Xbox Business Update Podcast | Xbox Everywhere Direction Discussion

[eastmen]

You're missing key context let me explain. Yes 2026 would be 6 years away from 2020 but the question is when did they start actually working on the new console? From the FTC docs that leaked in 2023 they were expecting to launch in 2028 so they wouldnt have started actual work on a new gen console by 2022. In 2022 they were expected to release closer to 2028 and only had conceptual stuff. In addition there's a huge possibility the next Xbox will be using ARM for the CPU, this needs time to work out if they are still serious about their hw.

I am not really missing anything of any context. We don't know when MS started work on a new console. They typically already start working on new consoles after the last one launched. Last generation Ms launched a console in 2013 and worked on and prepared a refresh for 2017. So they are already working on new hardware.

You are also using what another competitor states as a time line for a different company. We have no idea how sony internally operates vs MS.

Otherwise if they indeed release in 2026 it would a reactionary console developed between 2023-2026 not in sync with key industry developments in software and hw. And wouldn't be anywhere as good as something Sony will release in 2027/8 as that is built in line with current Software Engineering developments. They develop the hw based off research and data from actual software developers and develop the hw backwards from that. As you can read from this Cerny interview. This is what MS did with the OG Xbox and the Xbox 360, and to some extent with the Series X(Not with the Xbox One and Series S) .

This is one of the silliest takes I have ever seen

MS launched the Xbox in 2001. They released the xbox 360 in 2005. They were able to put out an advance machine that was better than what sony could put out in 2006 a full year later. It was actually more in line with what sony launched.

But now suddenly MS who with their partnership in openai and their control of Dx wouldn't be able to produce a console that would be in line with what the industry is developing? A 2027/8 sony console would be better than a 2025/6 MS console. But should Sony wait because a 2029/2030 console from Ms would be more in line with the industry and sony wouldn't be anywhere near as good as that ?

This is the industry standard because of developments in Software Engineering during the lifecycle of the gen amongst others such as hw advancements. You cant simply buy products off the shelf and then think you've built a console. Cerny explains this quite well actually. You'd be building a PC.

Yet Ms launched xbox in 01 and xbox 360 in 05.

Cerny says a lot of things and ended up with a PC. It uses an AMD APU + GDDR ram + NVME which is exactly like a pc. The PS5 Pro is again going to be an AMD APU + GDDR+NVME . once again a pc. The most exotic thing about the ps5 is the karken compression blocks which low and behold MS also has compresion blocks.

It seems to me like MS is very well poised to be disruptive with a new product. A 2025/6 machine and then a 2029/30 machine.

 

[cheapchips]

Xbox still seems to have their nigh indefinite budget, so they can just shoot a money cannon at getting a console out in two and a half years instead of 4.

The massive spend on ABK was buying $69bn of 'value'. So long as it's earning more than money in the bank then job done. I'm not sure there's an equivalent justification for raiding the bank to accelerate the next console's development. Does more money even allow you to go faster anyway?

 

[Shifty Geezer]

Music and movies aren't videogames. Everytime I hear about how physical is "shrinking" (even if by the insomniac leaks physical is still above 50% in almost all cases, eh) I'm like, yeah? Of course? Digital only consoles are being sold, so those users can't buy physical anymore. It's not some change of mind in the users,...

Then go look at PC games and how many physical copies are sold since Steam and fast broadband.

Physical is dead - the users have decided. Consoles will end up that way, just as PC did without any forcing people to choose medium.

 

[Charlietus]

It benefits devs, physical costs distribution $ on top of the cut a given store takes. Devs were happy to go digital because it made them more money per copy at the same price. That's a major reason AAA games remained $60 for so long, the large switch over to digital made them more money without charging more anyway.

In all probability there'll still be an oddly large market for physical Switch 2 carts, and could be one in certain markets for a handheld Xbox circa 2026. But at what point is a physical distribution system not worth the cost of having the distribution network, the R&D, the cost of keeping it on the console, etc? It's a good question to ask.

Devs are free to do whatever they want, but losing that shelf exposure is going to hurt them more than they think if they go that route.

 

[Charlietus]

I don't even get how somebody can be in denial about physical and that video games are different than content like music/movies.

Who buys physical still these days?

Either people who try to get the lowest price deals because of used sales, overstocking and buy outside the sales window. Game companies have all the interest to minimise such sales.
Then there are the collectors which want special releases either to put on their shelf or for future profits.

IMHO that kind also existed for a decade or so in the movie market but that is imho also pretty much niche when people realise it's not worth it. Special music collector sales can probably be hand signed these days.

What do you expect from physical releases? You can't play them anyway without downloading GBs of patches and when the servers shut down they are usually toast anyway. What problem do you wanna prevent with physical disks?



Then you have to be prepared for doomsday because your consumer interests don't align with corporate interest and consumer reality.

https://www.reddit.com/r/Superstonk/comments/1abphmy

So, who buys those physical games? The majority of people probably?
And those numbers are even higher for Nintendo, probably.

I guess if we keep saying that physical is dead it's going to happen, let's make it a self fulfilling prophecy.

 

[Charlietus]

Then go look at PC games and how many physical copies are sold since Steam and fast broadband.

Physical is dead - the users have decided. Consoles will end up that way, just as PC did without any forcing people to choose medium.

Look at that dead physical:

x.com

x.com

The users truly have decided.

And all of this is with series s and PS5 digital on the market, which weren't a thing before.
The PC was always a more digital platform, obviously before any console. But the death of physical there is still a loss for the user.

 

[Johnny Awesome]

All of those surveys are meaningless. A survey of music listeners in 1998 said that 90% of them bought CDs and yet here were are. My nephews don't even know what a CD is.

I don't know anyone who buys physical, Gamestop is going under, and Sony and MS are going all digital soon. That's the reality. Welcome to 2024.

Also, Cerny saying a console takes Sony 4 years to develop is meaningless as well.

1) MS has had 4 years.
2) MS could do it faster since they actually developed two machines in the time Sony took to develop 1 last time.

I'd love for MS to be on a 5 year cycle, but looks like I'm going to have to live with 6.

 

[Shifty Geezer]

Look at that dead physical:

You've just ignored my point. Explain the PC video game market and what that tells us about how valuable physical is.

x.com

x.com

Please quote the relevant information and not just link a tweet. People don't always get to view tweets or want to click on them.

The users truly have decided.

In Japan for the time being, maybe. If you have very big titles that take a long time to download, versus lots of convenient games stores you can grab a copy at, it makes sense. Other countries and areas with faster fibre and no game stores, it makes less sense. And as more game stores close down and more people have to buy digital, there's less reason to even produce a physical copy.

Almost 90% of games sold in UK in 2022 were digital - ERA

Physical game sales fell 4.5% last year, the digital entertainment and retail association says.

www.bbc.co.uk

Digital sales accounted for almost nine out of every 10 video games sold in the UK in 2022, according to a trade body.

About 30% of the sales came from mobile apps, which are sold digitally.

The PC was always a more digital platform, obviously before any console. But the death of physical there is still a loss for the user.

Huh? The PC was 100% physical, same as consoles, as digital didn't exist. You had big cardboard boxes with paper manuals, and then CD jewel cases. As games became available to buy online, more and more people bought online, until physical died completely. There was no impetus to buy online or industry pressure the change people's habits - they chose convenience themselves.

 

[Sonic]

Digital only is inevitable unless a new storage format holding hundreds of GB or even a 1 TB comes out and is readily affordable. If we're not getting a huge increase in capacity it doesn't make sense to continue when that path in the future. I appreciate physical as much as the next person and will continue to buy games I want for collection purposes this way but for regular game use it simply doesn't beat the convenience of digital only.

Retail space on shelves has shrunk to a considerable level compared to decades last and doesn't have as much sway. It's sad in a way but that's just the overall market dynamic in many countries.

And has been pointed out PC physical sales have gone extinct for years now. Now I would attribute this to the convenience of simply downloading a game and installing it on a HD via a broadband connection. And millions sure that before a digital storefront via piracy. Once devs/pubs realized this was the way to go it was curtains for physical on PC. Sprinkle something about DRM and yeah.

 

[fehu]

On the other hand, we can reach a point where an sd card is cheaper than paying the servers to transfer 1TB per user per game.

 

[Charlietus]

All of those surveys are meaningless. A survey of music listeners in 1998 said that 90% of them bought CDs and yet here were are. My nephews don't even know what a CD is.

I don't know anyone who buys physical, Gamestop is going under, and Sony and MS are going all digital soon. That's the reality. Welcome to 2024.

Also, Cerny saying a console takes Sony 4 years to develop is meaningless as well.

1) MS has had 4 years.
2) MS could do it faster since they actually developed two machines in the time Sony took to develop 1 last time.

I'd love for MS to be on a 5 year cycle, but looks like I'm going to have to live with 6.

That isn't a survey, that is Chris Dring, who has access to real sales data, telling us that just like in Japan, in Europe the great majority of videogames sold are still physical. Welcome to 2024

Ps: that is true in the us as well, Mat Piscatella has shared data on that.

 

[Charlietus]

You've just ignored my point. Explain the PC video game market and what that tells us about how valuable physical is.

Please quote the relevant information and not just link a tweet. People don't always get to view tweets or want to click on them.

In Japan for the time being, maybe. If you have very big titles that take a long time to download, versus lots of convenient games stores you can grab a copy at, it makes sense. Other countries and areas with faster fibre and no game stores, it makes less sense. And as more game stores close down and more people have to buy digital, there's less reason to even produce a physical copy.

Almost 90% of games sold in UK in 2022 were digital - ERA

Physical game sales fell 4.5% last year, the digital entertainment and retail association says.

www.bbc.co.uk

Huh? The PC was 100% physical, same as consoles, as digital didn't exist. You had big cardboard boxes with paper manuals, and then CD jewel cases. As games became available to buy online, more and more people bought online, until physical died completely. There was no impetus to buy online or industry pressure the change people's habits - they chose convenience themselves.

I don't think anyone can tell you exactly why PC boxes died, but it was probably steam. It became so popular with PC gamers and since steam didn't start to manufacture PC boxes their users didn't buy them. Also, I have been to many countries in Europe, and even 15 years ago I never saw PC sections in stores with games, just ps-nint-xbox. The PC market became big with steam, before it was just a niche.

In the tweet, Christopher Dring, which has access to Europe sales data, says that just like in Japan, the great majority of games sold in Europe are still physical.

That article you posted, just like many articles like this, are so misleading. It makes it seem like 90% of full video games sales are digital, while it's showing physical sales revenue vs digital sales, subscriptions, microtransactions AND mobile games.
But I guess it drives clicks.

 

[Cyan]

On the other hand, we can reach a point where an sd card is cheaper than paying the servers to transfer 1TB per user per game.

yeah, for a handheld hybrid or whatever, games in SD Card format might still be valuable. I got used to the digital stores and live in a rural area, I purchased the last physical game 9 years ago.

Steam makes it better to organize your stuff. Unless someone has Diogenes Syndrome I don't see the practicality of physical games nowadays.

Talking of which, imho, MS should embrace Steam..., many people are going to subscribe to pc gamepass even if they have access to Steam.

 

[Shifty Geezer]

In the tweet, Christopher Dring, which has access to Europe sales data,...

From where? AFAIK the console companies don't make digital sales information available.

Edit: We can go to the publishers but then we see:

Digital vs. non-digital revenue share of major video game publishers worldwide 2023 | Statista

Digital channel now account for the majority of gaming market revenues worldwide.

www.statista.com

I expect that includes digital content like add-ons, but it's still hugely skewed and shows how much players value digital. A physical game without the digital isn't worth as much as the digital game without with physical.

Furthermore, discs are increasingly worthless because you always need a day 1 patch. In some cases the disc doesn't even include the game! Digital is now enabling pre-order downloads, so instead of needing to visit a store, you can preload the game and have it the day of release the moment you get home (or a couple of days early if the pay the Impatience Tax).

 

[Charlietus]

From where? AFAIK the console companies don't make digital sales information available.

Edit: We can go to the publishers but then we see:

Digital vs. non-digital revenue share of major video game publishers worldwide 2023 | Statista

Digital channel now account for the majority of gaming market revenues worldwide.

www.statista.com

View attachment 11545

I expect that includes digital content like add-ons, but it's still hugely skewed and shows how much players value digital. A physical game without the digital isn't worth as much as the digital game without with physical.

Furthermore, discs are increasingly worthless because you always need a day 1 patch. In some cases the disc doesn't even include the game! Digital is now enabling pre-order downloads, so instead of needing to visit a store, you can preload the game and have it the day of release the moment you get home (or a couple of days early if the pay the Impatience Tax).

First, that link doesn't even load. And even if those numbers were true, again for the second time, it includes dlc, microtransactions and digital only vs just physical. Is it clear enough?

Second, yes, NPD and GSD track digital sales, aside from Nintendo. How is that even a question?

Third, discs have resell value. Consumers get so much more value from physical it's not even a question. Digital only people getting less for the same or higher prices. It's pretty funny.

The thing about the day one patch... It's not true in 99% of cases. When was the last time you bought a disc? Are you just talking out of things you heard on the internet somewhere?

Ps: the link finally loaded, and I have gone and take a look at, as an example from that chart, to the ea quarterly results. And I didn't find any disclosure on digital vs physical game revenues in there, only this:
Which isn't that helpful. So I don't know where they are getting this data for all publishers, or if they are just estimates. Either way, not a great source.

 

[Shifty Geezer]

Okay, can you provide some data beyond a tweet? I keep looking and struggle to find any direct "here's the %age digital and physical game sales" but keep finding things like:

GSD combined
34.2m video games were sold (down <6% YoY)

GSD digital only
<20m games were sold (down 3.4% YoY)

GSD physical only
14.2m games were sold (down 9% YoY)

First, that link doesn't even load. And even if those numbers were true, again for the second time, it includes dlc, microtransactions and digital only vs just physical. Is it clear enough?

Yes, I included that caveat. But now you have the argument that 10% physical revenue is greater than the game sales of digital, meaning >80% of all digital revenue is add-ons, not game sales. Perhaps, but that seems unconvincing (and doesn't tally with later data)

Digital only people getting less for the same or higher prices. It's pretty funny.

Added convenience is a plus. There's a reason why people do buy digital, even if physical was selling more. Don't talk like they are stupid for having different values to you. For many, buying a game cheap in a sale in a digital store is a better move than getting the game second hand at a CEX or GameStop.

The thing about the day one patch... It's not true in 99% of cases. When was the last time you bought a disc?

A long time ago, like many!

Are you just talking out of things you heard on the internet somewhere?

Yes, every time there's a big title. How many disc games do you have that haven't been patched? 'Day 1' is tongue in cheek - they all get bug fixes, and notably big updates. That version 1 Ghost of Tsushima you have on disc? It's had 43 patches. Spider-Man? 19. Number 15 included the fix "- Addressed an issue where enemies could fall off the Colexco building and not die, preventing progression, in the mission “Trust Issues.”" Would suck to play the game on disc Day 1 and have your game broken by a bug the digital version doesn't have...

Which isn't that helpful. So I don't know where they are getting this data for all publishers, or if they are just estimates. Either way, not a great source.

Neither do I. Do you know where your tweet is getting its data, though, or just taking it at face value? Here's another alternative fact to yours:


Can't find a more recent one. Separates digital software sales from add-on content.

And we have numerous stories over the months of decreasing physical copy sales in the UK such as constant FIFA boxed sales decreasing.

​

"Together with Call Of Duty, FIFA is always one of the most successful games of the year but FIFA 22 physical sales were down by 35% on FIFA 21, which was itself down on 42% over FIFA 20."​

And another:



So, no, I am unconvinced by your tweet without any supporting data. Please provide a 'great source'.

 

[Charlietus]

Okay, can you provide some data beyond a tweet? I keep looking and struggle to find any direct "here's the %age digital and physical game sales" but keep finding things like:

GSD combined
34.2m video games were sold (down <6% YoY)

GSD digital only
<20m games were sold (down 3.4% YoY)

GSD physical only
14.2m games were sold (down 9% YoY)


Yes, I included that caveat. But now you have the argument that 10% physical revenue is greater than the game sales of digital, meaning >80% of all digital revenue is add-ons, not game sales. Perhaps, but that seems unconvincing (and doesn't tally with later data)

Added convenience is a plus. There's a reason why people do buy digital, even if physical was selling more. Don't talk like they are stupid for having different values to you. For many, buying a game cheap in a sale in a digital store is a better move than getting the game second hand at a CEX or GameStop.

A long time ago, like many!

Yes, every time there's a big title. How many disc games do you have that haven't been patched? 'Day 1' is tongue in cheek - they all get bug fixes, and notably big updates. That version 1 Ghost of Tsushima you have on disc? It's had 43 patches. Spider-Man? 19. Number 15 included the fix "- Addressed an issue where enemies could fall off the Colexco building and not die, preventing progression, in the mission “Trust Issues.”" Would suck to play the game on disc Day 1 and have your game broken by a bug the digital version doesn't have...

Neither do I. Do you know where your tweet is getting its data, though, or just taking it at face value? Here's another alternative fact to yours:

View attachment 11550
Can't find a more recent one. Separates digital software sales from add-on content.

And we have numerous stories over the months of decreasing physical copy sales in the UK such as constant FIFA boxed sales decreasing.

​

"Together with Call Of Duty, FIFA is always one of the most successful games of the year but FIFA 22 physical sales were down by 35% on FIFA 21, which was itself down on 42% over FIFA 20."​

And another:

View attachment 11551

So, no, I am unconvinced by your tweet without any supporting data. Please provide a 'great source'.

I yield. Christopher Dring. The guy who reports the official sales numbers in Europe. The one who everyone makes news and articles about his reports. I guess GSD is not a good enough source.

Boxed: physical games sales (no used game sales btw).

Digital: Fortnite, warzone, apex, digital games on the psn-xbox live- Nintendo eShop, all microtransactions, add-ons, all games and indies that don't have a physical release.

I don't know what else to say.

 

[eastmen]

Digital only is inevitable unless a new storage format holding hundreds of GB or even a 1 TB comes out and is readily affordable. If we're not getting a huge increase in capacity it doesn't make sense to continue when that path in the future. I appreciate physical as much as the next person and will continue to buy games I want for collection purposes this way but for regular game use it simply doesn't beat the convenience of digital only.

Retail space on shelves has shrunk to a considerable level compared to decades last and doesn't have as much sway. It's sad in a way but that's just the overall market dynamic in many countries.

And has been pointed out PC physical sales have gone extinct for years now. Now I would attribute this to the convenience of simply downloading a game and installing it on a HD via a broadband connection. And millions sure that before a digital storefront via piracy. Once devs/pubs realized this was the way to go it was curtains for physical on PC. Sprinkle something about DRM and yeah.

On the other hand, we can reach a point where an sd card is cheaper than paying the servers to transfer 1TB per user per game.

yeah, for a handheld hybrid or whatever, games in SD Card format might still be valuable. I got used to the digital stores and live in a rural area, I purchased the last physical game 9 years ago.

Steam makes it better to organize your stuff. Unless someone has Diogenes Syndrome I don't see the practicality of physical games nowadays.

Talking of which, imho, MS should embrace Steam..., many people are going to subscribe to pc gamepass even if they have access to Steam.

I mean nvme for carts could be a reality soon enough since they can be supplemented as storage for dlc and updates. But it may take another generation or two


although thinking about it more. Most games are under 128gigs. So you could just ship a game on a 64-128gig nvme at some point. Perhaps change around Deluxe and collectors editions and ship a physical nvme with the game on it in those bundles instead of cheap nick nacks.

 

[rntongo]

Also, Cerny saying a console takes Sony 4 years to develop is meaningless as well.

Cerny said consoles take around 4 years to make, not that it takes Sony 4 years to make, he was speaking generally for the industry. He's an authoritative figure when it comes to gaming hardware. For example Switch 2 has been delayed numerous times for a myriad of reasons related to prospective technology advancements, delays in expected software API developments, etc.

Doesnt mean they couldnt slap together some hw components from different manufacturers, but they have to consider the machine their making is going to last longer software development cycles, something I have echoed here several times. It's not like the Xbox 360 and prior generation where games could be built in 2-3 years easy. His whole point is the process of making a console is much more involving than people( especially us on forums may think it is). He unequivocally states this in the interview.

 

[eastmen]

Cerny said consoles take around 4 years to make, not that it takes Sony 4 years to make, he was speaking generally for the industry. He's an authoritative figure when it comes to gaming hardware. For example Switch 2 has been delayed numerous times for a myriad of reasons related to prospective technology advancements, delays in expected software API developments, etc.

Doesnt mean they couldnt slap together some hw components from different manufacturers, but they have to consider the machine their making is going to last longer software development cycles, something I have echoed here several times. It's not like the Xbox 360 and prior generation where games could be built in 2-3 years easy. His whole point is the process of making a console is much more involving than people( especially us on forums may think it is). He unequivocally states this in the interview.

Again with this ? The 360 was forward thinking bringing many innovations with it and it was released within 4 years of the xbox (2001-2005)


I don't even get your games comment. there are games out on these consoles that run very poorly at sub 1080p resolutions. According to Digital foundry the last FF on ps5 in performance mode hit 900p with 37fps. So there are already games that will take advantage of any new hardware they have access too. The games in development now on the the series and ps5 will only run better on the newer hardware. The best part is these games are largely in development for the PC at the same time. Games like Gears of war Emergence day or Fable are all made for day one on the pc in which cpu's and graphics cards more powerful than anything in the xbox series s/x ps5 and even the ps5 pro exist today. All those games will on day one take advantage of all that new hardware day one. Fable on day one will work on 50x0 geforce cards and whatever amd new cards are at the time of release.

You are focusing in on a single person too much. Single people make mistakes all the time.