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Machiavellian on 23 September 2022
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ConservagameR said:
smroadkill15 said:

MS is paying for this acquisition so they will have made the money they spent on the acquisition by the time it goes through. They would also rather invest in something than let the money sit and do nothing. Why does Game Pass need to make the money back quickly? They are clearly playing the long game. It could take 15+ years and they are likely cool with it. 

MS had that $70 billion cash in their pockets, so no, they didn't need to make that money to make the purchase.

Unless XB exists just to be a subsidy for MS, making money back slowly is bad business for someone in MS's position.

If MS were fine with outrageous XB subsidies and didn't care how long the payback took, why have they waited 20 years to go big now?

Simplest answer to me is that they aren't planning on taking forever to pay it off. How that plays out will be the interesting part for XB owners.

Its called new management.  New CEO, new head of xbox, new direction for MS as a company with subscription services. MS as a business has changed in those 20 years.  Yes, GP is not a plan for making huge money today as MS has been careful to taking their time building the infrastructure to support it from spending billions on server farms and their cloud infrastructure all over the world to adding pieces to GP as the system continue to grow and building their first party content.  A company as large as MS does not have to make back a purchase right away.  I have worked for multiple companies who has either purchase or been purchase by another company and no it's not always about making your money back its about market position and expanding the capability of your company in a competitive environment.  MS purchasing publishers are not about making back their purchase in cash, it's about growth of their entertainment division and that is currently the position they are in a growth cycle for entertainment.

The paying it off is the simplest part of this whole story, since both publishers are all in the green.  It's not like they are purchasing companies in the red who products do not sell.  The larger scope is they expect more subs. More subs then just a console lifecycle can bring but global subs that allows gamers on whatever platform they chose play MS games.  PC, console, mobile, TV, Dongle you name it and MS wants to be there.  It's a pretty simple strategy that does not need a lot of thought, but it does need a lot of money and time building and setting all the blocks in place to achieve.