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Resetting Xbox

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Re: Resetting Xbox

#261

Post by galleywest200 »

ButlerianJihad wrote: post #198

The crazy thing about Xbox games, or any game today, is that they require infrastructure, they require maintenance and subscriptions, and they require a constant release cycle, and moreover, a thriving community of humans who are playing the same exact game at the same exact real time as others. It seems like the primary lost art of gaming is single-player, offline, solitary modes. Anyone could literally pick up an A…

This reads as someone who only looks at AAA major titles. The smaller games are the better ones in my opinion.

Nintendo games generally do not require maintenance or infrastructure. The vast majority of indie games do not require maintenance or infrastructure.

Re: Resetting Xbox

#262

Post by _verandaguy »

chrisfosterelli wrote: post #257
_verandaguy wrote: post #234

Earlier quoted context omitted.

> 150M at 5B revenue is not great Considered as a raw percentage in a vacuum, sure, I guess, but we're talking about... - A company which has undertaken a concerted, long-term effort to consolidate the industry under its umbrella (something they themselves call out as a problem in this post), reducing consumer choice - A company which has captured a significant chunk of the console market. They're one of the big thre…

> This is still $150M of pure gravy every single year. Sure, this is going to a corporation, but that's more money than most people could possibly dream of earning in ten lifetimes. That actually seems... tiny? Xbox is nearly 17,000 employees. That's like $8k in profit per employee. That's worse than big box retailers and like 1/100th of what is common in big tech and (to the letter's point) far worse than their bigg…

At some point you end up hitting the law of diminishing returns. I think this is a case of that.

Re: Resetting Xbox

#263

Post by Dylan16807 »

hbn wrote: post #229
Dylan16807 wrote: post #191

Earlier quoted context omitted.

Traditionally if you're going to play through a game in a couple weeks and then not own it anymore, that means you sell it and someone else buys it for their own couple weeks, and the company should be happy if they make $15 per person in the chain. Also this is part of why I'm really worried about how weak the concept of game ownership is getting. See also how anyone buying GTA6 near launch will be unable to resell…

The writing's been on the wall about physical games going away for quite some time now. You can tell the PS5 was designed to be a digital-first system by the disc drive slapped on the side like a tumour hanging off the otherwise symmetrical body.

I don't mind physical copies dropping in importance, and all else equal I even like the move to digital, but we desperately need to fix ownership of digital copies and stop having loopholes around "it's just a license".

Re: Resetting Xbox

#264

Post by CyanLite2 »

GamePass has awful choices of game, save or one two. Nobody wants to pay $35 a month for games (that sporadically disappear) which can be purchased outright at full retail price for $70.

Re: Resetting Xbox

#265

Post by chrisfosterelli »

sikim wrote: post #236
chrisfosterelli wrote: post #120

Earlier quoted context omitted.

With due fairness, these are two different sets of leaders and two different strategies. A lot of the strategy you outlined -- buying all these studios, replicating netflix, giving away day one games, raising game pass -- was a strategy put in place by Phil Spencer. Phil pushed for this investment with the promise it would pay off later for MS. He's talked publicly about having to convince Nadella to put up ungodly a…

Phil and the likes were too hands-off on these studios post-acquisition. They got too complacent enjoying steady paychecks over years of delays while working on their niche games that only highlight their artistic vision over generally fun gameplay. That's where they failed. The Activision/Blizzard acquisition and GamePass fumble were just a nail on the coffin

Yes, I agree. I empathize with Phil in spirit on it. He's a real gamer and tried to create a space for the developers to do their own thing and create what they want. But it doesn't seem to have been great business.

Re: Resetting Xbox

#266

Post by operatingthetan »

tayo42 wrote: post #192
darth_avocado wrote: post #116

Earlier quoted context omitted.

> Then they did not have to give away popular games day one on Game Pass A company that sells consoles complaining about not having enough games after 25 years in business and acquiring most popular game studios is hilarious. They keep cutting game studios, killing games and then set ambitious profit margins. At some point you have to question, do the people in charge understand their own business at all? They just g…

This attitude seemed prevelant at Blizzard too based on a book I read (Play Nice)they wouldn't fund anything that wasn't a billionaire dollar idea. Never ending growth and profits just seem to ruin everything

The result is that everything in the american economy is getting squeezed.

Re: Resetting Xbox

#267

Post by xienze »

_verandaguy wrote: post #234
mattalex wrote: post #207

Earlier quoted context omitted.

150M at 5B revenue is not great: that's 3% margin! The bigger issue is that console manufacturer revenue is highly cyclical. This is hard to see in e.g. Xbox and Sony since they are both part of a larger conglomerate, but really obvious for nintendo. You generally have a cycle of - "Launch": high marketing costs, low/negative HW margins - "Mid-cycle": lowering manufacturing costs, large game sales, high margin DLCs -…

> 150M at 5B revenue is not great Considered as a raw percentage in a vacuum, sure, I guess, but we're talking about... - A company which has undertaken a concerted, long-term effort to consolidate the industry under its umbrella (something they themselves call out as a problem in this post), reducing consumer choice - A company which has captured a significant chunk of the console market. They're one of the big thre…

> This is still $150M of pure gravy every single year

You're neglecting to consider that any time they acquire a studio or have a flop or two -- poof goes that $150M and probably more. It's not a risk-free venture. Entertainment is all about hits, and misses hurt.

Would you put up $5K to win $150 on a hypothetical roulette wheel that hits 90% of the time? The math's not perfect obviously but Xbox is a somewhat similar situation. Microsoft is putting up nearly $5B a year to make $150M. They'd be better off stuffing the $5B into bonds or something. There is a point where the returns aren't high enough to justify the expenses when risk is taken into consideration.

Re: Resetting Xbox

#268

Post by WorldMaker »

WarmWash wrote: post #239
WorldMaker wrote: post #49

Earlier quoted context omitted.

Xbox has been profitable almost continuously since a few years into the Xbox 360. It's fascinating how "profitable but low margins" equates to "struggling" to so many.

>It's fascinating how "profitable but low margins" equates to "struggling" to so many. If one bank pays 4.25% on your savings and the other pays 3.25%, which one are you going to chose to put your money in all else being equal? Why is the 3.25% one not a good choice despite you still making money? People inherently understand business, they use the same principles in their daily life, but they just get confused on ma…

A bank offering 3.25% isn't "struggling" either. Real struggling for a bank looks like bank runs and depression.

But you are talking the "consumer perspective". Right now the median interest on consumer savings accounts is less than 1%. [1] Someone getting 3.25% from their bank isn't "struggling" compared to their luckier neighbor that found a 4.25%. They are probably closer to the top 10% or top 1% and have a larger savings deposit and/or high credit/sustainably low debt. Most Americans can just envy that, not qualify for it.

There are opportunity costs in moving your money from a stable bank that you have an existing relationship and shopping it around to get that perfect 4.25% highest margin that you can find. Transfers are usually free for consumers, but a bank may give you a lower APR on your credit cards and a cheaper checking account if you keep your accounts all in the same place with that bank. Trying to move all of that at once for a similar deal at the 4.25% bank can risk hard credit checks and account closure notices that consequently drop your credit rating, including possibly enough to make the bank at 4.25% question your stability and change their mind on the deal.

I think consumers actually today have a better idea of the risks of these kinds of "small improvement" things than large companies. Wall Street is a much worse "Credit Rating Bureau" than the three (truly terrible) consumer Bureaus. Businesses have grown so large they no longer understand Opportunity Cost at any real level. If you shut down the things that bring in $5 billion revenue, you no longer have $5 billion revenue, you have a gamble that some other industry can ramp up to that quickly. $5 billion has never been "quick money". (Inflation would have to get a whole lot worse for that to happen and that point the company has too many other problems.)

[1] https://wallethub.com/edu/savings-account-statistics/143529

Re: Resetting Xbox

#269

Post by jjcm »

What's fascinating to me are the Valve comparables here.

17B ARR vs 20B ARR

At the end of the day there are two strong differences here. Valve has always been lead by people who were game devs, and have always conveyed a message that the gaming experience matters most. Xbox was led by Phil Spencer, who at least was known as being an avid gamer, but in his tenure pushed for things like xbox game pass to drive continual revenue and windows integrations that affected performance of games. Now it's being led by an industry outsider.

It boils down to trust in the end, and willingness to place profit over brand. If you look at the responses to this in r/xbox or other communities, it's overwhelmingly a stance of zero surprise. Xbox has always placed the business first, and this is the natural end of that mission - you get a bloated org with a platform that people don't end up trusting.

I do think resetting is the correct thing to do; there's no reason for Xbox to have 10k+ employees. Still it's another black mark against the brand. Also look at the framing of this message - it's about how their structure has affected the business. In this entire 47 sentence post, there is a single sentence that talks about the affect on the players:

> That complexity has slowed decisions, blurred accountability, and made it harder to deliver for players.

It says a lot when the players are the secondary consideration.

Re: Resetting Xbox

#270

Post by WorldMaker »

munificent wrote: post #123
WorldMaker wrote: post #49

Earlier quoted context omitted.

Xbox has been profitable almost continuously since a few years into the Xbox 360. It's fascinating how "profitable but low margins" equates to "struggling" to so many.

> It's fascinating how "profitable but low margins" equates to "struggling" to so many. A high revenue but low margin business is a lost opportunity to invest that same revenue in a different area with better margins.

If you shut down the things that bring in $5 billion revenue, you no longer have $5 billion revenue, you have a gamble that some other industry can ramp up to that quickly. $5 billion has never been "quick money". (Inflation would have to get a whole lot worse for that to happen and that point the company has too many other problems.) That's "Opportunity Cost" among other bits of what used to be past corporate wisdom that companies have seemed to have forgotten.
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