Xbox Business Update Podcast | Xbox Everywhere Direction Discussion

[iroboto]

Yes she may have worked in the game industry but her understanding of the financials behind these companies and what defines a commercially successful product to a shareholder are quite spurious at best

She has. Not may have worked. She has. And if you want to question her understanding of financials, I would like to see evidence that she doesn't understand financials? I work in sales and often meet with high level executives to go through the numbers each quarter. There's nothing there that would cause my eyebrow to lift.

Equity Analysts always consider the quality of a product made by a company they may be covering and use different methods to ascertain this(scuttlebutt, data from the supply chain, sales, consumer reviews, etc). The work of this analysis is what primarily drives shareholder decisions

Having an amazing product is not enough, if that were the case, Beta would have beaten out VHS. Having a better product had never given any business the entitlement to 'winning'. Shareholders look at what the strategies are and what they are doing to keep costs under control, analysts are not going to look at game reviews and 'invest' into game studios. They are going to look at revenue and expenses and growth, they don't care about reviews, they care about profits.

There's no question about whether Sony or Nintendo will exist in the next 10 years, they will and they'll still be selling fixed hw and adapting to the industry. But Xbox may not even survive the next 5 if things continue as they are at the moment, due to their own internal weaknesses within the division. If for example they use the Activision acquisition anti competitively, they could be forced to sell it by regulators and lose that financial lifeline. Time will tell but looking at a drop in console sales in a quarter and concluding its the end of the whole console industry isnt accurate imho. Its just temporary headwinds and a need to improve the quality of titles, SDLC and possibly increase the reach of titles as well as diverse the portfolio of types of titles. But quality still matters, great games still matter, AAA one and done still matters, GaaS still matters, small indie titles still matter etc.

Firstly, no one said they didn't matter. But this idea that companies would repeatedly take losses when their titles aren't homeruns is the big misunderstanding here. Shareholders won't stand for not hitting forecasts. The idea that you think xbox won't last 5 years is complete utter bollocks. I can't even address how ridiculous a statement like that is. Xbox's FTC numbers are below. I'm not sure if you understand why Phil continues to be in a leadership position, considering that they are down 3:1 in consoles.

Margin, it's a pretty important metric. Dominating the whole industry but living on the edge doesn't make a lot of sense for survivability either.

Let's do this again for 2024:

The company’s shares fell after the announcement, with around $10 billion of value wiped off the stock since the forecast cut, according to a CNBC calculation using FactSet data.

But analysts were watching another key metric — the operating margin in the gaming business — which came in just under 6% for the December quarter, according to a CNBC calculation. By contrast, Sony’s operating margin was more than 9% in the December quarter of 2022.

“The shipment forecast cut for PS5 ... is not what is disappointing ... What is disappointing is the low level” of operating margin, Atul Goyal, equity analyst at Jefferies, said in a note to clients on Wednesday

He added that prior to the January-to-March quarter of 2022, margins at the gaming unit were around 12% to 13% in the previous four years.

The latest quarter’s single-digit margin for Sony is present “despite various tailwinds that should have driven up the margins towards 20%,” Goyal said, adding that the situation is “extremely disappointing.”

These tailwinds include sales of its first-party games, which are increasingly in the form of digital downloads, in addition to its high-margin PS Plus subscription service, which commands around 50% margin, according to Goyal.

“Their rev (revenue) on digital sales, add-on-content, digital-downloads are at all time highs… And yet their margins are at decade-lows. This is just not acceptable,” Goyal said in an email to CNBC.

Be smart about this, what hurts more? Closing some studios or getting 10B wiped off your market cap. I can guarantee you, those 4 studios aren't worth $10B. Yes perhaps it's a long term move vs short term, that's often in debate - but I can't fault a company going one way or another.

It's obvious why Sony suddenly is much faster to porting their titles to PC.
And in the same vein, it's obvious why MS wanted to purchase ABK. Their operating margin is 40%

 

[Cyan]

Alanah covers what’s wrong with the industry and why this continues to happen.
I have largely bit my tongue reading the responses here, largely waiting for the hate train to calm and waited for exactly this type of video to explain how the industry works versus how you guys thinks it works. Some people going as far to say that MS will tank Sony or the games industry due to buying up and closing studios or some shit.

I have many times talked about these topics before, in various threads. Talking about how everything fights for your time. Talking about how live service and forever title games are the most profitable games to own. Etc.

Anyway, she’s covers this succinctly and this should be required watching if you want to actually understand the industry challenges at large and why both MS and Sony and others continue to change to adapt to the industry.

This was just never a thing in the past. We didn’t have forever games dominating play time like they do now. And if you’ve never shipped a game that had nearly 0 sales despite investing hundreds or thousands of hours to build it, what exactly do you know about how hard it is to have a breakout hit and survive. How many indie studios are shut down regularly after releasing just 1 title. You just don’t want to do it again.

I get there is a serious hate towards Xbox. But people are ignoring that Sony is equally suffering and are using the exact same strategies as MS, just different moves. So watch. Game pass isn’t the issue. If you want to save games, buy the ones you want to save. But what’s killing the industry are the same forever games at the top. They require potato machines to play, they cost nothing to own, and they monopolize all your time with season passes that keep you fomo’d to keep playing. That’s why everything else is dying, that’s why hardware is dying.
Until there is a forever game that actually requires next generation hardware, the need for power is dwindled.

Make a forever game with potato requirements and you have the largest chance to succeed. The general lack of discussion here around risk and reward was largely concerning to see. So much of the discussion rooted around emotion and not the root cause to make decisions that ultimately are aligned to appeasing shareholders. You might think that’s stupid, you may think they are greedy. But leadership roles are designed to be largely paid in shares so that their interest is aligned with shareholders and shareholder value is the most important metric to maximize.

If I paid you only in shares and doing the right thing means you’re shares are worth 10% less each quarter versus doing whats wrong but having that share price not move or go up, what would you do?

Firstly, you wouldn’t be In a leadership position for long because the rest of leadership is paid in shares so you’re out if you keep tanking the stock. Secondly, once you’re fired your shares are worth so much less to sell, you basically worked for free.

This idea that Xbox is the bad guy and that Sony is the good guy is just so childish. They are governed with the same rules, the only separation being that Sony has more margin to lose due to being the overwhelming leader in the industry. If the positions were reversed for sure Sony would be closing studios.

https://twitter.com/x/status/1788870272805650756

x.com

x.com

Moon studios talks a lot of shit. If MS didn’t promote and drive their two titles to the top, does ge really think he would have made enough cash and have enough exposure to make a sequel and another game following that on his own?

Common. The hubris on Tom.

fair points.

The first tweet you mention is the elephant in the room. Sony and MS are doing something wrong, this generation is the worst console generation I remember both in regards to games, excitement (both consoles are the same), and most of all sales.

@rntongo well tbh I felt for the console gamers but I'm now immune to that. If MS releases a console I am fine with it but I expect they change some things so it can be something a bit more open, more hybrid so to speak.

The team working on game preservation hints to that, and Microsoft is the only company that said that emulation should be legal. This is news from 2021.

https://www.axios.com/2021/11/17/microsoft-old-games-preserve-emulation

Microsoft’s vice president of gaming, Phil Spencer, wants the gaming industry to work toward a common goal of keeping older games available to modern audiences through emulation, he tells Axios.
Why it matters: The industry has big problems preserving its past, as older games routinely become unavailable.

• Many games remain locked to older hardware standards, including consoles that are no longer supported.
• “I think we can learn from the history of how we got here through the creative,” Spencer said, of being able to go back to past works of art. “I love it in music. I love it in movies and TV, and there's positive reasons for gaming to want to follow.”

The details: Spencer is advocating for an approach Microsoft already uses: software emulation.

• Emulation allows modern hardware to simulate the functions of older hardware and run game files, or executables.
• “My hope (and I think I have to present it that way as of now) is as an industry we'd work on legal emulation that allowed modern hardware to run any (within reason) older executable allowing someone to play any game,” he wrote in a direct message.

 

[iroboto]

The first tweet you mention is the elephant in the room. Sony and MS are doing something wrong, this generation is the worst console generation I remember both in regards to games, excitement (both consoles are the same), and most of all sales.

We can always look at one title and compare it to another. That's like comparing two people and saying one weighs more than the other because of genes even if you fed them the same amoutn of calories, perhaps it's gut bacteria. That may explain the difference between two people, but it wouldn't explain why over 50% of the world is suddenly obese. Right? That's a population problem. That means it's an environment issue.

So good games, quality games, yea. I get it, but that's comparing 1 title to the next. It doesn't explain that the population of games aren't being bought or played. I agree that diversity is needed, diversity hasn't netted Xbox much results. They have an extremely diverse catalog of games, they have a game pass system that is designed to support a diverse catalog of games. And everyone keeps going back to the same forever titles.

 

[Cyan]

There's a large list of AAA titles, that fit that description. The entire RTS genre straight up bellied up, and those were all great games. XCOM titles are great. Titanfall 1 and 2 are great, but they died. Battlefield is dead. Alan Wake II is amazing, as was Alan Wake 1, and they are both complete flops. Deathloop is great, dead. Disco Elysium, dead. So much of Obsidian's games, like Pillars 2, dead.

for those games to survive they should be used to have a more complete, prestigious catalog, on either a subscription model or via regular sales -with discounts-, instead of having them expecting to be the big hitters. We can't expect all the games to sell at least a million.

The idea is to build a sane ecosystem where everyone can play an adventure game a la Broken Sword, a RTS like AoE, a game for kids (quite a few on PC Gamepass, great stuff) etc etc. When I first started on PC Gamepass what I loved is that I could play Pillars of Eternity, Tyranny (fascinating story), etc, and that's invaluable.

I read that out of the 125+ Nintendo games on the Switch, 67 of them are 1 million sellers, which is a miracle. But that's Nintendo stuff. I couldn't corroborate the data so take this with a grain of salt but that means 60 of them at least didn't sell 1 million, yet Nintendo has the bigger profits ever, more than MS (Xbox sales), Sony, Activision, etc, combined.

 

[Cyan]

And everyone keeps going back to the same forever titles.

that the cheap forever titles that keep people addicted with forever and ever content until death, is a great point you brought up regarding what is killing AAA and videogames industry overall. Luckily, I don't play any of those, because they bore me.

Now that games earn much more than movies and music combined, greedy corporations are getting a free pass.

For certain people returning to a game should mean that the game has received some great mod, or that you just feel like playing it again. I think that the gaming industry will end up regulating itself.

meanwhile you have things like Steam, where you can play many games at good prices and there is something for everyone.

 

[iroboto]

for those games to survive they should be used to have a more complete, prestigious catalog, on either a subscription model or via regular sales -with discounts-, instead of having them expecting to be the big hitters. We can't expect all the games to sell at least a million.

The idea is to build a sane ecosystem where everyone can play an adventure game a la Broken Sword, a RTS like AoE, a game for kids (quite a few on PC Gamepass, great stuff) etc etc. When I first started on PC Gamepass what I loved is that I could play Pillars of Eternity, Tyranny (fascinating story), etc, and that's invaluable.

I read that out of the 125+ Nintendo games on the Switch, 67 of them are 1 million sellers, which is a miracle. But that's Nintendo stuff. I couldn't corroborate the data so take this with a grain of salt but that means 60 of them at least didn't sell 1 million, yet Nintendo has the bigger profits ever, more than MS (Xbox sales), Sony, Activision, etc, combined.

Nothing is forever right. As things change so do the market dynamics and how you must play in that field. Nintendo aims for a smaller market and dominates in that field insulating themselves from it.

but even Nintendo is going to run into these challenges otherwise mobile gaming will surpass their dedicated console and why would anyone bother with Nintendo.

Nintendo president: “Game development will become even longer, more complex, and more sophisticated”

Nintendo president Shuntaro Furukawa has explained to Japanese magazine Famitsu that video game development will become even longer, more complex, and more sophisticated in the future and that mergers…

mynintendonews.com

Does this sound familiar ?

“He also stated that he believes that further lengthening, complexity, and sophistication of game development is inevitable in the future, and that M&A is one possible means to address this

 

[rntongo]

She has. Not may have worked. She has. And if you want to question her understanding of financials, I would like to see evidence that she doesn't understand financials? I work in sales and often meet with high level executives to go through the numbers each quarter. There's nothing there that would cause my eyebrow to lift.

My first degree was in Finance, as well I spent time working as an Equity Research Analyst covering MSFT, Apple, AMD, TSLA, NVDIA, basically tech stocks. The things she said about risk were quite elementary and spurious. I dont want to go into a long spiel into risk theories, or corporate Finance or investment strategies its a world I stay away from anyways. She definitely has experience in the gaming industry and its why I called her video spurious, at the surface she says plausible things but her understanding of Financials and Finance is so rudimentary, she could reach wrong conclusions and mislead others.

Having an amazing product is not enough, if that were the case, Beta would have beaten out VHS. Having a better product had never given any business the entitlement to 'winning'. Shareholders look at what the strategies are and what they are doing to keep costs under control, analysts are not going to look at game reviews and 'invest' into game studios. They are going to look at revenue and expenses and growth, they don't care about reviews, they care about profits.

No one is saying having a quality game or amazing product is all that matters in of itself. Its sweeping statements such as quality doesnt matter(like in the video you posted) or great games dont matter or things along those lines that are not true. I know this because I was analyst myself recommending stocks to investors when I was much much younger. Qualitative factors were always crucial. You gave a good example of Beta vs VHS, but VHS wasnt a terrible product, it was a great product as well, arguably not as good as Beta. But other factors played a role in what was to be the winning product.

Firstly, no one said they didn't matter. But this idea that companies would repeatedly take losses when their titles aren't homeruns is the big misunderstanding here. Shareholders won't stand for not hitting forecasts. The idea that you think xbox won't last 5 years is complete utter bollocks. I can't even address how ridiculous a statement like that is. Xbox's FTC numbers are below. I'm not sure if you understand why Phil continues to be in a leadership position, considering that they are down 3:1 in consoles.

Again I covered MS as an equity research analyst I know it quite well and did valuations on it and led investments into it. Respectfully you misunderstood me. There's scuttlebut(Finance related scuttlebut) that MS is transitioning away from Xbox as a brand to MS Gaming. Yes its very plausible Xbox as a brand may not exist in 5 years. Its a valid assessment to me at least, I understand if you dont agree with me thats fine.

“I had lengthy conversations with a bunch of Xbox founders, and we all came to the same conclusion: it’s no longer Xbox, but Microsoft Gaming.” Ouch.

Margin, it's a pretty important metric. Dominating the whole industry but living on the edge doesn't make a lot of sense for survivability either.

Let's do this again for 2024:




Be smart about this, what hurts more? Closing some studios or getting 10B wiped off your market cap. I can guarantee you, those 4 studios aren't worth $10B. Yes perhaps it's a long term move vs short term, that's often in debate - but I can't fault a company going one way or another.

It's obvious why Sony suddenly is much faster to porting their titles to PC.
And in the same vein, it's obvious why MS wanted to purchase ABK. Their operating margin is 40%

In Finance we were taught to do valuations based on many things, one of the most important things were projected future cashflows, discounted to today were the present value. You quoting a certain 9 month period isnt useful to me. Show me the past 5 years of annual revenues and projected next 5 years of annual revenues as well as net earnings. You also assume MS's purchase of ABK(which saved their gaming line) was meant to grow only Xbox yet it could shift MS's entire outlook on whether they need Xbox.

 

[iroboto]

I dont want to go into a long spiel into risk theories, or corporate Finance or investment strategies its a world I stay away from anyways. She definitely has experience in the gaming industry and its why I called her video spurious, at the surface she says plausible things but her understanding of Financials and Finance is so rudimentary, she could reach wrong conclusions and mislead others.

That’s still projecting though. You’re assuming she needs to have a degree or that she has no experience in it. She only needs to be connected to the people who make the call on which games get the green light and which games don’t. Spend enough with the people who are in the business of pitching games, and she would understand how that process works without needing a finance degree. I’m fairly confident that her working as a journalist and for Santa Monica studios, she has deep connections in the game industry that would explain to her how things work. I would not underestimate her.

Its sweeping statements such as quality doesnt matter(like in the video you posted) or great games dont matter or things along those lines that are not true

I think there are tons of great games out there. But we aren’t talking about great games, you’re talking about marquee titles. Xbox has a lot of great games. They just don’t have “system sellers”.

There's scuttlebut(Finance related scuttlebut) that MS is transitioning away from Xbox as a brand to MS Gaming.

I think that’s just people indicating that the MS is taking a bigger role in governing Xbox. Not that Xbox is going away as a brand. The idea that Xbox would be such a dead brand, that rebranding it as MS Gaming would make it better screams all sorts of wrong.

Xbox is the only positive consumer brand that MS has that they’ve built ground up. Xbox isn’t going anywhere as a brand.

 

[rntongo]

That’s still projecting though. You’re assuming she needs to have a degree or that she has no experience in it. She only needs to be connected to the people who make the call on which games get the green light and which games don’t. Spend enough with the people who are in the business of pitching games, and she would understand how that process works without needing a finance degree. I’m fairly confident that her working as a journalist and for Santa Monica studios, she has deep connections in the game industry that would explain to her how things work. I would not underestimate her.

No you asked me to provide evidence. To me it was quite evident, when she went into things like risk, finance she was entering a territory where she may reach wrong conclusions, which in my opinion she did(reach wrong conclusions). I only brought up the Finance degree and Equity Research experience as context because I did this for a living at a time in my life, including covering the company she's talking about. Yes she may talk to some important people in the industry and write great articles but if she goes into an area like she did in the video, she can confuse multiple things and end up misleading viewers. Which she did imho. We have a saying in my other language that sleeping in a garage doesnt make one a car. Her being around domain experts in the gaming industry doesnt maker her one although it exposes her to useful data she may make wrong conclusions about it(like she did in the video imho). And its okay you could disagree with me since you found her video good. I as someone who did this for a living valuing MS, found her talk spurious especially when she went into the financial side which may not be expertise. But hey I could be wrong as well or didnt get her core message.

I think there are tons of great games out there. But we aren’t talking about great games, you’re talking about marquee titles. Xbox has a lot of great games. They just don’t have “system sellers”.

Well they need them system sellers. They could come in the form of one and done AAA like Elden Ring/Dragons Dogma or whatever or they could be a successful live service game. Thats my point.

I think that’s just people indicating that the MS is taking a bigger role in governing Xbox. Not that Xbox is going away as a brand.

Oh there is actual speculation it may also go away as a brand and replaced by MS Gaming or whatever will become of it!! In fact, MS isnt allocating as much money as in previous years to marketing certain gaming products like titles due to all this uncertainty. They're reevaluating all this due to changes in the tech industry such as AI, internal weaknesses, ABK litigation, etc. I think someone here also mentioned something quite true which is that before the huge AI boom, MS was pivoting gaming as a major future growth engine (incl. consoles). Well today they have AI as a major growth engine. They must be reevaluating what they're going to do with gaming. Expect more tough news in the coming months.

 

[function]

These latest cuts feel like they've been forced on Xbox on a corporate level. MS just blew 700 Trillion dollars to boost Gamepass, which is still stalling, and Xbox hardware sales have shrunk and in some areas collapsed. On a corporate level they probably feel they need to offer up a few thousand human sacrifices to the shareholder gods at this point.

 

[rntongo]

These latest cuts feel like they've been forced on Xbox on a corporate level. MS just blew 700 Trillion dollars to boost Gamepass, which is still stalling, and Xbox hardware sales have shrunk and in some areas collapsed. On a corporate level they probably feel they need to offer up a few thousand human sacrifices to the shareholder gods at this point.

I agree with this 1000% as well, it definitely feels that way when you consider on March 1st Sarah Bond was celebrating Tango and promising several more years.

https://twitter.com/x/status/1763685686295826790

This is something that came from the C-suite. But I think its a misguided strategy, more important would be to change leadership of MS's gaming division and let it make the right decisions. MS needs excellent execution at this point. Excellent. It needs leaders who are able to lay out a single focused strategy and have the founders of Xbox play a huge advisory role such as Seamus Blackley and Ed Fries, so it retains its sole.

Forcing decisions from higher ups isnt producing the desired outcomes as well. Satya Nadella could look at the broader industry and just think, "Oh we just need to get rid of exclusives across the industry and get rid of this box. While making our software available on every device and create a subscription gaming service". Which makes sense honestly but when it comes to execution the theory hits a major brick wall of reality or mountain even. You have multiple configurations of hw, game stores, competing companies that have different philosophies and outlooks, etc.

 

[Frenetic Pony]

You know what? Gamepass never made sense, Sony knew it and that's why they never really copied to tried to compete, people that spent a dollar (1$ for the first month!) to play a brand new AAA game then cancelled their subscription knew it (I'm one of those, thanks for the practically free Forza Horizon 5), the only person on earth that didn't know it was Phil Spencer.

Phil Spencer is a narcissistic moron who's only talent was hyping himself up. Satya Nadella took time off from victory laps for the AI stuff and surpassing Apple in market cap to finally ask "wait how much money have we been giving you, and your sales are going down?" Now Phil is in full on panic mode and just making random slapdash decisions to "make the financials look better".

I'd put it at 60/40 chance Sarah Bond or someone else is in charge of the Xbox division by years end. I mean sure, the PS5 is also something of a very moderate failure purely versus where it could've been (opportunity cost), but that's a wider failure of the games industry as a whole. EG People never stopped wanting to buy good enough Mass Effect games, never the less good enough Mass Effect games stopped being made (and Tony hawk, and just etc. etc.). But Xbox's current failure has managed to be the most egregious of these examples.

 

[rntongo]

You know what? Gamepass never made sense, Sony knew it and that's why they never really copied to tried to compete, people that spent a dollar (1$ for the first month!) to play a brand new AAA game then cancelled their subscription knew it (I'm one of those, thanks for the practically free Forza Horizon 5), the only person on earth that didn't know it was Phil Spencer.

Phil Spencer is a narcissistic moron who's only talent was hyping himself up. Satya Nadella took time off from victory laps for the AI stuff and surpassing Apple in market cap to finally ask "wait how much money have we been giving you, and your sales are going down?" Now Phil is in full on panic mode and just making random slapdash decisions to "make the financials look better".

I'd put it at 60/40 chance Sarah Bond or someone else is in charge of the Xbox division by years end. I mean sure, the PS5 is also something of a very moderate failure purely versus where it could've been (opportunity cost), but that's a wider failure of the games industry as a whole. EG People never stopped wanting to buy good enough Mass Effect games, never the less good enough Mass Effect games stopped being made (and Tony hawk, and just etc. etc.). But Xbox's current failure has managed to be the most egregious of these examples.

I completely agree with what you're saying here. I was just watching a video of SomeOrdinaryGamers about the current state of Xbox and it dawned on my how much Game Pass reminded me of Movie Pass. I really think Phil may have overplayed the significance of GamePass and not fully appreciated the state of the market, and technology. Created a two tiered hw system with a low cost Series S to push gamers into the subscription but it didnt sell well and caused dev issues due to strict console requirements. It was a combination of bad economics, lack of focusing on SDLC(which would require one single fixed hw system + support for PC and cloud), no clear strategy for buying studios, contrived hw choices aimed at pushing subscription model, etc. The fact the Series X launched without a single show case title shows just how much of a cluster eff this was honestly.

Phil got the economics wrong, the software wrong, the hw choices wrong, honestly this could end up worse than Don Mattrick if they were cooking Game Pass numbers. Because COD going onto GamePass day and date doesnt make any financial and anti-competitive sense at all. And a lot of people are going to cancel their subscriptions if a new GamePass tier is revealed(I'll be one of them). I think the coming months are going to get even worse. Satya must have looked at the ABK acquisition and wondered why they're still making these boxes if they can simply just buy as many studios and make the games available on the web(the experience is another issue). The announcement next month is going to be about MS Gaming store on the web!! I think they hope to push that store onto the iPhone, Mac, Playstation, or any device. Thats going to be their strategy moving forward. Its going to be some interesting months for sure.

 

[iroboto]

No you asked me to provide evidence. To me it was quite evident, when she went into things like risk, finance she was entering a territory where she may reach wrong conclusions, which in my opinion she did(reach wrong conclusions)

Right, so what was so evident? In what ways in your opinion did she reach the wrong conclusion? You say “may” and yet you said it was quite evident she was wrong without actually providing your own conclusions. So please state them so we know what we are talking about.

she can confuse multiple things and end up misleading viewers. Which she did imho. We have a saying in my other language that sleeping in a garage doesnt make one a car. Her being around domain experts in the gaming industry doesnt maker her one although it exposes her to useful data she may make wrong conclusions about it(like she did in the video imho)

So let me understand this point here; If I work daily with MBA level executives who very well explain to me what’s happening and why things are happening, why certain choices are made, where the industry is headed for the business area that we operate in. You’re telling me that you know more about my business area than I know about it even though I live it everyday and you have a finance degree that has analyzed a completely different companies and industry?

I just want to confirm here that we are talking about Game development studio closures and how they choose titles and you keep bringing up Microsoft which has massive products in many spaces. You keep talking about understanding the risk profile and she doesn’t, but you’ve not made it clear if you’ve ever been in meetings or have connections to those who regularly pitch games to be greenlit for funding. If you don’t know the drivers there for title selection, how would you know more than her?

Like exactly how much information are you working with to come up with your conclusions versus how much information she has to come up with her conclusions, versus her actual experience working games? She could very well be dumbing it down as well.

So if you don’t know about what she actually knows, then It’s speculation at best then right ? I trust her because she’s not just an angry drone out on the internet looking for blood. She has worked the space for decades. She has a job, she doesn’t need to monetize YouTube for her livelihood. She provides insight into the games industry that I can align with my other friends and family that work AAA. I have literally seen builds of games that are work in progress that will be out later this year. And I will tell you first hand that it is indeed a disaster ramped up by Covid.

So I’m really trying to understand here where she has gone so wrong in her messaging that it would be so easy to point out that every reader should see that she is completely lying through her teeth.

 

[iroboto]

SomeOrdinaryGamers about the current state of Xbox and it dawned on my how much Game Pass reminded me of Movie Pass. I really think Phil may have overplayed the significance of GamePass and not fully appreciated the state of the market, and technology.

I think it’s hubris (my apologies no offense) to think that you would know more about how the gaming economics works than he does. He has metrics you would never see or ever report on. He has worked the top position for the last 10 years. And has been in Xbox for decades before when many other platforms died out, Xbox survived.

it is really something if you’re going to flash your credentials why trust a raging YouTuber who has never worked the industry? How many people in the games industry actually understand how or why their consoles sell or don’t sell. I can assure you that ordinary gamers is not a IHV or even a ISV. He’s reading the interwebs Yet you trust him mire than someone who has direct access to actual game executives and has being doing it as a journalist and as a worker of the industry.

Okay, well. I’m done for a bit. I’ve gotta focus on exercising.

 

[cheapchips]

I'd put it at 60/40 chance Sarah Bond or someone else is in charge of the Xbox division by years end

I'd say your odd are somewhat better than 60/40. Sarah Bond is President of Xbox and has been since October last year.

 

[Cyan]

Gamepass never made sense

Gamepass is fine. The problem is Microsoft, which can't even get subscribers even if they whip people and thus they can't do business. If tomorrow Nintendo and Nvidia get together, and create a gamepass and stream every release that Nintendo has ever made and the new ones on day one, in a couple of years they will already have 100 million subscribers, which is basically like having a large country paying taxes.

Microsoft have neither freed themselves from the need for locked hardware, nor achieved a constant flow of games, nor do they offer exclusive content; and they are still surprised that subscriptions have plateaued.

They have half-baked objectives and strategies that don't quite come together: they don't sell consoles, they don't sell subscriptions, they don't sell games (they release very few even if they promised an AAA every 3 or 4 months back in 2020 and we have no Fable, no Perfect Dark, no Avowed, no Stalker 2, no State of Decay and so on and so forth), it's just not possible, they need to focus on one thing or the other.

Now you can see more sense in the rumors of the next Xbox/PC hybrid with Steam and so on, they need to free themselves from the "obligation" of having exclusives, and they need it NOW.

 

[Seanspeed]

These latest cuts feel like they've been forced on Xbox on a corporate level. MS just blew 700 Trillion dollars to boost Gamepass, which is still stalling, and Xbox hardware sales have shrunk and in some areas collapsed. On a corporate level they probably feel they need to offer up a few thousand human sacrifices to the shareholder gods at this point.

Xbox is corporate. I feel like some people view Xbox as like this plucky 'lower' division in Microsoft full of 'the good guys' versus the suits, but they're not, they're a major corporate entity and Phil reports to nobody else except Satya himself. Obviously they dont have full autonomy, but they aren't being run by some outside elements in MS, either.

It's Xbox leadership that is failing here. The cuts themselves shouldn't have ever been necessary, especially not when Microsoft showed they are willing to invest heavily into Xbox with the $75b Activision purchase. The problem is simply terrible management and direction.

 

[metacore]

RE : " Xbox President Sarah Bond has set up a new team dedicated to game preservation and forward compatibility"


It just dawned on me. If hardware situation is shaky, even exit is a possibility, you gotta set up some solution to transfer customer licenses to pc or xboxpc or lawsuits might happen. I bet this eventuality is also part of this forward compatibility initiative in non PR sense.

 

[Cyan]

I completely agree with what you're saying here. I was just watching a video of SomeOrdinaryGamers about the current state of Xbox and it dawned on my how much Game Pass reminded me of Movie Pass. I really think Phil may have overplayed the significance of GamePass and not fully appreciated the state of the market, and technology. Created a two tiered hw system with a low cost Series S to push gamers into the subscription but it didnt sell well and caused dev issues due to strict console requirements. It was a combination of bad economics, lack of focusing on SDLC(which would require one single fixed hw system + support for PC and cloud), no clear strategy for buying studios, contrived hw choices aimed at pushing subscription model, etc. The fact the Series X launched without a single show case title shows just how much of a cluster eff this was honestly.

Phil got the economics wrong, the software wrong, the hw choices wrong, honestly this could end up worse than Don Mattrick if they were cooking Game Pass numbers. Because COD going onto GamePass day and date doesnt make any financial and anti-competitive sense at all. And a lot of people are going to cancel their subscriptions if a new GamePass tier is revealed(I'll be one of them). I think the coming months are going to get even worse. Satya must have looked at the ABK acquisition and wondered why they're still making these boxes if they can simply just buy as many studios and make the games available on the web(the experience is another issue). The announcement next month is going to be about MS Gaming store on the web!! I think they hope to push that store onto the iPhone, Mac, Playstation, or any device. Thats going to be their strategy moving forward. Its going to be some interesting months for sure.

imho, again, gamepass isn't the problem. It's a great idea but badly executed as I commented in my previous post.

If you have a healthy ecosystem of games, with lots of varied games to offer, Gamepass allows you have a good catalog of modern and classic games, it's advantageous for them and for the players.

You can buy the games you like and play games that you'd like to play but aren't sure about, like adventure games, or Pillars of Eternity, Tyranny, and others, that people don't usually buy but you might like to play and finish them without worrying to pay the full price.

Thanks to PC GamePass I am playing kids games with my nephews that I'd never buy, of which I am surprised that there is quite a lot in the PC GamePass, which is nice.

Nintendo has million-selling franchises that support the business and could afford a gamepass where they can offer the entire catalog so people of different tastes can have fun.

Let's imagine the Nintendo catalog and a gamepass, they would demolish with so many subscriptions, the problem is that the Xbox isn't selling, thus neither gamepass nor the sale of games is sustaining Xbox. PC gamepass is cool but it's sooooo residual and MS isn't making Windows feel like running a Steam Deck, when they have everything to make an Xbox/PC.