Xbox acquires Bethesda

[Pyro as Bill]

Barkley said:

You haven't run the numbers correctly. You're assuming that 100% of the subscription money is profit for Microsoft it is not. They do not make $10.8 Billion profit a year from 60m subscribers, we can't assume it's even $7.5 billion.

The subscription from gamepass ultimate includes gold, thus that money is being used for where that goes (server maintenance, games with gold etc)

Gamepass ultimate includes third party titles, so more of that money is going to third party publishers.

Gamepass ultimate includes EA Play now, so money from it is going to that.

Gamepass ultimate includes XCloud, so money from it is going to running these cloud systems.

No 10m subscribers does not give microsoft $150 Million to spend on a AAA game and 60 million does not give them $10.8 billion to spend every year, not even close.

Spending $15 on gamepass utlimate does not give MS $15 to spend. That money goes to gold server maintenance, xcloud, third parties and now EA access too.

The actual money MS get from gamepass could be as little as $2 a month from subscribers or as high as $10 a month, we literally do not know because we don't know how much money they are giving to third parties or for ea access or running costs for xcloud or etc etc etc. But MS themselves have already said it's not super profitable for them at the moment.

Though one figure we do seem to have, MS gave Capcom $19 Million to get Devil May Cry 5 on gamepass. One third party game.

I never mentioned profit. I was showing how easily it works, it's potential and why PS5 sales aren't needed. It's the reason why everybody is doing it. EA seems  more than happy with theirs at $2.50/month.

The 3rd party deals are the only real cost. We know Epic, Valve and until recently Nintendo could all do free online and free games without passing on the cost to consumers and MS would be heavily invested in the cloud with or without XB anyway.

Ignore 3rd parties and imagine Nintendo starts their own GP but only for their 1st party games. Can you see how profitable they would become with 25-50m subscribers even if nobody bought a physical game ever again? Dropping $20m for a DMC5 deal would be peanuts.

In regards to profit, 10m subs @$15 ($1.8bn/yr) is equivalent to selling 30m full price, digital, first party games every year ($60/$60).
Or 50m first party, physical games per year ($34/$60).
Or 65m physical, 3rd party games per year ($27/$60).
https://qph.fs.quoracdn.net/main-qimg-60186931fa6306b13009f5b3d2fe8e25.webp

That's a 1:6 ratio for a GP sub compared with a physical 3rd party sale on PS5. If someone only does a $1 sub for a month, that could still cost Sony a sale on the types of games people only play through once.

Even if MS is giving EA the full $30, an annual EA Play sub is still only equal to 2 months of GP. You get a 50% discount when you buy 12mth instead of 1mth.
What sort of discount do you think EA will give MS when they buy 10-20 million? How many games would EA have to sell to match the $300-500m(?) cheque MS has just written for them?

Doesn't surprise me that GP isn't profitable yet. It's possible that Nintendo's $20 sub is more profitable than GP but that's because the games on Nintendo's service have already been built and paid for.