Xbox Series S/X: Thread 03

[charlesr]

Since game pass, I've bought very few games. Someone somewhere is losing.

[Neon Ignition]

The only way I imagine it's not losing millions would be due to a lack of content investment which we know isn't the case. Even the big success story services are losing money so no way MS is making a dime this gen.

[fishbowlhead]

Id take 23m subscribers with a massive pinch of salt, always going to be an inflated number plucked and combined all over the place from MS. Even if everyone of those 23m was paying full price every month, and the absolutely aren’t, they’d still be loosing money hand over fist on it.

[MartyG]

I also don't really understand where you think they're haemorrhaging money from with game pass either. Sure we know they're pushing to get subscribers so the entry fee is cheap but if they're now up towards 25-30 monthly subscribers that's a lot of revenue being generated. I get that they're not divulging numbers but that doesn't mean they're running it at a massive loss.

Some folks just want to see it fail.

If all subscribers were paying full price (and it's far more difficult to find huge discounts for 3 / 12 month subs now) it'd total around $3.2 billion a year - I posted up before the maths of this, how many games MS would need to sell every month to get parity with the $270 million it potentially pulls in a month and it's way more than is possible compared to Game Pass income.

[nonny]

Some folks just want to see it fail.

If all subscribers were paying full price (and it's far more difficult to find huge discounts for 3 / 12 month subs now) it'd total around $3.2 billion a year - I posted up before the maths of this, how many games MS would need to sell every month to get parity with the $270 million it potentially pulls in a month and it's way more than is possible compared to Game Pass income.

I think it's almost impossible to gauge at this point. It's not like MS have wholly replaced their services with game pass. You can still buy games at retail digitally or physical if you want away from game pass and so while it gets called the Netflix of games it's not really as it's just one service amongst a suite of other options.

I guess only MS knows for sure what it's costing them and how much it's popularity is eating into its more conventional revenue options. It's also going to be very interesting to see how much expansion we see now the cloud service options are coming to iOS, TV and other platform options (TV stick, possibly Switch if that ever becomes real).

We might we an actual percentage of users who use the service without even owning a PC or Console.

It's early days for the overall service so I think it's far too hard to speculate it's a disaster financially.

[MartyG]

MS has billions falling out of its pocked as change. Even if Game Pass is losing money, it's not going to have much impact on their bottom line - the point of the maths was that Game Pass can bring in far more money than simple game sales given that attach rates for the average user are very low (between 2-4 a year) - if you get all your casuals on Game Pass, you stand to make far more money out of them than you ever would from selling them games (and are more likely to keep them on your platform advertising to them).

[nonny]

MS has billions falling out of its pocked as change. Even if Game Pass is losing money, it's not going to have much impact on their bottom line - the point of the maths was that Game Pass can bring in far more money than simple game sales given that attach rates for the average user are very low (between 2-4 a year) - if you get all your casuals on Game Pass, you stand to make far more money out of them than you ever would from selling them games (and are more likely to keep them on your platform advertising to them).

Yeah agree. It remains to be seen whether game pass works as a whole as the glue for the wider strategy but I can see many additional benefits.

If having game pass becomes the norm for users within the Xbox ecosystem, and that ecosystem isn't just console then there is less concern about attach rates to hardware. They don't have to sell you a console to play, they just need to sell you on the service... Equally if your user base spans wider than consoles that means online communities for multiplayer, F2P are far larger so opens up more revenue stream potentially.

Halo Infinite launching F2P across all consoles, cloud and PC for instance ensures a wide audience and I guess attach rates on micro transactions is there they get their money from.

Looking at the epic court case and the revenue Fortnite makes ongoing for instance. This could be a regular thing in this model which subsidises more conventional story driven titles.

[Cassius_Smoke]

MS seem to be fighting on two fronts.
GP is competing with Steam/epic and the consoles are fighting Sony.
I get the feeling MS would much rather beat Steam then Sony.

[wakka]

I really like that Game Pass exists. I don't currently have it, because my Bone is packed away and I don't own a Windows PC, but I like that Microsoft are taking a different tack to Sony, and that a company with a real history in videogames, and which, I feel, genuinely cares about them is building what is essentially the pre-eminent gaming subscription/streaming service.

I feel a real natural bias against incursions by Google and Amazon into this space and feel a bit of schadenfreude when they fail, because fairly or unfairly I think they arrogantly enter the games market believing it's just another SaaS data platform industry that they can break into by simply spending a load of money. I'd rather MS lead in this area than they do.

That we have Sony and Nintendo both taking their own different respective approaches is delightful. We've got a real spread instead of just 3 identical products.

[nonny]

Yeah I kinda feel the same way. Microsoft ventured into the console market much like Sony did originally and have been a mainstay whereas I feel Amazon and Google are just trying to push a specific angle without committing to the broader existing marketplaces.

That's why I like game pass. It's not just game pass, it's built on top of a standard retail console. It's that whole suite of services that means if you're not into cloud gaming, or subscription services you could still play in the same ecosystem with others that do.

Stadia I feel was doomed to fail when they were only about cloud streaming and then expected you to also pay per title. By comparison game pass gets a lot of things right and with the move out of beta, to better server hardware (series X), adding in iOS streaming, and getting exclusive new games... The service should rapidly expand.

Whether it does succeed in delivering everything MS plans it certainly has the best chance of success where others have failed.

[Neon Ignition]

I think the entire Xbox ecosystem's revenue for two years isn't far off what they paid for Bethesda alone so it's an outright slam dunk that Game Pass alone isn't a money maker for them, but it's like has been said, they're making a lot more money with it than they did before it. I don't want it to go anywhere either, in its current form it's made the entire Xbox platform a cost free one. I just genuinely don't believe the market they think exists outside of the consoles via Cloud/TVs etc actually exists. Neither do I believe there are 23m constantly engaged users either. Ultimately MS is a business and they've already sunk two decades into failing to make Xbox a profitable venture, with Cloud and Game Pass being expensive railroads into new territory in order to try and mark out a sizeable market for themselves I'm curious what they'll do if they hit another dead end.

[wakka]

Yeah, I think the market for Game Pass as a smart TV app etc is an open question personally. How many people are there, really, who would subscribe to this service who wouldn't already have bought a console?

Part of me thinks, very few. But another part of me wonders if there are enough dabblers out there who aren't interested enough to drop £450 but might sign up for a 10 quid a month service they can access straight through their TV (that, maybe, includes a free pad if you sign up for a year of it).

I read quite a few Mac/Apple news sites and anecdotally on those there are an awful lot of people who claim they love Apple Arcade on the Apple TV as a games console for their family. They didn't buy it for that purpose but it's a nice side benefit. That's the kind of audience MS might hope to attract.

How many of those types of people there are though, I have no idea.

[Neon Ignition]

It's essentially the same push Ouya and OnLive made and failed at. Xbox is in a better position but its branding and approach would have to change severly to capture the passive casuals and I imagine that would mean losing favour with the core if history is anything to go by.

[nonny]

It's essentially the same push Ouya and OnLive made and failed at. Xbox is in a better position but its branding and approach would have to change severly to capture the passive casuals and I imagine that would mean losing favour with the core if history is anything to go by.

Not really. Ouya was a basic games device with crap controllers and a load of shovelware. OnLive was just streaming.

Xbox has a the last gen consoles capable of playing games natively or streaming. New consoles both at £249 and £449, the ability to stream direct from a browser and app support across iOS, Android and Windows.

Plus of course they have the Azure cloud services to back it all up.

In comparison it's a far more comprehensive setup even in it's current form. Add on better servers comparable to Series X and the fact you can use decent controllers with it... The fact they're adding on native TV apps and a dedicated stick device I can see they've basically got multiple options all with a near comparable experience, latency and bandwidth not withstanding. You can of course access your game saves and pick up and play across all of that.

I dunno... I don't think I'd personally ever give up on a dedicated console or pc for gaming but I can see the cloud service getting to a level that would attract casuals and tablet users.

I can also see people trying it out on on cloud, liking the subscription model and picking up the Series S on All Access for £20pm...

[nonny]

Pretty much sums up my own thoughts:

https://www.forbes.com/sites/paultassi/2021/06/11/microsoft-is-building-something-sony-nintendo-google-and-amazon-cant-match/?sh=6140fcab4c37