Xbox Business Update Podcast | Xbox Everywhere Direction Discussion

[rntongo]

The tariffs are mostly US related, though. You can build a data center in Canada or Mexico to serve the US market and completely avoid the tariffs.

That wont work. It may bypass some direct tariffs on US soil but it doesnt insulate them at all from broader ripple effects from these tariffs. We live in a globalized market and sweeping tariffs from the largest economy create imbalances in trade that such a relocation strategy wouldnt work, for one simple reason. MS, Sony, Nintendo operate in a global market where different parts are built by different companies from different countries and so is the pricing. ITS dependent on the US economy which is the leading consumer of said services.

So global supply chains for data center components and even brick and mortar will be affected by tariffs imposed by the largest economy and it will inevitably drive up costs for everyone since these supply chains rely on the US market to maintain current prices.

Basically a distortion in the flow of goods and services(especially high tech goods) in the US economy even without tariffs would have significant negative effects on building out data centers in Canada or Mexico. Now with sweeping tariffs, relocation is just not going to insulate them. Everyone's going to feel the negative consequences if there are any, especially cloud computing firms or other high tech multinationals like Sony, Nintendo.

 

[iroboto]

Hmm, I understand MS has Azure to fall back on for cloud gaming and the Series X APU is server grade but they'd still have capital costs to scale up cloud computing infrastructure.

They have it already. They are probably the largest provider for cloud today. I don’t think anyone is committing to building anything for the next quarter. Everyone is waiting to see if Trump reverses course on tariffs.

As of this moment, if those tariffs don’t go away, consoles will be up to 600+USD for a base model. Significantly higher for a pro model. We are already deep into the generation so anyone hoping for a lower price, is priced out. Effectively we will see hardware stop selling in the US. Which means significantly reduced production of existing consoles.

No one will release a new generation of these tariffs are still around. And the market will contract further around F2P gaming.

It does not bode well for anyone. When everyone is paying more for basic necessities, it’s just too costly to buy titles, let alone a new console.

 

[Johnny Awesome]

Valve can already be everywhere they want. They already offer video streaming on steam and they can implement cloud gaming streaming also.

Cloud isn't really ready yet.

IF you aren't growing as a business you are dying. I'm a Game pass subscriber and I don't want new hardware. There isn't a reason for me to waste money on a new piece of hardware where all those game will work on my tv without hardware. This is a sentiment echoed to me from lots of current xbox series owners.

You aren't the market. I don't believe a significant number of GP subscribers are just going to switch to xCloud in a couple years. It's ridiculous IMO. Good luck playing CoD on xCloud. Not gonna happen.

There were what 80-90m xbox 360 owners who wanted new hardware and 20-30m just vanished.

They didn't just vanish. MS pissed them off before digital ecosystem lockdowns were a thing.

I haven't seen any assertion from Microsoft that they believe they will make more money from those games on ps and switch than they will from all 3rd party platform revenue on xbox. Do you have a link to an interview stating that ?

They would be fools to publicly assert that, but it doesn't mean it's not true. I think between only selling 30 million units and GP, Xbox 3rd parties don't sell that many units. But the thing we don't agree on most is that you believe that MS going multi-platform will drop the userbase significantly and I don't. I believe most current Xbox users want another GP box.

I'm an existing xbox owner with gp and I am telling you I wont be buying a new xbox to keep game pass. I've owned all the xboxs and the next one I wont be buying. If I want game pass I don't need an xbox to use game pass.

We'll have to see what everyone else does. I don't think you're representative of the market. Everyone I know wants a new box for GP.

We already see xbox users jumping ship during this generation. Xbox series hardware is now behind xbox one hardware which was behind xbox 360 hardware

Xbox console sales continue to crater with massive 42% revenue drop

Xbox Series X/S sales seem to have peaked early in 2022.

arstechnica.com

https://www.tweaktown.com/news/102881/xbox-hardware-revenue-down-to-second-lowest-point-in-the-last-10-years/index.html

It depends where those people ended up. If on PS, then you have a point. If on PC, then it's fine. All the more reason to get more PC ish. MS behavior suggests the latter.

Interestingly, in my own circle I knew PC, X1 and PS4 people last gen and 100% of these people stayed with their platforms into current gen. It's a mix of casual and hardcore, btw. That's why I believe Phil when he says that losing the first digital generation was fatal to Xbox hardware growth. Even the amazing value of GP wasn't enough to pull PS people back to Xbox. That's the reality on the ground. There are still some growth possibilities due to little Jimmy outgrowing his Switch etc... , but it's a slow road.

But it cuts both ways. Most Xbox people don't want to go PS either. That's why MS believes going multi-platform won't lose too many fans. We'll see if they're right.

 

[rntongo]

They have it already. They are probably the largest provider for cloud today. I don’t think anyone is committing to building anything for the next quarter. Everyone is waiting to see if Trump reverses course on tariffs.

As of this moment, if those tariffs don’t go away, consoles will be up to 600+USD for a base model. Significantly higher for a pro model. We are already deep into the generation so anyone hoping for a lower price, is priced out. Effectively we will see hardware stop selling in the US. Which means significantly reduced production of existing consoles.

No one will release a new generation of these tariffs are still around. And the market will contract further around F2P gaming.

It does not bode well for anyone. When everyone is paying more for basic necessities, it’s just too costly to buy titles, let alone a new console.

Yes I agree this makes sense to me as well.

 

[Cyan]

It does not bode well for anyone. When everyone is paying more for basic necessities, it’s just too costly to buy titles, let alone a new console.

Gamepass in 2025 is more necessary than EVER (and with good reason)

 

[Cyan]

Okay since current rumours point to an Xbox branded PC manufactured by different OEMs, it doesnt matter how strong MS's software teams are, they are going to face serious challenges that Sony doesnt even have to worry about to provide the same seamless experience as a single spec PS6. On top of that Steam store on the Xbox branded PC takes away more sales and internal resources to facilitate a seamless experience of having multiple stores. Unless MS is just going to make it an Xbox branded Windows PC with a loader for Xbox OS.

whatever they do, Steam has broken the last barrier of Linux -terminal aside-, which is gaming. Once that's done Windows better start doing something to compete with that. Unix started as an OS because its creator wanted to play a videogame on his machine, and created Unix....

MS wanted Xbox to be a mix of a console and a PC, and the best CEO Xbox had was Peter Moore, with the X360, and imho his only mistake is that he went hardcore traditional console market. Flame wars, console wars, etc, that worked at the time, but they went with a totally locked hardware ever since, and that initial philosophy got lost.

 

[Shifty Geezer]

Unix started as an OS because its creator wanted to play a videogame on his machine, and created Unix....

Meaning? Unix wasn't created as a gaming OS per se, and hasn't evolved into a gaming optimised OS either. Its origins have zero bearing on Linux's suitability as a gaming OS.

 

[Cyan]

Meaning? Unix wasn't created as a gaming OS per se, and hasn't evolved into a gaming optimised OS either. Its origins have zero bearing on Linux's suitability as a gaming OS.

the point is that as of currently I'm using Ubuntu on my computer, and that I don't need Windows except for pc gamepass, and also I want to point out the importance of gamers as a way to measure your success in the desktop market and of course for keeping the crown there.

If MS doesn't take care of gamers on PC, which they didn't, for many many years, where Valve saved the industry and they did nothing for windows users, word of mouth and a slow trickle will do the rest. It may start slow 'cos many people still think Linux is complicated but it's just the next big change about to start.

For a start, every new game is compatible with Steam Deck, meaning compatible with Linux. This was impossible a few years ago, developers didn't care about Linux at all.

 

[Shifty Geezer]

the point is that as of currently I'm using Ubuntu on my computer, and that I don't need Windows except for pc gamepass,

Yes, but that has nothing to do with why Unix was created, has it? I'm not seeing any correlation between your statement about Unix and the possibility of Linux being a viable gaming platform.

 

[Cyan]

Yes, but that has nothing to do with why Unix was created, has it? I'm not seeing any correlation between your statement about Unix and the possibility of Linux being a viable gaming platform.

don't you think that you are seeing it from a totally different point of view than mine? The point is that gamers are a huge force that musn't be underestimated. Unix was created 'cos the author wanted to play a game, Linux is receiving more and more native games over time and now that Steam OS is a thing, you never know what will happen.

 

[Shifty Geezer]

Unix was created 'cos the author wanted to play a game

Not exactly. Ken Thompson was a computer scientist already working on OSes. He wrote his own game and wanted to port it to a different computer system. It was an additional impetus for the creation of Unix, but Unix would likely have happened with or without Space Travel. I think the bigger take home is 'human beings play.' It's in their nature and they'll find opportunities to create games anywhere. I think that has zero bearing on Linux's future in gaming, and it'll only become a strong platform for gaming if there are business reasons to drive investment.

Putting it another way, Linux has been around for 30 years. Gamers and computer scientists and hobbiests have had 30 years to turn it into the ultimate gaming platform, but they haven't. Mostly it's been for geeks and nerds more interested in the power of their text editor than its ability to game. The fact it started associated with an interest to run a game by its creator clearly wasn't a driving factor into making it a gaming OS, and so evolution of the OS and its adoption for gaming now is independent of that fact.

 

[Cappuccino]

Who cares who's new? The point is that there are 30 million GP subscribers that want new hardware. The cloud doesn't really work YET.

It seems every Xbox generation sells worse than the previous, so I don't think this is true. A lot of Xbox people don't end up buying the next generation.

 

[QPlayer]

The X360 sold four times as many units as the first Xbox. It all depends on the strategy. Today, the traditional console business is not working as expected, so they are changing it. It is possible that in a few years almost everyone will be playing on Xbox, on the new console version of PCs, which will have Xbox UI and run games on Xbox OS. And the fact that these will no longer be consoles is irrelevant, gamers will still see it as a console interface, because from a user perspective it will provide a completely console-like experience. These hardwares and the console OS will be announced soon.

 

[Cappuccino]

The X360 sold four times as many units as the first Xbox.

If you have to go back to 2005 for an example of an Xbox that maintained/expanded the install base of the previous entry that's not a good sign lol.

don't you think that you are seeing it from a totally different point of view than mine? The point is that gamers are a huge force that musn't be underestimated. Unix was created 'cos the author wanted to play a game, Linux is receiving more and more native games over time and now that Steam OS is a thing, you never know what will happen.

Linux is actually receiving almost no native ports, mostly because the devs that do care about Linux (hardly any) just rely on Proton to make it work.

 

[Cyan]

Linux is actually receiving almost no native ports, mostly because the devs that do care about Linux (hardly any) just rely on Proton to make it work.

how do you know that? I mean, games like Cyberpunk 2077 have a setting specifically for Steam Deck, and 6 million of Steam Deck users are hardcore users...., I guess porting to Linux nowadays it's much easier than it was in the past.

What I don't like are games like Alien Isolation where the Linux port is inferior, although native. In that case it's better to run the Windows version and get away with it.

 

[Dominik D]

The X360 sold four times as many units as the first Xbox.

OG was sold for 4 years, 360 for 8. It sold 75% better when accounted for time on the market. And no, OG could not be sold for longer as Intel stopper producing compatible CPUs. By the same metric XO sold 22% worse than 360 did. Market share is not a zero sum game - it is growing - but it isn't growing fast enough to make it possible for every entrant to grow its market base generation by generation by significant margins.

how do you know that? I mean, games like Cyberpunk 2077 have a setting specifically for Steam Deck, and 6 million of Steam Deck users are hardcore users...., I guess porting to Linux nowadays it's much easier than it was in the past.

One of the primary reasons is that Valve prefers running Windows game through Proton over native port.

What I don't like are games like Alien Isolation where the Linux port is inferior, although native. In that case it's better to run the Windows version and get away with it.

That's because Proton is much more stable than underlying Linux base system and it's easier to target it with your game rather than develop for Linux directly.

 

[Cappuccino]

how do you know that? I mean, games like Cyberpunk 2077 have a setting specifically for Steam Deck, and 6 million of Steam Deck users are hardcore users...., I guess porting to Linux nowadays it's much easier than it was in the past.

What I don't like are games like Alien Isolation where the Linux port is inferior, although native. In that case it's better to run the Windows version and get away with it.

Cyberpunk 2077 does not have a native Linux port. They’re using Proton.

I know this from literally just reading the store page lol.

 

[QPlayer]

If you have to go back to 2005 for an example of an Xbox that maintained/expanded the install base of the previous entry that's not a good sign lol.

It doesn't matter what the sign is, it's just a fact.

24 million vs 85 million

From a business perspective and valuation, one was a failure and the other was a real success.

 

[Cyan]

Cyberpunk 2077 does not have a native Linux port. They’re using Proton.

I know this from literally just reading the store page lol.

ah ok, I don't have the game, but it pre-dates Steam Deck, right?

 

[Johnny Awesome]

I would argue that the big shrink happened in the Xbox userbase from X360 to X1. 85 million to 56 million. They're probably still on track for 45 million this time if they stuck it out until 2028, but they've decided not to.

Btw, I believe it's more profitable for MS to have 35 million GP subscribing Xbox Series owners than it was to have 85 million X360 owners.

If they can keep those fans while Sony, Nintendo and PC owners pay for their game development, they'll be rolling in money.