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Xbox FY20 Q2: Software & services revenue down 11%. Hardware revenue down 43%. Overall gaming revenue down 21%.
- Thread starter Raylan
- Start date
Microsoft's fiscal year end is June 30th IIRC. So no, October - December is their Q2.
Yes and those people had to pay money still even if they got gold (even for cheap...company still had to buy them from MS)...so it's not like people got 3 years for "free"...money was still spent and paid years in advance. Right now you can buy 3 years worth of GamePass...still a subscriber. But yea...I'm the one spinning... *rolls eyes*
I think the issues still to be determined for Microsoft:
- Is GamePass revenue enough to offset the declines they're going to continue to see in discrete software sales as their audience continues to pick up Gamepass and become conditioned to buy less and less software?
- Are they going to sell enough consoles to get Gamepass into enough hands where it can hit that critical mass?
I'm going to be honest, I'm still not entirely sold on the monthly subscription business model as a primary means for platform holders to generate revenue. Microsoft might be able to get it to work if they can really get a solid foothold on the PC side of things (I think the Xbox market is just too small) but the one thing they've consistently shown over the last 20 years is their complete inability to properly leverage Windows into any sort of presence within PC gaming.
- Is GamePass revenue enough to offset the declines they're going to continue to see in discrete software sales as their audience continues to pick up Gamepass and become conditioned to buy less and less software?
- Are they going to sell enough consoles to get Gamepass into enough hands where it can hit that critical mass?
I'm going to be honest, I'm still not entirely sold on the monthly subscription business model as a primary means for platform holders to generate revenue. Microsoft might be able to get it to work if they can really get a solid foothold on the PC side of things (I think the Xbox market is just too small) but the one thing they've consistently shown over the last 20 years is their complete inability to properly leverage Windows into any sort of presence within PC gaming.
So Satya saying GamePass subscribers more than doubled over Q2 last year.
Q2 last year was about 6-9 months after Spencer said they had millions of GamePass subscribers.
So, I think it's safe to say MS has at least 6+ million subscribers to GamePass and likely more.
For comparison, Sony announced 1 million PSNow subscribers during the holidays.
Q2 last year was about 6-9 months after Spencer said they had millions of GamePass subscribers.
So, I think it's safe to say MS has at least 6+ million subscribers to GamePass and likely more.
For comparison, Sony announced 1 million PSNow subscribers during the holidays.
Hardware is declining, but PSN revenue is bigger than MS gaming revenue
It's pretty barren so far because of the lack of 1st party output but I expect subscriptions to go up once Microsoft gets into a better groove of releases. They didn't get all those studios for nothing.
I realize that. Is there no discount involved and does it not also include PC GP currently as well? If I were counting the numbers GPU would be distinctly in the GP bin and not in the XBLG bin. The spend for the GPU sale is significantly higher than for XBLG.
Yea, no. That is factually incorrect.
You are basically arguing that 3/4 of Sony's gaming revenue is from PSN+ and PSNow.
Sony is most non holiday quarters has just over $4b USD in revenue for all of gaming. As an example, their quarterly report in October 2019 had gaming revenue of 454b Yen = $4.1b USD.
MS gaming revenue was roughly $3.3b USD for this past quarter.
I pretty much bought a bunch of gamepass ultimates, and I might delay some game purchases until next gen hits.
User Banned (1 Week): Continued pattern of trolling and system wars.
A whole generation of damage control, lol.
If you're talking about the people who used the converting deal to get up to 3 years for 5 or so dollars a month, then that's not free.
Not to mention it becomes a major reason to invest in the next Xbox console.
Last number i saw for the annual report PSN alone made more revenue than the entire xbox game division.
You see the post by the ceo about gamepass numbers nearly doubling?
Gamepass is doing great. And considering Xbox is now all in on it, it means Xbox will continue to do great in the future.
PSN isn't just them, it's also the PS Store. It made more than Nintendo and Xbox combined in 2018 I think, it's massive.
Down 905 million in gaming revenue?
Yes I know Microsoft millions/billion are limitless but this report is still shocking.
Yes I know Microsoft millions/billion are limitless but this report is still shocking.
ok
Game Pass subscribers on their own are higher attach rate than the average console owner
Game Pass subscription is roughly equivalent to 2 games a year. So for a console owner from launch that's equivalent to 14 games owned throughout a generation. This is why we're seeing the push towards "ecosystems" as these subscribers are highly likely to maintain subscriptions across generations.
Then you factor in that consumers won't stop buying games... third party titles like GTA, Sports titles, Call of Duty are still games people will buy as they aren't part of the subscription model.
Game Pass also scales heavily in the favor of content creation. They're able to offset the bandwidth and server costs just due to Azure existing... so they get that essentially for free on the tail of another business segment. To match all first and third party revenue, they'd need about 80 million subscribers. I'd guess about 20-30 million would be needed to replace all first party sales.
I think the last PS hardware numbers were a 28% drop, so it's not like 'end of generation slowdown' is something only Microsoft is seeing in hardware.
Hey, what can we say? People like arguing over the lengths of penises that don't belong to them.
Consoles are still a big chunk of revenue, even if they don't really add to profit. Beginning of a generation they can charge $400-$500 per console. At the tail end of the consoles life cycle hardware is always on sale and customers don't buy as much so you have majorly decreased revenue from hardware sales.
They attributed it to a single title to last year having RDR2 while this year there wasn't a massive hitter like that. I'm actually expecting we'll see a similar drop from Sony in the software category for the same reason.
So.... All of Sony's gaming but hardware sales and retail sales are larger than all of MS gaming + hardware sales...
This is pretty much what you would expect at this point even with a 20-30% lead over a competitor in the games industry. Digital sales (including dlc and MTX) are about 80% of all software related sales.
If you want to play online with your Game Pass games you still need Xbox Live if you are on Console. Plus anyone who took advantage of the $1 Gamepass deal needed to have Xbox Live Gold first.
Edit: I didn't see that you had put GPU . Game Pass Ultimate is both Gamepass and Xbox Live, so I bet they count it as both.
The most important statistic anyone can bring up when talking about Game Pass is this. Netflix is the worlds most popular streaming service and it's still not profitable today.
Streaming services of this type are very hard to make money on. Phil can say everything is fine right now, because they're willing to take a big loss for now in hopes of making profits later, but who knows what the company might decide if game pass doesn't grow it's subscriber numbers in a massive way over the next few years.
I was trying to post NPD Matt's tweet, but I can't see the tweet anymore. Either I'm having issues with my phone or it's deleted.
I would say at least 7-8m GP
And for PS Now, it was 1 million+ as of end of Oct (when they reported their Q2 earnings)
He talked about PS Store + Services (PS+/Now) which will generate in 2019 over 11.8-12B+ likely
So that's at least 2 million XGP subs extra in the previous quarter. Xbox will finally have a decent year, first party-wise, with Ori, Minecraft Dungeons and Halo Inifinite. They just need to keep bringing the quality titles and the subs will come. The sooner they transition XB1 folks to Lockhart, the better.
Eh. Ms are a big company theyll be fine. Also its the end of the gen. Sony are experiencing similar issues
It's both, actually.
Microsoft cited a third-party title when gaming revenue was flat in Q1, 2020 earnings. RDR2 wasn't out during Q1, 2019. Fortnite really started growing during June 2018 and through the end of the year, exactly when new players are spending a lot on skins etc. Microsoft's guidance for Q3, 2020 also notes gaming will be impacted again by "lower transaction volume on a third-party title."
Why shouldn't XBLG subs be growing, they still selling new consoles.
Netflix doesn't generate money beyond the subscription. Like...they don't have anywhere for me to buy a movie...dlc...or anything else after I've watched it their shows.
I thought one of the positives of gamepass is it's driving customers to spend more money within the ecosystem?
I thought one of the positives of gamepass is it's driving customers to spend more money within the ecosystem?
couple mistakes here
Microsoft owns a massive data service... and is one of the industry top publishers
Netflix had to buy other companies content... isn't even remotely close to a top studio (wasn't even a studio when they started) and they largely don't own their infrastructure.
the models are a little bit different on the backend... and the complexity of financials is simpler. There is far more revenue generation on GP model vs Netflix.
The dollar discounts really did help
I was definitely one of them that paid for 3 years to front with the $1 deal for GPU.
Having said, I'm curious to see how much of content and service will grow knowing that a good bulk of Xbox customers won't be subbing until 2021 or so. If they grow at a good rate that'll be really incredible.
Game Pass doubling it's subscribers is quite big. Can't wait to see how it'll affect some of the stuff MS has coming out this year.
It doesn't need to pass 50 mil. The future is changing and Microsoft has recognized it. Azure and their cloud division is enormous and hugely profitable. I don't think it's a mistake that their next gen approach involves diversifying how you play Xbox. It makes complete sense.
Yes, judging from the downward trend right before they stopped reporting unit sales and some indirect estimations based on revenue, npd data etc I would be surprised if it's anywhere close to 50m. Some people are still using the PS4/One ratios from 4 years ago but those just can't be reliable anymore.
I guess a weaker line up of games will impact too (compared to what was released last year)
Concerning in what regard? XBO sales have been pretty low for a while now, and the gen in on the wind down on top of Microsoft transitioning more and more away from a hardware focus. I'm not sure it's really concerning as in means anything significant for the future. If hardware sales are anemic when the new gen launches now that would be cause for concern, as even with less emphasis on hardware I assume they still expect there to be decent hardware sale #s.
As it stands it's not really good or bad news, just kinda an expected conclusion of the gen for Microsoft. I don't think anyone expected a big boost of sales of the console this far in.