All purpose Sales and Sales Rumours and Anecdotes [2021 Edition]

[Deleted member 11852]

Yes. There's going to be a transitioning period from the mixed era to the digital only era that might take 5-7 years even, but I do think we are headed to digital only. Sony and MS both want it, they just don't want to piss off consumers too much.

Digital became an option for consoles in 2005/06 and after fifteen years we're around 50/50 now. One barrier is technical, i.e. availability and speed of internet. I can currently use same-day delivery order from Amazon to get games quicker than I can download them and I live in an expensive part of London. People in remote and rural areas are worse off because their prospects for better, affordable internet are worse than mine. Based on on all the metrics I've seen, internet is not improving widely-enough or quickly enough to make that a non-issue in just 7 years.

But until they make digital games cheaper to own, I don't know how they overcome the cost barrier. The early promise of digital was that games would be cheaper because there would be no disc to press, package and ship and retailer cut. But happened for digital stores just ate that margin. It would be an easier pill to swallow - and a carrot to counter the stick - if Microsoft and Sony were to bite that 30% and make digital games cheaper than buying on disc.

 

[Johnny Awesome]

MS has made it cheaper with GamePass.

Maybe MS and Sony will be pressing 10k discs for people in the boonies 7 years from now, but I doubt it. Once the physical gets below 20% they'll just say .. too bad. After all, better they make an extra 30% on the remainder. They'll probably sell it as a green digital only Xbox. Go green with a green Xbox.

 

[Deleted member 11852]

MS has made it cheaper with GamePass.

Ownership vs. rental. I know people who mostly play games like Skyrim, or Civilization or other games that have tremendous re-playability. You don't want to rent that on a month-to-month basis, you want to buy it once.

I know you love GamePass but given the subscription number is a fraction (20-25%) of the size of the Xbox user base after four years, that should tell that it's not the preferred solution for the vast majority of Xbox owners. ¯\_(ツ)_/¯

 

[Johnny Awesome]

Isn't it closer to 40% of the Xbox user base at 24 million or something?

You seem to think that it's not going to increase, even after you can get Starfield, Halo, Elder Scrolls VI (blah blah blah 35 dev teams) on Day 1 for $5 per month (since Live costs $5 anyway). We'll have to agree to disagree on that point. I'm betting MS is at 50+ million GP subscribers by the end of this generation. Easily.

 

[eastmen]

We kind of do know this;

1) only a stupid company would potentially lose customers to the competition by not supplying enough product, they would have done market research and produced product accordingly
2) demand is higher for the disk version as resale is higher, just check our eBay etc for the proof

1) If a company has limited product that will sell out they will produce and sell the one that makes them the most profit / less loss. I've said this multiple times but you don't want to really address it.

2) Is the resale higher in comparison to its higher price point vs the digital or do they fall in line with that $100 pricing disparity ?

 

[Deleted member 11852]

Isn't it closer to 40% of the Xbox user base at 24 million or something?

There are only 60 million Xbox users?

You seem to think that it's not going to increase, even after you can get Starfield, Halo, Elder Scrolls VI (blah blah blah 35 dev teams) on Day 1 for $5 per month (since Live costs $5 anyway). We'll have to agree to disagree on that point. I'm betting MS is at 50+ million GP subscribers by the end of this generation. Easily.

I'm sure it'll increase but I don't think it'll increase significantly before Microsoft have to change GamePass to make it profitable, which we know it isn't. You mention Elder Scrolls VI but is that even coming this generation?

 

[megre]

I also don't think xcloud will help gamepass get more subs.

$10-$15 a month is already a hard sell among the gamers (for different reasons). I couldn't imagine how the casual gamers would be willing to sub when their f2p phone games are enough for their casual entertainment.

 

[AlphaWolf]

I'm sure it'll increase but I don't think it'll increase significantly before Microsoft have to change GamePass to make it profitable, which we know it isn't.

I'm sure I heard that argument before with Netflix. It seems to have worked out. MS has deep pockets an open field with a huge upside if they succeed. They need more content and it's clear they are looking to address it.

 

[Deleted member 11852]

I'm sure I heard that argument before with Netflix. It seems to have worked out. MS has deep pockets an open field with a huge upside if they succeed. They need more content and it's clear they are looking to address it.

Netflix have pivoted their business model twice. First when switching focus from mailing DVDs to people to digital distribution. Then again when they made a conscious decision to invest in more original content rather than just licensing everything. Both were about improving profitability and keeping viable.

 

[AlphaWolf]

Netflix have pivoted their business model twice. First when switching focus from mailing DVDs to people to digital distribution. Then again when they made a conscious decision to invest in more original content rather than just licensing everything. Both were about improving profitability and keeping viable.

Yes. Now tell me how much money gamepass is losing.

 

[London Geezer]

Netflix have pivoted their business model twice. First when switching focus from mailing DVDs to people to digital distribution. Then again when they made a conscious decision to invest in more original content rather than just licensing everything. Both were about improving profitability and keeping viable.

Is Netflix making any money yet? Have they ever? Honest question.

 

[Deleted member 11852]

Yes. Now tell me how much money gamepass is losing.

That was not disclosed.

Is Netflix making any money yet? Have they ever? Honest question.

Netflix has been profitable since 2003. The biggest jumps in profit were in the last four years, which represented the biggest diversion of investment into original content, which shows you how much licensing other people's content drains the coffers.

 

[AlphaWolf]

You can skip dates before 2010 for netflix. That is when they launched their streaming service. You will notice a dip in their profits as they built up their subscribers.

Game development seems like it's a bit slower than movies/tv so I wouldn't be surprised if it takes MS longer to hit their stride in terms of profitability, but gamepass not being profitable yet doesn't mean the xbox division is bleeding money. They've been piling on subs without anything big 1st party in a year. I'm not a gamepass guy, but I wouldn't bet against it.

 

[Deleted member 11852]

You can skip dates before 2010 for netflix. That is when they launched their streaming service. You will notice a dip in their profits as they built up their subscribers.

So Netflix started off profitable and became more profitable when they changed what and how their service operated. So GamePass, not profitable after four years, is not like Netflix.

Game development seems like it's a bit slower than movies/tv so I wouldn't be surprised if it takes MS longer to hit their stride in terms of profitability, but gamepass not being profitable yet doesn't mean the xbox division is bleeding money. They've been piling on subs without anything big 1st party in a year. I'm not a gamepass guy, but I wouldn't bet against it.

Nobody is saying Microsoft is bleeding money, all that was said is that it's not profitable. It is the blind notion that GamePass will just become profitable if enough people subscribe I question. Some costs, like server hosting, will not materially increase given Microsoft's these costs now and in the future are likely heavily amortised through Azure, but content licensing will increase proportionately. More subscribers = higher licensing costs. This happened to Netflix and it happened to Amazon to the point where both had to license less and make more.

If Microsoft want to make GamePass profitable, and I assume they do, they need to change something. Like Netflix and Amazon.

 

[AlphaWolf]

So Netflix started off profitable and became more profitable when they changed what and how their service operated. So GamePass, not profitable after four years, is not like Netflix.

Nice try, but Netflix's streaming service was not profitable when they launched it. I could just as easily claim MS was profitable before gamepass and they are still profitable.

Nobody is saying Microsoft is bleeding money, all that was said is that it's not profitable. It is the blind notion that GamePass will just become profitable if enough people subscribe I question. Some costs, like server hosting, will not materially increase given Microsoft's these costs now and in the future are likely heavily amortised through Azure, but content licensing will increase proportionately. More subscribers = higher licensing costs. This happened to Netflix and it happened to Amazon to the point where both had to license less and make more.

If Microsoft want to make GamePass profitable, and I assume they do, they need to change something. Like Netflix and Amazon.

They just need to produce more of their own content and it's quite clear they are doing that.

 

[Deleted member 11852]

Nice try, but Netflix's streaming service was not profitable when they launched it.

Can you highlight which parts of Netflix's annual reports state this?

 

[AlphaWolf]

No, it's not in the reports. Just like gamepass isn't in the reports.

 

[Deleted member 11852]

No, it's not in the reports. Just like gamepass isn't in the reports.

Phil Spencer and others at Microsoft have spoken explicitly about GamePass. We know the score because they've clarified it, as have others like Tom Warren at the Verge who been semi-officially releasing Microsoft-sourced information for a while.

 

[goonergaz]

@DSoup I’d bail mate, I did for my sanity...I now talk to brick walls and get movement on their position.

1) If a company has limited product that will sell out they will produce and sell the one that makes them the most profit / less loss. I've said this multiple times but you don't want to really address it.

2) Is the resale higher in comparison to its higher price point vs the digital or do they fall in line with that $100 pricing disparity ?

I’m going to reply one last time.

1) yes I did but you ignore me or twist what I say or change the argument
2) it’s a higher % markup on RRP - the same reason how we know demand for PS5 is higher than XSX that you chose to ignore

That’s it now, I’m out for my sanity.

 

[zed]

Can you highlight which parts of Netflix's annual reports state this?

FWIW Netflik still owes $10-15 billion
https://www.nytimes.com/2021/01/19/business/netflix-earnings-debt.html