Or somebody is in denial so I'm not going to waste my time.
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Tech journalist and Microsoft insider Paul Thurrott: "Xbox has never been profitable"
- Thread starter hydrophilic attack
- Start date
Just show him what you are referring to in MS quarterly reports, how else is he supposed to know what you are talking about? Those reports are pretty big.
'Tech journalist' versus MS financial reports. I'm sure I know who is in the corner on this one.
Fortunately I don't live in denial, MS making money doesn't hurt my ego.
I'm not from US.
Labour rights doesn't mean they're gonna continue to get paid, lmao. I bet they wish they were though. You might be talking bout redundancy pay, but you realise there's limits to who can get that and it's pennies compared to what MS makes right?
Since you seem to be such an expert maybe you can post some figures (or at least proof that they are) they're supposedly still paying out as a result of these mass layoffs?
Uno Venova
Banned
Still nothing?
Sony made lay-offs to their San Diego studioI'm not from US.
Labour rights doesn't mean they're gonna continue to get paid, lmao. I bet they wish they were though.
Since you seem to be such an expert maybe you can post some figures (or at least proof that they are) they're supposedly still paying out as a result of these mass layoffs?
PS4 is a failure confirmed.
LALALALA I'm not listening to you.
Dude, just put a pause to that mini meltdown and quote the reports. That way we can shut this thread down.
Banjo-Kazooie
Member
Which is pretty much what I've been saying. I believe *right now* they are turning a profit for the division. NO, I don't believe they will ever be "profitable" in the sense of since the OG Xbox inception, but as you said, they don't need to be. As long as the division is gaining "profit" from here forward they should be "safe". Nadella has been mentioning them more in reports, briefing calls, and even showing up to Build to brief people https://mspoweruser.com/microsoft-says-xbox-growing-profitability-monetizes-far-gaming-networks/
They aren't going anywhere soon
...That's exactly what we're saying about you, until you find these quotes that say they're profitable.
Look, I don't care if they are or aren't. I would love to believe you. Can you show me some quotes so I can?
Towards the end of the '90s the set top box was an existential threat to Microsoft, whether it came to fruition or not. They needed to be in the living room, so they went into the living room. Now they're so entrenched in the game console market that it would look bad on them if they pulled out. It may not be "profitable", but it's highly successful, and if they're breaking even at this point, Xbox at least works as a brand ambassador for them.
Of course, in the consumer space, Xbox will not be nearly as important as mobile phones in the long run...
Would this make gaming better overall?
The OP has been using his journalistic integrity especially using his famed post #175 to peddle absolute bullshit but can't then go the financial reports that are publicly available every quarter to the investors of a billion dollar company?
And why is that?
hydrophilic attack
Member
In EU labour markets, where employees generally have relatively strong bargaining power, qualified staff, such as game developers, generally have contracts with generous redundancy packages, in excess. I don't have any specific source for how much it would cost though. I will make an attempt to find some numbers though
Can you do it as prove that they're profitable? It would take seconds of your time to prove your claim, and then we can all say with certainty that they're profitable and that you're right. Just show us, please.
Given that 360 BC and Games Pass are pretty great features, nope. Competition, even if it's not strong, forces companies to innovate and put up new features. At the same time, they cannot "rip off" customers just because they are the only player on the market.
Apparently you aren't able to find the specific parts in the fiscal reports to substantiate your claims, or why aren't you doing that to prove your claims?
May I could, but then again, you would have to prove to me the world isn't flat.
In fact I have links from science journalists who say the world is.
Assuming ALL of Lionhead employees were 65, worked there for 15 years, earned £5000 a week, they would still only be entitled to £11k redundancy pay. That's literally less than a minimum wage salary. Wiki says they have ~100 employees, so that puts them at £1.1 million in total they would have to pay to lionhead employees, and as I'm sure you're aware, fitting that criteria is ridiculous. I'm sure that £1.1 million is absolutely the decider for wether MS is profiting or not. Ignore the $75million they just wasted on fable legends, that £1.1million is definitely breaking their bank
https://www.gov.uk/calculate-employee-redundancy-pay
And if you worked at Lionhead for <2 years you would get absolutely nothing. Or if you're younger/worked less years/earned less money you get even less.
Thank you for proving you don't have proof. If you wish to have an actual discussion, please bring proof to your next post.
While it's never been confirmed I thought this was commonly known. They sank to many losses into Xbox and dealing with RROD for 360. Then they had to cut down the price of the One quickly due to slow sales.
It's certainly being used more often and I'm sure it's making tons of money digitally through Xbox Live and the marketplace.
But if Xbox was profitable, Microsoft wouldn't be so dodgy about it and would be promoting it left, right and center.
It's certainly being used more often and I'm sure it's making tons of money digitally through Xbox Live and the marketplace.
But if Xbox was profitable, Microsoft wouldn't be so dodgy about it and would be promoting it left, right and center.
Baron Samedi
Member
A lot of Harvard Business graduates in this thread...
Check post #95, shows profits from third year onwards.
Or you can ignore it, whatever helps you sleep at night.
If you go to the actual quote in #95, there's a note that says "these are operating income, not net income". So, sorry, still not proof it's profitable
You got me.
Okami Haundo
Member
It's definitely an interesting concept! It seems logical that Microsoft should just stop supporting Xbox if it isn't profitable for them, but there's definitely more to that story. There's presence in the living room as some others have mentioned. There's also having another avenue to rope people into their services that do make them money.
I honestly hope Xbox stays around for the foreseeable future as I prefer playing on that platform.
I honestly hope Xbox stays around for the foreseeable future as I prefer playing on that platform.
hydrophilic attack
Member
Yes, that's what you are required to pay according to UK law. But like I said, skilled workers (such as software developers) which have bargaining power receive more in severance packages than what the law states they should get, as part of their contracts. Associated costs are usually referred to as restructuring charges.
I couldn't find numbers for restructuring charges for Lionhead specifically, but I did find this in the 2016 financial report for all of Microsoft:
That was for the entire company. If Lionhead has 100 employees costs for layoffs should be on the order of magnitude of tens of millions of dollars.
More in general about restructuring charges:
.
http://www.investopedia.com/terms/r/restructuring-charge.asp
Supporting my original point that layoffs and studio closures cost money up front, but pay off long term
What a childish remark. Video games are already full of emotional connections to corporations, which is already absurd, but wanting one to crash and burn?
I don't even know why I asked him for clarification. I know the answer. Childish indeed.
I don't think you can legitimately interpret growing profitability as "currently losing money but almost profitable". That would be a highly misleading statement if so.
You could rather interpret this as "our year over year profits are growing" even if the division as a whole has been a negative investment.
You have to imagine there are people on the board pulling for exactly that.
Of course. And people stull refuse to see it. It's kike the "many sides" statement...
- Console price down 1/3 (-Kinect) after 1 year ($500->350)
- At it's first post launch Black Friday you could basically get the console for half it's launch price (-Kinect) through further reductions, rebates and pack-ins
- Even bigger reductions in (parts of) Europe
- Completely dead in Japan
- Underperforming exclusive titles
- Higher cost for exclusive deals through lower marketshare
- Cost of canceled Kinect
The Xbox was designed as a loss leader to get Microsoft into American living rooms. The iPhone handily disrupted the concept of family computing on TV screens. Don't underestimate just how badly the iPhone disrupted the entire business model behind the original Xbox. It wouldn't surprise me if the Xbox was never intended to become profitable. Even if it was, the RRoD fiasco killed that possibility forever. MS may keep at the console thing just in case something radical happens with how consumers enjoy media, but the dream of making any real money probably never existed and was certainly doomed forever by three angry red lights.
Yearsoflurking
Member
- xbox live
- Ea access
- BC
- thousands of controller revisions and elite controllers
- play anywhere initiative
- minecraft
- and now games pass
I'm sure they're making a profit every quarter . How big we will never know but they have tons of services
Also the bold makes zero sense unless you're speaking of money hats
Humdinger
Member
Agree. That seems like the only sensible explanation. We know (from data posted earlier in the thread) that Xbox has had a number of profitable years. So "never been profitable" is just false, unless he's speaking about the whole history. (Which seems unfair, given that those early costs are absorbed or written off, and not a part of the ongoing picture.)
Either that, or Thurott is just completely in the dark.
And yet if you take his statement the way you are hearing it, he would be ignorant. MS has posted a number of profitable years for Xbox, or at least the gaming division (2008-2012). So his statement is demonstrably false, viewed from that perspective. The alternative to him being ignorant is that he's talking about the whole lifespan of the Xbox.
moondoggerr
Banned
I've heard that Amazon has also never turned a profit, and i don't see them going away any time soon.
http://www.investopedia.com/stock-a...kes-money-no-one-cares-amzn-aapl-wag-azo.aspx
http://www.investopedia.com/stock-a...kes-money-no-one-cares-amzn-aapl-wag-azo.aspx
Can someone explain to me Microsoft's business strategy with the Xbox?
I know they are moving more to GaaS, but they're also selling less hardware, and over time less hardware means a lower consumer base, which means less people paying for services (read: XBL) which means less revenue which means less profits. Right? Sounds like a means to an end to me.
If Microsoft can't find a way to get more consoles into homes, how is this business model sustainable? It seems to me with this they've already decided the Xbox division will just tread water for as long as it can until it sinks.
Someone please help me with what I'm not seeing here.
I know they are moving more to GaaS, but they're also selling less hardware, and over time less hardware means a lower consumer base, which means less people paying for services (read: XBL) which means less revenue which means less profits. Right? Sounds like a means to an end to me.
If Microsoft can't find a way to get more consoles into homes, how is this business model sustainable? It seems to me with this they've already decided the Xbox division will just tread water for as long as it can until it sinks.
Someone please help me with what I'm not seeing here.
hydrophilic attack
Member
I laid out the possible reasons for this discrepancy in based #post175
Maximilian Kolbe
Member
Leak? this is a article from few weeks ago(July 21).
Not sure why people arguing it right now lol.
Yeah, especially with the BILLIONS of dollars worth of philanthropic efforts Microsoft has made over the years; what a pack of c$%#s.
Leak as in the CEO saying the division is "growing profitably" .....then someone on the "inside" tipping off the reporter saying "psst.. you know that statement the CEO just said, we actually never turned a profit"
Basically I saying this possibly could have been a hit job using Thurrott, a well-known inside, as a foil (whether he knew or not) to put the sell-off/spin-off discussion rumors back out there
wapplew
Member
Selling less hardware is not selling negative hardware, 30M users won't go away even they stop selling any more hardware.
They still get money from those 30m users consistently, they'll probably will get money from those 30m users next gen and the next gen after that.
They investment into services like BC, OS, game pass, game refund etc are not short term investment that hope to turn the tide, it's invest for the future, make sure most of those 30m stick with them in future endeavors.
Maximilian Kolbe
Member
We all know it's never been profit overall "thanks" to OG Xbox era and RROD era.
If you want to say the article is about Xbox never profit in every quarter, nope, in Kinect years it were profitable.
??? Maybe you quoted me incorrectly originally?
Im not arguing their profitable status one way or another?
I'm arguing why the article was written in the first place
So 4700 employees if I'm reading that right? That's not just contract termination fees, that's over $100k each. That will be including relocation aswell as other factors that wouldn't be relevant to the closure of studios. I'm guessing a lot of that is from the Nokia/Mobile phone stuff? I can't remember exactly what went down with that though but I know they had major changes to it last year.
It might be more than what I said but I still have a hard time believing it's enough to offset them into a negative. Xbox makes a lot of money these days I think people understimate just how much. Don't forget they have Minecraft aswell under that umbrella which has sold another 50M since MS bought it. They could be making more, absolutely, but they still make roughly a billion revenue each month. When you're making that much money a million or 2 loss here and there doesn't really move the needle.
- What? They cut the cost of kinect out the box, what does that have to do with them losing money? If anything they were probably making even more money from that and it was $399, the kinect was $150 so that essentially gave them an extra $50.
- Again irrelevant, those consoles didn't come with kinect to the whole half price (which is a ridiculous statement anyway) is nonsense. Yes the price dropped a lot but so did the cost of manufacturing said bundles making this not really relevant to wether they're losing money on it or not
- Where? Lol
- How does this make them lose money? It doesn't, they just don't get money from Japan and the stock and whatnot will reflect that. They never had Japan in the first place.
- Agree but that's not a lot and it's spread out so it will only be a couple mill loss each month of development at best, considering their revenue is around a billion each month, a million or 2 is pennies and really not gonna move the needle (FL was roughly ~1.5M a month and that was an expensive game)
- Which exclusives? By the time lower marketshare was known the only deal that's really been done is ROTR and I DR4 and we don't know how much that cost but I doubt it's a whole lot in the grand scheme of things - hell we don't even know if money exchanged hands, or if they just gave up part of their 30% cut.
- How do you know it cost them money to kill off kinect? It's not like those kinect bundles were lying about, they eventually got sold. Does it cost money to slow down production of an item? If so, any idea how much?
your whole argument for them losing money is basically "the cost of the items went down" while ignoring so did the manfucaturing costs meaning it's possible (and likely) they evened themselves out, actually made more per item or didn't take as big of a hit as you seem to think. Dropping from $499 to $399 with kinect removal wasn't really a price drop in the normal sense.
I think GaaS, Minecraft, Xbox Live, UWP etc is all about getting people into their ecosystem. You see this when they use MAU as their primary measurement of success. They want people making Microsoft accounts and spending time in their environment.
I'm sure the goal is to just keep building everything up and hoping that these users become dedicated enough to spend money.