Microsoft Earnings Q4 2022

[Lord Mittens]

Haha my brother! Yes yes yes!

I caused @peter42O to have a craig style breakdown last night hahaha


Look how it took him the whole night to calm himself down and than come back with 50 paragraphs to you the next day to try and save face lmao

It's like what I said earlier, xbots are the worst because they try and pretend they are neutral when they are clearly not. While others are what they are with no hiding. Don't fall for his spiel and whole song and dance. xbots always play that game. It's so transparent. Never take someone for their word. Let them prove it with action.

Heres what he wrote in another xbox fanboy thread after what he told you.

The thread was:

"The many lies and failure under Jim Ryan leadership"

It was all a bunch of silly blatant FUD points grossly misquoting or misinterpreting Jim's statements, like for example the xbot FUD claim that Jim lied about "believing in generations." Jim was talking about the controller, loading, and technology etc. So Jim was spot on and couldn't have been more true to that word. The DualSense and PS5 SSD say hello! And to this day only PS5 has had true next gen exclusives like Returnal & Rift Apart, meanwhile the xbone has had ZERO. Leave it to xbots to ignore all context and nuance. The irony being that they were the ones lied to about having next gen games or having any games! Can we say stockholm syndrome?

It was also a bunch of other ridiculous things like "Jim aint a real gamer, or they dont care about Japan, or bu but 70$,"

and yet here was his response to that FUD thread



So as you can see, he's not sincere and has never been sincere. He ain't no Playstation fan, and has never been one. His very own posts make that clear. Remember, hold someone accountable by their actions, no matter what words they claim

So never let an xbox fan appeal to your sympathy or emotions, or run you their whole song and dance about how they are really just "neutral," and just speaking "truth"....yet they will never speak that truth when it comes to xbox

His 90 paragraph damage control to you basically comes down to:

"I was just trolling. I'm really just neutral, I promise"

He even let slip up that he posts on xbox-era lol, and anyone who knows, knows that that xbox resetera discord was a breeding ground for micorsoft shill FUD. Its game over for them now!

 

[thicc_girls_are_teh_best]

So since we got PlayStation's quarterly fiscal results today, and well Xbox's are already here, any guesses as to what the profit drop might've been for Xbox this past quarter?

Sony's went down by 30%, but we know a lot of the reasons why (lack of 1P software releases, lack of any big 3P software releases, people going outside more, Bungie acquisition completed, likely PSVR2-related costs as well). We can assume Xbox had some of the same factors (lack of 1P software releases, lack of any big 3P software releases, people going outside more), but they haven't completed the ABK acquisition yet and have no big new hardware in development set to release within the next six months, either.

I'm gonna go out on a hunch and say their profit drop (from whatever their profits were already at) actually wasn't as big as Sony's. Let's just say it was a 15% drop, 20% drop tops. And how about Nintendo? They don't have any 1P software budgets approaching Sony's marquee games (like GOW Ragnarok), BUT they might be readying a Switch 2 (or Switch "Pro") release soon within the next six months. Can't recall if they had any big 1P releases the past three months, but people going outside more doesn't impact them the way it does Sony & Microsoft due to Switch being very portable anyway.

Nintendo's profits for the quarter might be down too but it could be as little as 5% or as much as 15%, I guess. Anyone else got any guesses for Microsoft & Nintendo?

 

[Heisenberg007]

So since we got PlayStation's quarterly fiscal results today, and well Xbox's are already here, any guesses as to what the profit drop might've been for Xbox this past quarter?

Sony's went down by 30%, but we know a lot of the reasons why (lack of 1P software releases, lack of any big 3P software releases, people going outside more, Bungie acquisition completed, likely PSVR2-related costs as well). We can assume Xbox had some of the same factors (lack of 1P software releases, lack of any big 3P software releases, people going outside more), but they haven't completed the ABK acquisition yet and have no big new hardware in development set to release within the next six months, either.

I'm gonna go out on a hunch and say their profit drop (from whatever their profits were already at) actually wasn't as big as Sony's. Let's just say it was a 15% drop, 20% drop tops. And how about Nintendo? They don't have any 1P software budgets approaching Sony's marquee games (like GOW Ragnarok), BUT they might be readying a Switch 2 (or Switch "Pro") release soon within the next six months. Can't recall if they had any big 1P releases the past three months, but people going outside more doesn't impact them the way it does Sony & Microsoft due to Switch being very portable anyway.

Nintendo's profits for the quarter might be down too but it could be as little as 5% or as much as 15%, I guess. Anyone else got any guesses for Microsoft & Nintendo?

Sony's revenue stayed relatively the same (down by only 2%), which means any decrease in profits is mainly because of re-investment.

They specifically mentioned "increased game development costs", which means they invested a larger portion of the revenue in more games to be developed. In addition, there are acquisitions, new partnership agreements, timed exclusives and, most importantly, PS VR 2 (which, we know, is in full production right now).

They could have avoided that decrease in profit but decided not to. Good news for PS gamers.

On the other hand, I think the Xbox loss would be more severe. I'm saying this because 11% of PS software sales were first-party, which is huge! Because Xbox didn't release any new first-party games, and none of their latest releases charted either, that means they wouldn't have anything to set off the low 3P software sales.

Having said that, if they didn't invest as aggressively as PlayStation must have (strong possibility, IMO), the decrease in profit / loss, wouldn't be relatively lower than PS.

 

[IntentionalPun]

Sony's revenue stayed relatively the same (down by only 2%), which means any decrease in profits is mainly because of re-investment.

It's also because hardware sales are up, which boost revenue a lot, but lower your profit ratio.

 

[Savant]

I'm gonna go out on a hunch and say their profit drop (from whatever their profits were already at) actually wasn't as big as Sony's

That's very very wishful thinking my dude lol

xbox testified in court in the apple vs epic case that xbox has never made profit in its history

If i recall Sony still made 4billion in profits this quarter, which is very good. It's just not as much as last quarter. And being only 2% down in revenue means they simply had more expenses this quarter

 

[Savant]

I talked about that a few weeks ago

How based on Sony's May 10 earnings report, they were planning to reinvest profits back into 1st party studios

So this quarter makes sense and puts things in a much better light. The Playstation division is actually reinvesting its profits back into Playstation. Yes, that means u will see a "loss of profits on paper" but it means more resources being pumped back into Playstation to make larger profits the next quarter and so on

Sony is being very smartly ran and is in terrific position right now

30billion dollar budget for aquistions and capital etc

Playstation 1st parties not being neglected and still receiving investments via profit from Playstation being reinvested back into Playstation

Everything is a well oiled machine which is going to keep pumping and pumping and expanding

Etc

 

[Heisenberg007]

It's also because hardware sales are up, which boost revenue a lot, but lower your profit ratio.

Not for Sony though. They have been making profit per PS5 unit sold for the last 12 months if I recall correctly.

 

[thicc_girls_are_teh_best]

On the other hand, I think the Xbox loss would be more severe. I'm saying this because 11% of PS software sales were first-party, which is huge! Because Xbox didn't release any new first-party games, and none of their latest releases charted either, that means they wouldn't have anything to set off the low 3P software sales.

Having said that, if they didn't invest as aggressively as PlayStation must have (strong possibility, IMO), the decrease in profit / loss, wouldn't be relatively lower than PS.

Good point on the 1P sales ratio; their peak is still FY 2020 @ 18.5% and I'm guessing they're hoping to perhaps meet or exceed that this FY 2022, I think they have a good chance if GT7 remains evergreen and HFW keeps getting some traction (maybe with some new rollout of ads now that's gotten so many updates), and especially with GOW Ragnarok.

We know MS aren't really investing into AAA games the same way Sony are, I even kind of doubt games like Starfield have a budget over $50 million and other games like RedFall are well short of that costs-wise, too. The only hardware they have rumored in development are the streaming "stick" (maybe it's a puck or a box instead) and a cloud-based handheld, the former further along, but right now costs for both would only be in R&D because neither are close to going into certification, let alone mass production, ad campaigns for rollout or anything like that.

But counterbalancing that with the portion of software of MS's being 1P, as you brought up, and the fact some games are probably down on MTX/DLC sales due to being in really poor shape (Halo Infinite), yeah it's possible MS's Xbox profits are down quite heavily this quarter as well.

That's very very wishful thinking my dude lol

xbox testified in court in the apple vs epic case that xbox has never made profit in its history

If i recall Sony still made 4billion in profits this quarter, which is very good. It's just not as much as last quarter. And being only 2% down in revenue means they simply had more expenses this quarter

That's Sony and not SIE, right? I think annually Sony generally averages something like $20 billion in profit so per quarter they'd want around $5 billion.

If they fell short this FQ1 2022 and it was due to lack of big releases and lack of PS5s, both of those issues will correct themselves this quarter & next given what's right around the corner and supply looking on the up and up.

Not for Sony though. They have been making profit per PS5 unit sold for the last 12 months if I recall correctly.

Last I heard they were making profit off the disc version PS5 and that was probably a year ago if not even sooner. On its own the digital PS5, at least for the first year, was being sold for a loss and they weren't making money off of just the sales of it alone, but that could have changed at this point.

Tho, it's always seemed like the digital PS5s were in very small supply regardless. Like, comically small ratio compared to disc PS5 units early on. I don't know how the ratio split looks like now between the two models.

 

[Savant]

Not for Sony though. They have been making profit per PS5 unit sold for the last 12 months if I recall correctly.

Yep

https://www.gamesradar.com/ps5-is-no-longer-selling-at-a-loss/

Last week, Sony held a Q1 financial briefing for investors, to mark the period of the year ending July 30. Within this online broadcast, Sony CFO Horiki Totoki revealed that the PS5, which retails for $499/£449, was no longer selling at a loss, finally breaking even after going on sale in November 2020


Since July 2021, PS5 disc has not been selling at a loss

@thicc_girls_are_teh_best

 

[Savant]

That's Sony and not SIE, right? I think annually Sony generally averages something like $20 billion in profit so per quarter they'd want around $5 billion.

If they fell short this FQ1 2022 and it was due to lack of big releases and lack of PS5s, both of those issues will correct themselves this quarter & next given what's right around the corner and supply looking on the up and up.

Yeah, you're right

Playstation made 4billion profit in the quarter I think. That's what I read. But if I'm wrong feel free to correct me. Still very good, but than you have expenses etc. Preparing to launch PSVR2. Profit being reinvested back into Sony 1st party studios etc.

On another note, this quarter was basically the legs of Horizon & GT7 accounting for 14% of all games sales in the quarter. Thats just insane. I don't think people still understand just how actaully impressive that is. Playstation had a good quarter. Theres a reason Sony is so transparent (while microsoft hides everything lol)

Also, Sony music and Sony movies did phenomenal and shattered expectations.

Does anyone have any info on how Sony insurance did?

 

[Heisenberg007]

Last I heard they were making profit off the disc version PS5 and that was probably a year ago if not even sooner. On its own the digital PS5, at least for the first year, was being sold for a loss and they weren't making money off of just the sales of it alone, but that could have changed at this point.

Tho, it's always seemed like the digital PS5s were in very small supply regardless. Like, comically small ratio compared to disc PS5 units early on. I don't know how the ratio split looks like now between the two models.

I think a 4:1 or 5:1 ratio for disk:digital is a safe bet.

Assuming they even make $20-$25 profit per PS5 disk edition (which one after one year of breaking even is a very safe assumption), that would be enough to set off any loss they would be making for selling the PS5 Digital Edition.

PS5 Disc profit = $25
PS5 Digital Loss = $75 per unit (assuming COP is $475)

They will only need to sell 3 Disc editions for every Digital edition to break even.

 

[Yurinka]

Sony's revenue stayed relatively the same (down by only 2%), which means any decrease in profits is mainly because of re-investment.

They specifically mentioned "increased game development costs", which means they invested a larger portion of the revenue in more games to be developed. In addition, there are acquisitions, new partnership agreements, timed exclusives and, most importantly, PS VR 2 (which, we know, is in full production right now).

These "increased game development costs" basically mean a lot of people getting hired in previously existing 1st party teams, new deals & partnerships signed (2nd party publishing deals, 3rd party total/timed/console exclusivities for PS5 & PSVR2, deals to put games in PS+ or PSVR2, maybe some deal to bring PS Studios games to PC and mobile) and some Haven & Bungie acquisition costs (even if the big chunk of the Bungie acquisition will be booked in the next quarter).

The other main reason Sony mentioned in addition to "increased game development costs" for the decrease in profitability is that this quarter the 1st and 3rd party releases have been weaker than in the previous year. In 1st party they had MLB like last year, but that's all when last year they also had Returnal, Ratchet and Days Gone PC and there were several big 3rd party releases like RE Village.

 

[thicc_girls_are_teh_best]

Yeah, you're right

Playstation made 4billion profit in the quarter I think. That's what I read. But if I'm wrong feel free to correct me. Still very good, but than you have expenses etc. Preparing to launch PSVR2. Profit being reinvested back into Sony 1st party studios etc.

On another note, this quarter was basically the legs of Horizon & GT7 accounting for 14% of all games sales in the quarter. Thats just insane. I don't think people still understand just how actaully impressive that is. Playstation had a good quarter. Theres a reason Sony is so transparent (while microsoft hides everything lol)

Also, Sony music and Sony movies did phenomenal and shattered expectations.

Does anyone have any info on how Sony insurance did?

I know someone's had to of looked through the report for the Insurance section numbers, but they're likely quite good. That division's always been pretty strong.

People are definitely underestimating the long-term "slow-roaster" sales for HFW and GT7, or a lot of Sony's 1P games really. Well, by "people" I just mean a few folks around places, but I've seen some wild comments, mainly directed at the bundles. As if people are being forced to buy them, like they had no desire to play the games otherwise.

Like, that's just not true. For one the bundles are priced slightly higher so the people buying them have to pay for the cost of the included game anyway. If they really had no desire for the game, then fine but I doubt the majority buying the bundles are disregarding the pack-in games. I don't know if the people trying to make up the "forced bundles" argument realize it's flawed because the included games from Sony act as their way of the included trails for GamePass Microsoft includes with Series X & S units, or what they do with the All-Access program.

It's the exact same strategy, only one is with a service and the other is with specific software. They're meant to add value in both cases, consoles have done it since the 16-bit era.

I think a 4:1 or 5:1 ratio for disk:digital is a safe bet.

Assuming they even make $20-$25 profit per PS5 disk edition (which one after one year of breaking even is a very safe assumption), that would be enough to set off any loss they would be making for selling the PS5 Digital Edition.

PS5 Disc profit = $25
PS5 Digital Loss = $75 per unit (assuming COP is $475)

They will only need to sell 3 Disc editions for every Digital edition to break even.

That's not a bad ratio at all, then, and it might match the portion of the buying base who are into digital to the point they have zero regard for physical. I think for the majority who do buy digital, they still have some regard for physical so they would lean to the disc version. 3:1 sounds like a good balance with that taken into consideration.

Is it possible Sony could be making even bigger (slight) profit off the disc models at this very point? Rumor has it they're shifting at least some portion of systems to 6nm which is cheaper than 7nm. They might also have made some further internal revisions of certain components for costs & weight reasons. Nothing drastic individually but added together could probably help increase profit margins on disc models and even make the Digital Edition cheaper to manufacture.

I'd guess Microsoft are taking some similar measures; anything to shave off some of the costs. Although I don't think there's a lot of room for that with Series S tbh; Series X should have more room in that regard, but BOM production costs for Series S might be tapped or near the tapping point. But really, I'm just hoping Microsoft, Sony & Nintendo don't decide to increase the MSRP of the consoles like Facebook/Meta have with Rift 2 :/

These "increased game development costs" basically mean a lot of people getting hired in previously existing 1st party teams, new deals & partnerships signed (2nd party publishing deals, 3rd party total/timed/console exclusivities for PS5 & PSVR2, deals to put games in PS+ or PSVR2, maybe some deal to bring PS Studios games to PC and mobile) and some Haven & Bungie acquisition costs (even if the big chunk of the Bungie acquisition will be booked in the next quarter).

How do you see the rest of the Bungie acquisition costs affecting the FQ2 2022 results?

 

[Yurinka]

How do you see the rest of the Bungie acquisition costs affecting the FQ2 2022 results?

Part of the acquisition will be there, other will be spread over multiple years. I think in Q2 pretty much will eat the profits partly compensated with extra profit from Bungie (if they already add their revenue and profit there) and a PS+/network services revenue increase. But I think there aren't major releases during Q2 for 1st or 3rd parties, which I assume will be the major reason of a revenue and (combined with acquisition costs) profit decrease YoY. I think hardware sales may be flat, slightly up YoY. I don't expect a noticiable increase of HW sales until Q3.

But well, they didn't buy Bungie for a quarter. They have a bunch of workers but Destiny 2 will continue making money and specially their upcoming multiple new IPs (the next one can be released in 2023 or 2024) will give Sony a ton of money in the future.

 

[IntentionalPun]

Not for Sony though. They have been making profit per PS5 unit sold for the last 12 months if I recall correctly.

Their profit RATIO goes way down. Hardware becomes a much higher percentage of their revenue, and it's essentially "break even" or small profit on it.. whereas stuff like their 30% cut from Fortnite is like all profit lol that's how you end up with revenue being fairly stagnant while profit goes down quite a bit.

 

[Heisenberg007]

Their profit RATIO goes way down. Hardware becomes a much higher percentage of their revenue, and it's essentially "break even" or small profit on it.. whereas stuff like their 30% cut from Fortnite is like all profit lol that's how you end up with revenue being fairly stagnant while profit goes down quite a bit.

True, that happens, but in that case, we'd be looking at significantly higher console sales to compensate for the loss of revenue in MTX and 3P software sales, and we know that did not happen.

In this quarter, Sony sold 2.4 million PS5 units sold. Last year same quarter, they sold 2.3 million, while they sold 2.0 million in the previous quarter, so it's basically the same amount.

So if the revenue has the stayed the same, and the number of consoles sold is also the same (while staying profitable), we can say with certainty that it's not the console sales that caused the decline in profit.

Bungie's and Haven's acquisition, PS VR 2 production, more partnerships for VR and non-VR games, and increased development costs (confirmed by Sony) are the more likely catalysts here.

 

[Heisenberg007]

That's not a bad ratio at all, then, and it might match the portion of the buying base who are into digital to the point they have zero regard for physical. I think for the majority who do buy digital, they still have some regard for physical so they would lean to the disc version. 3:1 sounds like a good balance with that taken into consideration.

Is it possible Sony could be making even bigger (slight) profit off the disc models at this very point? Rumor has it they're shifting at least some portion of systems to 6nm which is cheaper than 7nm. They might also have made some further internal revisions of certain components for costs & weight reasons. Nothing drastic individually but added together could probably help increase profit margins on disc models and even make the Digital Edition cheaper to manufacture.

I'd guess Microsoft are taking some similar measures; anything to shave off some of the costs. Although I don't think there's a lot of room for that with Series S tbh; Series X should have more room in that regard, but BOM production costs for Series S might be tapped or near the tapping point. But really, I'm just hoping Microsoft, Sony & Nintendo don't decide to increase the MSRP of the consoles like Facebook/Meta have with Rift 2 :/

Yeah, and I was honestly being very conservative with that ratio. Data suggests that it is way more aggressive in favor of the Disk edition (which means even more operating profit for Sony).

If we look at the split in the latest Famitsu report, the ratio is 7:1. We can extrapolate it to the rest of the world.

PS5 Disk = 9,804
PS5 Digital = 1,390
Ratio = 7.05

 

[Gediminas]

there could be numbers of things why profit is down. but if other numbers are similar, and revenue is almost the same. most probably they re-invested profit back to playstation - marketing, developing or expanding. either way it is good. that means good things going on and will keep going on.

 

[thicc_girls_are_teh_best]

Part of the acquisition will be there, other will be spread over multiple years. I think in Q2 pretty much will eat the profits partly compensated with extra profit from Bungie (if they already add their revenue and profit there) and a PS+/network services revenue increase. But I think there aren't major releases during Q2 for 1st or 3rd parties, which I assume will be the major reason of a revenue and (combined with acquisition costs) profit decrease YoY. I think hardware sales may be flat, slightly up YoY. I don't expect a noticiable increase of HW sales until Q3.

But well, they didn't buy Bungie for a quarter. They have a bunch of workers but Destiny 2 will continue making money and specially their upcoming multiple new IPs (the next one can be released in 2023 or 2024) will give Sony a ton of money in the future.

Maybe TLOU1 Remake technically counts as a major 1P release for Q2? Outside of that though yeah I don't think Sony has anything until GOW Ragnarok and that is Q3.

I actually think hardware sales will be at least slightly up; the supply was a lot better in NA for June, and it's generally been stabilizing into better supply in all territories, Japan is another one. The only reason hardware sales might be only slightly improved (or modestly improved) is because Sony may be holding off on the bulk of new stock for Q3, especially for territories like NA and most of Europe.

I mean they have that 18.3 million forecast for FY2022 and the still have 15+ million to go to hit it in 9 months. Even with an even split for all three remaining quarters, they should be able to do more than 2x hardware numbers for Q2, Q3 and Q4. Even if Q3 gets majority of the remaining stock, things would have to go wrong for Q2 hardware sales to be flat (but I'm also going off rocky memory for FY2021 hardware numbers which I think were ~10 million, right? Maybe a bit less? I saw you post some charts in the Sony fiscal results thread with FY2021 quarterly hardware figures but I haven't looked at them in days).

Yeah, and I was honestly being very conservative with that ratio. Data suggests that it is way more aggressive in favor of the Disk edition (which means even more operating profit for Sony).

If we look at the split in the latest Famitsu report, the ratio is 7:1. We can extrapolate it to the rest of the world.

PS5 Disk = 9,804
PS5 Digital = 1,390
Ratio = 7.05

Yeah that ratio split is why it's always somewhat felt like the Digital Edition was for marketing/bragging purposes; clever and it worked, and there's definitely demand for that version. But 7:1 is a heavy drowning for Digital

I'm basically forced to get the Disc one due to data cap worries, but I know Digital Edition ratio would be bigger in places like Japan (where they have great internet and none of the data cap BS, AFAIK) if the actual number of DE systems were larger. Though I think maybe the convenience of physical is understated (by outsiders) in countries like Japan as well, at least for console gaming.

 

[Remember_Spinal]

Maybe TLOU1 Remake technically counts as a major 1P release for Q2? Outside of that though yeah I don't think Sony has anything until GOW Ragnarok and that is Q3.

They have TLOU remake and two Spider-man PC ports and they will be reporting their bungie revenue