Why is MS selling its best first party studios?

[Deleted member 7537]

Bizarre (Proyect Gotham Racing)---> Activision
Pandemic & Bioware (Mass Effect) ---> EA
Bungie (HALO)---> Independent
Irrational Games (Bioshock) ---> Take2

I't doesn't make sense, knowing that third party developers will be soon multiplatform only due high cost of development. Wouldn't be more logical to buy more studios like Sony has been doing over the last years so they'll have more first party exclusive games to compete with Nintendo and Sony? And the worst thing is that they are selling the studios that make the triple A titles for the 360.

PD: Sorry for my english.

 

[scooby_dooby]

MS only sold Halo.

Bizarre, Bioware, Pandemic and Irrationale are all 3rd parties that have recently been purchased by a new publisher.

So I guess the real question is, why didn't MS purchase one or more of these studios.

In particular, Bioware would've seemed like a no-brainer, but I guess MS felt they couldn't afford $805 million for both Pandemic and Bioware. I don't think you could do much better than thsoe two studios for a 1st party acquisition. Both Bioware and Pandemic are AAA studios IMO, and between the two could release a steady stream of exclusives and strong IP's. Huge missed opportunity for MS imo.

On a personal level, MS has probably lost my default support for the launch of their next system. Bioware was always my main reason for preferring the Xbox platform, and it seems they'll now be cross-platform.

 

[D3B]

Maybe they are finally giving up.

I believe MS have made zero profit since xbox.

 

[AlphaWolf]

Maybe they are finally giving up.

I believe MS have made zero profit since xbox.

in what world does 0 = $billions?

If you meant that the gaming division has lost money, well you get a big duh..., but they seem to think its gone profitable now. They just had their first profitable quarter (since halo2) and are projecting that it will be profitable throughout the next fiscal year, so now would seem to be the wrong time to be giving up.

 

[Arwin]

Maybe the $1 billion that they've had to reserve for the RROD issue had to come from somewhere? It would otherwise have been just about enough to make the other bidders back down. It must be painful, and we'll have to see whether or not Sony will have to make similar sacrifices (or already has) in the future as they have been paying dearly (though apparently not as dearly as some investors feared) for the diode issues in the PS3. Dropping BC's also a painful issue in that respect.

As for Halo, I'm personally convinced that Bungie's desire to do something else was made known to Microsoft during or just after Halo 2. And for the record, I'm pretty sure that Halo is still owned by Microsoft, just as PGR is still owned by Microsoft.

 

[Shifty Geezer]

Maybe they are finally giving up.
I believe MS have made zero profit since xbox.

They didn't enter the console market specifically to make a profit on it. For ages now, there has been this idea that there will be a digital box in people's living rooms where they watch stuff and listen to music and experience their content. Whoever controls this box can get a royalty for every piece of content downloaded. It's the iTunes model only extended to the nth degree. The dream of these companies is to get all that revenue for no work - someone else creates the content, and the servers handle payments and delivery of content. PlayStation was a strong contender. Kutaragi came out of the gate with his fantastic dreams of a networked content delivery platform. Microsoft saw this and realized Sony could well become the Living Room box company. In order to get a piece of the pie, they offered Sony to make the PS2's OS. That way if PlayStation remained successful, it'd carry MS into the living room. When Sony turned them down, MS took emergency measures. They weren't happy to rely on the Media PC route as Media PC sales were nothing like console sales. Thus they created their own box to carry the MS brand and interface into the living room.

As long as MS win this space, they don't care what the console division costs them. And it doesn't have to be won by XB either. If they manage to stall PS off long enough to establish other services via PC and set-top box, they've won.

 

[woundingchaney]

They may simply be wanting to streamline their overhead. MS has a different traditional take on exclusives and first parties as seen with their agreement with Bungie. MS chooses simply to remain rights owner of titles and contract out their creation through various development houses. All in all it could potentially be a more profitable venture for them then housing several different studios in their games division. Im personally wondering if it is a tactic that the other console manufacturers will adopt.

I wouldnt doubt that the recent loss of approx. 1 billion dollars in hardware failures helped make this stance a bit easier to accept.

 

[Skrying]

They didn't buy them because it's far to much of a risk. When Microsoft bought Rare what did people expect? They thought a massive success like Perfect Dark, they thought Banjo Kazooie, but guess what has happened? Several very disappointing releases.

I believe it is much wiser to invest money instead in marketing the game for your console or offering specific advice to the developer for your console. If you give the advice every developer is going to take it, they'd love to have an expert come in and help get rid of the bugs, or improve performance and looks. You can't simply go out and buy game after game studio expecting great results. For them it is probably much more profitable short term to help independent studios make better games for their platform.

 

[D3B]

As for Halo, I'm personally convinced that Bungie's desire to do something else was made known to Microsoft during or just after Halo 2..

Or it could been because Rare was paid FAR more money then Bungie= so not fair.

 

[AlphaWolf]

Or it could been because Rare was paid FAR more money then Bungie= so not fair.

Rare is running multiple teams, you have to account quantity as well as quality. While rare's recent releases haven't lit up the charts, none of them have been bad, just under performing expectations.

 

[BoardBonobo]

I agree with Shifty on this one. For MS it's all about controlling the digital living room. They already have most of the corporate\PC space sown up, after that there is only the consumer space left. It's got nothing to do about making the best console or gaming experience. It's all about who controls what you watch and download. They'd chuck any old piece of junk in there if it would stall other companies ability to take hold of this space. As long as it carried the MS brand, to increase consumer awareness, and was servicable enough to be a placeholder.

 

[Deleted member 7537]

Maybe they are finally giving up.

I believe MS have made zero profit since xbox.

Don't think they are gonna leave now that finally have some profits.

They may simply be wanting to streamline their overhead. MS has a different traditional take on exclusives and first parties as seen with their agreement with Bungie. MS chooses simply to remain rights owner of titles and contract out their creation through various development houses. All in all it could potentially be a more profitable venture for them then housing several different studios in their games division. Im personally wondering if it is a tactic that the other console manufacturers will adopt.

I wouldnt doubt that the recent loss of approx. 1 billion dollars in hardware failures helped make this stance a bit easier to accept.

Could be more profitable, but what about the quality of the product, what about if PGR5 is done by any other studio and it turns out to be a bad game, no one will buy any other PGR if it's not done by Bizarre. Letting go the studios that had made some of the best games for your system could be dangerous.

PD: Again, sorry for my english

 

[AlphaWolf]

Could be more profitable, but what about the quality of the product, what about if PGR5 is done by any other studio and it turns out to be a bad game, no one will buy any other PGR if it's not done by Bizarre.

What if BC makes it and it turns out to be bad? Then you're stuck with a bad game and a bad studio, but MS never owned BC so I guess that's all just theory crafting anyway.

And I bet if you polled all the PGR game owners, a small % of them could actually tell you who made it without looking at the box.

Letting go the studios that had made some of the best games for your system could be dangerous.

Keeping them also has risks, see factor 5.

 

[D3B]

Don't think they are gonna leave now that finally have some profits.

:

Doesnt the billion in RROD offset any profit.

 

[AlphaWolf]

Doesnt the billion in RROD offset any profit.

Sure, just like Sony's last quarter negates all their profit from ps2 for the last few years, but that's not the way they do math at corporate HQ. Profit requires investment.

 

[iceberg187]

Rare is running multiple teams, you have to account quantity as well as quality. While rare's recent releases haven't lit up the charts, none of them have been bad, just under performing expectations.

Perfect Dark Zero and Kameo sold over a million and Viva Pinata has done over 500k. Microsoft's policy isn't hard to see, so I don't why there is always discussion over it. When Ed Fries and Seamus Blackley was there, we got games like Blinx and Azurik. Since Shane Kim has taken over, we've gotten Gears of War and soon to be Mass Effect, among others. Microsoft swings for the fences now instead of singles and doubles.

 

[Deleted member 7537]

Doesnt the billion in RROD offset any profit.

Did they include that in their financial results? I mean, Q2 profits were "real"?

 

[mrcorbo]

They'd chuck any old piece of junk in there if it would stall other companies ability to take hold of this space. As long as it carried the MS brand, to increase consumer awareness, and was servicable enough to be a placeholder.

That doesn't make much sense. If you're a major corporation you don't just carry your brand with "any old piece of junk". Your products affect your corporate image, which you are literally spending 10s to 100s of Millions of dollars to create in the form of PR and advertising. For a company like Microsoft it's in their best interest to try to create the very best product they can in any market they try to enter.

 

[fearsomepirate]

They didn't enter the console market specifically to make a profit on it.

Revisionist history doesn't work as well in the digital age. Microsoft was clear about intending Xbox to make a profit within the first year and outsell the PS2. I wouldn't be surprised if they later revised their console strategy to "Lose billions, but keep anyone else from making anything, either." That's been their strategy in pretty much every sector outside of operating systems and Office. MS is sort of the poster child for putting market control ahead of profits. Their corporate strategy basically amounts to, "It's more important for us to be in control than for us to make money or for good ideas to flourish, as long as we've got Windows keeping us in the black."

 

[BoardBonobo]

That doesn't make much sense. If you're a major corporation you don't just carry your brand with "any old piece of junk". Your products affect your corporate image, which you are literally spending 10s to 100s of Millions of dollars to create in the form of PR and advertising. For a company like Microsoft it's in their best interest to try to create the very best product they can in any market they try to enter.

Then something went horribly wrong this time. I can't see any big business that wouldn't spend 10's or 100's of millions now to guarantee either dominance or at least a large slice of a pie that may be worth billions in the near future.