Xbox Business Update Podcast | Xbox Everywhere Direction Discussion

[Cyan]

Is that official, or speculation? Once it hits the everyman PC, maintenance becomes much more problematic. Vavle have to worry about supporting every PC configuration under the sun, and support for those platforms as things evolve over the ages. Do they want that and can they do that?

read it several times from different people, but this VERY recent interview in Frandoid with one of the creators of SteamOS might add some insight.

"In the end, what we want is for the general OS to become something that can be used for a classic computer as well as for a portable console or any other format."

Back in the days of Windows 8, Gabe Newell accused Microsoft of killing the PC ecosystem. Is SteamOS the Windows killer developed by Valve?

"I don't think the goal is to have a certain market share, or to push users to leave Windows. If a user has a good experience on Windows, there is no problem. I think it's interesting to develop a system that has different goals and priorities, and if it can become a good alternative for a typical desktop user, that's fine. It gives him a choice. But it's not a goal in itself to convert users who already have a good experience. »

The interview is in french, I used a translator. In the rest of the interview he mentions more details about what you are asking, he even talks about office use, and so on.

« Il y a 12 ans de travail pour en arriver là » : interview de Pierre-Loup Griffais, développeur de SteamOS, l'OS phare du Steam Deck

Si le Steam Deck est un franc succès, la console portable doit véritablement son attrait à SteamOS, le système d'exploitation développé sous Linux. Nous

www.frandroid.com

 

[Seanspeed]

Hate to say but I called this last year. They are now preparing the masses for it, but this seems like the next logical step in the transition towards a 3rd party software developer.

https://twitter.com/x/status/1879163083928502557

I think the only thing stopping them from doing it now is the threat from Steam OS.

I mean, there seems to be pretty reliable sources saying that Microsoft is 100% committed to going full third party and the only reason that a game might not be multiplatform on Day 1 going forward is lack of resources/preparation, not because there's any strategy to keep a game locked to Xbox for any period of time. And even that will probably be solved eventually to where like with their PC initiative, all their games really are on all other viable platforms immediately.

 

[Cyan]

I mean, there seems to be pretty reliable sources saying that Microsoft is 100% committed to going full third party and the only reason that a game might not be multiplatform on Day 1 going forward is lack of resources/preparation, not because there's any strategy to keep a game locked to Xbox for any period of time. And even that will probably be solved eventually to where like with their PC initiative, all their games really are on all other viable platforms immediately.

it seems like that's going to happen, MS multiplatform release focus is going to be more aggressive, it seems. The ABK deal didn't move the needle as much as they expected.

https://www.theinformation.com/articles/microsofts-gaming-business-falls-short-despite-activision

 

[Cyan]

Jason Roland, now VP of Microsoft Game Studios is basically confirming that MS isn't abandoning consoles.

https://twitter.com/x/status/1879172443824435203

 

[fehu]

Jason Roland, now VP of Microsoft Game Studios is basically confirming that MS isn't abandoning consoles.

Tell me that you are failing without telling me that you are failing
"We are not exiting this market! I swear! Again!"

 

[rntongo]

Jason Roland, now VP of Microsoft Game Studios is basically confirming that MS isn't abandoning consoles.

https://twitter.com/x/status/1879172443824435203

Remember when they said only a few titles were going onto Playstation and then said case by case and now nothings off the table? Gradual socialization. They are not abandoning Xbox but are taking every step to do so.

 

[rntongo]

It’s all the same source. Media writes 50 articles amplifying a statement like it’s independently verified when it’s all pointing back to 1 dude. It’s a terribly sad world we live in.

The "1 dude", was corroborated by MS influencers. As well he predicted that the Switch 2 will be revealed today and it has been revealed today!! I would say there is a lot of smoke its going to be hard to believe there is no fire.

 

[Shifty Geezer]

it seems like that's going to happen, MS multiplatform release focus is going to be more aggressive, it seems. The ABK deal didn't move the needle as much as they expected.

https://www.theinformation.com/articles/microsofts-gaming-business-falls-short-despite-activision

Requires sign up. Any particular overview quote on the 'falling short' measure?

 

[iroboto]

The "1 dude", was corroborated by MS influencers. As well he predicted that the Switch 2 will be revealed today and it has been revealed today!! I would say there is a lot of smoke its going to be hard to believe there is no fire.

I don't have a problem with him being right about his leaks. But it's an issue when there are 50 articles all linking back to the same source. What appears to be a lot of news about said topic all link back to a single source. So it's just repetition, not redundancy.

 

[rntongo]

I don't have a problem with him being right about his leaks. But it's an issue when there are 50 articles all linking back to the same source. What appears to be a lot of news about said topic all link back to a single source. So it's just repetition, not redundancy.

okay gotcha!!

 

[Cyan]

Requires sign up. Any particular overview quote on the 'falling short' measure?

used my google account. Some tidbits:

In 2021, Microsoft CEO Satya Nadella faced a choice involving the company’s Xbox and cloud gaming business. The company could either acquire major game studios to drive more subscriptions to its nascent Game Pass subscription service. Or it could wind down its games business entirely, Nadella told two people at the time.

Nadella took the first path, acquiring Elder Scrolls maker Bethesda Studios for $7 billion in 2021 and Call of Duty maker Activision Blizzard for $75.4 billion in the fall of 2023. So far, the returns on the investments appear unimpressive: In the year to June, Microsoft’s gaming business revenue grew 5.8%, well below the 11% target set for the purpose of calculating part of Nadella’s compensation, according to securities filings. (That growth excludes revenue of Activision since its acquisition but includes Game Pass).

Gaming was the only section of his pay evaluation that fell short of Microsoft’s goals. Meanwhile, in the three months ending Sept. 30, Microsoft indicated that its gaming division didn’t grow at all without the first-time contribution of Activision revenue in the quarter.

Even so, given the sheer amount Microsoft has spent on gaming expansion—the Activision purchase was its biggest ever—the outcome of Nadella’s gaming bet is important in the long run.

“Seventy billion dollars is not a pittance—it’s a lot of cash. They might lose money in the short term, which is fine, as long as they can prove that in the long run Game Pass is a solid source of recurring revenue,” said Wedbush analyst Michael Pachter.

Uncharted Territory

Microsoft first launched its Game Pass subscription service in 2017. It charges customers $12 to $20 per month to access a library of PC and Xbox games from any device.

By launching the service, Microsoft is forging into uncharted territory. The company hopes to prove a business model that is now omnipresent in movies and television streaming can also prove successful in videogames.

Big gaming firms, like Activision, have historically been reluctant to put their games on an all-you-can-play subscription service, worried they would make less money than they do by selling games outright at $60 to $70 apiece. Buying Activision allowed Microsoft to change that dynamic.

Since then, however, several leading game studios have resisted Microsoft’s pitch that they should put their titles on Game Pass in exchange for fees that Microsoft offers to pay to the gaming studios, according to people familiar with the discussions.

“I just think the majority of the game market doesn’t really want a game pass” like the one Microsoft is offering, said Gus Zinn, a portfolio manager of the Macquarie Science and Technology Fund, which holds roughly $400 million in Microsoft stock and has kept its Microsoft position roughly flat over the past year.
Microsoft also hoped the Activision deal would attract game developers to rent its Azure cloud servers. But Activision wasn’t using Azure prior to the deal, and it still rents servers from Google Cloud and Amazon Web Services while primarily relying on its own servers for development, according to someone with direct knowledge of the situation and another person briefed on it.

Pushing a New Business Model
Between launch and 2021, the number of Game Pass subscribers grew to 18 million, Microsoft reported. Since 2022, Microsoft has stopped regularly reporting annual numbers, although it said in February last year that Game Pass had grown 36% since 2022 to 34 million subscribers.

Before completing the Activision acquisition, Microsoft targeted having over 100 million Game Pass subscribers by 2030, meaning it would have to triple its current subscriber base in five years—or grow at a rate of 40% annually, which would be faster than its rate of growth every year since 2020.

The company previously included Game Pass growth as one of the metrics that determined CEO Satya Nadella’s pay package, but it eliminated that provision in October 2023 after it failed to meet Game Pass growth targets in the prior two years.

When reached for comment, a Microsoft spokesperson referred to Nadella’s remarks to shareholders in October that Game Pass had set a “new revenue record” in the quarter prior and that a record number of people had signed up for Game Pass on the day Microsoft published Activision’s new Call of Duty: Black Ops 6 title.

Some shareholders say Activision’s contribution won’t matter much as long as Microsoft generates growth in other areas like cloud and artificial intelligence software sales.
“[Activision] has been disappointing,” said Denny Fish, a Janus Henderson Investors portfolio manager who oversees two funds that included a total of more than $800 million in Microsoft stock as of November. “It’s also a business that had some degree of consistency over, like, a three- to five-year period but was highly volatile from year to year, because you’re so dependent on the big releases like Call of Duty.”
However, Microsoft’s heavy spending on data centers for AI is a bigger drag on its stock price than the Activision deal, Fish said.

 

[Nisaaru]

That's such an insane reasoning...

Either we drop out of the Xbox gaming market or we'll buy gaming studios for 80B+ to push Gaming Pass.

WTF...

 

[rntongo]

That's such an insane reasoning...

Either we drop out of the Xbox gaming market or we'll buy gaming studios for 80B+ to push Gaming Pass.

WTF...

100% I read it thinking its a ridiculous way of looking at things. Yeah sounds like an excuse to push an acquisitions strategy.To be very fair I think it was Phil driving such a push after he failed to have a coherent well executed strategy for Xbox. The solution was to rely on acquisitions to drive growth.

 

[BoardBonobo]

100% I read it thinking its a ridiculous way of looking at things. Yeah sounds like an excuse to push an acquisitions strategy.To be very fair I think it was Phil driving such a push after he failed to have a coherent well executed strategy for Xbox. The solution was to rely on acquisitions to drive growth.

Shoudn't be surprised. Growth through acquisitions has been Microsofts primary strategy since the mid '90s. Everything else they have tried to create from scratch has been a failure in one way or another.

 

[Cyan]

100% I read it thinking its a ridiculous way of looking at things. Yeah sounds like an excuse to push an acquisitions strategy.To be very fair I think it was Phil driving such a push after he failed to have a coherent well executed strategy for Xbox. The solution was to rely on acquisitions to drive growth.

problem is that MS not always have a coherent strategy. They didn't pay proper attention to Windows -their OS- gaming.

Yes they supported it with new features and stuff but never made it easy for gamers, when they had a huge market there. This is eomething I've been talking about for years, the oem strategy, some Windows standards for gaming such as "Windows Certified Gaming PC low/medium/high/ultra whatever", but they were involved in other stuff.

Their most recent consoles are ok as such, but they just started a losing battle, which is doing the same as Playstation, and Sony has much more experience in console gaming. Sigh.

 

[Nisaaru]

100% I read it thinking its a ridiculous way of looking at things. Yeah sounds like an excuse to push an acquisitions strategy.To be very fair I think it was Phil driving such a push after he failed to have a coherent well executed strategy for Xbox. The solution was to rely on acquisitions to drive growth.

A company with a lot of cash on hand has only 2 reasonable options. Pay its shareholders back or expand and with inflation getting real assets makes total sense to me. Which SW companies are left for MS to take over? Games was obviously one option.

And that you want to see profits from your huge investments and that you decide to expand to other platforms to generate more sales makes sense from that perspective. Obviously not really well thought out about the Xbox console business itself.

But the way he "argues" is just insane. If that's the truth how that guy still has his job is a mystery to me.

 

[Cyan]

A company with a lot of cash on hand has only 2 reasonable options. Pay its shareholders back or expand and with inflation getting real assets makes total sense to me. Which SW companies are left for MS to take over? Games was obviously one option.

And that you want to see profits from your huge investments and that you decide to expand to other platforms to generate more sales makes sense from that perspective. Obviously not really well thought out about the Xbox console business itself.

But the way he "argues" is just insane. If that's the truth how that guy still has his job is a mystery to me.

when you say "the way he argues", who are you referring to within MS? I mean, are you referring to any news or article or is it just a reply to a @rntongo comment? Just curious... I mention this 'cos I didn't see the word argue in any article iirc. .

 

[rntongo]

A company with a lot of cash on hand has only 2 reasonable options. Pay its shareholders back or expand and with inflation getting real assets makes total sense to me. Which SW companies are left for MS to take over? Games was obviously one option.

And that you want to see profits from your huge investments and that you decide to expand to other platforms to generate more sales makes sense from that perspective. Obviously not really well thought out about the Xbox console business itself.

But the way he "argues" is just insane. If that's the truth how that guy still has his job is a mystery to me.

He's good in other areas. But the reason he sounds ridiculous is because Phil is his direct report. He doesnt sound like this about AI, Office, other non gaming acquisitions.

 

[rntongo]

Shoudn't be surprised. Growth through acquisitions has been Microsofts primary strategy since the mid '90s. Everything else they have tried to create from scratch has been a failure in one way or another.

And its worked quite well, they've made some great acquisitions. Xbox was one thing they had actually done well before the BAs(Don Mattrick) and the Phils started ruining it. Now its back to growth through acquisitions.

 

[Shifty Geezer]

used my google account. Some tidbits:

I see a lot of commentary but no actual measure that shows how MS fell short. I don't know what the target was it's being measured against.

The point about a record number of GP sign ups the day COD launched...that's going to be a great test of whether people are abusing short sign-ups to play games cheap over a month or two, or whether they'll stick with it and account for subscriber growth.