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Xbox + Microsoft FY24 Q2 Results: Total Gaming +49%, Content and Services +61% Hardware +3%

why are we so sure xbox units were down? 2022, 249 xss 500 xsx, probably 50-50 share imo.
This is the biggest flag I see. Where do you get "probably 50-50 share" from? All discussion I've seen described 2022 as very Series S dominant because this is when there was the shortage of PS5 & Series X components due to COVID. Do you have any sources which indicate that the Series S and Series X were more or less split evenly in terms of units?
 
Looking at the results, I can perfectly understand why would Microsoft exec would want to release games on other platforms. Granted considering that people don't buy games on Playstation either, I don't think it will help much. Plus the console margins are low, so it is not great either.

I don't see how consoles sales can recover. Phil was right that losing Xbox One era was the worst time to lose because now it is close to impossible to make people switch from one ecosystem to another. I mean right now even Playstation has trouble making people switch from PS4 to PS5 without much profit because people just buy consoles and continue playing the same big games.

It is funny that some people believe that by starting the next gen early Microsoft somehow will be able to make people abandon their digital ecosystems and friends and switch to a whole different platform. People don't do that on PC with different launcher (losing their Steam achievements and digital libraries), much less buying a completely different hardware with all their friends, achievements and so on. It is like on mobile - same people buy same phones every year within the same ecosystem. Some new markets open but even then - like iPhone in China - it does not grow much and can contract even.

Xbox has to do something different this time. In home consoles it is basically over.

If PlayStation people don't buy games, then you're saying that most games are unsuccessful.

Most third-party developers favor PlayStation because that's where their games generally find the most success.
 
why are we so sure xbox units were down? 2022, 249 xss 500 xsx, probably 50-50 share imo. 2023, 249 xss 349 xsx. share?? but we know at least usa december was 67% xsx. so that would be more units.

sure some xsx were sold up to 449 i guess. in the end it gets pretty impossible to parse but i dont think its a slam dunk units were down, in fact they were likely up. in fact for down to be the case xss would have to greatly increase it's share worldwide to compensate for 50-150 cheaper X, which is very doubtful, given the usa data where most Xbox are sold. am i missing something?
Series S was 150$-199$ during holiday 2022
And X did not have enough supply for 50:50
 
Profits should be the metric and not units sales and revenue. Take a look at PlayStation and Nintendo profits since 2017 again.
Depends what you’re measuring. If you’re looking at the platform with the biggest scale, then the metric is revenue, as revenue is a measure of where the most consumer spend is happening. While profit is a measure of the efficiency of a business, not its scale.
 
Activision revenue dropped from $2.3B to $2.1B. That "COD -40%" barely had an impact on their bottom line, it seems.

You do realise Activision revenue also had the possibility of increasing YoY. So we don't know how much CoD poor performance affected Revenue generated or not generated.

One must consider that this year Activision also had Diablo 4, which nevertheless continues to sell some units. That helped lessen the effect of COD "poor" performance. Next year they will have to do well with the next Cod because they won't have any other game other than that.

The way ATVI is accounted under MSFT is unclear.

Prior, ATVI disclosed two types of NET Revenue. For instance in Q4 2022:
  • Segment NET Revenue = $3.325B
  • Consolidated NET Revenue = $2.334B
They account for the difference as well, as it varies quarterly:

Screenshot-2024-01-31-at-20-05-12.png



We know ATVI total revenue was $2.1B, this does not include the part of ATVI revenue on Xbox (to avoid double counting), which I estimate to be ~$300M. So around $2.4B for this Q.

With COD seeing such a big decline after breaking records last year, it would be unusual for this $2.4B to be Consolidated NET Revenue, as it means this year was higher.

Compared to Segmented NET 2022 of $3.32B its a -28% drop.

However, it could be consolidated NET, as sometimes consolidated is > segmented, as we see in 2021. Due to this its hard to compare to 3rd P ATVI reports (with the added difficulty of having to estimate the XB ATVI revenue every Q).
 
Depends what you’re measuring. If you’re looking at the platform with the biggest scale, then the metric is revenue, as revenue is a measure of where the most consumer spend is happening. While profit is a measure of the efficiency of a business, not its scale.
The comparison isn't valid since both companies calculated their revenues differently. Profits should be the only valid comparison metric for PlayStation and Nintendo.

2023 operating profits (9 months)
Nintendo - $2.72bn
SIE - $0.991bn
Activision Blizzard(6 months) - $1.38bn
 
The comparison isn't valid since both companies calculated their revenues differently. Profits should be the only valid comparison metric for PlayStation and Nintendo.

2023 operating profits (9 months)
Nintendo - $2.72bn
SIE - $0.991bn
Activision Blizzard(6 months) - $1.38bn
LOL.

They have vastly different expenditures. You can work backwards to figure out the equivalent revenue figures.

Back on topic, has anyone done the math to figure out the revenue of games+dlc for Xbox.
 
The comparison isn't valid since both companies calculated their revenues differently. Profits should be the only valid comparison metric for PlayStation and Nintendo.

2023 operating profits (9 months)
Nintendo - $2.72bn
SIE - $0.991bn
Activision Blizzard(6 months) - $1.38bn
How is this even relevant? Why does it matter here at all? This whole nonsense started because of a ridiculous claim that people don't buy games on Playstation.
 
LOL.

They have vastly different expenditures. You can work backwards to figure out the equivalent revenue figures.
No we can't? Expenses aren't that detailed in their IR, we can't get a comparable G&NS figure excluding 3P digital revenue.
 
This is the biggest flag I see. Where do you get "probably 50-50 share" from? All discussion I've seen described 2022 as very Series S dominant because this is when there was the shortage of PS5 & Series X components due to COVID. Do you have any sources which indicate that the Series S and Series X were more or less split evenly in terms of units?

i'll have to poke around more see what i can find (had to edit this comment cus i made dumb math the 1st time)
 
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This was Activision's net impact on Gaming this quarter

image.png

I'm an economist not an accountant, so can someone tell me if this is somehow including some sort of cost of capital? Would that fall under accounting adjustments or is that just a valuation adjustment of some sort.
 
I think that the direction MS has been going since last generation in focusing on gaming as an overall ecosystem proposition makes results leaning toward diminishing hardware sales over time unsurprising. While they'll want to keep dedicated hardware on the table as an entry point, they've transitioned away from Xbox hardware being the heart and foundation of their gaming sector toward the broader Windows platform family and now beyond that.

I've never been a fan of the strategy shift ever since the Xbox One due to the direction involving a devaluation of their dedicated hardware through the abandonment of exclusives, but they're just about managing to prove a functional case of the current trajectory with Game Pass's growth and an opportunity for further progress thanks to a long over-due slate of yet unreleased software from their internal studios since the last generation and the current acquisitions adding to the pile of projects alongside the capacity for more titles across each given calendar year once the ball really starts rolling.

Without another strategic shift or a degree of success that has the western market leaning primarily on Xbox, I don't think their hardware will majorly pick up too much and will probably end up settling at a modest baseline with a lower proportion contribution to overall profits year to year outside of generational launches. Being a good cost-to-value entry point into the dedicated gaming hardware space still gives their range of consoles an important place, but direct comparisons to their competitors should probably be tempered with different expectations with how we've seen them pivot on so many fronts. Relative sales to the current Nintendo and Playstation offerings are interesting to see, but they're no longer as distinct a means of gauging success or how well things are going. If Xbox really picks up steam in the next few years, I think that disjoint will end up being more evident with overall segment profits in the face of their flagship software distribution method and general business model continuing to make direct comparisons more ambiguous to the overall picture.
 
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This will surely lead to less and less XSeries in stores across EU.
This is already thing in the city center where I live and has been this whole generation. The largest department store has prominent Switch and PS5 signs close the main entrance all year around. The only Xbox hardware that is sold is the basic Series X controller for hefty 70€ price tag.
 
Add Microsoft to the long line of companies who made video game hardware and then left the business. They are now out of the console video games business and solely in the PC games business. Game pass is a Steam competitor, not a Nintendo competitor.

Maybe it‘s better business for them this way. But it’s not as profitable as a successful console that sells lots of games. They have failed and failed to make a compelling games lineup to support their Xbox hardware and leaving the business is the result.
 
looks like ms stock was up a bit today. xbox/gamepass continuing success no doubt helped that.
It has nothing to do with Xbox.
Microsoft's performance today depends almost solely on Azure and the development of the AI.
Xbox could even close tomorrow and Microsoft would lose nothing in the stock market. We also don't know if Xbox/game pass can be called a big success right now....
 
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Add Microsoft to the long line of companies who made video game hardware and then left the business. They are now out of the console video games business and solely in the PC games business. Game pass is a Steam competitor, not a Nintendo competitor.

Maybe it‘s better business for them this way. But it’s not as profitable as a successful console that sells lots of games. They have failed and failed to make a compelling games lineup to support their Xbox hardware and leaving the business is the result.
Lol. Lmao, even.
 
Lol. Lmao, even.
Rather than Lmao’ing me, how about you tell what I said that is incorrect?

Leaving the console market might be better business for Microsoft. I didn’t say they were a failure of a company. In fact, a successful company recognizes business failures and adjusts around their strengths. Microsoft has proven to be not good at getting enough compelling software out there to support a dedicated console. So, they are adjusting to fit around their core strengths of cloud server delivery and software services. They’ll probably make more money than when trying to support the Series X as an actual console.

Is any of that incorrect?
 
Rather than Lmao’ing me, how about you tell what I said that is incorrect?

Leaving the console market might be better business for Microsoft. I didn’t say they were a failure of a company. In fact, a successful company recognizes business failures and adjusts around their strengths. Microsoft has proven to be not good at getting enough compelling software out there to support a dedicated console. So, they are adjusting to fit around their core strengths of cloud server delivery and software services. They’ll probably make more money than when trying to support the Series X as an actual console.

Is any of that incorrect?
Microsoft still produces Surface laptops and Satya Nadella last year said this about Windows phones


Game Pass primary user base is on consoles. Microsoft still takes in billions from third party software royalties. I'm confident in saying we'll see new Xbox's being made more than a decade from now.

Microsoft fucked up this gen with super expensive hardware that hasn't delivered on anything unique to the platform compared to PS5. Series S and X are still sold at big losses, and the digital only Series X is taking way too long to come out.

Going by the leaked plans for Gen 10, I'd be expecting the next Xbox to be natively weak, cheaper to produce, and use AI upscale via cloud compute to boost sub native resolutions and lower than 30/60fps. Microsoft will not want Xbox hardware to take massive losses again.
 
Microsoft still produces Surface laptops and Satya Nadella last year said this about Windows phones



Game Pass primary user base is on consoles. Microsoft still takes in billions from third party software royalties. I'm confident in saying we'll see new Xbox's being made more than a decade from now.

Microsoft fucked up this gen with super expensive hardware that hasn't delivered on anything unique to the platform compared to PS5. Series S and X are still sold at big losses, and the digital only Series X is taking way too long to come out.

Going by the leaked plans for Gen 10, I'd be expecting the next Xbox to be natively weak, cheaper to produce, and use AI upscale via cloud compute to boost sub native resolutions and lower than 30/60fps. Microsoft will not want Xbox hardware to take massive losses again.
Seems like we are on the same page. Microsoft recognized that their current Xbox path wasn’t working so they are reworking it to play to their strengths. That being said, it sure looks like leaving the console business and focusing on PC and mobile users. Even if they release another Xbox, it’ll be a streaming dongle that’s basically a dumbed down streaming PC.

I’m calling a spade a spade with them leaving the console business while agreeing that they will probably make more money (or at least losing less) going that route. Them stripping their first party software developers of talent says they no longer intend to compete using first party output.
 
Rather than Lmao’ing me, how about you tell what I said that is incorrect?

Leaving the console market might be better business for Microsoft. I didn’t say they were a failure of a company. In fact, a successful company recognizes business failures and adjusts around their strengths. Microsoft has proven to be not good at getting enough compelling software out there to support a dedicated console. So, they are adjusting to fit around their core strengths of cloud server delivery and software services. They’ll probably make more money than when trying to support the Series X as an actual console.

Is any of that incorrect?

Your original post said that Microsoft is now out of console business with is simply false.
 
Your original post said that Microsoft is now out of console business with is simply false.
It is true. They are phasing out retail software and changing the Xbox to an online dongle. That’s not a console. That’s a gimped PC.

They also dismantled their largest first party. Gamepass is more of a storefront than anything to showcase first party games. That is more like Steam than Nintendo or PlayStation. Hence why I’m calling a spade a spade.

That not a bad thing necessarily as it might be better business for Microsoft.
 
Microsoft still produces Surface laptops and Satya Nadella last year said this about Windows phones

I wouldn't say that too soon. Surface division has not been doing good lately:

surface-revenue-2014-24.jpg


The face of the Surface Division left to join Amazon and the division has had significant cuts.
And while Satya says that, it comes across as wishful thinking. Windows phone marketshare was getting to the low single digits, and with most ecosystem products, the lack of dev/consumer support only causes that to further decrease as time goes on. Its hard to imagine what MSFT could have done at that point to even maintain it as a vestigial business.

Microsoft still takes in billions from third party software royalties.

From the recent leak Xbox console 3rd P TRX was $6.6B. If we assume ~20% avg cut (since we know big third parties like to bring it down), its $1.3B.

And I'd assume that decreases as the Xbox installbase decreases, which it is.
 
It is true. They are phasing out retail software and changing the Xbox to an online dongle. That’s not a console. That’s a gimped PC.

They also dismantled their largest first party. Gamepass is more of a storefront than anything to showcase first party games. That is more like Steam than Nintendo or PlayStation. Hence why I’m calling a spade a spade.

That not a bad thing necessarily as it might be better business for Microsoft.

Phasing out physical games has nothing to do with leaving the market and today Xbox is a traditional console, so again, your statement is simply false.

If you had said that MS will leave in the future, would be debatable, but you're wrongly said that it's already out.
 
Phasing out physical games has nothing to do with leaving the market and today Xbox is a traditional console, so again, your statement is simply false.

Is it false? Why is only Xbox doing it? Why is only Xbox walking away from the mainstream and expanded audience purchases that being on a shelf at Target or Yodobashi Camera give access to? Why is Xbox alone torching their relationship with Walmart and Bic Camera? Why does Xbox alone no longer care about whether the mainstream expanded audience can see their hardware on a store shelf?

That’s not some sort of 4D chess. That’s leaving the console market despite not announcing it as such. They believe it’ll be better for their business to leave the console market in favor of mobile streaming, a PC game launcher, and an online only dongle.

By your argument, Apple, Inc. is in the console business because you can play video games on the Apple TV streaming only device.

If you had said that MS will leave in the future, would be debatable, but you're wrongly said that it's already out.

Ok. It’s made moves and announcements that say they are getting out. There are still Series X’s and boxed games on shelves so they aren’t out yet. They have told retailers to stop ordering games and hardware from them and retailers have been discontinuing stocking Xbox products in anticipation of them exiting the market.
 
Going by the leaked plans for Gen 10, I'd be expecting the next Xbox to be natively weak, cheaper to produce, and use AI upscale via cloud compute to boost sub native resolutions and lower than 30/60fps. Microsoft will not want Xbox hardware to take massive losses again.

I'm glad I'm not the only one thinking this.
The R&D and costs of a high-end console aren't sustainable for a platform with such a low demand, and by going even further with multiplatfrom efforts its clear that the next Xbox will be nothing more than a convenient box to access GamePass content at a relatively low entry point.
 


(FYI) According to Zenimax employee, Sarah Bond (Xbox Director), will speak in Spring to explain the change in Xbox's strategy regarding Hi-Fi Rush, Sea of Thieves, and other games going multi-platform.

“Wait for springtime, Sarah Bond will say something, you guys will be fine.”

[...]

Edit. Sry, my bad, wrong thread. That's the better topic for this and it's been allready there, link.
 
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I don't think Microsoft will abandon hardware in the next generation, at least not yet, but I think it will further diminish the focus on Xbox console hardware in the next years. So even less marketing, less exclusives and less production of the consoles and consequently even less sales.
I think we are already beginning to see the first signs of that
 
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