The console war is over

[DonFerrari]

Azzanation said:

DonFerrari said:

And since you can`t provide revenue or profit for xbox we can only really look at their hw sales estimatives from several different places.

From the 3 companies the only one that really can have much higher profit than the others with a lot lower sales is Nintendo because first their games budget is a lot smaller, they have a very high attach ratio and mostly sell first party games. MS and Sony their profit is very dependent on the number of consoles sold (with subs about 40-50% of the HW sales, games sold total about 12 per consoles and most being 3rd party). So you won`t have Xbox selling half of PS and profiting double unless you want to pick up money made on other markets (let`s say consider GP, SW, Gold sales done on PC, minecraft sales done on PS, PC and Switch that isn`t a comparison to include against Switch or PS as much as isn`t picking Pokemon Go revenue or anime or merchandise that go to Nintendo) even if in current gen even if you pick every single source of revenue and profit and for the whole department (that have more than even every Xbox market) it doesn`t win from Nintendo or Playstation.

You just answered my question and that's exactly the direction Xbox is taking. Now that doesn't mean it made XB1 more successful this gen than the PS4, far from it, it just means they are building on a model where they don't need to rely on console hardware to deliver record breaking profits etc.

RolStoppable said:

It's just like I said the first time I responded to you: You can't tell the difference between revenue and profit. When you first posted your example, you said that company A made $3 billion in revenue and company B made $5 billion in revenue. Now you use the same numbers as profit figures. Something like that can only happen when somebody doesn't know that revenue and profit are not the same thing.

A proper example would look like this:

Company A sells 10m consoles, makes $8 billion in revenue, a profit of $1 billion.
Company B sells 5m consoles, makes $6 billion in revenue, a profit of $2 billion.

That's how you get your desired result of company B doing better than company A despite selling less hardware.

But even if you get the example correct, the question remains how it applies to the real world. When Microsoft gets outclassed by a big margin in hardware sales, their competitors can naturally sell a lot more games and subscriptions than Microsoft can. Furthermore, Microsoft's only growing business right now are Game Pass subscriptions, but they have been selling most of them at such low prices that they've been almost given away for free; this allows Microsoft to brag about subscription numbers, but it's far from a profitable business at this point.

I made the question simpler which i stated so we can get to the point. Hardware and profits. The potential for bigger sales is correct if you sell more hardware however keep in mind that producing more hardware eats up costs as well. To manufacture millions of consoles as well as Sony and Xbox eating the costs is like a double edge sword and that's if you sell the consoles to begin with. MS is looking past that by making their games suitable on PC and based on rental services like GamePass so they wont have to produce as many Xboxes or rely on trying to sell them. By going outside the walls of the consoles industry, not only does it increase their audience beyond the console market but also promoting their own brand in the mean time. The revenue that GamePass will be making for Xbox over the long term will be massive it they continue to grow the service and maintain the quality. They wont sell as many consoles with this strategy and that's the point, its not about selling as many consoles anymore for Xbox, its about getting onto Xbox Live/GP. If they sell consoles in the process than obviously that's a good thing too, they have an audience their and they will continue to offer the options.

Consoles are important, just each company prioritizes hardware differently, Sony and Nintendo's structure is all about selling the consoles and they heavily rely on it, if the PS5 or next Nintendo console doesn't sell well it hurts the business as they don't have any other type of alternatives, well Sony has PSNow. If Xbox doesn't sell well next gen, they have plenty of other ways of earning money so the business risk is also a lot less..

Keep in mind, not all console owners buy into PSN or Live, something these companies want you to do, and it looks like Xbox is trying to turn more people towards the service so instead of having 30% subscribed, they want 100% subscribed and that's where GamePass comes in, its not Live but its an affordable entry which is crazy not to sub if you are a Xbox owner, its even a good bargain for PC gamers. Add in Xcloud and you have plenty of potential to make more money than they would have if they just stay locked in the console market.

Except you have a humongous bridge on to close from not selling much HW to still manage to sell a lot of SW and subs