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Hypothetical scenario: How would the industry react if Microsoft suddenly started investing 10-20B per year in Game Pass exclusives?

12Danny123

12Danny123

Member
Jan 31, 2018
1,722
This is probably an interesting scenario if something like this happened. If Microsoft said in their statement in their earnings call that they will spend 10-20B on Game Pass content to gain a lead in the Subscription/Streaming Wars. Losses won't matter to them, all that matters is getting subscribers to the table. How would the industry react to this situation?

This type of scenario is basically what Netflix is doing, spending around 20B on Original content. Microsoft's Game Pass model is similar to Netflix and PSNow is Disney+ so curious to see what will happen. But the biggest difference is that Gaming companies are much much smaller than the Movie Giants like Disney, HBO etc.

I think in my opinion this would cause companies to catchup. LIke how the media giants are trying to catchup to Netflix
 

Deleted member 59126

Banned
Aug 10, 2019
2,053
That's an insane amount of money. They would need to sell 83 million subscriptions a month at $10/$20 just to break even, not only is that unheard of, it's grossly negligent. It would cost thousands of people their jobs, it would make investors lose trust and probably be the very thing that causes Microsoft to go bankrupt.
 
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modiz

modiz

Member
Oct 8, 2018
17,841
LOL.
Thats sounds like the biggest money sink ever.

I expect their value to drop like crazy if they do this.
 
Rosebud

Rosebud

Two Pieces
Member
Apr 16, 2018
43,583
Gamepass would never be profitable and investors would be pissed

But if they want to give me all for almost free, be my guest.
 
bane833

bane833

Banned
Nov 3, 2017
4,530
Not gonna happen. That would be twice their yearly Xbox division revenue und impossible to recoup.
 
PROh1bited

PROh1bited

The Fallen
Oct 25, 2017
3,701
They would be laughed at and the Xbox would be no more cause that's an insane amount of money.

Like, does the r&d costs of making a new console even touch 10b?
 
Kill3r7

Kill3r7

Member
Oct 25, 2017
24,430
That is an insane amount to invest. I could see them reaching Netflix levels of investment ~$8B annually, if and when the userbase justifies that sort of investment.
 
klier

klier

Banned
Oct 29, 2017
937
12Danny123 said:
This is probably an interesting scenario if something like this happened. If Microsoft said in their statement in their earnings call that they will spend 10-20B on Game Pass content to gain a lead in the Subscription/Streaming Wars. Losses won't matter to them, all that matters is getting subscribers to the table. How would the industry react to this situation?

This type of scenario is basically what Netflix is doing, spending around 20B on Original content. Microsoft's Game Pass model is similar to Netflix and PSNow is Disney+ so curious to see what will happen. But the biggest difference is that Gaming companies are much much smaller than the Movie Giants like Disney, HBO etc.

I think in my opinion this would cause companies to catchup. LIke how the media giants are trying to catchup to Netflix
Click to expand...
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10-20 billion? How old are you?
 
Squirrel09

Squirrel09

Member
Nov 4, 2017
1,569
The entire Halo franchise has only made 5 billion in a decade... lol

The industry wouldn't do anything because Microsoft couldn't support that. The entire industry brought in 43 billion last year.
 
Rosebud

Rosebud

Two Pieces
Member
Apr 16, 2018
43,583
They should just give free Xbox's on the street to random people if they just want to spend money
 
Mesoian

Mesoian

▲ Legend ▲
Member
Oct 28, 2017
26,501
Devoting 10-12% of your total annual operational cost to 1 program?

It wouldn't pay off and the decision-maker would be out of the company.


TheRulingRing said:
Even a billion a year is out of reach for Xbox/Gamepass (or probably for any video game company).
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Not only that, I think the past year of gamepass has proven that they don't NEED to spend any more than they already are for the service to be a success. If they maintain the level of quality it currently has, people will come to it, especially as we move into another console cycle.

On top of which, Microsoft still wants you to buy games as well as have gamepass. Purchasing titles is still a big part of their revenue.
 
Eumi

Eumi

Member
Nov 3, 2017
3,518
The rest of the industry would easily be able to vilify Game Pass for locking games behind a subscription fee.

What was good will for a pretty great service becomes the EGS X 10 overnight.
 

Deleted member 59126

Banned
Aug 10, 2019
2,053
Velg said:
Yeah... I think this is a fun question! Hope he's ok!
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Masoyama said:
I mean OP has to be like 14-16 years old right? Just, wow.
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I remember meeting a kid in a GameStop who had the idea of using google earth to create a real-time zombie game. I didn't want to burst his bubble, until he started saying that developers were idiots for not thinking of the idea before him. I promptly gave him a short lesson as to why his game idea was neither economically or technically feasible. He cried...
 
Buzzman

Buzzman

Attempted to circumvent ban with alt account
Banned
Oct 25, 2017
1,549
For 20 Billion dollars Microsoft could probably buy the entire output of Sony WWS for a year.
 
Saci do PXB

Saci do PXB

Member
Nov 12, 2017
367
The problem is the "suddenly" word.
It would never be that way.

A balance is needed between growth and investment. There is simply no way to invest even half that amount without throwing a lot of money away.
 
EscoBlades

EscoBlades

Banned
May 31, 2019
73
Toronto
Just to point out that Netflix is also saddled with a LOT of debt. Their content budget is $15 billion for 2019, and their debt load is currently $14 billion.
Their Debt/EBITDA ratio is around 6.7, considered high.
 
Diarrhea Day-Lewis

Diarrhea Day-Lewis

Member
Oct 27, 2017
20,761
It would be an unsustainable model for Xbox while at the same time damaging the entire industry because if successful it would devalue games so much like with music and movies. You'd have even more paid product placement in games to make up for not being able to sell $60 copies since everyone would be used to getting great stuff for $10 per month
 
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