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[Pedro Motta]

Are they counting all the Pringles cans sold in that revenue?

 

[Bumblebeetuna]

Not really. it still takes 35 years of gamepass to pay for Activision

That’s not how it works.

MS isn’t worried about “paying” for Activision. What MS is worried about is whether they’ll generate more profit from ABK versus that 70B sitting in a bank collecting interest.

 

[Grildon Tundy]

LMAO did Mike delete his post? I can't find it anywhere

For the unaware...

The $600.000 XB paid to bring "Cooking Simulator" to GP counts towards GP's revenue.

https://www.neogaf.com/threads/report-microsoft-paid-big-cheese-600-000-to-bring-cooking-simulator-to-game-pass.1640225/

This is explosive, in terms of the conversation so far. How you do know it's counted in the revenue? Do they count all GP game acquisitions in their stated revenue?

There must be more than meets the eye on this one.

If you look at the subscriber counts for 2021 - which will include PC players - and divide the revenue up, which it is claimed is only console, it puts the number at a number that's basically the retail cost of GPU, let alone solo GP.

This doesn't many sense when, whilst people like to joke about the $1 deal, there will be a lot of people taking advantage of that. There will also be many people using trials, the promotional memberships I keep seeing bundled with retail purchases even things like internet services etc.

For me this only works if they're booking the full retail value for all of the above as 'revenue' and then applying the discount as a cost on the balance sheet.

That would make a lot of sense. Clever accounting.

As I've mentioned before, the only people who know about the repeatable Gold Upgrade deal are a very small subset of nerds that live on nerd forums, discords, and deal sites. It's a relatively small group who acts as an advertising vehicle for the service, which is why they haven't ended it. The critical mass is paying the full $15 monthly, including the vast majority of people who did the upgrade deal in the first place, unaware it's repeatable.

I'm a nerd that lives on a nerd forum. Where would one go about finding out how to pull off the Xbox Live Gold Upgrade trick? Thanks!

The revenue figure shows an average of 16m subs in the year so if they started the year with 15m monthly subs and finished with 25m subs there are serious fluctuations in subscriber numbers or it remains constant at 15m and bounces to 25m in December.

It would be interesting to study what drives the numbers up and how long does that event last for before its drop. If it's only that month, do MS need a big hit every month or every 3 months to retain its users. Or is it tied to certain periods like the Christmas holidays that will always get a bump no matter what. In that case is there a need for a holiday game.

These revenue figures supplied are pointless without additional information. It can never be used as evidence of profitability or loss despite what posters in the thread think. The only thing it inadvertently shows is the average monthly subscribers in 2021, 16m.

Halo Infinite launched in December '21 and it was Day One on Game Pass. I'd bet that's why you're seeing that spike in Dec.

 

[TGO]

China don't care.

 

[Aguero9320]

Surprised some people haven’t got whiplash on here they just changed direction so fast lol.

That’s a huge number, if only to dispel the ‘everyone only pays $1’ bs. Impressive how quickly they are unifying around the ‘profit’ backup plan

Imagine what it will be when they get their in-house teams producing? Then add in Activision etc? And whoever they buy next Whole new ball game in five years…

Easy to see why Jim Ryan is panicking - have to pivot or get left behind… Hopefully he’s up to it.

 

[remember_spinal]

Because even though we have evidence of the contrary, people still like pretending that 100% of people on Xbox have Game Pass, and therefore nobody buys their first party games because they all have them with Game Pass

I mean the games rarely register on NPD or any other charts so thats a fair assumption to make at this point

 

[Ozzy Onya A2Z]

Let us take a stupid guess at costs for GP during 2021 -

• $1 Billion - Royalties and partner/profit sharing e.g. dev/studio/publisher contracts for 30% on say 50% of their sales revenue
• $250Mil - 5 x AAA games tentpole games developing (remember these games take years of this cost shared to finish)
• $200Mil - GP staff/development/support e.g. family plan, Xbox dash/store, PC app, backend, test, Azure resources etc.
• $250Mil - Marketing
• $50Mil - 10 AA games @ $5Mil a pop
• $25Mil - 50 A/Indie games @ $500K a pop
• $250Mil Opportunity loss from cheap GP subs/titles e.g. loss leading for market share-
• $500Mil - Taxes, office, equipment, power, computers, food etc etc.

So, we know it was confirmed as $2.9Bil for 2021 less above costs of $2.525Bil and we guesstimate GP at approx $375Mil in NET profit for 2021. All that in just 1 year, GP is in the black and pushing forward.

 

[Frank Horrigan]

It’s an interesting, hard data point we didn’t have before. And the revenue figures seem better than many projections I’ve seen here.

And not to be a debbie downer but we are taking a hard data point from a year when most people spend the majority of the year at home.

Next year we will most likely see a drop in revenue, just like netflix and other subscription services have seen.

 

[Infamy v1]

Hmm, but that goes against the narrative that Game Pass is hemorrhaging money and that Microsoft is using their Azure and Office money to sustain it

Yeah, the amount of backpedeling, downplaying and salt ingestion happening in this topic is fucking hilarious, lmao.

People are literally saying there actually isn't too many $1 subs, suddenly, as an excuse to downplay the actual subs if you divide that massive number by $15. You can't make this shit up

You know what the best part is?

The best part is this doesn't include PC Game Pass subs, game sales (games are 10-20% cheaper in Game Pass and many buy games that way), microtransactions, DLC, and the fact that 2022 was a trash year for Xbox first party. Imagine: the avalanche of Xbox games coming in 2023, Family Game Pass, and the closure of the ABK deal. If these rats are already eating crow now, imagine what they going to be eating next year...

But wait?

Werent they only supposed to be bringing in like $500 million.
Isnt that what GAF Finacial analysts told us?
Wasnt everyone using the $1 deal....so how did they get to 2.9 billi with 1 dollar subs?
Dont most people only sub for the month the game they want to play is out, then stop subbing anyway?


I am a fucking GAFFER!, I demand to know exactly how much profit, not revenue, fucking profit the service is actually making because thats gonna affect my decision to do absolutely fucking nothing but keep pounding at my keyboard.

Lmao, this should be stickied.

 

[Lasha]

Trying to point out that the sum is only revenue and not profit is coping. The reported Gamepass Revenue is enough to pay for the development of 20-30 AAA games. Microsoft is making money.

 

[ReBurn]

Let us take a stupid guess at costs for GP during 2021 -

• $1 Billion - Royalties and partner/profit sharing e.g. dev/studio/publisher contracts for 30% on say 50% of their sales revenue
• $250Mil - 5 x AAA games tentpole games developing (remember these games take years of this cost shared to finish)
• $200Mil - GP staff/development/support e.g. family plan, Xbox dash/store, PC app, backend, test, Azure resources etc.
• $250Mil - Marketing
• $50Mil - 10 AA games @ $5Mil a pop
• $25Mil - 50 A/Indie games @ $500K a pop
• $250Mil Opportunity loss from cheap GP subs/titles e.g. loss leading for market share-
• $500Mil - Taxes, office, equipment, power, computers, food etc etc.

So, we know it was confirmed as $2.9Bil for 2021 less above costs of $2.525Bil and we guesstimate GP at approx $375Mil in NET profit for 2021. All that in just 1 year, GP is in the black and pushing forward.

Without actual budget detail this kind of exercise isn't really valuable. Especially in light of Gamepass only being 18% of Xbox revenue.

 

[jorgejjvr]

Will they fix no aim assist on console when playing with pc friends?

 

[Hobbygaming]

Lol, what does this even mean? Of course ‘revenue’ isn’t ‘profit’.



I believe these numbers are for Xbox Gamepass subscribers alone. The article does say it doesn’t include PC Gamepass.




It’s an interesting, hard data point we didn’t have before. And the revenue figures seem better than many projections I’ve seen here.

I thought the article said PC subs are included?

 

[Ozzy Onya A2Z]

Without actual budget detail this kind of exercise isn't really valuable. Especially in light of Gamepass only being 18% of Xbox revenue.

Hence the word guess. Take a plus or minus margin of error of 25% if you like. It's basically the same result from the guess. GP is well beyond its historic place as a tax write down/investment in the larger Microsoft view and now covers its own costs, staff, market jostling, partner network and more. It's simply a matter of sustaining a level of growth over drop off at this point. The writings on the wall for magnitudes more growth e.g. more devices, cloud streaming improving, more devs/partners/buyouts and games from other ventures releasing e.g. ActiBliz.

The guess is more than accurate enough to debunk a large portion of posts/repeat posts in this thread and this idea that GP has never been profitable and is a "remains to be seen" success. Facts are GP is a success now, profitability and sustainability have also been proven and refined. Microsoft leadership took what worked with Azure so well by becoming agnostic and open instead of walled off like old school Microsoft and its Xbox's turn at the same path. So far, it's proving to be lucrative and less of an onramp duration required for long term success.

The same article also stipulates 2.5X growth for GP subs over a 2 year period and only 18Mil subs. Phil also confirmed current day GP has 25 Million subs, likely 7-10 Million more than the numbers and data we're working from the 2021 figures. It's arguably increased in terms of both revenue and net profit for 2022 already with bigger and better games to launch or appear via GP in 2023. This leads me to state the above guess is more than likely conservative with costs and profit, quite the opposite to your reply.

 

[jorgejjvr]

Will they fix no aim assist on console when playing with pc friends

 

[adamsapple]

Hence the word guess. Take a plus or minus margin of error of 25% if you like. It's basically the same result from the guess. GP is well beyond its historic place as a tax write down/investment in the larger Microsoft view and now covers its own costs, staff, market jostling, partner network and more. It's simply a matter of sustaining a level of growth over drop off at this point. The writings on the wall for magnitudes more growth e.g. more devices, cloud streaming improving, more devs/partners/buyouts and games from other ventures releasing e.g. ActiBliz.

The guess is more than accurate enough to debunk a large portion of posts/repeat posts in this thread and this idea that GP has never been profitable and is a "remains to be seen" success. Facts are GP is a success now, profitability and sustainability have also been proven and refined. Microsoft leadership took what worked with Azure so well by becoming agnostic and open instead of walled off like old school Microsoft and its Xbox's turn at the same path. So far, it's proving to be lucrative and less of an onramp duration required for long term success.

Phil's comment of "it's sustainable" in retrospect of these numbers makes more sense in that game pass, as an entity, seems like it is entirely sustainable in itself for all the deals for bringing games on it and the cost/upkeep, without the need to burden the rest of their Games and Services, which in total nets a revenue of ~$16bn last year.

And this GP revenue most likely does not include MTX revenue earned from games already on GP and/or the indirect game sales, for example whatever people buy with a 20% discount GP offers, or when people buy a game they like before it leaves the service.

Will they fix no aim assist on console when playing with pc friends

That's probably the next step after printing out the Profits.xlsx

 

[Ozzy Onya A2Z]

Phil's comment of "it's sustainable" in retrospect of these numbers makes more sense in that game pass, as an entity, seems like it is entirely sustainable in itself for all the deals for bringing games on it and the cost/upkeep, without the need to burden the rest of their Games and Services, which in total nets a revenue of ~$16bn last year.

Too right, they passed this point when he stated that, early this year or late last year I think. We're only seeing the rough numbers proof now.

 

[lh032]

that doesn't seem alot? its just revenue, so what is the net profit?

I'm curious about the operating cost of maintaining gamepass tbh.

 

[kapshin]

Are they counting all the Pringles cans sold in that revenue?

Don't hate once you pop you can't stop!

 

[kapshin]

that doesn't seem alot? its just revenue, so what is the net profit?

I'm curious about the operating cost of maintaining gamepass tbh.

Revenue is equal to cost, profit is money plus after revenue.

i.e. you mow a neighbors lawn, they pay you $20, revenue is $20 gas and maintenance on the mower cost you $10 so you net $10 profit total of $20.

 

[StreetsofBeige]

that doesn't seem alot? its just revenue, so what is the net profit?

I'm curious about the operating cost of maintaining gamepass tbh.

Who cares what the profit is. What is important is the customer gets a good deal and product. Why do you care if GP makes profit when MS has been funding Xbox for 20 years?

Do you use Spotify or many other sub plans? Most of them lose money. Do you care they lose money? Or do you just care about about getting a good product and a good price?

Sony has never disclosed profits of PS+, do you criticize the lack of transparency about not telling the world its profits?

 

[lh032]

Who cares what the profit is. What is important is the customer gets a good deal and product. Why do you care if GP makes profit when MS has been funding Xbox for 20 years?

Do you use Spotify or many other sub plans? Most of them lose money. Do you care they lose money? Or do you just care about about getting a good product and a good price?

Sony has never disclosed profits of PS+, do you criticize the lack of transparency about not telling the world its profits?

because im interested on the sustainability of Gamepass, which is one of the most important topic on Neogaf : D

 

[Lasha]

that doesn't seem alot? its just revenue, so what is the net profit?

I'm curious about the operating cost of maintaining gamepass tbh.

Gamepass operating cost are probably close to zero since Microsoft already maintains the necessary CDN and entitlement system for it's existing services. COGS is probably the bulk of expenses for the service. The net is almost certainly positive.

 

[Three]

LMAO did Mike delete his post? I can't find it anywhere

Maybe removed by a mod. You can't delete posts, only edit them as far as I know.

 

[adamsapple]

Don't hate once you pop you can't stop!

Pre-popped for the next 3 years

 

[Torrent of Pork]

Is anybody in the "but muh profitz" crowd seriously thinking Microsoft spent damn near 3 billion dollars on 1st party development, and 3rd party Gamepass deals in 2021?

 

[Jamesb0ndjr]

Hmm, but that goes against the narrative that Game Pass is hemorrhaging money and that Microsoft is using their Azure and Office money to sustain it

We’ll revenue does not equal profit so to assess the claim we need to know how much they spent.

 

[kapshin]

We’ll revenue does not equal profit so to assess the claim we need to know how much they spent.

This, plus Xbox revenue or profit means little to Microsoft whole of profit or revenue, Xbox is a division of Microsoft.

 

[bender]

Is anybody in the "but muh profitz" crowd seriously thinking Microsoft spent damn near 3 billion dollars on 1st party development, and 3rd party Gamepass deals in 2021?

Games like PAW Patrol: Grand Prix don't come cheap.

 

[legacy24]

Who cares what the profit is. What is important is the customer gets a good deal and product. Why do you care if GP makes profit when MS has been funding Xbox for 20 years?

Do you use Spotify or many other sub plans? Most of them lose money. Do you care they lose money? Or do you just care about about getting a good product and a good price?

Sony has never disclosed profits of PS+, do you criticize the lack of transparency about not telling the world its profits?

it's so weird right like why can't people just enjoy Gamepass for what it is today instead of being so worried about the future.

 

[StreetsofBeige]

because im interested on the sustainability of Gamepass, which is one of the most important topic on Neogaf : D

Already been around for 5 years and Ms has deep pockets. Why the worry?

You never answered my question to you if you got any of the money losing sub plans like Spotify and such, and if you question their financials.

 

[Frank Horrigan]

I can't believe how much of an argument has been caused for pointing out the difference between profit and revenue.

Like pointing that out is somehow simultaneously an attack on Gamepass' quality, longevity and quantity of games and an excuse to brush off any reports of revenue or profit because we should just enjoy gamepass (we should) in a thread discussing the financials of gamepass.

The internet has broken people's minds. I remember when console wars on this forum were posting comparison pictures, witty jokes and antonio banderas gifs. Where's the humour and humility gone from the internet? (rhetorical question and Off topic)

 

[Topher]

Who cares what the profit is. What is important is the customer gets a good deal and product. Why do you care if GP makes profit when MS has been funding Xbox for 20 years?

Do you use Spotify or many other sub plans? Most of them lose money. Do you care they lose money? Or do you just care about about getting a good product and a good price?

Sony has never disclosed profits of PS+, do you criticize the lack of transparency about not telling the world its profits?

Who cares about financials then? Why participate in these threads at all?

 

[freefornow]

As a MSFT stockholder though, I very much care what the profit margin is. I hope GP's path to profitability takes much less time than say Netflix did.

As a stockholder you would be looking at their whole portfolio of businesses. More to the stock than GP.

 

[StreetsofBeige]

Who cares about financials then? Why participate in these threads at all?

Why not? It’s a forum.

Are you telling me every thread you do on GAF you own the product so you discuss it?

 

[StreetsofBeige]

I can't believe how much of an argument has been caused for pointing out the difference between profit and revenue.

Like pointing that out is somehow simultaneously an attack on Gamepass' quality, longevity and quantity of games and an excuse to brush off any reports of revenue or profit because we should just enjoy gamepass (we should) in a thread discussing the financials of gamepass.

The internet has broken people's minds. I remember when console wars on this forum were posting comparison pictures, witty jokes and antonio banderas gifs. Where's the humour and humility gone from the internet? (rhetorical question and Off topic)

Do you use Spotify or any other big sub plan? I don’t think Spotify has made annual profits once in its history.

 

[Topher]

Why not? It’s a forum.

You are the one saying who cares about profit? Why not? It's a forum. That works both ways.

Are you telling me every thread you do on GAF you own the product so you discuss it?

Have no idea what you are trying to say.

 

[StreetsofBeige]

You are the one saying who cares about profit? Why not? It's a forum. That works both ways.



Have no idea what you are trying to say.

You’re smarter than that.

If you’re going to question people posting in a thread about interest in a thread, you should make sure you prove to the world you got interest in the thread too. You wouldn’t want people questioning your posts in threads going forward.

 

[Strider Highwind]

Nasa was like bro that's a spider web.

 

[IFireflyl]

Trying to point out that the sum is only revenue and not profit is coping. The reported Gamepass Revenue is enough to pay for the development of 20-30 AAA games. Microsoft is making money.

That's not how that works. Is it possible Microsoft is making money off of Game Pass? Definitely. Is it possible they're hemorrhaging money? Definitely.

Revenue is just the incoming money. It doesn't take into consideration outgoing money. That would be the money that it costs Microsoft to keep Game Pass alive. You need to take into consideration deals with developers/publishers, maintenance costs, employee wages, and a myriad of other business expenses. None of that information is known, so the revenue bit is a pretty useless piece of information. Every business and business analyst looks at the incoming and outgoing expenses, not just one or the other. Individually the numbers are pointless, and there is no useful information that can be gleaned from them.

 

[Frank Horrigan]

Do you use Spotify or any other big sub plan? I don’t think Spotify has made annual profits once in its history.

I only sub to gamepass.

I don't get what your point about posting profits though?

 

[lh032]

Already been around for 5 years and Ms has deep pockets. Why the worry?

You never answered my question to you if you got any of the money losing sub plans like Spotify and such, and if you question their financials.

why do i want to give a crap about Spotify? nobody is talking about sustainability of Spotify, we are talking about gamepass here.
Dont change the topic xD

 

[Topher]

You’re smarter than that.

If you’re going to question people posting in a thread about interest in a thread, you should make sure you prove to the world you got interest in the thread too. You wouldn’t want people questioning your posts in threads going forward.

I was throwing your own logic back at you. Why ask someone why they care about profits and then started talking about the customer being important. That's all fine, but this is a thread about financials. The person questioning other's interest is you.

 

[adamsapple]

I was throwing your own logic back at you. Why ask someone why they care about profits and then started talking about the customer being important. That's all fine, but this is a thread about financials. The person questioning other's interest is you.

To be fair the other person in that equation has called for threads like this to be banned. If that is their level of disinterest in what they perceive as half baked information, they're probably ruining their own day by continuing to participate in it.

because im interested on the sustainability of Gamepass, which is one of the most important topic on Neogaf : D

Very sustainable and very very ah-cool.

 

[Lasha]

That's not how that works. Is it possible Microsoft is making money off of Game Pass? Definitely. Is it possible they're hemorrhaging money? Definitely.

Revenue is just the incoming money. It doesn't take into consideration outgoing money. That would be the money that it costs Microsoft to keep Game Pass alive. You need to take into consideration deals with developers/publishers, maintenance costs, employee wages, and a myriad of other business expenses. None of that information is known, so the revenue bit is a pretty useless piece of information. Every business and business analyst looks at the incoming and outgoing expenses, not just one or the other. Individually the numbers are pointless, and there is no useful information that can be gleaned from them.

If Gamepass generates the revenue to fully fund 20-30 AAA games then Gamepass generates more than enough revenue to pay the incremental useage costs it incurs due to increased load on the Xbox store. The account and infrastructure for Gamepass are already provided by Xbox and really Microsoft as a whole. Content is the largest cost of the service so taking a worst case of developing AAA games is a fair approach.

 

[Bonfires Down]

There must be more than meets the eye on this one.

If you look at the subscriber counts for 2021 - which will include PC players - and divide the revenue up, which it is claimed is only console, it puts the number at a number that's basically the retail cost of GPU, let alone solo GP.

This doesn't many sense when, whilst people like to joke about the $1 deal, there will be a lot of people taking advantage of that. There will also be many people using trials, the promotional memberships I keep seeing bundled with retail purchases even things like internet services etc.

For me this only works if they're booking the full retail value for all of the above as 'revenue' and then applying the discount as a cost on the balance sheet.

It must be revenue for Game Pass + Live Gold, though it’s hard to tell for sure based on the terribly written article. Sony is listed as having 40-50% of the sub market which could only be the case if they count all subs.

 

[Topher]

To be fair the other person in that equation has called for threads like this to be banned. If that is their level of disinterest in what they perceive as half baked information, they're probably ruining their own day by continuing to participate in it.

Don't know anything about that. If that were the point being made though then I wouldn't have responded.

 

[SportsFan581]

The revenue figure will never reveal the number of people using the $1 upgrade to Gamepass. That discount will only appear in the expenses figure.

The revenue figure will count each monthly sub as the full price regardless of what was paid.

That shouldn't be the way you are reporting revenue. I've never seen anyone add $ that they never collected and count that as gross revenue. The discounts aren't an expense, that money was never collected.

Digital sales is where you will see a lot of expenses in software, since the platform collects all the money and then the developer/publishers 70% of that is an expense. GP's expenses would be whatever is owed to devs/publishers plus the operating costs (and possibly you could look at first-party dev costs).

 

[IFireflyl]

If Gamepass generates the revenue to fully fund 20-30 AAA games then Gamepass generates more than enough revenue to pay the incremental useage costs it incurs due to increased load on the Xbox store. The account and infrastructure for Gamepass are already provided by Xbox and really Microsoft as a whole. Content is the largest cost of the service so taking a worst case of developing AAA games is a fair approach.

Again, you don't have any figures for Microsoft's outgoing expenses. All you're doing is making assumptions. It is possible that you are correct, but it is equally possible that you are incorrect. Quit acting like it's a fact that Game Pass is profitable right now. Until we can actually see the full picture and not just the revenue it is 100% speculation.

 

[Topher]

That shouldn't be the way you are reporting revenue. I've never seen anyone add $ that they never collected and count that as gross revenue. The discounts aren't an expense, that money was never collected.

Googled it and Dick Jones seems to be correct. Discounts are deducted from gross sales.

"Net sales is the sum of a company's gross sales minus its returns, allowances, and discounts."

Net Sales: What They Are and How to Calculate Them

Net sales are the result of gross sales minus returns, allowances, and discounts. They are a factor in gross profit but do not include costs of goods sold.

www.investopedia.com