Quantcast
Xbox Head Phil Spencer Said "The Business isn't About Selling How Many Consoles "

Forums - Gaming Discussion - Xbox Head Phil Spencer Said "The Business isn't About Selling How Many Consoles "

Tagged games:

Do you agree with Phil

Yes 15 29.41%
 
No 27 52.94%
 
In between 6 11.76%
 
Somehow 1 1.96%
 
I don't have any clue 2 3.92%
 
Total:51

Well hardware sales effect active user base, active user base effects both software sales and subscriptions, so... It is a pretty major factor...

Say for example that, PS5 and Switch both sell 100m+ consoles, and then the XB4 only sells say 12m consoles.

That would have a huge effect on total software sales and subscriptions going forward, and it would also effect how many games come to Microsoft's platform.

It also would effect how often the Xbox brand is spoken about (Smaller user base would mean less word of mouth).

Basically, a lot of things synergize off of console gaming hardware sales, even if the profit margin on hardware itself is basically nothing.

Sure, Microsoft can become a third party publisher and just run their own storefront, but how do they then keep their slice of the pie from shrinking against all the other alternative storefronts/services if their brand word of mouth gets diminished from its current position?

Sony's hardware/software/service ecosystem contends as a fairly strong competitor with the entirety of PC gaming because of hardware sales supporting the brand, etc. its influence is self synergizing and to forgo that focus is to become a smaller competitor, not larger.



Around the Network
VAMatt said:
thismeintiel said:

Those profits came from Nintendo selling tens of millions of handheld HW, which led to tens of millions of SW sold from that HW. It definitely didn't come from underperforming home consoles.

And yes, digital subs and sales are important, but it is the combination of both that and physical retail that makes one very successful. And more boxes sold means more profit from HW and higher potential for sales of physical and digital goods.

Except that nobody has ever made an real money on sales of consoles.  They're a loss leader.  They're used to get you in the "store", so you'll buy the other merchandise (software, subscriptions, and peripherals) where they make real money.  

But, your other points are right.  Selling consoles is an important part of the overall recipe for success, as the industry works now.  But, with MS selling subscriptions to PC users, and games to users of nearly every platform, the recipe is changing.  And, in that context, Phil's statements make sense.  

You don't think Sony and Nintendo are making money on their HW? Oh, they are. Especially Sony. The PS4 HW was profitable just 7 months after launch. And they have been able to sell their HW at $299 for almost three years now. They are making a killing on HW.

EricHiggin said:
thismeintiel said:

Those profits came from Nintendo selling tens of millions of handheld HW, which led to tens of millions of SW sold from that HW. It definitely didn't come from underperforming home consoles.

And yes, digital subs and sales are important, but it is the combination of both that and physical retail that makes one very successful. And more boxes sold means more profit from HW and higher potential for sales of physical and digital goods.

MS seems to understand the long game from a tech perspective, they just don't understand it from a present consumer's perspective overall and how that leads to a future customer worldwide. Either that or they're just more worried about making money, and focusing on digital is a safer bet vs physical in terms of profit in general.

I think the beginning of this gen proves your last statement to be true. MS is one of the foolish who believes that killing the used game market will bring them larger profits. Of course, the truth is that it would more likely result in increased piracy and lower game sales. 

DialgaMarine said:
I’m aware that Xbox has been under new management since last gen, but they clearly didn’t have this philosophy when their hardware sales numbers were actually more competitive. I only disagree because I think their metrics for success are far more vague than putting out hard sales numbers, and I feel that they’re implying that putting out hardware numbers somehow equates that company’s console not being consistently used by the majority of its buyers.

Funny enough, they don't seem to like to give out any hard numbers, SW or HW. It's always vague metrics, like how many hours played or how many times a specific goal in the game was met. Their position is no matter how poorly or well they are doing, they're great.



COKTOE said:
Snoopy said:

He is right. Buying a console and throwing it in a closet or buying a couple of games for the console isn't going to help Microsoft or Sony much.

He's right?....Can you envision any other scenarios aside from the 2 you mentioned that might draw into question how stupid this idea is in 2019? If you buy a console and smash it in the parking lot is literally an equivalent to one of your 2 arguments as to how Phil Spencer is right. Out....standing.

Software and subscription services are what matters the most. In fact, if these companies can sell less hardware, but more software/subscriptions the more money they will make.



Snoopy said:
COKTOE said:

He's right?....Can you envision any other scenarios aside from the 2 you mentioned that might draw into question how stupid this idea is in 2019? If you buy a console and smash it in the parking lot is literally an equivalent to one of your 2 arguments as to how Phil Spencer is right. Out....standing.

Software and subscription services are what matters the most. In fact, if these companies can sell less hardware, but more software/subscriptions the more money they will make.

And the more hardware you sell the more Software you'll sell. Which is why PS4 has sold twice as many games as the XBO, because it's sold twice as much hardware. Getting a cut of all that third party software is lucrative. Selling less hardware means selling less software and getting less money from third parties. MS don't get a cent when Assassins Creed sells on PC, they do when it sells on Xbox. So selling a lot of hardware guarantees a lot of revenue and people being locked into your closed system generating you revenue.



Predictions (Made July 2019)

LTD: PS4 - 130m, Switch - 110m, XBO - 52m       2019 : PS4 - 15m, Switch - 18.8m, XBO - 4.8m        2020: Switch - 22m (Peak Year)

thismeintiel said:
LudicrousSpeed said:
The business is about revenue and profit. Selling more consoles certainly helps that, but it isn’t the only factor. Nintendo made a lot of money selling much less console amounts during the N64-GCN era.

You’re going to see all three companies go all in on subscriptions and recurring revenue. It’s the future, just like it has become in pretty much every other entertainment avenue. It will become less and less about selling the boxes.

Those profits came from Nintendo selling tens of millions of handheld HW, which led to tens of millions of SW sold from that HW. It definitely didn't come from underperforming home consoles.

And yes, digital subs and sales are important, but it is the combination of both that and physical retail that makes one very successful. And more boxes sold means more profit from HW and higher potential for sales of physical and digital goods.

Nintendo profited with less hardware by controlling the prices of their software. You can already buy Detroit and God of War for less than $20 pretty routinely. Never happened with Nintendo back in the day or even modern Nintendo. Sony came into the industry with a loss-leading mentality and Nintendo never really followed. PS3 eventually sold what, close to 90 million or something? Yet Sony lost billions on it at one point and maybe still ended up losing overall, idk.

Yeah, you sell more consoles, you can sell more games. He doesn't say console sales have zero importance. He's talking about a customer already in the Xbox ecosystem, and how MS doesn't need to sell them an S or an X if they're still buying games and subscribing to Gamepass on their launch Xbone. And of course, he's right. And they obviously understand they need to improve their appeal to other gamers in order to grow that install base, otherwise they wouldn't have just bought a shit ton of studios.

The big question is, post-E3, have you made your annual "if __ fails, MS is out of the industry!!" prediction yet? What is it this time? If Elite 2 fails? If Battletoads fails? Please let us know.



Around the Network
Barkley said:
outlawauron said:

Those subscriptions are huge money makers though. Live is successful and likely lifts the entire bottom line. I don't think MS breaks down the numbers like Sony does in that regard, but if PS+ subscriptions bring in more revenue than all of Nintendo, then surely MS is doing just fine.

Right, but what drives the sales of Live? Selling consoles. You can't sell Live to people who don't own an Xbox.

I don't own an XBO. I am an on-again, off-again Live subscriber for legacy Halo. With MCC coming to PC, I am starting to feel tempted to start that subscription back up. 




Retro Tech Select - My Youtube channel. Covers throwback consumer electronics with a focus on "vid'ya games."

Latest Video: More than Just a Genesis? Analogue Mega SG Review

StuOhQ said:
Barkley said:

Right, but what drives the sales of Live? Selling consoles. You can't sell Live to people who don't own an Xbox.

I don't own an XBO. I am an on-again, off-again Live subscriber for legacy Halo. With MCC coming to PC, I am starting to feel tempted to start that subscription back up. 

Why would you, you get no benefit for being a Gold member on PC.



Predictions (Made July 2019)

LTD: PS4 - 130m, Switch - 110m, XBO - 52m       2019 : PS4 - 15m, Switch - 18.8m, XBO - 4.8m        2020: Switch - 22m (Peak Year)

jason1637 said:
DonFerrari said:

MS hides it under 10 feet. But if we use a rule of thumbs with PS4 having about 45% PS+ subs, then with X1 I think about 50% would be a good measure (so 15-20M subs to gold).

PSNow is under 2M, so Gamepass probably also on the 1-2M subs.

SW sales still makes most of the revenue, and for that if they don't have the platform they miss most since most of the SW sold on Xbox is 3rd party.

Gamepass is probably closer to 4m. 

Please give us numbers, because MS don't give them.

Consider their announcements of "1M people have played SoT" or equivalents, that have people on Gamepass plus people that bought the game I doubt they have a stable 4M subs on gamepass. Anyway XCloud will probably take quite a time to achieve great numbers of subs.

VAMatt said:
thismeintiel said:

Those profits came from Nintendo selling tens of millions of handheld HW, which led to tens of millions of SW sold from that HW. It definitely didn't come from underperforming home consoles.

And yes, digital subs and sales are important, but it is the combination of both that and physical retail that makes one very successful. And more boxes sold means more profit from HW and higher potential for sales of physical and digital goods.

Except that nobody has ever made an real money on sales of consoles.  They're a loss leader.  They're used to get you in the "store", so you'll buy the other merchandise (software, subscriptions, and peripherals) where they make real money.  

But, your other points are right.  Selling consoles is an important part of the overall recipe for success, as the industry works now.  But, with MS selling subscriptions to PC users, and games to users of nearly every platform, the recipe is changing.  And, in that context, Phil's statements make sense.  

MS won't sell Xcloud or Gold on PS. They may sell some on PC.

And Nintendo almost always makes money on HW. Sony is loss leading at the start of the gen (well PS3 probably for almost all gen), but they make money on the HW when they are doing the price cuts and slim.

DialgaMarine said:
I’m aware that Xbox has been under new management since last gen, but they clearly didn’t have this philosophy when their hardware sales numbers were actually more competitive. I only disagree because I think their metrics for success are far more vague than putting out hard sales numbers, and I feel that they’re implying that putting out hardware numbers somehow equates that company’s console not being consistently used by the majority of its buyers.

We don't even know the revenue and profit of Xbox itself. It is the whole division that have more stuff than Xbox.

Snoopy said:
COKTOE said:

He's right?....Can you envision any other scenarios aside from the 2 you mentioned that might draw into question how stupid this idea is in 2019? If you buy a console and smash it in the parking lot is literally an equivalent to one of your 2 arguments as to how Phil Spencer is right. Out....standing.

Software and subscription services are what matters the most. In fact, if these companies can sell less hardware, but more software/subscriptions the more money they will make.

Yes sure, MS will sell less Xbox but that will make they sell more Gold membership, that also will make they sell more SW.



duduspace11 "Well, since we are estimating costs, Pokemon Red/Blue did cost Nintendo about $50m to make back in 1996"

http://gamrconnect.vgchartz.com/post.php?id=8808363

Mr Puggsly: "Hehe, I said good profit. You said big profit. Frankly, not losing money is what I meant by good. Don't get hung up on semantics"

http://gamrconnect.vgchartz.com/post.php?id=9008994

What Phil should've truthfully said was ""Microsoft's business now isn't About Selling How Many Consoles "  Because let's face it Microsoft makes consoles, and back then selling consoles was one of the biggest things for MS since they barely made any games. 

So for Phil to say that it isn't about selling how many consoles, well it isn't a lie, but its a twist PR on them as that's what they were about before or else they wouldn't have joined the console wars and just made games instead.



DonFerrari said:
jason1637 said:

Gamepass is probably closer to 4m. 

Please give us numbers, because MS don't give them.

Consider their announcements of "1M people have played SoT" or equivalents, that have people on Gamepass plus people that bought the game I doubt they have a stable 4M subs on gamepass. Anyway XCloud will probably take quite a time to achieve great numbers of subs.

The 4m number is just a guess based on some info their studios have shared on their games.

Two days ago Rare shared that they have reached 8.4 million SoT players and that 2m of those are new players when they launched their big year one update back in march. Back in April Rare also shared that the split between gamepass and game ownership for SoT is 50/50 so 4.2m own and 4.2m use gamepass.

Forza Horizon 4 devs also shared yesterday that their game reached 10m players. Forza Horizon is more popular so it probably sold more (maybe 5-6m) so it's possible than 4m used gamepass on that game.