(Business Perspective) Does MS really need Xbox Hardware?

[DonFerrari]

Ryuu96 said:

Azzanation said:

-Snip-

As a business standpoint Ryu is wrong, and you will see very soon who is right in the coming years when we no longer see future Xbox hardware which would make you very happy Don. 

But, I've provided actual facts and figures which back my points up, which you still haven't done, I have actual financial data on Microsoft's Gaming FY which show why abandoning Hardware would mean abandoning billions of dollars in Revenue/Profit via the 30% Cut. You keep claiming Microsoft loses billions on Hardware and losses billions on RnD but have yet to post any source for that.

Ryu its simple, 100m GP Subs will earn more money than everything Xbox hardware offers and their 3rd party cut from games. $1b a month, $12b a year without the expense of hardware manufacturing. This is the direction, and this is achievable. They will need to make the cut with Live and consoles to move forward which will only hurt the small fanbase Xbox has but it will be what makes them grow.

$12bn a Year if everyone Subbed at full price for the entire year (so, not likely). Where is the other $4bn coming from in that scenario?

100m GP Subs is a lofty goal, even fully multiplatform, that is Disney levels, Xbox simply doesn't have the brand for that, Game Pass doesn't have to achieve TV Show level subs to be a success either and Imo likely won't ever achieve that level of Subs.

You'd have to hope for an insane attach rate on PlayStation/Nintendo or a massive increase in Game Pass PC Adoption (Rather than just using Steam).

I really dont get your point with porting games? Porting isnt an issue today and if games are made with PS moving forward, they wont need to port them. 

There's dozens-hundreds of 1st Party titles available in Game Pass which aren't currently on PlayStation. That's my point, they'd have to port them all over, porting costs time, money and resources, unless they start fresh.

ABK is worth $70b and they strive without making hardware. Xbox wont be bigger than ABK straight away if they go 3rd party but its a start. 

1. We don't know how much Xbox would be worth on the market.

2. ABK's Revenues are $8bn a Year - They are the largest 3rd Party Publisher in the industry.

The 3rd Party Publishers strive but the Console Manufacturers make way more money than them.

Nintendo and Xbox bring in double ABK's Revenues, beyond ABK we have EA slightly behind, Take-Two further behind and everyone else distant far behind.

What Xbox is worth on the market would be irrelevant because we wouldn't know it.

"Xbox won't be bigger than ABK straight away"

So what you're saying is that we, and shareholders, would witness Microsoft Gaming going from a $16bn a Year business, down to a ~$8bn a Year business and that would be a good look? Lol.

What i am saying out of all of this is Subs > Hardware. Get GP on everything. Sony will want Xbox games as they also have Bethesda games and Sony wouldn't want to lose out on Elder Scrolls, Fallout etc. These are system sellers. If Sony say no, than Nintendo would love those titles which will increase Switch sales. 

Game Pass needs Hardware. Sony doesn't need them, PS5 will sell 100m+ without an Elder Scrolls, without a Fallout, there wasn't even a new Elder Scrolls in the PS4 gen and only a single Fallout and PS4 sold over 100m.

Nintendo/Sony DO NOT need Xbox's IPs to be massive successes, they will reach their thresholds without them. Again, Elder Scrolls on Switch will probably be via xCloud too which will be a largely inferior experience, not to mention, a huge portion of Bethesda's fans are on PC.

Thus Sony will have the negotiation advantage. Sony will likely demand it's 1st Party Only and a split of the Revenue which means less subs and less revenue for Microsoft.

You don't see Steam clamouring for Game Pass, why would Sony? Lol.

Xbox's 5,000 Employees isn't enough to hold interest without 3rd Parties. Xbox have already stated their goal is 4 Large Titles a Quarter. That is good for a Console Manufacturer, it's more than enough for current Game Pass which is supplemented by a dozen 3rd Parties every month too but it isn't enough if it was just 1st Parties...That would be 4 AAAs Per Year for Game Pass...What would be the point in subbing for a year at that stage. You'd just sub the month they release.

Game development is long as hell, it's unpredictable as well, one screw up and a 1st Party Only Game Pass is now left with 3 AAAs a Year.

If Microsoft wanted to increase on that then they'd have to massively expand.

Let's just keep it simple. GP right now is 25-30M subs right? To get to 100M subs it would need to grow 3 to 4 times "instantly", that certainly wouldn't come just by being available on PS and Nintendo. So the offset of losing revenues by having GP on PS+Nintendo is non-existing.