also pretty sure they will generate loses instead of profit.
How can you be 100% sure when you literally don't know? Also the CEO of Microsoft gaming said that Gamepass is "already sustainable", so any losses could only come from hardware.
 

DaGwaphics

Gold Member
It would still be a lot of money (around $250-300M/year in revenue lost for Sony and around $850-$1B/year in revenue lost for MS) but yes, what Sony would lose compared to the amount of yearly revenue that Sony makes ($25B/year) it's only a tiny portion.

You are confusing revenue and profit numbers again. There could not be this big of a gap between the revenue Sony would lose and what MS would lose in your scenario (because of the high percentage of digital purchases now). If you are only counting the 30% that Sony keeps, than that is net profit where $250m is 8% of their entire business.

You can't compare things on a line that much anyway. Let's say CoD did go exclusive, any customer that was pulled away from Sony would be worth more to MS than just the price of CoD (and cause more losses than just that sale at Sony). CoD is an online game, that's another $5/mo for MS and maybe a $5/mo loss for Sony (since you do have a subset of players that may only play a few games per year).

Plus, if I'm looking at their last quarter correctly, OI at Activision is higher than revenue from consoles. Thus, even if you looked at console revenue as 100% profit and deducted every dollar of it (even the xbox $$) from OI, they are still turning a profit, making it impossible for this deal to cause losses at MS gaming. It would be a net profit regardless of what they do with CoD. Power of that CandyCrush money. :messenger_grinning_smiling:
 
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yurinka

Member
How can you be 100% sure when you literally don't know?
Because by doing some basic math and some estimates even the most optimistic ones point to loses.

Also the CEO of Microsoft gaming said that Gamepass is "already sustainable", so any losses could only come from hardware.
Sustainable doesn't imply to be profitable. Sustainable may mean that it can be unprofitable forever but that they are rich enough to be able to handle it and to don't give a shit about profitability at least for mid term.
 

reksveks

Member
Plus, if I'm looking at their last quarter correctly, OI at Activision is higher than revenue from consoles. Thus, even if you looked at console revenue as 100% profit and deducted every dollar of it (even the xbox $$) from OI, they are still turning a profit, making it impossible for this deal to cause losses at MS gaming. It would be a net profit regardless of what they do with CoD. Power of that CandyCrush money.
Yeah, I was going to say this as well. King and Blizzard makes enough profit to cover Activision it seems.


Cost of Activision$ 1,811
Profit of King/Blizzard$ 1,837
 
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oldergamer

Member
Because by doing some basic math and some estimates even the most optimistic ones point to loses.


Sustainable doesn't imply to be profitable. Sustainable may mean that it can be unprofitable forever but that they are rich enough to be able to handle it and to don't give a shit about profitability at least for mid term.
Thats stupid dude. Gamepass is self sustainable. Its not losing money. Period. Stop trying to spin it into something its not.
 

DavJay

Member
Phil is such a smart and persuasive man. Lucky too. Activision stock was at an all time low so MS got a great deal because it. He some how got the MS CEO greenlite the for the purchase. Not long ago Xbox was almost shutdown. Never seen a greater turnaround in gaming.
 

adamsapple

Gold Member
They never said that their plans to keep supporting games on other platforms were only limited to the ones with crontractual obligations. One thing was to keep supporting them and another one was to honor their obligations.

By honoring contractual obligations they mean the signed timed console exclusives (like Deathloop or Ghostwire Tokyo) will be as signed or marketing deals (potentially of handful pending games maybe already published, maybe to be published) they have signed will be honored, marketing deals with -at least in the case of the REVillage one- things like mandating that the game not only had to be released full featured and day one PS but also that it couldn't be on a rival game subscription for 15 or 16 months.

Do you really think games like Minecraft Story Mode, Minecraft Dungeons or Quake Remastered were released due to contractual obligations? Why would they lie to their investors and regulators in legal documents? Why would the Xbox CFO lie saying that they don't plan the Bethesda games exclusive but instead that their strategy is 'first or better' on Xbox? And which are the timed exclusive Bethesda ones?

I already addressed this point on this very page regarding Starfield, it is not coming to PS5. Let it go.

Where did the Xbox CFO said they plan to keep their future games multi platform on consoles ? please cite the source accurately.
 
Because by doing some basic math and some estimates even the most optimistic ones point to loses.
I'd be interested in that math. Have a shot.
Sustainable may mean that it can be unprofitable forever but that they are rich enough to be able to handle it and to don't give a shit about profitability at least for mid term.
No, that's the opposite of sustainable. When he says sustainable, he means sustainable.
 

yurinka

Member
You are confusing revenue and profit numbers again.
No
There could not be this big of a gap between the revenue Sony would lose and what MS would lose in your scenario (because of the high percentage of digital purchases now). If you are only counting the 30% that Sony keeps, than that is net profit where $250m is 8% of their entire business.
For Xbox, PS, Nintendo, Apple App Store, Google Play and many PC stores it's a standard that from the revenue generated from a game (via game units sold, dlc, mtx, etc) is split on 70% for the publisher and 30% for the platform holder. So for each copy that isn't sold on PS, MS will lose 70% of that revenue and Sony 30% of that revenue.

$250M of revenue is a 1% of $25B revenue, basic maths.

Having a revenue of $25B, their profit depends on the costs they had and the investments they made that year. As an example, if they want to rise profits por a particular year can reduce some investments (like to reduce a marketing campaign, or to don't geenlight a particular game and wait for the next year, to don't invest in certain stocks or acquisition and keep it for the next year etc)

Let's say CoD did go exclusive, any customer that was pulled away from Sony would be worth more to MS than just the price of CoD (and cause more losses than just that sale at Sony). CoD is an online game, that's another $5/mo for MS and maybe a $5/mo loss for Sony (since you do have a subset of players that may only play a few games per year).
Any CoD customer moved from PS to GP means that in PS he paid more to get the game, was more engaged on this game instead of distracted testing other ones so paid more for dlc/iap/passes, even if in PS MS got a 70% of them instead of 100%

For buying the game on PS let's say the player paid an average of $50/year(depending on the edition and if discounted or not) and MS gets a 70% of that.

For renting the game on GP let's say the player paid on average (which is blatanly false due to promotions, cd key stores, currencies and so on) let's say $10*12=$120/year. But since this subscription isn't only for CoD but it's split between hundreds of games available on GP and the service itself with server costs and so on, being very generous let's say a 1% of that the $120/year GP revenue is for each CoD game. So the proportional part of the GP yearly revenue paid for a single user for a specific yearly CoD game would be barely above $1/year being optimistic. MS gets 100% of that.

Regarding mtx/dlc/passes add-ons: Sony gets 30% of these CoD games (yearly ones only, or Warzone too) add-ons revenue generated on PS, which means that MS would need to 'steal' at least 70% of the CoD PS userbase to don't lose money with their overall add-ons revenue.

And this is assuming that the engagement/time/average revenue per user spent in add-ons is the same on PS where on average the player buys a couple of games per year than in GP where the the player is constantly bombarded with new games, so his time/engagament/addons revenue gets split into more games, so the average addons revenue per player must be smaller in GP than in PS. Meaning that MS would need to steal way more than this 70% of PS CoD players to don't lose total addons revenue to compensate it. But 70% leaving was already very unrealistic so won't happen.

TLDR: A PS CoD player generates on average significanly more revenue for MS both with game sales (vs GP subs) and in add-ons (in PS vs in GP) to a point that each player more than to bring profit brings loses. Even to 'steal' the full CoD PS userbase, which obviously won't happen, wouldn't compensate it, it would mean more loses. To remove CoD games from PS and to put them day one on GP doesn't make sense financially, would mean big loses for each game. It would be smarter to release the game multi and to wait until it sold most of its copies before putting it on GP.

Plus, if I'm looking at their last quarter correctly, OI at Activision is higher than revenue from consoles. Thus even if you looked at console revenue as 100% profit and deducted every dollar of it (even the xbox $$) from OI, they are still turning a profit, making it impossible for this deal to cause further losses at MS gaming. It has to be a net profit gain regardless of what they do with it.
If a game costs you let's say $200M and you sell 20-30M copies of a game and on top of that have a good chunk of addons revenue, generated by players who buy in average of a couple of game, so is pretty focused on them, it gives you way more than enough revenue, let's say way over $1B, so it's very profitable. This is the current model they have outside GP.

If instead you don't release the game for your biggest selling platform and in the other ones it's included in a subscription where the proporional part of the revenue spent by the player for this game is around $1 (for a year), you will probably lose around 2/3 of the game sales, which will be replaced by too small revenue of like $20M. You'll also lose many users from that lost platform, so there will be less players paying add-ons and the ones using that subscriptions will be less engaged with these game because will be distracted discovering other ones so on top of that the average addon revenue per user will be smaller. By doing some basic maths estimations this method provides loses unlike the traditional one mentioned in the paragraph above.
 

yurinka

Member
Where did the Xbox CFO said they plan to keep their future games multi platform on consoles ? please cite the source accurately.
Googling somthing like "xbox cfo bethesda first or better" you find many related news, but here is the original transcript:

"Bethesda was a little bit of a different lens to what we've done in the past, whether it's Ninja Theory or Obsidian or inXile, some of the smaller studios that had great IP. Bethesda gave us a great sort of launch with -- I'll say, launch into a big, let's call it, group of content, a big catalog of content that we can use for Game Pass.

And we said this as part of the announcement. When we think about Bethesda, it's going to be the continuing to allow -- I'll say allow, but continue to sell their games on the platforms that they exist today, and we'll determine what that looks over time and will change over time. I'm not making any announcements about exclusivity or something like that. But that model will change."

...

"And another question we're getting from the line here is with the acquisition of Bethesda, is the plan to make certain Bethesda franchises, like Fallout and DOOM, exclusive to Xbox? Or will you still support cross-platform play?

Tim Stuart

Yes. The goal here is, we're -- I'll say it from a cross-platform perspective. Microsoft is a platform. We're one of the first to really support Minecraft, Roadblock, Fortnite across platforms. So we highly encourage cross-platform play, simply from this landscape of, if it's good for the gaming ecosystem, it's good for us, classic rising tide lifts all boats.

What we'll do in the long run is we don't have intentions of just pulling all of Bethesda content out of Sony or Nintendo or otherwise. But what we want is we want that content, in the long run, to be either first or better or best or pick your differentiated experience, on our platforms. We will want Bethesda content to show up the best as -- on our platforms.

Yes. That's not a point about being exclusive. That's not a point about we're being -- adjusting timing or content or road map. But if you think about something like Game Pass, if it shows up best in Game Pass, that's what we want to see, and we want to drive our Game Pass subscriber base through that Bethesda pipeline.

So again, I'm not announcing pulling content from platforms one way or the other. But I suspect you'll continue to see us shift towards a first or better or best approach on our platforms."
https://seekingalpha.com/article/43...interactive-entertainment-virtual?part=single



Notice that he's asked about franchises, not specific games. Also notice he mentions "in the long run" meaning long term plan, in the future, he isn't talking only about already published games. And "first" meaning timed exclusives (not released until now, so future games) and "better" meaning multiplatform since day one. So the only type of exclusives he considers are timed exclusives. This guy is the one in charge of the financials of Xbox / MS gaming division.
 

DaGwaphics

Gold Member
No

For Xbox, PS, Nintendo, Apple App Store, Google Play and many PC stores it's a standard that from the revenue generated from a game (via game units sold, dlc, mtx, etc) is split on 70% for the publisher and 30% for the platform holder. So for each copy that isn't sold on PS, MS will lose 70% of that revenue and Sony 30% of that revenue.

$250M of revenue is a 1% of $25B revenue, basic maths.

Having a revenue of $25B, their profit depends on the costs they had and the investments they made that year. As an example, if they want to rise profits por a particular year can reduce some investments (like to reduce a marketing campaign, or to don't geenlight a particular game and wait for the next year, to don't invest in certain stocks or acquisition and keep it for the next year etc)

You're not getting the fact that when Sony (or MS, or Nintendo) sell a third-party game on their store, the entire purchase price is added to their revenue total ($60/$70 in the case of day one CoD), with the 70% just being deducted as an expense later on. You are taking what you estimate as Sony's net profit from the sale and comparing that against their total revenue, rather than comparing that against their profits. That's where the math falls apart in your example.

Sure, MS might lose some CoD sales, almost certainly would if it was Xbox/PC exclusive. But any way you slice it, Activision is profitable even if they axed console sales all together. Basically MS can do whatever they want on the console side without losses. The numbers are out there, that's just the way it is.
 
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adamsapple

Gold Member
Googling somthing like "xbox cfo bethesda first or better" you find many related news, but here is the original transcript:

"Bethesda was a little bit of a different lens to what we've done in the past, whether it's Ninja Theory or Obsidian or inXile, some of the smaller studios that had great IP. Bethesda gave us a great sort of launch with -- I'll say, launch into a big, let's call it, group of content, a big catalog of content that we can use for Game Pass.

And we said this as part of the announcement. When we think about Bethesda, it's going to be the continuing to allow -- I'll say allow, but continue to sell their games on the platforms that they exist today, and we'll determine what that looks over time and will change over time. I'm not making any announcements about exclusivity or something like that. But that model will change."

...

"And another question we're getting from the line here is with the acquisition of Bethesda, is the plan to make certain Bethesda franchises, like Fallout and DOOM, exclusive to Xbox? Or will you still support cross-platform play?

Tim Stuart

Yes. The goal here is, we're -- I'll say it from a cross-platform perspective. Microsoft is a platform. We're one of the first to really support Minecraft, Roadblock, Fortnite across platforms. So we highly encourage cross-platform play, simply from this landscape of, if it's good for the gaming ecosystem, it's good for us, classic rising tide lifts all boats.

What we'll do in the long run is we don't have intentions of just pulling all of Bethesda content out of Sony or Nintendo or otherwise. But what we want is we want that content, in the long run, to be either first or better or best or pick your differentiated experience, on our platforms. We will want Bethesda content to show up the best as -- on our platforms.

Yes. That's not a point about being exclusive. That's not a point about we're being -- adjusting timing or content or road map. But if you think about something like Game Pass, if it shows up best in Game Pass, that's what we want to see, and we want to drive our Game Pass subscriber base through that Bethesda pipeline.

So again, I'm not announcing pulling content from platforms one way or the other. But I suspect you'll continue to see us shift towards a first or better or best approach on our platforms."
https://seekingalpha.com/article/43...interactive-entertainment-virtual?part=single



Notice that he's asked about franchises, not specific games. Also notice he mentions "in the long run" meaning long term plan, in the future, he isn't talking only about already published games. And "first" meaning timed exclusives (not released until now, so future games) and "better" meaning multiplatform since day one. So the only type of exclusives he considers are timed exclusives. This guy is the one in charge of the financials of Xbox / MS gaming division.



The only relevant point from all that is that they won't take off games from existing platforms and met their existing contractual obligations i-e Deathloop and Ghostwire.

The articles you've quoting are from 2020, shortly after the deal was announced and before it closed. Since it closed, we have seen a pretty obvious shift in tone from higher ups like Phil Spencer and Aaron Greenberg.

Elder Scrolls VI - November 2021 - Phil Spencer, head of Xbox games.


As PCGamer reports, during an interview with GQ, Phil Spencer, Head of Xbox, confirmed that Elder Scrolls VI will be an Xbox console exclusive. We already knew that Starfield was only going to be released on Xbox and PC, but Spencer says it's going to be the same for the next Elder Scrolls game.

In the interview he explained:

"It’s not about punishing any other platform, like I fundamentally believe all of the platforms can continue to grow. But in order to be on Xbox, I want us to be able to bring the full complete package of what we have. And that would be true when I think about Elder Scrolls VI. That would be true when I think about any of our franchises."


Redfall:


Official website and any other source you can find will say launching exclusively on Xbox and PC with Game Pass Day 1.

And no asterisk with *won't be available on other platforms for so and so length* unlike Deathloop and Ghostwire.



Starfield:

Aaron Greenberg, GM of Xbox Marketing:


We have tried to be as clear as possible, not a timed exclusive, this is simply where the game is being made.


Any other upcoming games from the studios, we don't know anything about on any official capacity so there's no point in commenting about a speculative next Doom or Wolfenstein right now.

--

TL;DR I don't see what the fascination of sticking religiously to a non-commital statement an Xbox CFO made before the Bethesda deal was closed. Since the deal has closed, the conversation has shifted entirely. Much as it will, I suspect, when Sony's deal with Bungie closes regarding any new games.
 
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X360. In the long run many people only see those 80 vs 85M consoles sold, but those 5M extra on Sony's part are far from definition of "dominating". But it was X360 that lead the entire generation with innovation, it was what shaped today's market, while Sony has been just catching up with PSN, Trophies, PS+, PS Move etc. while still never been able to catch up with stuff like cross-game party chat people wanted so much during that gen.

And while RROD did cost MS a bit over 1B$, Sony lost around 3-3,5B in total due to early PS3 models manufacturing costs. Then there's paid online on X360 part vs free PSN, Kinect was also much more successful than PS Move. I mean, Sony's results during 2006-2013 period speak for themselves:



And many people call it "winning"...
Great Post. I think many people forget (including myself) how much Microsoft pioneered and how much PlayStation was playing catchup or plain copied a lot of features from that generation.

I would go as far as to say the PS4 and PS5 OS would be barebones had Microsoft not bought those features to Xbox.
 

kingfey

Banned
Great Post. I think many people forget (including myself) how much Microsoft pioneered and how much PlayStation was playing catchup or plain copied a lot of features from that generation.

I would go as far as to say the PS4 and PS5 OS would be barebones had Microsoft not bought those features to Xbox.
not to mention, the rise of western games. We have seen alot of wrpg thnx to that console.
 

kingfey

Banned
Sustainable doesn't imply to be profitable. Sustainable may mean that it can be unprofitable forever but that they are rich enough to be able to handle it and to don't give a shit about profitability at least for mid term.
Sustainable means, the service can pay for itself, without outside funding. After that, it can make profits. You dont make a profit, if your business isnt sustainable. If gamepass, can make itself sustainable, it can generate alot of profits in the longer run.
 

yurinka

Member
Sustainable means, the service can pay for itself, without outside funding. After that, it can make profits. You dont make a profit, if your business isnt sustainable. If gamepass, can make itself sustainable, it can generate alot of profits in the longer run.
By sustainable they may mean that it's profitable (not the case) or that GP (or the game division) as of now has loses that even if big they can afford because outside gaming they have way bigger profits that more than compensate them, and that they have a long term plan they plan to turn this business into profitable and to end having operative profit compensating past loses of GP/game division.
 

kingfey

Banned
By sustainable they may mean that it's profitable (not the case) or that GP (or the game division) as of now has loses that even if big they can afford because outside gaming they have way bigger profits that more than compensate them, and that they have a long term plan they plan to turn this business into profitable and to end having operative profit compensating past loses of GP/game division.
You cant have a sustainable business, if you lose money. Its basic economic.

"Sustainability can help companies become more profitable: Accenture CEO. ... She cited a research that said companies that have combined sustainability into their business strategy are 2.5 more successful than those who have not"

If you want more studies, here is one.
 

oldergamer

Member
Again, Gamepass is already sustainable.

Quote from Phil Spencer: "It's not the only thing that's growing in Xbox. It's not the only focus of the organization, and it, as a standalone thing, is very sustainable as it sits today, just like today. It's sustainable," Spencer said. "I know there are a lot of people that like to write, 'We're burning cash right now for some future pot of gold at the end.' No. Game Pass is very, very sustainable right now as it sits and continues to grow."


Just for any confusion the definition:
  1. 1.
    able to be maintained at a certain rate or level.
    "sustainable fusion reactions"


 

oldergamer

Member
By sustainable they may mean that it's profitable (not the case) or that GP (or the game division) as of now has loses that even if big they can afford because outside gaming they have way bigger profits that more than compensate them, and that they have a long term plan they plan to turn this business into profitable and to end having operative profit compensating past loses of GP/game division.
Again, you're trying to mince words. Gamepass is already sustainable.

Quote from Phil Spencer: "It's not the only thing that's growing in Xbox. It's not the only focus of the organization, and it, as a standalone thing, is very sustainable as it sits today, just like today. It's sustainable," Spencer said. "I know there are a lot of people that like to write, 'We're burning cash right now for some future pot of gold at the end.' No. Game Pass is very, very sustainable right now as it sits and continues to grow."


Just for any confusion the definition:
  1. 1.
    able to be maintained at a certain rate or level.
    "sustainable fusion reactions"
 

yurinka

Member
Again, you're trying to mince words. Gamepass is already sustainable.

Quote from Phil Spencer: "It's not the only thing that's growing in Xbox. It's not the only focus of the organization, and it, as a standalone thing, is very sustainable as it sits today, just like today. It's sustainable," Spencer said. "I know there are a lot of people that like to write, 'We're burning cash right now for some future pot of gold at the end.' No. Game Pass is very, very sustainable right now as it sits and continues to grow."


Just for any confusion the definition:
  1. 1.
    able to be maintained at a certain rate or level.
    "sustainable fusion reactions"
Yes, this is what I mean. That sustainaible means that GP for them is "able to be maintained at a certain rate or level", and that can happen being profitable, or not being profitable but having loses that they can handle and are ok for them to continue supporting it since they can afford them since are small in the context of their whole corportation and long term plan.
 
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