Yeah I'm sure the shareholders are pissed that they are seeing such an immediate return on that investment.
Xbox Business Update Podcast | Xbox Everywhere Direction Discussion
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You misunderstand. This isn't about shareholders or whether it was a good idea or not - it's about understanding how the XBox operations are doing. Because of the AB acquisition, activities in the XB division are obfuscated. However, since rntongo's post, we had a little breakdown that broke out the AB as 53%, revealing the 8% increase in other XB operations on which rntonga followed up.
I think MS needs to move quickly on the handheld market with a proper, game\power friendly, supporting OS otherwise it is very likely that SteamOS will eat their lunch. And if SteamOS takes the handheld market but can also be installed on desktop PCs then it is highly likely that will start to cannabelise Windows gaming segment. After all who deosn't want an OS that is bloat free, secure, power friendly, performant, and makes your game ownership universal.
On pc there's already steam,. Who would want to install another os, or add a vm, just to play the same games, but with wine that emulates windows?
And an open platform os is the gate to driver's hell and compatibility/performance problems.
That front is secured for ms for a lot of years.
And an open platform os is the gate to driver's hell and compatibility/performance problems.
That front is secured for ms for a lot of years.
that seems correct, the news can be misleading because there is growth but this news is old and that 60% something increase includes the data comparison from the ABK acquisition compared to how Xbox fared without the ABK deal.
that's true. I think though that Valve is a very respectable opponent, not to be undervalued. People didn't believe in Steam when it was released... nowadays I calculate it's more profitable than the Playstation and Xbox division.
If they double the amount of games or more in the Gamepass service, all with an extremely fast specialized OS, many people may switch to a monthly subscription model for cost-effectiveness. But, it takes a lot of good games.
In Finance we were taught to always try to project out future earnings and discount them back to the present value. If most of the growth is coming from a recent acquisition that could be a good or bad thing if that acquisition cannot sustain earnings growth rates that meet or exceed eps targets. That could lead to downward pressures on that unit to generate more cashflows which can have negative effects on the product. That was the point I was trying to make.
Indeed this is a very very serious threat to them.
Sort of ... It was mostly renaming and introducing an upsell tier. They renamed Xbox Live/Gold to GamePass Core. They then sunset GamePass Console (GamePass only without any Online benefits) to be legacy customers only. The new tier GamePass Standard is mostly a tier no gamer will ever really subscribe to and useful only to get folks into GamePass Ultimate.
There's still been the same sort of heavily discounted subscription codes to GamePass Ultimate as before the GamePass adjustments too.
Previously when talking about the breakdown of subscribers, Microsoft indicated the vast majority of all subscribers were to GamePass PC/Console/Ultimate with under 20% being to that lowest tier Xbox Live/Gold as this was before the GamePass Core existed.
No they're not. Xbox acquired Activision for a reason. They are an official part of Xbox and trying to break them out misses the entire point of what and how they are doing.
What BriT said. Why does Activision money not count, Microsoft didn't buy them to lose money
Successful at what cost? This is a good strategy for a games publisher but its eroding what little moat Xbox still has for the actual console.Everyone benefits from the strategy of MS games being released on multiple platforms. This is actually a better way to ensure that Xbox games are more successful and popular. In addition, it feels very good that these games appear in Day1 Gamepass for both Xbox console and PC, so that we Gamepass users can play them at a much more favorable price.
Moreover, as MS games start to flow more and more, the Gamepass service will become more and more valuable.
I just can't help but notice that all of the successful console vendors keep their business going in a world going more PC-centric by cultivating exclusives. This is basically Nintendo's whole business model and they're the only ones really thriving in the console space.
It just seems like the complete opposite direction to go in: you spent all this money buying out studios just to willingly publish their titles on other platforms? MS buying Bungie/Halo back in 2000 basically set up the Xbox brand with a generational exclusive and a solid moat, why not replicate that?
Will it? Very few people are going to make waves over a package of 23-12 year old games. At this point most people have played the core Halo canon anyways.
Yeah basically this, most people have already played Halo and its nowhere near the cultural phenomenon it was even 10 years ago, never mind 15-20 years ago in its heyday.
It's not about what MS are doing but what we're doing.
We're trying to see how XB games and hardware and services are doing. In the past all we've had to go on basically are MS's division revenues comparing year on year. Where there aren't huge changes, each year shows growth or decline based on the hardware, software and services.It does count for finance. It doesn't count if you're trying to see how the other parts of the company were doing. It depends entirely what you are looking for.
Let's imagine a bagel company selling bagels to the US. They sell 20 million in 2010. 21 million the next year. 22 million the next year. Clear growth. Then 22M, 22M - no growth. Then 21M and 20M - it's in decline. They say they want to turn things around, launch a big US marketing campaign, and buy a European bagel maker - on the following year, sell 25M bagels. That's 25 million bagels. The company is happy. The shareholders are happy. But for people wondering whether the bagel market in the US is still in decline or not, and whether their marketing campaign worked or not, the addition of European bagels obfuscates that info if it's not broken out in the financials. If we learn EU bagels were only 3 million, that'd mean US bagels were 22M so a big improvement. If EU bagels were 10M, that'd mean only 15M bagels in the US which mean not only did their marketing fail, they apparently discouraged bagel consumption. But all together, we don't know what's happening with the US bagel market for this company.
Compare this hacked barchart with a fake 2024 added on the end and line drawn:
MS reports revenue in 2023 of $15.5B that goes on the chart. In 2024 they report revenue of $25B after ABK, on the chart. If you just care how much money is coming in, that's fine. However, if you're interested in how the other parts of the business, not ABK, are doing, the trajectory of the line, does it go up in 2024 or down? You don't know in these consolidated revenue figures.
Now if the ABK revenue was isolated like this (in red)...
...and you're interested in just the green part of the graph, you could see whether XB hardware and services was improving. Why this matters is if the XB hardware is going down when revenue is going up, you can see the XB platform is in decline and that MS are shifting to a software company, which could even inform purchasing decisions in future. But even if not very useful, it's still a talking point for those wanting to understand how XB's hardware and existing studios are doing, some of whom have been following the console market for decades and still want their sales numbers to see how it's changing.
Is SteamOS spreading anywhere other than SteamDeck? Is there even a roadmap and intention from Valve to do that?
It's already announced for the Legion Go S, they are producing two version of that handheld. One with Windows and one with SteamOS, the SteamOS version is a hundred dollars cheaper and will likely perform way better. It's also been implied that a device agnostic vertsion will be available this year for other handhelds.
It seems that Valve are already, sepecifically, working on Rog Ally compatability (which will be amazing - Windows is the cause of nearly all the issues handhelds have - battery life, game performance etc). If they pull this off, and I have no reason to think they won't, then SteamOS will be a very viable alternative to Windows for Gamers - if their sole reason for having a PC is to play games then Windows becomes the worst option for that. Even if you do need access to other appliactions then SteamOS is a full linux OS under the hood so you still have a desktop and productivity tools available.
Windows has never been a good gaming OS, too much bloat, too much overhead etc. though if I remember 2000 was OK but that was only because the underlying code was bought when they purchased NT.
There's quite a good article here
What other parts, though? They bought most of those other parts as well, so if we are going to disregard all of the studios/IP they purchased then the company is... Well I don't even know what Xbox is. The only modern franchise I can think of that Xbox has built from the ground up is Forza. Their other franchises (Halo, Gears, COD, Crash), they're all acquired. So where do we draw this line and say "this is how they are really doing".
At the end of the day, Microsoft wants Xbox to to what every console company in the games market is trying to do. Make money, and control some portion of the market that allows them to make more money. Their acquisitions, including the more recent ones like ABK, are pursuant to those goals. Which is why I think it's silly to carve out just the ABK revenue. They didn't buy them to lose money. They didn't buy them to lose market share in the FPS market. And they did buy them to help fill the deficiencies in their other departments. These criteria are all being met.
Just from previous company structure prior to the huge change. It's not about isolating parts but seeing whether XB is growing or not. The acquisition of a studio wouldn't result in a large %age change in more total revenue, so in those years there was such an acquisition, for MS or Sony, the revenue change was still largely in keeping with general operations so we could see the platform was growing, from more hardware, more users, etc. That's why year after year we compared revenues and sales and had an idea of the state of the consoles. If there wasn't insight in such figures, we wouldn't have used them to gauge how well the platforms were doing.
And no-one's saying they aren't. Although some are now arguing that XB as a concept could be shrinking even if revenue for that division is increasing.
Going back to my bagel analogy, let's say instead of bagels results, those figures were dollars.
2010 : $20 million
2011 : $21 million
2012 : $22 million
2013 : $22 million
2014 : $22 million
2015 : $21 million
2016 : $20 million
2017 : $25 million
In 2016 they buy a tea-cake company in Europe. The company's plans to improve their money are definitely working, but what does this tell us about the bagel market? Up until 2017, all the revenue was from bagels so we could see bagels were growing and then shrinking. Come 2017, we've no idea what the bagel sector is like. From now on, we can look at the company's revenue in terms of 'pastries' but that could mean the end of all bagels and becoming a teacake only company. Even if across 2010 - 2016 they bought a few bakeries that expanded their output, that wouldn't affect the understanding of the year-to-year trends so long as those acquisitions were small.
If you're only interested in the company being profitable, and don't care whether it's making bagels, pastries, or ends up making sportswear, then revenue figures tell you just that. That's exactly what investors and shareholders care about and look at. If you are a fan of bagels and love this company's bagel work and want their bagels forever, you'll be more keen to know how that side of the business is regardless of their other pastries or new sportswear line, and keen to know if they are moving away from bagels and into other pastries or sportswear.
Neither outlook is the right one and the other should be excluded. They are different, looking for different info.
One of the challenges is that we don’t know about the cross effects of the acquisitions. That’s sort of the reason why you don’t need to separate it out. The first quarter you close out it makes sense, but following that, you want to know the network effects on the business as a whole. Both ABK and MS can move up or down together.
peanut butter on its own may not be a great seller, but after acquiring chocolate, people are very interested in Reese Pieces suddenly. At a certain point in time, separation no longer makes sense because MS is making ABK make moves they would not normally do; AKA, COD on gamepass period, let alone day one.
I understand there is a deep desire to determine if Xbox is failing as an organization. And separation of numbers may help that argument, only, if you want to define success based on traditional views of the console market.
What if the market is transitioning away from the traditional console market strategies? That’s probably worth discussing a lot more, where we are headed is certainly more important than discussing what once was.
peanut butter on its own may not be a great seller, but after acquiring chocolate, people are very interested in Reese Pieces suddenly. At a certain point in time, separation no longer makes sense because MS is making ABK make moves they would not normally do; AKA, COD on gamepass period, let alone day one.
I understand there is a deep desire to determine if Xbox is failing as an organization. And separation of numbers may help that argument, only, if you want to define success based on traditional views of the console market.
What if the market is transitioning away from the traditional console market strategies? That’s probably worth discussing a lot more, where we are headed is certainly more important than discussing what once was.
It's not looking for failure. It's only failure if you have a desired objective. What's being looked for, certainly from me (I appreciate some persons may be looking for evidence of their own narrative), is understanding. If change is happening, I'm neither labelling it good or bad. However, I want to see what and how the change is happening. We might see MS 'Xbox' revenue increase 5% per year every year for 20 years, but that's a different story to what's happening with the XBox console which might reduce 20% year on year...and first we'd know about it is no more consoles, I guess.
The main issue here really is MS constantly evolving how they communicate with shareholders. Sony is very old school, breaks down the numbers, and they are pretty open about what's going on with their businesses as a result. Because MS doesn't have these direct breakdowns we're often left reading between the lines. In this particular news, at least we've been thrown an 8% bone! But we can't interpret that in terms of units sales or subs as it includes the GP price changes.
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