Seems like a wildly premature response based on outdated thinking about what the Xbox business actually is. This is nowhere near as bad a report as some think unless people only focus on the hardware numbers.
It's their strongest non-holiday quarter ever for xbox content & services, which includes Game Pass. Game Pass' continued growth totally defied Microsoft's expectations in a positive way, leading to the exact opposite of the worst outcomes Microsoft predicted in their previous quarterly report. Content and Services went from an expected loss to revenue growth due to Game Pass. Xbox revenue overall didn't decline as much as expected.
They're about to add $7-$8 billion in revenue from Activision Blizzard plus be able to count Diablo IV, Redfall, Minecraft Legends, Starfield, Forza, COD 2023, Warzone and Warzone mobile, etc,. among their balance sheets this year at some stage in the next 2 quarters. I can't think of a more perfect storm from a gaming business standpoint, especially how the ABK closing will impact Game Pass growth. Anyone who looks at the full picture sees there's nothing alarming here besides their console supply situation.
From a pure business outlook, anybody can see that any premature claim of a doomed Xbox is suffering from a lack understanding that they're not getting the complete picture. That complete picture includes Activision Blizzard. Even without them it's clear to see that Xbox is in prime position. And thinking Redfall will do nothing appears a little too skeptical when it's quite obvious from those Game Pass content and services results that Hi-Fi Rush, Halo Infinite Season 3 and an Xbox Direct had a seemingly far bigger impact than many thought it would, to the point that it led to a record non holiday quarter for Xbox content and services and the Xbox revenue as a whole outperformed Microsoft's expectations from last quarter along with content and surprises which posted a gain when Microsoft expected a loss. Notice also Microsoft predicting they would have worse supply compared to the prior year in their forecast?
Totally not true, but what followed afterwards? Xbox has had 6 back to back record setting fiscal years for revenue since FY17Q4. Every Q4, you see what's happening? These are supposed to be the years Xbox is getting stomped by Playstation, but it's steadily doing better and better. Way better, in fact, than Xbox 360 ever did for them revenue wise. It's because many don't really factor in just how the business has actually changed since then and why the current Game Pass strategy for Microsoft is secretly paying dividends that most are missing.
Game Pass, in short, is Microsoft's first party games lineup turned into a subscription service and sold. And then it gets some support from 3rd parties here and there to further help with subs and retention. Xbox right now is seeing more yearly revenue from first-party thanks to Game Pass than at any other time in the entire history of the xbox console. Game Pass literally brought in $2.9 billion in revenue just on consoles in 2021. Nobody can point to a single year in the existence of Xbox such a thing has ever occurred, not even with the 360's 2007 that included Halo 3, Mass Effect and many other titles.
Game Pass has changed the entire calculation of what success means at Xbox. This was implemented under Phil's leadership. The first full fiscal year seeing it in action led to Satya putting Phil in the Senior Leadership Team at Microsoft in late 2019.
Mind share is night and day different thanks to Series X, Game Pass' popularity and its overall value. The overall offering to xbox fans and the future games pipeline is vastly superior to anything Xbox has ever seen. Microsoft has never had this many exciting looking games in development from a first-party standpoint, many of which will be exclusive. It can't be understated how many effectively free and high quality games people are seeing on Xbox thanks to Game Pass.
Sometimes I wonder if people have ever factored what Game Pass could look like by the end of this generation, and how many quality games from amazing studios will be in there. This isn't the same old Xbox of years past.
Another often overlooked element is that Microsoft absolutely nailed their VRR implementation on Series consoles in such a way that nearly every game experience is just flawless on the system, and the Series X VRR range is top tier. Many of what people see in DF comparisons framerate wise does not ever show for people with capable displays. There are rare cases where a game's optimization messes with the VRR window, but it is exceedingly rare and it's always fixed though not often covered by DF, which just makes sense because they can't cover everything.
So I really doubt you're being serious when you say the xbox platform is not in as strong a shape as it was back during the 2014 year with Xbox One. For people just enjoying all the games we've been gettting, especially through Game Pass and not taking the whole thing too serious, Xbox is mopping the floor with what Xbox was before. The lineup has never been more diverse and all we have to do is just wait for more amazing games to drop, and this year is setup to be an incredible year indeed.
Microsoft is on the verge on launching Bethesda's next big RPG IP exclusively on xbox consoles and day one on Game Pass. And they'll be able to count Diablo IV and the success of the next COD as part of the Xbox brand fairly soon and get all the financial and mind share benefit that comes with that, especially knowing that they're likely to add Diablo IV in Game Pass as soon as they possibly can. They'll have a hit with that on Steam as well as with COD 2023 and Starfield. I know Game Pass isn't free, but it's damn near effectively free for what we're getting, so the thought of everything MIcrosoft will own first-party this year, outside of Call of Duty, dropping into Game Pass is really something I don't think people have truly factored in yet.
