cheapchips
Veteran
I suppose it is a risk when your game is a bit of a miss with players. I bet the similar in some ways Planet of Lana is doing really well through Gamepass.
Business aspects of Subscription Game Libraries [Xbox GamePass, PSNow]
- Thread starter iroboto
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I suppose it is a risk when your game is a bit of a miss with players. I bet the similar in some ways Planet of Lana is doing really well through Gamepass.
Likely total lifetime so we don't really have an idea of current active memberships and growth.
Xbox Game Pass made $230 million revenue in one month, most users pay for full subscriptions
Microsoft reveals a rare look at concrete Xbox Game Pass earnings, with the subscription breaking $230 million in subscriber revenues in a month's time.
www.tweaktown.com
"...Most Game Pass subscribers are paying full price for their subscription, with the net revenue/sub value of $9.26 more closely matching up with the original $9.99/month cost of the base Xbox Game Pass console and PC tier."
That's an average of about $110 per user per year. That seems pretty good.
I suppose net revenue will be much less after taking care of studios, operating expenses ...Xbox Game Pass made $230 million revenue in one month, most users pay for full subscriptions
Microsoft reveals a rare look at concrete Xbox Game Pass earnings, with the subscription breaking $230 million in subscriber revenues in a month's time.
Johnny Awesome
Veteran
Net profit will be, but isn't that obvious?
Revenue is headed to $3 billion per year fairly soon. They likely need to be at $10 billion to make it all work in the long run though.
Revenue is headed to $3 billion per year fairly soon. They likely need to be at $10 billion to make it all work in the long run though.
It's the same with anything else. No company gets 100% of the sale
The important question is what part of that revenue is profit? Is it more profitable or less than selling games? At $10 a month per user, if that's $9 on costs, it's not great, but if it's $3 on costs, it is.
We can also start crunching numbers on how much developers could be getting next time MS provides an infographic on 'x billion games downloaded. y zillion hours played".
We can also start crunching numbers on how much developers could be getting next time MS provides an infographic on 'x billion games downloaded. y zillion hours played".
Hmm I don’t think profit and loss would be defined that way.
You’d define a revenue target, margin is a floating number depending on how close you are to fulfilling the target.
We see sales because the revenue target hasn’t been hit by the quarter, so drop the price a bit and sell units for less margin to hit the revenue target.
Sub services should be the same, there is an annual expense, and if enough subs cover the annual expense you’re at break even. Once the subs go above you’re into profitability. But you can’t really break it down to, 9/10 dollars is expense and $1 is profit for each sub sold. Simple math $100 expense and $100 revenue sold at $10. Profit is 0, ratio is 0 $100 sold and 1000 revenue at $10, profit is 900. Is 1:9.
So you really just need to look at the expense and revenue line items here. The price point of the sub will be determinant on the maximum they believe people are willing to pay for the service for the most amount of expense the company can afford
Sure. I was just using simplified number for illustration. Each month costs might change based on what people are downloading and what those deals are. I'm guessing AAA titles get more money than tiny indies. My point really is revenue doesn't tell us much on its own as we've no idea what the costs are! 
Microsoft May Exit Gaming Business If Game Pass Subscribers off Console Don't Increase Enough by 2027
Microsoft's Phil Spencer said in testimony that the company may exit its gaming business if GP subscribers off consoles don't increase a lot.
wccftech.com
Seems like Microsoft, despite what some claim, genuinely are betting the entire farm on Gamepass. And that if they dont hit the numbers they are hoping for, they will have to consider shuttering the Xbox division.
Exactly what I've been worried about, especially in the wake of MS going on an acquisition spree and putting lots and lots of really great studios in jeopardy with their high risk strategy.
Frankly, even if they're successful, a future where people buy less and less games and just rely on subscription services is a nightmare. It will have huge ramifications for the industry, and create even more winners and losers for developers based on who can get on a subscription service or not. And really, I just hate subscriptions and vastly prefer to own games. I can even see it getting to a point where some games start to release not just digital-only, but subscription-only. Once you've got like 50m+ subscribers, you control access.
Silent_Buddha
Legend
Alternatively if it doesn't require the use of a console then that potentially no longer includes a 300-600 USD up front cost (reports of XBS consoles sold at a loss) in order to hopefully start making a profit on games. Granted a large number of players are probably using GP on console, but there's also a large number on PC and some small amount on mobile (through cloud). Would love to know the split between Xbox subscribers and PC only subscribers (like me).
Ancillary to that is if it gets someone to enter the Xbox ecosystem (Xbox, PC and cloud) that's profit generation that would not have existed if they stayed out of the Xbox ecosystem.
If it encourages purchase of DLC in a game that a person would not have bought or played if they didn't have access to it through gamepass, then that's also profit that would not have existed if they didn't have GP.
There's also the factor of GP helping push users towards going all digital rather than continuing to buy physical disks which would also boost profitability by removing the costs associated with physical disk manufacturing and distribution for anyone that GP helps ween from their reliance on physical media.
Profitability for GP is more complex than just game purchase versus subscription fee.
That said, I'm not sure if GP has gotten enough of a subscriber base for it to be more profitable (as a whole) than users just buying games even if Microsoft's internal metrics show that GP subscribers spend more per person on average than non-GPU subscribers.
Regards,
SB
Johnny Awesome
Veteran
I never believe what any of these execs say, even someone like Phil Spencer, even though he's generally a likeable guy. It was in Phil's best interest to claim that Xbox needed to acquire ABK to bolster GP or their business would fail and Sony would own the market when he was testifying before the FTC and CMA. It helped smooth the deal through. It's just the right thing to say. Whether or not he or MS actually believes they need GP to succeed that badly is a different story. I'm sure some people around here will choose to believe Phil and Jim whenever they say something, but I'm not so naïve.
My guess is that MS has purchased 30+ studios knowing that GP "could" fail and the backup plan is just to go full software on PC and maybe PS. MS really doesn't want to be in the hardware business.
My guess is that MS has purchased 30+ studios knowing that GP "could" fail and the backup plan is just to go full software on PC and maybe PS. MS really doesn't want to be in the hardware business.
Considering that MS keeps expanding their hardware offerings I wouldn't be too sure that they don't want to be in the hardware business. I am sure they would love to have the same hardware dynamic that Apple hasI never believe what any of these execs say, even someone like Phil Spencer, even though he's generally a likeable guy. It was in Phil's best interest to claim that Xbox needed to acquire ABK to bolster GP or their business would fail and Sony would own the market when he was testifying before the FTC and CMA. It helped smooth the deal through. It's just the right thing to say. Whether or not he or MS actually believes they need GP to succeed that badly is a different story. I'm sure some people around here will choose to believe Phil and Jim whenever they say something, but I'm not so naïve.
My guess is that MS has purchased 30+ studios knowing that GP "could" fail and the backup plan is just to go full software on PC and maybe PS. MS really doesn't want to be in the hardware business.
I think it's obvious that to make subs work you need lots of content and lots of fresh content constantly coming into service. Licensed content isn't reliable enough to base your platform on as deals constantly change or content can be on multiple different platforms.
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All these companies they bought were profitable. It'd be insane to shutter them and wipe out those investments instead of operate as a games publisher and just let them make and sell games for profit!
Johnny Awesome
Veteran
MS is in the hardware business now because it's a GP delivery mechanism. I still believe they'd prefer not to be.
Btw, I'm going to make a prediction about this new controller that I haven't seen posted anywhere else, so you heard it here first: [I might be wrong about this, LOL]
MS has figured out that trying to get xCloud adopted is a two fold problem - latency and control. Touch controls are crap and latency is a problem that has two components a) latency between the console and the cloud and b) latency between the controller and the console. They can eliminate b) by making the controller the console. a) Will just get better over time as bandwidth increases. This also solves the touch control problem as you have an actual controller in your hands. Therefore, I think this new controller is a dumb terminal that can work on any smart TV that you download the xCloud app to.
So if you have 2 or 3 smart TVs in your house or you're on the road and in a hotel, or the xCloud app is on your phone or on your laptop etc... You just have this controller you can move around and play your games. The controller IS the console. Think of it as a handheld without a screen with better controls than any handheld you've ever played, because it's just a regular controller. It's limited mainly to home/hotel use as it's not super portable and doesn't mean they aren't going to support things like steamdeck etc...
The end game of all of this is to eliminate the hardware at home 15 years from now. Just buy an xCloud controller and GP and play on any smart TV, laptop or phone.
Btw, I'm going to make a prediction about this new controller that I haven't seen posted anywhere else, so you heard it here first:
[I might be wrong about this, LOL]MS has figured out that trying to get xCloud adopted is a two fold problem - latency and control. Touch controls are crap and latency is a problem that has two components a) latency between the console and the cloud and b) latency between the controller and the console. They can eliminate b) by making the controller the console. a) Will just get better over time as bandwidth increases. This also solves the touch control problem as you have an actual controller in your hands. Therefore, I think this new controller is a dumb terminal that can work on any smart TV that you download the xCloud app to.
So if you have 2 or 3 smart TVs in your house or you're on the road and in a hotel, or the xCloud app is on your phone or on your laptop etc... You just have this controller you can move around and play your games. The controller IS the console. Think of it as a handheld without a screen with better controls than any handheld you've ever played, because it's just a regular controller. It's limited mainly to home/hotel use as it's not super portable and doesn't mean they aren't going to support things like steamdeck etc...
The end game of all of this is to eliminate the hardware at home 15 years from now. Just buy an xCloud controller and GP and play on any smart TV, laptop or phone.
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Its also insane how much money MS is potentially spending for third party AAA games to get on GamepassMicrosoft May Exit Gaming Business If Game Pass Subscribers off Console Don't Increase Enough by 2027
Microsoft's Phil Spencer said in testimony that the company may exit its gaming business if GP subscribers off consoles don't increase a lot.
Seems like Microsoft, despite what some claim, genuinely are betting the entire farm on Gamepass. And that if they dont hit the numbers they are hoping for, they will have to consider shuttering the Xbox division.
Exactly what I've been worried about, especially in the wake of MS going on an acquisition spree and putting lots and lots of really great studios in jeopardy with their high risk strategy.
Frankly, even if they're successful, a future where people buy less and less games and just rely on subscription services is a nightmare. It will have huge ramifications for the industry, and create even more winners and losers for developers based on who can get on a subscription service or not. And really, I just hate subscriptions and vastly prefer to own games. I can even see it getting to a point where some games start to release not just digital-only, but subscription-only. Once you've got like 50m+ subscribers, you control access.
Microsoft expected to offer $300m to get Star Wars Jedi: Survivor on Xbox Game Pass, leak suggests
The recent leak of internal Microsoft documents gives an indication as to what the company expects to pay to get games …
www.eurogamer.net
Hence why they want to buy out big companies to reduce the costs in the long run for getting the content there.
To sustain this, acquiring big studios under them is a catastrophic necessity for the market at large and a lucrative business for them
Why get rid of xbox ?
MS is just now entering a postion to really drive sales for xbox
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