Dan

If Decker was referring purely to CoD, then he should have said "I still don't see how buying a huge exclusive AAA game..." since, being real, MS isn't developing it.
But even then, MS has been very clear that if the Activision deal goes through, CoD will not be exclusive to Xbox for something like 10 years. They benefit from some titles remaining cross-platform. I really don't think he was referring to CoD though, given the use of the word 'exclusive,' but more likely Starfield and other up-and-coming games, not the established franchises like Halo and Forza.

RichC2

I mean, it isn't cause of its woes "at this time"

Decker

Never knew that about game sales. Figured they were totally tanked because of GPU. If that's not the case, then shame on consumers, I guess.

The Questyen

It's definitely not sustainable nor smart. The only reason they are doing it is because they literally had nothing else and have tons of money to waste to try and remain competitive. It's no big deal currently because they don't have any AAA games but as soon as they have a few of these games that people actually want to play that cost $80-100 million dollars to make they are going to have to drastically raise the price of gamepass to have it make any financial sense.

Adam Tyner

I have a bunch of friends and family "in real life" who game on Xbox (and Switch; weirdly almost no one plays PS), and none of them subscribe to Game Pass. Some are collectors, some find it to be a hassle (paralysis of choice, not wanting to deal with de-listings or keeping up with what's new, the simplicity of just firing up a game they bought, etc.), and sometimes it's just cost. If you only have the time or inclination play a tiny handful of games a year -- even if one of them is something like Forza Horizon 5 -- why not just spend $60 instead of $180?

I'll admit that I've bought physical copies of games that are on Game Pass (even though I do subscribe) thanks to my cursed collector's mentality.

Decker

That's what I'm thinking. It just seems like Starfield is such and expensive and ambitious game, they could really benefit from massive sales.
But if they still sell lots of copies, more power to them. I can't get my head around why more than a small subset of people would buy it rather than play it with GP at no additional cost, but if that's the case, great.

To me it sort of feels like when Disney put Pixar movies like Turning Red on Disney+ rather than bringing them to theaters first. It kind of devalues the product in a way.

Adam Tyner

Most people don't play that many games, especially when you factor platform into account. If you only have the time or inclination to play 3-5 games (if that!) a year, an all-you-can-eat service which may not even include many/most/all of what you want to play isn't worthwhile.

Of the 31 games I played through last year, only 6 were on Game Pass (at the time I played them, anyway). And of those, only one was AAA: Halo Infinite. Everything else was pretty low-budget and overwhelmingly indie.

And something like Starfield will bring new users in the Xbox ecosystem and new Game Pass subscribers, plus any DLC sales, plus the strong support it'll surely have from people buying the game... I mean, Game Pass has something like 30 million active subscribers. Not everyone's paying full price, no, but still, multiply 30 million times however many dollars a month times 12 months a year, and it's in the billions of dollars. Microsoft will be just fine.

Deftones

I assume MS hopes, that like many Netflix subscribers, you will continue to pay for it even if you aren't using it. Also it buys you into their ecosystem with the hopes you stay locked in. The hardcore gamers are always going to buy games. Maybe their sales take a hit as a result of GP. But you are also creating a second revenue stream from gamers who may not have purchased your game at all.

Dan

This is absurd, especially in light of the details Adam already covered.

As for them 'drastically raising the price to make any financial sense,' this line of thinking has been repeated endlessly since 2017, and yet... *crickets*
The closest they got to that in the last 5.5 years:
- 2020 - They raised PC game pass monthly rate from $5 to $10, after the beta phase ended. That was inevitable.
- 2021 - They sought to raise monthly and quarterly XBL Gold prices, not GP or GPU, and they left 6-month and yearly XBL prices untouched, yet still pulled back on the increases after backlash. GP/GPU was never affected.

That said, being reasonable, at worst, I expect we'll see them realign the Ultimate price to match the pretty-much-standard $70-per-AAA-title going rate, so most likely $210/year instead of $180/year. If that's 'drastic'

True. Take the lowest possible* price of $5/month; someone who buys XBL Gold** for 3 years and pays $1 to upgrade to GPU. This is probably a fraction of a fraction of GPU subscribers, but still. Say it's all 30 million. That's $1.8B per year, minimum. It's more likely that the average price someone is paying is closer to the GP (not GPU) price of $10. So you could reasonably double it.

This is why I don't think the layoffs have anything to do with Game Pass itself. It's clearly a more complex financial situation than "GP is not sustainable because I say so!"

*not counting those who grind for MS reward points, which gets you GPU for free, if you have the time.
**yes, some have got XBL Gold nicely discounted as well. I'll let someone else do that math if they see fit. I'm basing this on $60/year for XBL Gold.

fujishig

Layoffs are not purely because of Gamepass, though gamepass did not hit some lofty goals that were set up for exec bonuses, again, they expanded a ton in the last few years and this is probably a correction. Having said that, I don't think Halo Infinite made the impact they thought it would, even if initial sales were decent. Earnings call is next week so we'll see how they spin it.

Decker

To be fair, that's not really what I'm talking about because MS didn't have any major exclusives in 2022. I have no doubt that MS made money on Game Pass in 2022 because they were selling subscriptions without providing much high-demand new content. Once those big games come out, that's when I wonder if they will be missing out on revenue.

lwhy?

Gaming boomed during the first year and a half of the Pandemic and companies expanded to keep up with demand. The demand has now dropped off and the market correction is causing all the layoffs in tech unfortunately.

The Questyen

Well it has been repeated endlessly because everyone expected at some point Microsoft was going to start releasing AAA games again and they have not. So yes like I mentioned it is not affecting them now because they don't have any games that people want to pay full price for but assuming they one day will it would be a different story. Gamepass is no different then their huge push on backwards compatibility. They were only focusing on it because they have nothing else going on and they need people to have a reason to buy their systems other than new games since Microsoft has forgotten about those.

K&AJones

Microsoft tenacles reaches a vast amount of the Tech Sector...and while some think the Gaming Sector provides a nice chunk of revenue, truth is it's small...ranked second from last behind MS Devices...in terms of actual revenue brought in.

Their fiscal year runs July to July so they're already in Fiscal 2023.here's a great site showing Mircosoft's Revenue Breakdown. Al-in-all almost across the board, it increased from last Fiscal Year (July 2021 to 2022(....BUT...profit margins were lower due to costs and forecasts fell short. And some areas they are losing money...like losing on XBox hardware, search engine, PC Sales down nearly 15% hence Windows OEM sales are down....

Microsoft Revenue Breakdown by Product, Segment and Country - KAMIL FRANEK Business Analytics

Despite the layoffs, MS is still spending, buying, aquiring....just recently bought a Chip Maker for a rumored price of $190 million..... Microsoft Just Acquired a Chip Design Start-Up. Here's What Semiconductor Investors Need to Know. | The Motley Fool


And this story Jan 10, 2023..... Microsoft Might Invest $10 Billion in Money-Losing ChatGPT Parent -- What Investors Need to Know ...... Microsoft Might Invest $10 Billion in Money-Losing ChatGPT Parent -- What Investors Need to Know | The Motley Fool

The thing uis, it's all about investors, forecasts, profit margines all the while growing be it MS or anyone else. It's no secreat that costs for about every resource, labor, item, energy, etc...has all gone up. A couple a losing % points on stock or a small downgrade might not seem much but for Wall Street it could mean Billions in loses.

Decker

How much did they lose supporting that Twitch rival that failed (and whose name escapes me)?

Music

They bought Beam and renamed it Mixer.

And honestly is was more that they bought the FTL technology and gave up on Mixer.

Adam Tyner

It was a drag too because Mixer was better than Twitch.

Music

Yeah, the lag on Twitch is irritating.

Decker

FTL technology?

Music

Faster Than Light
Basically near instant lag free for streamers and chat.

I'm guessing they use it for cloud gaming now.

K&AJones

Awhile back with all the cancellations and delays at Ubisoft, I was asking myself, "What the heck is going on over there"....now one has to wonder....seriously....what's happening at Microsoft especially if this report is true which say the layoffs hit 343 Industries hard....

343 Industries Will No Longer Make Halo Games, But Will Oversee Outside Development - Report - GameSpot

K&AJones

On a side note from another Key Franchise that MS let slowly fade away....there is a bit of hope this is out there, being worked on, done, who knows but if this is true and happening, I've talked to a few Friends who we all played this and now on PS5....we'll get a XBox solely for this.......but way too many questions after the mass layoffs as just what the heck is Microsoft doing, what they plan and just where does their Gaming Side go.....

RichC2

Fade? Gears 5 isn't even 4 years old, still has an active community and has a remastered collection coming soon.

The gameplay in the franchise is pretty dated tho with an unusual number of invisible barricades, hopefully they'll fix some of that.

And after the mass layoff, Microsoft still has more employees than they did a year ago. If they were going to make majors cuts to any of their studios it probably should be 343.

Rob V

I'm sure I'm in the minority but I never really cared about the Gears or Halo franchises. They pale in comparison to the story-telling in God of War, Last of Us or the Nathan Drake games.

nickdawgy

You’re not. The last Halo I finished was part 2 and played one of the spin-offs. I finished the first Gears. Then played a bit of 5. That’s pretty much it.