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Resetting Xbox

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Re: Resetting Xbox

#711

Post by ChrisRR »

Drupon wrote: post #579
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: that's 3% margin! Oy vey maybe this kind of money grubbery is not good for our society.

What's not to understand that when you're having to spend 4.85B in order to get 5B in revenue makes your business quite risky. You want to be operating on larger margins than that

Re: Resetting Xbox

#712

Post by port11 »

PaulHoule wrote: post #126
rockyj wrote: post #24

This is a total mess IMHO. - The make around 5 billion in revenue per quarter - The problem according to them is profit margin - around 150-160 million So first of all, they are big! Secondly they are not at a loss. They just have a "thin, non-growing margin". So to fix all this they are trimming down, so they can "return to growth" (which I think is ridiculous). Some points - - They are huge business even now - 5 bi…

It comes across to me as a really honest letter. At least they are talking about spinning out studios instead of shutting them down, I think that plays better than previous announcements. (e.g. make a hit game like Hi-Fi Rush and get shut down!)

Fair, but who told them to buy up everything? That part annoys me to no end.

And the bad plays are management-related, so they’re firing a bunch of people…

Re: Resetting Xbox

#713

Post by tommit »

lelanthran wrote: post #695
Orygin wrote: post #691

Earlier quoted context omitted.

Oh yeah I forgot 5 BILLION dollar in revenue is a signal that the market does not want your product

> Oh yeah I forgot 5 BILLION dollar in revenue is a signal that the market does not want your product Doesn't matter how big the revenue is if the market is not interested at the price you are selling. I mean, by your logic, if I sell a dollar for 64c, and do $5b revenue, that's an indication that the market does indeed want the product, but not an indication that the market wants the product at the price you need to…

No? By that logic you sell a dollar for 103c and that's not enough to quench your greed.

Obviously both statements are gross oversimplifications. But I could not help myself and let that slide just like that.

Re: Resetting Xbox

#714

Post by ChrisRR »

account42 wrote: post #645
mike_hearn wrote: post #628

Earlier quoted context omitted.

Margins that low are dangerous because businesses can often see year to year margin variance higher than that.

So? Why is it impossible for businesses to do long-term accounting?

They have been doing long term accounting, and that's why they're resetting their business

Re: Resetting Xbox

#715

Post by port11 »

sakex wrote: post #532
rockyj wrote: post #24

This is a total mess IMHO. - The make around 5 billion in revenue per quarter - The problem according to them is profit margin - around 150-160 million So first of all, they are big! Secondly they are not at a loss. They just have a "thin, non-growing margin". So to fix all this they are trimming down, so they can "return to growth" (which I think is ridiculous). Some points - - They are huge business even now - 5 bi…

3% profit margin means you're better off selling the business and investing the cash into US bonds at current rates.

If everyone thinks like that, no jobs are created. Xbox hires a ton of people and creates genuine value for consumers. Okay, that last part you can question, but I’m an original Xbox-er so I believe in it.

3% profit should be totally fine for any business. The planet is cooked, I think we can live with the shareholders making a bit less.

Re: Resetting Xbox

#716

Post by ChrisRR »

dd8601fn wrote: post #638
coffeebeqn wrote: post #620

Earlier quoted context omitted.

I just don’t know how great the IPs at Xbox game studios are. They have a few staples but most studios they bought have struggled to put out any major successes in the last 5+ years. There’s only a few Pokémon’s and Harry potters out there. They even ran Halo to the ground ffs

I assume a bunch of them print pretty reliably, like Call of Duty, when you're not using them as a loss leader on an expensive subscription that nobody wants.

That would be King

Re: Resetting Xbox

#717

Post by port11 »

King-Aaron wrote: post #670
rockyj wrote: post #24

This is a total mess IMHO. - The make around 5 billion in revenue per quarter - The problem according to them is profit margin - around 150-160 million So first of all, they are big! Secondly they are not at a loss. They just have a "thin, non-growing margin". So to fix all this they are trimming down, so they can "return to growth" (which I think is ridiculous). Some points - - They are huge business even now - 5 bi…

These companies are discovering that selling products to consumers is no longer the thing they need to do in order to earn money.

Might work if you don’t: out-price your hardware, get rid of disc trays, make GamePass expensive, force Microsoft accounts and online mandates, buy up every studio and force them to out out crappy updates,… ahm, no it’s the users, they’re getting old and cranky.

Yikes, I bought every Xbox console and plenty of day-1 releases, but skipped the last gen when it became clear that the platform isn’t about gamers anymore.

Triple-As are also getting tiresome, so I think plenty of people are happy to get a cheaper title on Steam that feels like better value.

Re: Resetting Xbox

#718

Post by venzaspa »

georgeecollins wrote: post #410
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 -…

Sure, 3% is terrible. But the point is you spent a fortune buying all these studios-- aka key strategic intellectual properties-- and then you manage them badly. Then you just sell or shut them down at their absolute bottom and you end up just destroying value. Older forms of media understand this. WB loses money and its still really valuable because people see the potential of Batman, Harry Potter etc. IP studios ar…

Depends, Tesco (the UKs largest supermarket chain - one of the largest in the world) on average net about 2.5-3% profit on a given year and they have to do a lot more than pump out a game or two every few years.

Re: Resetting Xbox

#719

Post by tommit »

refurb wrote: post #708
slg wrote: post #703

Earlier quoted context omitted.

It's pretty difficult to go bankrupt turning a profit.

Making a thin 3% profit that can go negative when the wind blows

Making crazy changes like squeezing out every last dollar out of your existing, loyal customers (looking at any PE firm ever) certainly affects the wind I'd wager.

Re: Resetting Xbox

#720

Post by sunaookami »

LunaSea wrote: post #344
speak_plainly wrote: post #11

At some point, the games industry decided it wanted to be interactive Hollywood, and the consequences are entirely predictable. Meanwhile, Nintendo just quietly shipped 3.8 million units of Tomodachi Life in two weeks, and 4 million of Pokopia in five. They're making actual games. Sony's obsession with prestige cinematic bloat, like Xbox, has also put them in a slow-motion death spiral that's going to become painfull…

Nintendo survives on a few banger licenses. Innovation left the house a long time ago.

Huh? They are trying a lot of things and when they want to establish a new franchise they are often successful, see e.g. Splatoon. Innovation also does not correlate with new IPs.
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