I think they should double down on GamePass and XCloud. Make it a play on any device kind of thing and be dominant on the cloud gaming sector.
Nintendo basically has mobile console gaming down pack and Sony is going down the immersion path with console VR.
Microsoft needs to be dominant in something before Nintendo and Sony and that is GamePass everywhere via XCloud.
Make a two tier system with the higher tier for day one releases.
Forget COD and invest that 70 billion into games. Like someone said in the Microsoft/Activision thread, 70 billion gets you 100+ AAA games.
One AAA game a month, Xbox with GamePass and XCloud becomes very appealing within 10 years.
How are they going to afford to make a AAA at the rate of releasing one every month? Also for Game Pass & xCloud to pay off, actual customers have to want it first.
In theory a AAA game a month could drive interest, but at the scale of the mass-market marquee AAA games, that's at least $150 million per game. That's almost $2 billion a year in just software development, doesn't even account for marketing.
Say Game Pass Day 1 reduces 1P game sales by 50%, and 3P game sales by 30%, on average. Now, I think software sales last fiscal year were probably around 70% of Xbox's division revenue; last fiscal year they made a little over $16 billion in gaming revenue. On average, 1P sales probably account for like 10% of that in Xbox's case (for comparison Sony's peak year for 1P sale revenue as a percentage of total game sales revenue was 18.5%, the rest were 3P sales).
So out of $11.2 billion, 1P games would be $1.12 billion and 3P games would be $10.08 billion. Game Pass would have to bring in $4.144 billion annually to cover the loss in direct sales revenue. And that's on top of whatever revenue it brings in right now, which we'll say it something like $1.8 billion a year. So altogether it'd have to bring in $5.944 billion annually. At an ARPU of ~ $72 per sub averaged (that's the amount Game Pass would be bringing in if revenue were $1.8 billion/year off 25 million subs), they'd need 82.5 million subscribers to Game Pass to make it work.
How are they going to grow more than 3x the subs they have right now in a reasonable amount of time while operating the service as it currently does (including the pricing deals and loopholes plus pricing differences in various markets that the loopholes let people take advantage of)? They'd need an explosion of sub growth in like half the time it took them to reach 25 million, but I don't think the upcoming slate would help push them to 82.55 million subscribers in the next 3-5 years.
Maybe getting ABK and COD
would help do the trick, that
is possible. But it'd require a miracle for Microsoft with the current acquisition proceedings, for things to go that much in their favor. So it's either that, or hope they strike gold with a few of their big releases in the next few years and start closing up the loopholes while maybe introducing a new tier or two, and slightly increasing the subscription price.
But I think most of that growth is going to depend a lot of Xbox hardware, and they have to fix the decline that's currently happening in their global sales volume.
Microsoft doesn’t break out ‘services revenue’. They report ‘content and services’. And Xbox ‘content and services’ revenue declined Y-o -Y mainly due to a sparse Q4 release schedule In 2022 compared to Q4 2021 when Halo Infinite and Forza Horizon 5 were released.
Right, but the leaked services revenue from the CADE court documents listed $2.9 billion for, IIRC, calendar year 2021. So we would know at least some portion of that was recorded in FY 2020 results, and the other portion in FY 2021 results.
The thing about those CADE figures though is that they accounted for all gaming services, not just Game Pass. And I really don't think "just" having a lack of calendar Q4 1P releases is why Xbox saw drops in all gaming categories the past fiscal quarter; it's the holidays,
SOMETHING should have seen an increase. Game Pass services or hardware, should have seen an increase.
Instead they both saw drops alongside software revenue.
In that same earnings report, MS disclosed that this drop was partly offset by growth in Gamepass subscribers.
On PC. Where Game Pass has been almost a non-starter, for a myriad of reasons. On console side it had "stalled", going by some of Phil Spencer's own words.
You do seem to have a knack for either pushing misinformation or speaking confidently about topics you’re not really familiar with.
I've been more or less following the back-and-forth over the acquisition events as long as you and most here have, and anything I haven't had the most insight on, I've either asked for clarification or learned from others. I've even outright admitted there are things I don't really know about all to well, because I'm not a professional lawyer.
But I don't need someone to tell me I'm reading fiscal results wrong when the results are showing clear drops. And I can use some contextual logic to see what factors about the gaming division are likely attributing to those losses.
Lots of other example. Games like the Forza Horizon series, Ori, Grounded and even recently HiFi Rush, for example. Upcoming fare like Starfield is already high up on Steam wishlists.
Are you really bringing up HiFi Rush? The same HiFi Rush that did not chart in NPD at all for January? WOM was spreading relatively quickly, but that seems to have done more for it on Steam than Xbox. Thing is, the sales on Steam should have contributed towards NPD; they did it's just that they weren't enough for the game to chart. Games like Grounded IIRC aren't full-price on Steam, and they have regular sales. At least, I know from Sea of Thieve's history, where it would get a spike in sales whenever they lowered the price for while.
So sales could look decent in bursts, but the revenue is being affected by the price cuts in order to spur on sales. And honestly I don't think the buying audience for games on Steam is particularly massive, compared to console; they have 130 million registered users but you don't need to pay for a Steam account and there are a lot of super-cheap games there, outright free games and F2P games too. When you look at the top concurrent player charts they are dominated by F2P-style games, and I barely ever see a Microsoft game in the Top 25 (granted similar can be said of Sony games but most of theirs are single-player games that don't have online components the way a Halo Infinite or FH5 does. And at least Sony gives sales numbers; Microsoft doesn't).
