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Forums - Gaming Discussion - (Business Perspective) Does MS really need Xbox Hardware?

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Soundwave on 14 May 2023

I would suggest MS do the opposite.

Take that $70 billion they were going to invest in Activision and instead spend less, a few billion to buy Call of Duty Day 1 Game Pass + maybe even 6 months exclusivity on COD every year for XBox + Windows PC Store. The rest of Activision was never worth such a huge price tag anyway. 

Then take some of that huge amount of money you have left and buy some more local level exclusives for Game Pass + XBox and just keep building and building.

There's nothing a regulatory body can do to stop this either.

I'd also make the whole "MS doesn't have games on Switch and must abandon hardware first!" moot. Put games on the Switch (Halo, Forza, Killer Instinct, Master Chief in Smash, new Banjo-Kazooie) full stop, just make sure they are older versions of those IP, which would line up anyway since the Switch/Switch 2 is always going to have a power gap with XBox home consoles. Get the Switch audience on your side and loving your IP and then they will be more likely IMO to buy an XBox over Playstation as their stationary home console (most Switch owners still own one of an PS or XBox). So Halo Master Chief Collection on Switch ... enjoy it, want to play the newest Halo? Well you have to buy an XBox or have a PC rig for that. Or Game Pass streaming. 

Last edited by Soundwave - on 14 May 2023

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Conina on 14 May 2023
Azzanation said:
LudicrousSpeed said:

Man I can’t believe this thread is still going. You’re making all kinds of assumptions about subs and numbers, none of it makes any sense. Here’s what MS loses by going third party:

Millions of XBLG subs
Millions of GamePass subs
Licensing fees off of millions and millions of physical games sold
Full share minus retailer cut of millions of physical first party sales
Digital shares off of millions and millions of digital games sold
Digital shares off of millions and millions of digital micro transactions/DLC

Here is what they gain:

They can offer a stripped down, more expensive version of GamePass to Sony and Nintendo and make less money off of it, because Sony and Nintendo now get a cut of everything.

They can sell physical games on these platforms but they have to give retailers and share and now pay licensing fees to Sony/Nintendo.

They can sell digital games on these platforms but they have to give platform holders a 30% cut of all transactions.

You assume they’ll see a large growth in GamePass subs, but there’s no basis for that assumption. I sign up for GamePass because of day one first party games and cool third party titles I’d otherwise typically not try or sometimes not even notice. All of that is gone in this new GamePass on competing consoles. They lose subs.

Millions of Subs will dominate the profit boards than everything you just mentioned. 100m Subs is $1billion a month. 200m is $2billion a month. They arent hitting those sub numbers hanging onto console hardware.

The reason they need to dump the hardware is to lessen the competition with Sony, so Sony will agree to a GP model on PS which Sony will also benefit from profiting. 

Example: 1st Party Xbox GamePass on rival systems means plenty of Nintendo and Sony customers can possibly sign up. Sure they lose the 3rd party games but that model can still exist on PCs etc.

This also means Xbox can release all their games digital as stand alone games on both Nintendo and PS increasing digital sales by a fair margin. Imagine games like Halo Infinite, Gears 5 and Horizon 5 on Switch and PS4.

Yes i am assuming they will sell better, but do you and others really disagree with that assumption?

They aren't hitting those numbers hanging onto console hardware... so your solution is expanding subs onto console hardware (Sony & Nintendo consoles)?

"Imagine games like Halo Infinite, Gears 5 and Horizon 5 on Switch and PS4."... they already can release those games on PS4, PS5 and Switch, if they want to. Even without ditching Xbox console hardware (andd pissing off Xbox users by that move) and without a "GamePass lite" with only Microsoft games on PlayStation or Switch. Like Ori 1 & 2, Minecraft Dungeons, Psychonauts 2...

And why do you expect massive sub growth by such a "GamePass lite" on Sony and Nintendo consoles? That's not a given. Either they would have to properly port EVERY GamePass first party game to EVERY supported console (PS4, PS5, Switch) OR they would only offer game streaming with its known problems (fast internet connection necessary, streaming stability, video artifacts, response lag, wrong controller symbols when using a PS or Switch gamepad...) and in most cases a worse experience than local play on an entry level console like the Xbox Series S.



LudicrousSpeed on 14 May 2023

I don’t get where this 100,000,000 subs number is coming from. It’s just a bizarre number you’re pulling out of thin air. We’re using actual numbers like revenue and digital sales and licensing fees and digital cuts and you’re just whipping out this insane billion a month in subs number.

If MS can’t get 100 million on Xbox, PC, and mobile hardware, how are they reaching that just by adding Nintendo and Sony? And why are those companies going to allow a day one GamePass service on their platform?



the-pi-guy on 14 May 2023
Azzanation said:
LudicrousSpeed said:

Man I can’t believe this thread is still going. You’re making all kinds of assumptions about subs and numbers, none of it makes any sense. Here’s what MS loses by going third party:

Millions of XBLG subs
Millions of GamePass subs
Licensing fees off of millions and millions of physical games sold
Full share minus retailer cut of millions of physical first party sales
Digital shares off of millions and millions of digital games sold
Digital shares off of millions and millions of digital micro transactions/DLC

Here is what they gain:

They can offer a stripped down, more expensive version of GamePass to Sony and Nintendo and make less money off of it, because Sony and Nintendo now get a cut of everything.

They can sell physical games on these platforms but they have to give retailers and share and now pay licensing fees to Sony/Nintendo.

They can sell digital games on these platforms but they have to give platform holders a 30% cut of all transactions.

You assume they’ll see a large growth in GamePass subs, but there’s no basis for that assumption. I sign up for GamePass because of day one first party games and cool third party titles I’d otherwise typically not try or sometimes not even notice. All of that is gone in this new GamePass on competing consoles. They lose subs.

They might sell more physical games since they have two more platforms to sell to. But they make a lot less on each sale. They make 30% less on each digital sale.

The kryptonite to your argument are digital services and transactions. You’ll need to sell an absolute gargantuan number of games to make up the revenue you lose from gold and GamePass and digital transactions. Just saying “well you get a lot more subs!â€Â doesn’t cut it.

There’s a reason Xbox is consistently in third place and yet MS still sticks around and makes profit and invests billions in the product.

Millions of Subs will dominate the profit boards than everything you just mentioned. 100m Subs is $1billion a month. 200m is $2billion a month. They arent hitting those sub numbers hanging onto console hardware. The reason they need to dump the hardware is to lessen the competition with Sony, so Sony will agree to a GP model on PS which Sony will also benefit from profiting. 

Example: 1st Party Xbox GamePass on rival systems means plenty of Nintendo and Sony customers can possibly sign up. Sure they lose the 3rd party games but that model can still exist on PCs etc.

This also means Xbox can release all their games digital as stand alone games on both Nintendo and PS increasing digital sales by a fair margin. Imagine games like Halo Infinite, Gears 5 and Horizon 5 on Switch and PS4.

Yes i am assuming they will sell better, but do you and others really disagree with that assumption?

Do you really think 100m people would subscribe to a service of just Xbox games?



LudicrousSpeed on 14 May 2023

GamePass as it exists today is the best deal in gaming, even more so if you have Ultimate. And even still, it only accounts for 10-15% of their revenue and Phil has said they see it staying around that mark.

Yet somehow a more expensive, worse version of GamePass would suddenly balloon to 100,000,000+ subs just because they add it to two more consoles.

I just don’t get it.



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Ryuu96 on 15 May 2023
LudicrousSpeed said:

GamePass as it exists today is the best deal in gaming, even more so if you have Ultimate. And even still, it only accounts for 10-15% of their revenue and Phil has said they see it staying around that mark.

Yet somehow a more expensive, worse version of GamePass would suddenly balloon to 100,000,000+ subs just because they add it to two more consoles.

I just don’t get it.

It makes complete sense, all Microsoft needs to do to maintain the same revenues they achieve now is...

  • Bring in double the $ of the current largest 3rd party publisher (Activision-Blizzard-King).
  • Hugely increase their employee headcount (studio count means shit).
  • Get Game Pass on Switch/PlayStation (hope they don't rip me off as I'm negotiating at a position of disadvantage).
  • Massively expand Game Pass subs from 25m to 100m+ (putting Xbox alongside worldwide juggernauts such as Netflix and Disney).
  • While coming up with an equal replacement of Xbox Live Gold for Game Pass Ultimate (unless I want everyone to drop down to Regular).
  • Have an insane attach rate on PlayStation or Switch for Game Pass (50% on each?).
  • Massively expand our Game Pass PC desirability (or everyone just continues to use Steam).
  • Massively expand our footprint in Mobile (which we've barely even started).
  • Find a way to quickly replace the current majority of Game Pass users (who are on Xbox Consoles).
  • Grow multiple of our IPs into CoD level juggernauts (aside from $30 Minecraft).
  • Hope xCloud massively increases in appeal/viability (better hope those ISPs hugely improve and we have an Azure data centre everywhere).
  • Release a CoD level IP every single year (or like dozens of other IPs which bring in $billions in total).
  • Replace billions lost in 30% cuts (it's okay, Game Pass will magically grow to 100m+ but that still leaves us with $4bn missing just to maintain).
  • Massively expand our planned studio output from 4 AAAs a year (to maintain a 1st party only Game Pass at $120 a year).
  • Hope that we don't lose millions of subscribers when we remove 3rd parties, EA Play and Xbox Live from the service.

It's easy bro! I don't know what you're worried about! I'm sure Microsoft would be happy to go from Xbox being currently profitable to making insane losses on a massive gamble and those shareholders as well would totally be happy seeing Xbox go from a $16bn business to a ~$10bn business overnight despite the fact that Xbox as it currently stands is growing and is hitting its best ever revenue.

May be down this FY but next FY I've no doubt they will break another record and maybe hit $17bn-$18bn but lets throw that all away on a hunch.

Last edited by Ryuu96 - on 15 May 2023

Ryuu96 on 15 May 2023

Additionally Microsoft clearly doesn't agree as the CMA have already confirmed Microsoft's next Xbox console is in development and they have info about it and Microsoft's plans for hardware in the future.

Last edited by Ryuu96 - on 15 May 2023

Azzanation on 15 May 2023
Conina said:

They aren't hitting those numbers hanging onto console hardware... so your solution is expanding subs onto console hardware (Sony & Nintendo consoles)?

"Imagine games like Halo Infinite, Gears 5 and Horizon 5 on Switch and PS4."... they already can release those games on PS4, PS5 and Switch, if they want to. Even without ditching Xbox console hardware (andd pissing off Xbox users by that move) and without a "GamePass lite" with only Microsoft games on PlayStation or Switch. Like Ori 1 & 2, Minecraft Dungeons, Psychonauts 2...

And why do you expect massive sub growth by such a "GamePass lite" on Sony and Nintendo consoles? That's not a given. Either they would have to properly port EVERY GamePass first party game to EVERY supported console (PS4, PS5, Switch) OR they would only offer game streaming with its known problems (fast internet connection necessary, streaming stability, video artifacts, response lag, wrong controller symbols when using a PS or Switch gamepad...) and in most cases a worse experience than local play on an entry level console like the Xbox Series S.

They cant go full 3rd party if they still have to focus on Xbox hardware. They still need to show support for their current gen systems. Take the hardware out, and they can go full 3rd party.

The amount of studios Xbox own will be more than enough to convince those on other platforms to sign up for a small fee. Star Field, Elder Scrolls, Doom, Quake, Perfect Dark, Fable, Halo, Gears, Forza Series, Rares next game etc. Plus all the live service games will benefit greatly. where Xbox does it better than its competition is their live service games, putting games like Sea of Thieves, Elder Scrolls Online, Grounded etc plus all their 1st party games with MP modes like Halo and Gears on GP and putting it on PS and Switch is a great attraction. You don't always need new games to keep those subscribed if they are playing live service and MP games, something Xbox has a plethora of.



ShadowSoldier on 15 May 2023

As a Sony Fanboy, I DO NOT want Microsoft to stop making consoles. I need Microsoft to be good or we'll get arrogant Sony...I was on these boards when Sony was at the height of their PS3 humbling.



Black Women Are The Most Beautiful Women On The Planet.

"In video game terms, RPGs are games that involve a form of separate battles taking place with a specialized battle system and the use of a system that increases your power through a form of points.

Sure, what you say is the definition, but the connotation of RPGs is what they are in video games." - dtewi

Pemalite on 15 May 2023
Azzanation said:

1) Plenty of articles hinting it. I didn't have to look far for it.

Microsoft President Questions Whether Gaming Consoles Will Still Be Around In 10 Years | Pure Xbox

Microsoft's Xbox Plans to End the Console Wars With Sony (businessinsider.com)

Did you even read what you posted? The first link had a quote from Phil Spencer and I quote:

"I don't think Xbox Series X is our last console", also claiming that Microsoft "will do more consoles to make that great television play experience work and be delightful."

The second link is telling us they are going to support as many platforms as possible.

Again. You DON'T have any real hard evidence that Microsoft is abandoning the Console market... So I would appreciate it if you didn't spread false rumors and try to assert them as fact.

Azzanation said:

2) Sega couldnt compete, they were the 3rd wheel and all 3rd wheels in this industry fall off or die. Thats a historical fact.

No. Sega failed to compete, so they faltered. That is how competition works.

At the time that Sega failed, Sony was the only real competitor remember, Nintendo and Microsoft were yet to launch the Gamecube and Xbox.

The whole "3rd wheel" argument is thus bullshit.

And that is a historical fact.

Azzanation said:

3) PC never needed Competition of the likes of another Steam. Its only hurt PC gamers when more try to enter. That has been obvious by many. 

PC always had competition.
You keep regurgitating the same arguments, but it's not forwarding the conversation.

Azzanation said:

4) Sony doesn't have to accept GP, however they have been accepting Xbox owned games which will more than satisfy MS. Increasing their 1st party game sales. But as you mentioned before, Sony can take a cut of GP profits which i am sure they will gladly accept.

Sony is also entitled to reject games and services from it's platform.

If Microsoft wants Gamepass to succeed, then it needs a Trojan horse to do it, because Sony can very quickly shut it down without Xbox around.

That is a fact.

Azzanation said:

5) Ill be here when MS stop making Xbox consoles, they might hint of a hybrid system next gen however they are going to leave only in a matter of time. It isnt needed and many will gladly see them leave. No idea why Xbox fans defend this so hard.

I won't be. Once Microsoft abandons their consoles, then I will abandon the brand.

The console Market has evolved over the decades and thus it is only logical to assume it will keep evolving, nothing lasts forever.

Azzanation said:

6) Porting isnt an issue. They literally made almost all 360 games work BC on X1 consoles. 

Almost all 360 games?

Don't lie.

Only 633 games out of 2154 are backwards compatible.

It's a fraction of the library.

https://en.wikipedia.org/wiki/List_of_backward-compatible_games_for_Xbox_One_and_Series_X/S

Azzanation said:

7) What does Steamdeck sales have to do with GP being officially green lit for it?

It means it's an irrelevant platform in terms of Gamepass having a bolstered user base...

Because not only have Steamdeck sales been modest, but not every Steamdeck user uses Gamepass.

Get it?

Azzanation said:

Xbox hardware needs to go, it's not doing anyone any favors hanging around. The Console market isn't big enough for 3 platforms. Thats the reality Xbox fans need to understand and accept. No matter how good the hardware is.

I'm not any more of a fan of Xbox than Switch or Playstation.
I don't have a horse in this race, I just like competition and Microsoft -is- providing competition.

I am a PC gamer first and foremost. Microsoft providing hardware competition and higher-end hardware ensures that PC ports will keep pushing hardware on my preferred platform, the PC.

Azzanation said:

Give Sony and Nintendo the keys and let them drive the hardware front, its only a matter of time before the hardware market isn't necessary either.

You know people said the same thing about Nintendo handhelds that phones and tablets will make the handheld console market redundant?

And here we are in 2023. - The Switch is at 120~ million+ units sold and still going.

If you have the games and services in an attractive package, then people will still buy it.

I for one will -never- partake in cloud gaming because it is not technically feasible due to my geographical location in the world stage driving up latency, I am not the only one who feels this way either.

There is always a place for hardware.

Apologies for the 3-day delay in replying, life got stupidly busy for a little bit.



--::{PC Gaming Master Race}::--