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News How Xbox outgrew the console: inside Phil Spencer’s multi-billion dollar gamble

mckmas8808

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I'm still not a believer in Gamepass. I have a massive backlog, I buy games and trade them in etc. Gamepass isn't like Spotify for me where I can consume and try a ton of music. Where as with games you have games that are like 30 hours long, you can be playing a multiplayer games for 100 hours etc. I just don't see how a person who has other hobbies, a family etc has time to play more than a handful of games a year. Music, TV and Movies are quicker to consume in comparison to games.

This is the sneaky part of our discussion that most people don't want to have here. The idea that comparing GamePass to Netflix as a 1-to-1 is flawed for the reasons K KAL2006 stated. It's just different and that's okay. But this reason (amongst others) are way GamePass can't out grow the console. Unless they are looking to completely change their business model.

And if they are willing to do that, I can't consider that "outgrowing" consoles. It's just changing away from the console business.
 
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KAL2006

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This is the sneaky part of our discussion that most people don't want to have here. The idea that comparing GamePass to Netflix as a 1-to-1 is flawed for the reasons K KAL2006 stated. It's just different and that's okay. But this reason (amongst others) are way GamePass can't out grow the console. Unless they are looking to completely change their business model.

And if they are willing to do that, I can't consider that "outgrowing" consoles. It's just changing away from the console business.

Honestly I know there are promotional offers where you can get Gamepass for cheap with 3 years paid off. But I'm talking about the regular Gamepass. If I paid for it I'd actually be spending more money to be honest based on my going habits.

For example if say I'm interested in a game like Monster Hunter that's on Gamepass, it's a type of game I'd be hooked on for like 7 months just playing that 1 game alone. If I paid for Gamepass for that game that would be £11 a month in the UK. So that's £88 to enjoy Monster Hunter for 8 months. Then when I stop paying I lose access. I'd actually be better off paying for the game and keep it forever instead of subscribing to Gamepass. I could just purchase the game for £50, play it for 8 months, then resell the game for £25 in 8 months. So that would cost me £25 to enjoy Monster Hunter for 8 months in comparison to Gamepass. Now you can argue Gamepass is cheaper if I buy a year sub. However with a year sub, let's say I want to play a game that's not on Gamepass, so I purchase a game that I'm interested in, and play that. Now I'd be wasting my Gamepass sub while playing the purchased game as you cannot pause the sub.

People think they saving a ton of money with Gamepass, but the reality is you are better off buying games used, trading in, waiting for sales and have control of which game you actually want to play instead of being locked into a sub. Gamepass is good for a certain audience the type of audience who plays a ton of games and doenst mind just being restricted to what's on Gamepass. And yes there is a few people in that audience who can actually play that many games a year, but I struggle to believe that audience is as big as people think in this forum. I'm not exactly a busy man myself I have a very easy job, a side hussle where I'm studying for another career move, I have a wife and child I spend my time with, then I have other hobbies like gym, TV movies and etc majority of the world have people like me, and those people can only play a handful of games.
 

reksveks

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I just don't see how a person who has other hobbies, a family etc has time to play more than a handful of games a year.
Depends on the length of the game. One of my favourite games this year is Artful Escape and my one of favourite game of all is Journey.
 

DaGwaphics

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Joking about what? The post you quoted said Phil was ok with not a single copy being sold. My question is does the game have microtransactions? The game selling on steam has nothing to do with the quote in your post. It literally disregards any potential sales the game might have had. Phil seems to be ok with not selling any copies on steam or xbox as long as it sells gamepass subs.

In the context provided that would mean that every Xbox owner bought GP and they didn't sell any copies because of it. That changes the nature of the statement a bit.
 
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John Wick

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MS has proven it DOESNT need to sell those consoles, they dont make profit. they have so much money, this shit is just free moolah for them. Things like office, windows and other services is what gives them money. they can afford to spend on xbox and tyr out new things. they dont need to sell consoles to make money, just their services.
So why didn't they do that with Windows Phone?
 

ClosBSAS

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So why didn't they do that with Windows Phone?
Lol cause Xbox is not a waste of resources like the phone was. Phone was crap, Xbox isn't crap, it has software it sells in the millions, it has gamepass...what did the phone have? A shitty ass os that nobody uses cause there's 9nly two monopolies there, google and apple. No place for third. Xbox is not profitable but it's far from a waste.
 

KAL2006

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Lol cause Xbox is not a waste of resources like the phone was. Phone was crap, Xbox isn't crap, it has software it sells in the millions, it has gamepass...what did the phone have? A shitty ass os that nobody uses cause there's 9nly two monopolies there, google and apple. No place for third. Xbox is not profitable but it's far from a waste.

Nothing matters until it makes a profit. You can talk about sustainability, growth, fastest selling etc etc. But in the end all that matters is if it makes a profit. If Xbox does not make a profit in let's say 10 years will Microsoft pull the plug. That's the question? How long until Gamepass will make a profit? Will they have to put the price up? Will subscribers continue to subscribe when price goes up or when promotions stop? Will Microsoft keep investing in game studios and pay for developepment, how much is the running cost for all these studios? So many questions so little answers? Without data and numbers to back of cost and profit we can't really say what the future holds for Xbox.
 

mckmas8808

Ah. Peace and quiet. #ADayWithoutAWoman
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What does Xbox have to do with Windows Phone? Completely different division under completely different leadership.

The point was.....MS isn't around to just toss money at stuff that doesn't or won't make a profit.
 

ShirAhava

Plays with kids toys, in the adult gaming world
Jun 10, 2008
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untrue. They literally had deathloop on sale. And returnal was $50 on PSN. They gave steam like sales all the time.

Thats good to hear! when I had a PS4 many moons ago a fairly recent first party game going on sale was like seeing a unicorn
 

ShirAhava

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Nah, they discount uncharted, God of war all the time.

I remember discounts for the previous title in the series but def not one that was a few weeks old at least not in the ps3/early ps4 days I can't speak on anything after 2017 as I no longer had a sony console
 
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MonarchJT

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Stop feeding this guy's ego, he's already signing controllers like he's some sort of celebrity. Xbox is still in debt with GamePass and all the studios they bought, how about we return to this topic when they start making their money back and GamePass becomes profitable. Even Nintendo fans didn't have this kind of unhealthy relationship with Reggie.
gamepass is doing it's money already - Spencer words
 

IDKFA

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Netflix is on every device in the world. People can access those shows.

Gamepass job is to enable people to access the game. No matter whether the game is on playstation or not, as long as its on gamepass. That low $ monthly payment makes people get in to the service. Making it exclusive to gamepass, will make people just buy the game on xbox. They wont have a reason to sub to the service.

Buying the game from other devices, makes the sub value strong. Only playing the game on xbox, will make the sub worthless. I can buy that game, when its cheap. So, why would I need to sub it to every month?

You can buy Netflix shows on blu-ray and dvd. It's another monetization option.

Things don't work this way in the real world. You're assuming that gamers don't want to game the way that they currently are now. You'll need to convince all Nintendo and Playstation gamers that it's actually bad to purchase their games in the first place.

As of now......gamers worldwide don't agree that buying their games is bad.

Thanks for the input. I've been thinking about it and I now understand why Microsoft still offer the option to purchase their games.

Some people don't want to pay a monthly fee to play their games. Some people may only buy one or two games a year, so wouldn't get the full benefit of Gamepass. Also, the cost of getting all publishers to release their AAA games on Gamepass day one would mean an increase in the monthly fee. If that happened I'd be willing to pay it, but lots of other people wouldn't.
 
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carlosrox

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This is the kinda news that ruffles fanboy feathers isn't it?

I think Gamepass is great for the consumer but I do wonder how devs and pubs make their money back from this, then again I don't know how they even begin to calculate any of this shit.

However I do know that Gamepass is for videogame lovers and I consider it the first legit Netflix of games. Others may have done it first but MS has done it best so far.
 

Papacheeks

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There are 2 types of people in the world. Those have GP, and those that analyze GP.

Or those who tried it and dont have time for a bunch of games. They have time for 1 or 2. So buying a sub that will hardly get used doesn't make sense for them? On top of there not being anything I cant get cheap on PC.
 
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SkylineRKR

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Or those who tried it and dont have time for a bunch of games. They have time for 1 or 2. So buying a sub that will hardly get used doesn't make sense for them? On top of there not being anything I cant get cheap on PC.

You can sub on a monthly basis. Its how I use Netflix. I never let that run since there are periods of 3 or more months I never watch a thing. 15 euros a month for the 4K sub. Thats worth a game if I let that run.

GP I have running in combination with Live, so it should expire in 2022. I typically let subs run if they're dirt cheap, like Prime.
 

Papacheeks

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You can sub on a monthly basis. Its how I use Netflix. I never let that run since there are periods of 3 or more months I never watch a thing. 15 euros a month for the 4K sub. Thats worth a game if I let that run.

GP I have running in combination with Live, so it should expire in 2022. I typically let subs run if they're dirt cheap, like Prime.

My issue is similar to netflix issue when there isn't some big new series or something that interests me on the service. Also Gamepass on PC has been in my opinion as of the last year pretty trash. On top of issues I've had with it in the past on windows 10. I hear that Windows 11 they alleviated some of those bottlenecks. But to me they just now are fixing it via a new OS when Windows 10 is not EOL until 2025.

I'm not upgrading my OS just to have a better Gamepass Experience. Mainly a lot of the admin tools I use for my Administrative job are not there yet, and windows 11 still has some issues.

Until they find a way to put Xbox originals on PC, I'll sub once in a blue moon when something like halo comes out, or if its a good price I'll just buy it.

Unless you have a console, to me gamepass is only worth it for specific tasts. Trying to play a EA title on PC via gamepass is a fucking nightmare. Thats honestly was the thing that broke me, I own a origin account with tons of games, and they want you to use a new piece of shit app to play EA titles through gamepass. Fucking pure garbage.
 
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Filben

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Can someone explain to me how the Game Pass allows more freedom? I mean, games still cost money and someone has to pay.

So, is it ultimately MS just waving everything through and pay everything, too, and therefore allowing creative freedom? Couldn't they've done it without the Game Pass?

How does one ties to another one?

Genuine and faithful question. Thank you!
 

Bernd Lauert

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Because some people seem to think because MS have cash and that its limitless that they will continue to dump money into a loss making venture.
Because if that was the case Windows Phone would still be a thing.
Xbox is a loss making venture?
 

Iced Arcade

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EA Access has a tier where you get unrestricted access to everything, including DLC.

It also had (and still has) well over 200 quality titles available (including lots of games from outside of EA's published library) on PC.


Just because it's not available on console to that degree doesn't mean it doesn't exist.

Next you'll tell me Microsoft invented the operating system.
And to think, you get EA access with gamepass lol
 

Chukhopops

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Can someone explain to me how the Game Pass allows more freedom? I mean, games still cost money and someone has to pay.

So, is it ultimately MS just waving everything through and pay everything, too, and therefore allowing creative freedom? Couldn't they've done it without the Game Pass?

How does one ties to another one?

Genuine and faithful question. Thank you!
Basically instead of buying the games you get those as part of the sub, which encourages experimenting with different genres and types of games since there’s no incremental cost for the user. It removes the cost and risk associated with the discovery process.

Just like on Netflix where you sub and end up watching Korean cooking/drama series or Japanese animation, Game Pass is great for trying stuff like Football Manager, Crusader kings 3 etc and see if you like it.
 

reksveks

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Can someone explain to me how the Game Pass allows more freedom? I mean, games still cost money and someone has to pay.

So, is it ultimately MS just waving everything through and pay everything, too, and therefore allowing creative freedom? Couldn't they've done it without the Game Pass?

How does one ties to another one?
It's just different constraints.

- If you don't have to have to worry about users buying into the game, you can take more risks cause you aren't focusing too much on the current game buying audiences
- If you don't have to worry about price points, then you can play about with game lengths; no need to have padding to hit a certain game length
- For first party studio's, you don't have to worry about just box/full software +mtx sales but it's also includes bringing in new users.

I am sure that I am missing stuff.
 
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Mattyp

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Can someone explain to me how the Game Pass allows more freedom? I mean, games still cost money and someone has to pay.

So, is it ultimately MS just waving everything through and pay everything, too, and therefore allowing creative freedom? Couldn't they've done it without the Game Pass?

How does one ties to another one?

Genuine and faithful question. Thank you!

You can go to Microsoft and they’ll be like know what that sounds different and fun, doesn’t stick to the same formula of first person action adventure here’s a set amount for you (securing dev pay and making the adventure worthy) and you can also sell the game outside of us.

If sales bomb, they bomb. But they’re guaranteed that set amount and a lot of people picking up the game who originally wouldn’t walk into a shop and buy it who may purchase it after gamepass.
 
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Brofist

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Or those who tried it and dont have time for a bunch of games. They have time for 1 or 2. So buying a sub that will hardly get used doesn't make sense for them? On top of there not being anything I cant get cheap on PC.
So you analyze it then? Or you just let a service you don't use live rent free in your head for no particular reason. Cool
 
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Papacheeks

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So you analyze it then? Or you just let a service you don't use live rent free in your head for no particular reason. Cool

What part of I use to have Gamepass did you not get from my comment? I've used it for a while, and the experience on PC sucks. I also when I was subbed for a year found myself not using it much because I dont have a lot of time to game period.

I can play 1 or 2 games at a time, and each game is a different game. Like I play something on my PS5, then have my social game like call of duty or PC single player title like darksiders genesis, wasteland. But other than that thats all I really have time for.

If your young and have more time than probably yea gamepass is probably amazing. Or if you have a family that like playing games. But there are people that only have so much time to game so a sub to me is wasted money if your only playing a game once in a blue moon.

Does that make more sense to you?
 
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Filben

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Basically instead of buying the games you get those as part of the sub, which encourages experimenting with different genres and types of games since there’s no incremental cost for the user. It removes the cost and risk associated with the discovery process.

Just like on Netflix where you sub and end up watching Korean cooking/drama series or Japanese animation, Game Pass is great for trying stuff like Football Manager, Crusader kings 3 etc and see if you like it.

It's just different constraints.

- If you don't have to have to worry about users buying into the game, you can take more risks cause you aren't focusing too much on the current game buying audiences
- If you don't have to worry about price points, then you can play about with game lengths; no need to have padding to hit a certain game length
- For first party studio's, you don't have to worry about just box/full software +mtx sales but it's also includes bringing in new users.

I am sure that I am missing stuff.

You can go to Microsoft and they’ll be like know what that sounds different and fun, doesn’t stick to the same formula of first person action adventure here’s a set amount for you (securing dev pay and making the adventure worthy) and you can also sell the game outside of us.

If sales bomb, they bomb. But they’re guaranteed that set amount and a lot of people picking up the game who originally wouldn’t walk into a shop and buy it who may purchase it after gamepass.
Thank you, makes sense!
 

Bernd Lauert

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We don't know what profits Xbox makes as MS has never released them on their own. They are always tied in with other products etc. It's a good indication why they don't just release them on their own if they were profitable?
They also never release profits for cloud, Office or Windows. Are these also loss making ventures?
 
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bender

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MS has proven it DOESNT need to sell those consoles, they dont make profit. they have so much money, this shit is just free moolah for them.
 

Panajev2001a

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They also never release profits for cloud, Office or Windows. Are these also loss making ventures?
They do report revenue for their Azure (cloud) business https://msdynamicsworld.com/story/m...q4-and-full-year-earnings-azure-growth-steady

Given where their CEO is from it does not surprise they are bullish and feel so strong about that segment of their business.

Windows… not sure in and of itself it draws the mega bucks. Not what it is there for IMHO. Office licensing is a great revenue stream because businesses have little alternative and they have a comprehensive offer (G-Suite is technically very good and easy to use but weirdly enough not for Enterprise customers, not quite there… and once you start to also pay for Office 365 well…). Office is not a growth market, it is a squeeze profits out of and hold market.
Their plans to have a web based suite (right now their Mac desktop apps are already RN based) and the way they evolved Teams (or did not… same shitty Electron based app on Desktop) points to that.
 

reksveks

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Being pedantic again, i need to double check but that's 'revenue growth' and that's why they also report for xbox/gaming, no? Admittedly they don't have a nice table of gaming revenue growth, its typically in the written part of the slides.

I will double check if they give actual revenue numbers in the earning reports this evening.
 
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Bernd Lauert

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They do report revenue for their Azure (cloud) business https://msdynamicsworld.com/story/m...q4-and-full-year-earnings-azure-growth-steady

Given where their CEO is from it does not surprise they are bullish and feel so strong about that segment of their business.

Windows… not sure in and of itself it draws the mega bucks. Not what it is there for IMHO. Office licensing is a great revenue stream because businesses have little alternative and they have a comprehensive offer (G-Suite is technically very good and easy to use but weirdly enough not for Enterprise customers, not quite there… and once you start to also pay for Office 365 well…). Office is not a growth market, it is a squeeze profits out of and hold market.
Their plans to have a web based suite (right now their Mac desktop apps are already RN based) and the way they evolved Teams (or did not… same shitty Electron based app on Desktop) points to that.
They also report Xbox revenue. We were talking about profits.