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Forums - Microsoft - Microsoft will make BILLIONS from Xbox Live.

starcraft on 26 June 2008
Squilliam said:

starcraft said:
I think Microsoft has a choice to make.

Option 1:
Earlier, larger price cuts leading to a larger userbase and better stead for next generation but just missing lifetime profit on the Xbox 360.

*Leveraged with games If you don't have the games then theres no point in cutting the price. Price cuts are just removing the reasons NOT to buy a console. You have to give them a reason to buy it in the first place more importantly. Something the Wii has mastered it seems. Squilliams words*

Option 2:
Later, smaller price cuts leading to a smaller userbase and a more difficult next generation, but making the Xbox 360 profitable over the course of its lifetime.

Agreed.

 

 

 



starcraft - Playing Games = FUN, Talking about Games = SERIOUS

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Krusnik on 26 June 2008

where are these ppl getting this $60 per year for XBL. I've been and live gold member since 2003/04 and last i checked i've been paying 49.99 per year.

Can someone explain where they're getting this $60 figure from?



Gamer4life on 26 June 2008

Amazing stuff when you put out the numbers. SONY made another stupid decision and now can't change it. As MS continues to make money SONY continues to lose money. As a whole we can see that the 360 is making money in all aspects(Live, Console) while PS3 is losing money in all aspects(PSN, Console). Looks like atleast MS knows how to run a profitable business.



Loud_Hot_White_Box on 26 June 2008
Squilliam said:

You heard me right - Billions.

If you estimate that they make $20 from every Xbox Live gold account per year in profit and they have a 1/3rd attach rate for instance. It means that currently they would be making $120,000,000 in profit from the current userbase per year. Multiply that number by say 3 - that means about $400,000,000 in profit from the current userbase over the next three years.

But Xbox live gold isn't stagnant, its growing with all the multiplayer/online games coming out and the organic increase in userbase. If they add another 4 million accounts to the service by the end of the year thats another $80,000,000 added to their bottom line, bringing the total profit from just that area of the service to over $200,000,000 per annum.

Since the userbase is expected to increase to 40,000,000 consoles - and assuming that same 1/3rd attach rate with a $20 profit windfall on every one thats $260,000,000 per year using conservative numbers for final sales of the 360 and the attach rate for the gold service.

But this isn't the only windfall that they are making on live. The have Online movies/music downloads and the kickbacks ascociated. There is also downloadable content/Xboxlive arcade downloads to factor as well. Since there are three MMO games coming for the 360 this year/next year it makes sense to assume they will also be getting a kickback from the subscription service and the fact that every user must also have a Live gold account.

But heres the kicker... The money they can potentially make increases as the cost of production for the console goes down and the retail sales price follows. The windfall they make on a $200 console connected to live is much greater relative to its sales price than when they were originally sold for $400. With greater sales comes greater profit. Their incentive is to get the machine into as many hands as possible, so they should offer pretty good value on the machine itself to encourage more sales.

Don't fret, if you own an Xbox360 and you use it online this extra money will be used to buy awesome multiplayer exclusives for you to play and the increased vitality it offers to the Xbox360 will be carried forward to the nextbox. For anyone who likes the system and the what it offers can say that it offers value for money in the returns it gives gamers.

Agreed that MS offers fewer features for the price of their console: PS3 gets you online gameplay, HD movies, wifi, etc without paying more for it.

MS's online propaganda campaign somehow worked to convince its fans that "PS3 is overpriced" at the same time that "MS fans pay more."

Profit-wise, MS's strategy is better.  Sony includes so much with online gameplay, continuing firmware badassness, upcoming Home, that they really should be seen as the fan-favorite good guys (yes, in game XMB is taking too long), but somehow in these conversations MS fans conveniently care about their company's bottom line rather than what they are forking out to the company in payment for the benefits received.

Oh well, competition is good for us fans.



Loud_Hot_White_Box on 26 June 2008

 Their incentive is to get the machine into as many hands as possible, so they should offer pretty good value on the machine itself to encourage more sales.

 

 

Worked great in Others, huh?



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Gamer4life on 26 June 2008
Loud_Hot_White_Box said:

 Their incentive is to get the machine into as many hands as possible, so they should offer pretty good value on the machine itself to encourage more sales.

 

 

Worked great in Others, huh?

 

Yea it did. Comparing to the previous generation it is close to overtaking the XBOX in others while the PS3 looks pathetic comparing it to the PS2.



leo-j on 26 June 2008
Gamer4life said:
Loud_Hot_White_Box said:

 Their incentive is to get the machine into as many hands as possible, so they should offer pretty good value on the machine itself to encourage more sales.

 

 

Worked great in Others, huh?

 

Yea it did. Comparing to the previous generation it is close to overtaking the XBOX in others while the PS3 looks pathetic comparing it to the PS2.

No.. the PS3 is selling better than the ps2 did at the same time this gen(in europe according to sony).

And its not so behind WW either.

 



 

mM
EggsWithLegs on 26 June 2008

@ Above - Don't derail the thread with fanboy rants. It was a good discussion until this "Worked great in Others, huh?"

@Krusnik - Well its €60 a year for Gold which equals approx $90. So infact Squilliam's prediction of $20/xbox live user could easily be underestimated by an amount.

And OT Microsft were very smart making it a pay to use service and will definitely make billion(s) by the end of the 360's live span.



Squilliam on 26 June 2008
Loud_Hot_White_Box said:
Squilliam said:

You heard me right - Billions.

If you estimate that they make $20 from every Xbox Live gold account per year in profit and they have a 1/3rd attach rate for instance. It means that currently they would be making $120,000,000 in profit from the current userbase per year. Multiply that number by say 3 - that means about $400,000,000 in profit from the current userbase over the next three years.

But Xbox live gold isn't stagnant, its growing with all the multiplayer/online games coming out and the organic increase in userbase. If they add another 4 million accounts to the service by the end of the year thats another $80,000,000 added to their bottom line, bringing the total profit from just that area of the service to over $200,000,000 per annum.

Since the userbase is expected to increase to 40,000,000 consoles - and assuming that same 1/3rd attach rate with a $20 profit windfall on every one thats $260,000,000 per year using conservative numbers for final sales of the 360 and the attach rate for the gold service.

But this isn't the only windfall that they are making on live. The have Online movies/music downloads and the kickbacks ascociated. There is also downloadable content/Xboxlive arcade downloads to factor as well. Since there are three MMO games coming for the 360 this year/next year it makes sense to assume they will also be getting a kickback from the subscription service and the fact that every user must also have a Live gold account.

But heres the kicker... The money they can potentially make increases as the cost of production for the console goes down and the retail sales price follows. The windfall they make on a $200 console connected to live is much greater relative to its sales price than when they were originally sold for $400. With greater sales comes greater profit. Their incentive is to get the machine into as many hands as possible, so they should offer pretty good value on the machine itself to encourage more sales.

Don't fret, if you own an Xbox360 and you use it online this extra money will be used to buy awesome multiplayer exclusives for you to play and the increased vitality it offers to the Xbox360 will be carried forward to the nextbox. For anyone who likes the system and the what it offers can say that it offers value for money in the returns it gives gamers.

Agreed that MS offers fewer features for the price of their console: PS3 gets you online gameplay, HD movies, wifi, etc without paying more for it. They also make more money from every console sale. Elite Xbox360s must make them quite a bit of money.

MS's online propaganda campaign somehow worked to convince its fans that "PS3 is overpriced" at the same time that "MS fans pay more."

Profit-wise, MS's strategy is better.  Sony includes so much with online gameplay, continuing firmware badassness, upcoming Home, that they really should be seen as the fan-favorite good guys (yes, in game XMB is taking too long), but somehow in these conversations MS fans conveniently care about their company's bottom line rather than what they are forking out to the company in payment for the benefits received.

Oh well, competition is good for us fans.

You could use the same argument for DVD vs Blu ray as for Live vs PS3 online. They both offer the same services yet one is considered better than the other generally and that product is charged at a higher rate.

Sony is no better than Microsoft for what it does in the console sphere. Theres no angel here.

 



Tease.

Bitmap Frogs on 26 June 2008
Loud_Hot_White_Box said:

Agreed that MS offers fewer features for the price of their console: PS3 gets you online gameplay, HD movies, wifi, etc without paying more for it.

MS's online propaganda campaign somehow worked to convince its fans that "PS3 is overpriced" at the same time that "MS fans pay more."

Profit-wise, MS's strategy is better.  Sony includes so much with online gameplay, continuing firmware badassness, upcoming Home, that they really should be seen as the fan-favorite good guys (yes, in game XMB is taking too long), but somehow in these conversations MS fans conveniently care about their company's bottom line rather than what they are forking out to the company in payment for the benefits received.

Oh well, competition is good for us fans.

I'm sure ps3 owners got a lot of gaming value outta the built-in card reader. Truth is, as much as both MS and Sony tried the consoles are just gaming machines to most people and all that supposed "built in value" the ps3 customers paid an extra for didn't amount one inch as far as gaming values are concerned.

It's similar to comparing two vacuum cleaners, one has a built in merry christmas tree and is 100$ more expensive while the other offers it as an option for 150$. Sure on paper the first one is better value, but what's the use of a christmas tree when you just want to clean the floor.

And frankly, the fact that sony doesn't ask a payment for online gaming has had a cost on ps3 gamers: way less content available online, wonkier net support on ps3 versions of games and even lack of it in some cases, etc. Or to put another way, you don't pay 50$/year but you paid 600$ for the console and had to wait close to two years to have basic online features - not to mention resources funneled the home way that are taken away from game development. Xbox Live Silver users don't get punished because Xbox Live Gold users are siphoning money off the company to keep the online infraestructure afloat. Meanwhile, ps3 users who aren't interested in online play just got 8 Days and The Getaway 3 cancelled.

 





Current-gen game collection uploaded on the profile, full of win and good games; also most of my PC games. Lucasfilm Games/LucasArts 1982-2008 (Requiescat In Pace).