Microsoft: Xbox One is the “Highest-Engagement Console” in the Market; Explains Strategy for Gaming

[Kittenz]

This thread makes my head hurt. Spin?!?!?

Corporations the size of MS don't regularly lie to their investors, particularly the ones actively participating in conference calls on earnings, about relatively small chunks of the company. Xbox and gaming makes them money; it's not cloud computing or Windows, where the money really lives.

It's the CEO and CFO for Microsoft, not the marketing department or the PR hacks for the specific Xbox brand. They won't be CEO and CFO long if they routinely lie to their primary investors.

Can't decide if being trolls or just genuinely don't see the difference between the CFO discussing quarterly numbers and Major Nelson pimping State of Decay 2.

 

[Deleted member 1238]

Can't decide if being trolls or just genuinely don't see the difference between the CFO discussing quarterly numbers and Major Nelson pimping State of Decay 2.

Click to shrink...

It's a little bit of both.

 

[Yearsoflurking]

Aka, Microsoft wants to sell gaming software and services that connect to their Cloud Platform Azure. Consumer facing and Developer facing. No matter what client platform. The number of users that are using these services, aka engagement is what they are tracking.

Click to shrink...

Actually this is incorrect gaming is now a large part and the forefront of ms consumer facing products. Mixer ,xbox, xbox live and similar services is inportant for microsoft and azure going forward.

 

[Deleted member 4044]

This thread makes my head hurt. Spin?!?!?

Corporations the size of MS don't regularly lie to their investors, particularly the ones actively participating in conference calls on earnings, about relatively small chunks of the company. Xbox and gaming makes them money; it's not cloud computing or Windows, where the money really lives.

It's the CEO and CFO for Microsoft, not the marketing department or the PR hacks for the specific Xbox brand. They won't be CEO and CFO long if they routinely lie to their primary investors.

Can't decide if being trolls or just genuinely don't see the difference between the CFO discussing quarterly numbers and Major Nelson pimping State of Decay 2.

Click to shrink...

The trolls most likely haven't worked in a publicly traded company at a level where they learn the relationship between the CEO and the board/investors.

 

[melodiousmowl]

Actually this is incorrect gaming is now a large part and the forefront of ms consumer facing products. Mixer ,xbox, xbox live and similar services is inportant for microsoft and azure going forward.

Click to shrink...

Do people even realize what Azure really is and who uses it for what? Do people here think its just some cloud set up to run game servers or something?

 

[ethomaz]

Who the hell is losing money?!

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Losing users is the same than lose money... it is the same.

MS is losing a lot of money with a tiny userbase... and before you try to say they are happy, good, etc they definitely are not... no company is... everybody want the big slice of the cake and that is even more true after you experience better sales in the past (360).

 

[tomofthepops]

They've sold half the consoles so of course the percentage is going to be bigger than PlayStation.

 

[Yearsoflurking]

Do people even realize what Azure really is and who uses it for what? Do people here think its just some cloud set up to run game servers or something?

Click to shrink...

?

 

[khamakazee]

Engagement is useless by itself. Engagement as a metric is only relevant when matched with userbase size. More specifically, engagement PERCENTAGE is nearly useless. What matters is the actual number of people who are heavily engaged, not how big they are in proportion.

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If 25 million people spend on average $300 a year on content/services that is an engaged customer compared to 40 million who may only buy $100 worth of content each year. Android may have more users than Apple but who is making more money?

 

[Yearsoflurking]

Losing users is the same than lose money... it is the same.

MS is losing a lot of money with a tiny userbase.

Click to shrink...

I'm not sure you understand the concept of "losing money", you can't "lose" money from customers you never had.

 

[ethomaz]

I'm not sure you understand the concept of "losing money", you can't "lose" money from customers you never had.

Click to shrink...

?

You had 80+ million consumers... they had now 35+ million consumers.

They are losing a lot of money with that.

I don't know how you run your business but in mine if I had 300 consumers but in a few years I lose 150 it will makes me lose a lot of money. Money that I will hate to lose and I will try to do everything to avoid that.

 

[Yearsoflurking]

?

You had 80+ million consumers... they had now 35+ million consumers.

They are losing a lot of money with that.

Click to shrink...

When did the "xbox one" have 80+ million consumers?

 

[Deleted member 1238]

Engagement is useless by itself. Engagement as a metric is only relevant when matched with userbase size. More specifically, engagement PERCENTAGE is nearly useless. What matters is the actual number of people who are heavily engaged, not how big they are in proportion.

Click to shrink...

Well Microsoft does track their userbase size with monthly active users, but that gets laughed off here as spin as well.

I disagree with your statement that engagement percentage is useless because having a high percent of your users be highly engaged is a very good thing. Of course it ultimately depends on what the company defines as highly engaged but Nadella's comments come as an explanation for why Microsoft's gaming revenue grew and he calls it a "great growth area." So obviously to them it is a valuable and meaningful metric which has actual measurable benefits to their bottom line.

 

[ethomaz]

When did the "xbox one" have 80+ million consumers?

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If I'm not using the wrong date... after 2012 they had over 80 million... they lose over half of that after 2014 without any perspective to recover until 2019-2020.

 

[Kaako]

?

You had 80+ million consumers... they had now 35+ million consumers.

They are losing a lot of money with that.

I don't know how you run your business but in mine if I had 300 consumers but in a few years I lose 150 it will makes me lose a lot of money. Money that I will hate to lose and I will try to do everything to avoid that.

Click to shrink...

Damn, did they really have 80+ mil consumers? And that dropped to 35+ this generation? o_O

 

[Ehker]

This thread makes my head hurt. Spin?!?!?

Corporations the size of MS don't regularly lie to their investors, particularly the ones actively participating in conference calls on earnings, about relatively small chunks of the company. Xbox and gaming makes them money; it's not cloud computing or Windows, where the money really lives.

It's the CEO and CFO for Microsoft, not the marketing department or the PR hacks for the specific Xbox brand. They won't be CEO and CFO long if they routinely lie to their primary investors.

Can't decide if being trolls or just genuinely don't see the difference between the CFO discussing quarterly numbers and Major Nelson pimping State of Decay 2.

Click to shrink...

Spin isn't about telling a lie, it's that they might be taking the result from lack of growth and presenting it as a positive. Say two console makers are perfectly tied in both sales and engagement, but one greatly expands their business into the casual crowd. The one that didn't expand could now brag that their players have the highest-engagement on average, but that was a result of not growing like their competitor.

That's not necessarily what happened here, without all the information we have to figure it out or guess, but there are some possible scenarios that aren't as positive as they may seem that can be covered with spin.

 

[khamakazee]

Losing users is the same than lose money... it is the same.

MS is losing a lot of money with a tiny userbase... and before you try to say they are happy, good, etc they definitely are not... no company is... everybody want the big slice of the cake and that is even more true after you experience better sales in the past (360).

Click to shrink...

Sure, if you are Sony and have put more emphasis on PlayStation than other electronics/cameras etc. because the company as a whole was bleeding money but now its gaming is growing and being more profitable. So when you compare gaming to each other Sony is doing a better job financially but as a company Microsoft still dwarfs Sony. Microsoft can and will use Xbox as part of it's overall strategy so to simply say it only has 35 million or 40 million Xbox systems sold isn't really showing the whole picture because It's users online and engagement of those users are actually increasing.

 

[ethomaz]

Damn, did they really have 80+ mil consumers? And that dropped to 35+ this generation? o_O

Click to shrink...

Last public number was 84 million but it was increasing yet so it possible reached close to 90 million.

 

[watdaeff4]

Well Microsoft does track their userbase size with monthly active users, but that gets laughed off here as spin as well.

I disagree with your statement that engagement percentage is useless becausinf having a high percent of your users be highly engaged is a very good thing. Of course it ultimately depends on what the company defines as highly engaged but Nadella's comments come as an explanation for why Microsoft's gaming revenue grew and he calls it a "great growth area." So obviously to them it is a valuable and meaningful metric which has actual measurable benefits to their bottom line.

Click to shrink...

And basically this is all that needs to be said. The division is doing well. He answered investors questions at an investors call. His comment wasn't guided towards forum console warriors. At this point anyone who wants to keep arguing that it's meaningless, spin, PR, etc. will never grasp this, either intentionally or not. There is no point wasting your time with them.

 

[Yearsoflurking]

If I'm not using the wrong date... after 2012 they had over 80 million... they lose over half of that after 2014 without any perspective to recover until 2019-2020.

Click to shrink...

Xbox one never has 80 million consumers however the xbox 360 a different product you're confusing it with had over 80 million consumers

 

[ethomaz]

Sure, if you are Sony and have put more emphasis on PlayStation than other electronics/cameras etc. because the company as a whole was bleeding money but now its gaming is growing and being more profitable. So when you compare gaming to each other Sony is doing a better job financially but as a company Microsoft still dwarfs Sony. Microsoft can and will use Xbox as part of it's overall strategy so to simply say it only has 35 million or 40 million Xbox systems sold isn't really showing the whole picture because It's users online and engagement of those users are actually increasing.

Click to shrink...

Users and online engagement happens with bigger user base... userbase will always be more important to a company because it what generate money, engagement, MAUs, etc.

MS dreamed to have over 80 million users now doing these MAUs, engagement, etc... not these 35 million.

Userbase is and it always will be the key metric for a game business.

 

[melodiousmowl]

?

Click to shrink...

I just get the impression a lot of people on ERA don't actually know what Azure is.

?

You had 80+ million consumers... they had now 35+ million consumers.

They are losing a lot of money with that.

I don't know how you run your business but in mine if I had 300 consumers but in a few years I lose 150 it will makes me lose a lot of money.

Click to shrink...

Yeah, that logic certainly holds up in some weird business school that doesn't exist.

If 25 million people spend on average $300 a year on content/services that is an engaged customer compared to 40 million who may only buy $100 worth of content each year. Android may have more users than Apple but who is making more money?

Click to shrink...

Apple, just on phones, takes in what is it, 87% of industry PROFITS off of 18% of unit sales. That is fucking insane btw. https://www.investors.com/news/tech...tphone-profits-but-small-slice-of-unit-sales/

also.

https://techcrunch.com/2017/03/29/app-annie-android-to-top-ios-in-app-store-revenue-this-year/ So last year might have been the first time Andoid app store(s?) generated more revenue than the apple app store, despite ~20% of phone sales.

I am only pointing this out because pure numbers sold don't necessarily represent the health of a product.

This weird, black and white binary arbitrary cause effect think on ERA is crazy making sometimes.

 

[Godzilla24]

Users and online engagement happens with bigger user base... userbase will always be more important to a company because it what generate money, engagement, MAUs, etc.

MS dreamed to have over 80 million users now doing these MAUs, engagement, etc... not these 35 million.

Userbase is and it always will be the key metric for a game business.

Click to shrink...

You don't need to increase userbase to increase engagement. What are you talking about? MS is doing both.

 

[Its Dead Jim]

If I'm not using the wrong date... after 2012 they had over 80 million... they lose over half of that after 2014 without any perspective to recover until 2019-2020.

Click to shrink...

Wait....you think all of the people who had X360's have now moved over to next gen?

If that were the case then Xbox live subscriptions and MAU statistics would have dropped off a cliff, more than a 50% drop according to the tales from your ass.

 

[Soony Xbone Uhh]

Xbox one never has 80 million consumers however the xbox 360 a different product you're confusing it with had over 80 million consumers

Click to shrink...

That's not how it works. Unless you think Ps4 also lost consumer in comparison to the Ps3 generation

 

[THEVOID]

Users and online engagement happens with bigger user base... userbase will always be more important to a company because it what generate money, engagement, MAUs, etc.

MS dreamed to have over 80 million users now doing these MAUs, engagement, etc... not these 35 million.

Userbase is and it always will be the key metric for a game business.

Click to shrink...

So Android is probably 10-1 with Apple in devices and it matters what to Apple. Nada.

 

[ethomaz]

You don't need to increase userbase to increase engagement. What are you talking about? MS is doing both.

Click to shrink...

Userbase generates more engagement... userbase is key no matter how this gen companies or some users try to spin.

80 million expending $80 is a hell of bigger than 35 million spending $100.

 

[watdaeff4]

edit: actually removed the quote from teh poster as it's not worth my time as it will go nowhere.




Apple, just on phones, takes in what is it, 87% of industry PROFITS off of 18% of unit sales. That is fucking insane btw. https://www.investors.com/news/tech...tphone-profits-but-small-slice-of-unit-sales/

also.

https://techcrunch.com/2017/03/29/app-annie-android-to-top-ios-in-app-store-revenue-this-year/ So last year might have been the first time Andoid app store(s?) generated more revenue than the apple app store, despite ~20% of phone sales.

I am only pointing this out because pure numbers sold don't necessarily represent the health of a product.

This weird, black and white binary arbitrary cause effect think on ERA is crazy making sometimes.[/QUOTE]
I hate to tell you, but you are fighting an uphill battle. You're correct of course, though

 

[cgcg]

Did they hire Trump to write this? "Highest! Bestest!" lol

 

[Godzilla24]

Userbase generates more engagement... userbase is key no matter how this gen companies or some users try to spin.

80 million expending $80 is a hell of bigger than 35 million spending $100.

Click to shrink...

You still fail to understand that you don't need to increase userbase to increase engagement of the console.

 

[THEVOID]

Userbase generates more engagement... userbase is key no matter how this gen companies or some users try to spin.

80 million expending $80 is a hell of bigger than 35 million spending $100.

Click to shrink...

That's if the full 80 million is engaged. Let's be honest last gen Sony and MS did 80M consoles. That's not 80 million users. How many of us bought 2-3 of them over the generation.

 

[watdaeff4]

You still fail to understand that you don't need to increase userbase to increase engagement of the console.

Click to shrink...

No offense, but you are wasting your time.

 

[khamakazee]

Users and online engagement happens with bigger user base... userbase will always be more important to a company because it what generate money, engagement, MAUs, etc.

MS dreamed to have over 80 million users now doing these MAUs, engagement, etc... not these 35 million.

Userbase is and it always will be the key metric for a game business.

Click to shrink...

If that was the key to success Ferrari would have shut down years ago.

You don't need to increase userbase to increase engagement. What are you talking about? MS is doing both.

Click to shrink...

Well he also thought console crossplay was anti-consumer and bad for gamers so it's pretty clear he doesn't want to shed any positive light on what Microsoft says or does. The fact is a user who isn't really engaged isn't a valuable customer to begin with. Valve can say they have 200 million active users but that doesn't mean a heck of a lot because my Steam account automatically logs in every time I turn my pc on.

 

[Godzilla24]

No offense, but you are wasting your time.

Click to shrink...

Yeah you're right.

 

[CoLD FiRE]

You still fail to understand that you don't need to increase userbase to increase engagement of the console.

Click to shrink...

Look who you're replying to. Microsoft could cure cancer and he would somehow find a way to turn that into a negative.

 

[Deleted member 862]

?

You had 80+ million consumers... they had now 35+ million consumers.

They are losing a lot of money with that.

I don't know how you run your business but in mine if I had 300 consumers but in a few years I lose 150 it will makes me lose a lot of money. Money that I will hate to lose and I will try to do everything to avoid that.

Click to shrink...

sticking with your analogy then what this is saying is those 150 people are spending more because they offer a different product.

It's not like 80m 360 consoles being sold meant 80m copies of Halo were being sold to 80m people.

 

[THEVOID]

?

You had 80+ million consumers... they had now 35+ million consumers.

They are losing a lot of money with that.

I don't know how you run your business but in mine if I had 300 consumers but in a few years I lose 150 it will makes me lose a lot of money. Money that I will hate to lose and I will try to do everything to avoid that.

Click to shrink...

But aren't they making more money this generation then last? So it's a moot point.

 

[ethomaz]

Yeah, that logic certainly holds up in some weird business school that doesn't exist.

Click to shrink...

It is called real world businesses.

You sell q lot more with little decrease in consumer spending resulting in way more revenue/profit. When you sell a product you can decrease the money coming from each unit to increase sales and overall have a bigger revenue/profit.

I do that every time.

I have a product selling 250 units per month at $31... I decrease its price to $25 to sell over 800 units per month (basically my month stock).

Engagement are products being sold.

You decrease a little the money coming from the engagement if you have twice the userbase but the overall revenue/profit will be way bigger.

 

[THEVOID]

Spin isn't about telling a lie, it's that they might be taking the result from lack of growth and presenting it as a positive. Say two console makers are perfectly tied in both sales and engagement, but one greatly expands their business into the casual crowd. The one that didn't expand could now brag that their players have the highest-engagement on average, but that was a result of not growing like their competitor.

That's not necessarily what happened here, without all the information we have to figure it out or guess, but there are some possible scenarios that aren't as positive as they may seem that can be covered with spin.

Click to shrink...

But didn't Matt say that in 2018 Xbox has been growing quite a bit? So it's not like they are stagnate and telling spins here. I'm pretty sure Xbox always had the highest-engagement even last generation when they both sold 80M units. It's not a spin.

 

[Stoopkid]

It seems to be a tough pill to swallow for a lot of people here that the Xbox business is growing constantly even though their hardware sales are lower than those of the competition.

Xbox One X will amplify this effect, no matter how many more PS4 Amateur Sony sells.

The pill will beome harder and harder to swallow in the future. Whoever calls a statement of the MS CEO (who is a genius) a spin not based on reality is embarassing themselves anyway.

Click to shrink...

 

[ethomaz]

But aren't they making more money this generation then last? So it's a moot point.

Click to shrink...

You can do the math of what they could be doing with bigger userbase.

It is not moot.

It is a big issue for MS business... they lose a lot of consumers and that migration and that made they lose money... they are doing everything to gain back these consumers because they want that money, they want that bigger userbase, they want recover what they lose.

No company will ever be happy with what they have today when they could have way way way more but lose it for a série of own mistakes.

 

[Kilgore]

Not saying that Xbox One will match sales of 360 but, why are people here comparing the installed base on year 8 of 360 with year 4,5 of Xbox One?

 

[Kaako]

It's all about how much profit you make even if you have 1 remaining user in the whole entire ecosystem. If that 1 user is giving you more money than your entire userbase last gen, then it's all good. Sounds like a bulletproof business model to me!
/s

 

[Yearsoflurking]

That's not how it works. Unless you think Ps4 also lost consumer in comparison to the Ps3 generation

Click to shrink...

Ps3 and ps4 is different products not sure what you're trying to say. Every console restarts at zero

 

[VallenValiant]

MS made the right business decision to hide their console sales numbers. Sony did the same back with the PS3.
Keeping the fandom engaged also involve making the ecosystem appear healthier than it actually is. And fans being fans, will assume the beat case scenario no matter how unlikely.
But I am still fascinated at fans who have so much conviction, as to genuinely think Xbox is actually in a superior position compared to its competitors.

 

[Deleted member 4518]

That's good news for Microsoft. If they use that extra profit to reinvest back into first party software, providing diverse experiences, they can grow that install base even further. GamePass and Backwards Compatability are great selling points — they just really need some new software that's super compelling beyond their core base.

 

[watdaeff4]

Not saying that Xbox One will match sales of 360 but, why are people here comparing the installed base on year 8 of 360 with year 4,5 of Xbox One?

Click to shrink...

At the end of the day, the 360 lost the company money and the XB1 will likely turn a profit. That is what investors care about.

That's good news for Microsoft. If they use that extra profit to reinvest back into first party software, providing diverse experiences, they can grow that install base even further. GamePass and Backwards Compatability are great selling points — they just really need some new software that's super compelling beyond their core base.

Click to shrink...

Yeah, it will be interesting to see if they do. I guess we will see.

 

[THEVOID]

It is called real world businesses.

You sell q lot more with little decrease in consumer spending resulting in way more revenue/profit. When you sell a product you can decrease the money coming from each unit to increase sales and overall have a bigger revenue/profit.

I do that every time.

I have a product selling 250 units per month at $31... I decrease its price to $25 to sell over 800 units per month (basically my month stock).

Engagement are products being sold.

You decrease a little the money coming from the engagement if you have twice the userbase but the overall revenue/profit will be way bigger.

Click to shrink...

Explain to me how Apple still controls 80% of the profits when Android beats them in sales by a very, very large margins. Consoles are a gateway to by more products through that product which neither Sony or MS see's any profits from. It's all about each of those users being engaged to buy shit.

 

[watdaeff4]

sorry double post

 

[melodiousmowl]

It is called real world businesses.

You sell q lot more with little decrease in consumer spending resulting in way more revenue/profit. When you sell a product you can decrease the money coming from each unit to increase sales and overall have a bigger revenue/profit.

I do that every time.

I have a product selling 250 units per month at $31... I decrease its price to $25 to sell over 800 units per month (basically my month stock).

Engagement are products being sold.

You decrease a little the money coming from the engagement if you have twice the userbase but the overall revenue/profit will be way bigger.

Click to shrink...

You literally have no clue what you are talking about. Engagement has an ancillary correlation to products sold. Its about how much time and money your customers are spending. And, as other have pointed out, your engagement numbers might tend to go down the more consoles you have out there because you might/probably dilute the base of users who have high engagement (that is spending time and money playing), ie., "filthy casuals".