Microsoft reveals how much money (revenue) Game Pass actually make
- Thread starter Lord Mittens
- Start date
as usual its funny too see the usual xbox zealots try to paint revenue as profit
I'm sorry but I'm not aware of Microsoft's accounting practices, however what you described is done aplenty in the business world. Say you're in the business of hardware and software sales. You report on your hardware and software sales at full price to boost your revenue, then include the discounted amount as a business expenses, a lot of times under "other expenses" so as not to clearly report on it. They may also include those "other expenses" on "server" or "manufacturing" costs, for example.
From an accounting standpoint the operating income should be the same, so you're not "fudging" numbers, but it helps to sell a narrative to your investors.
Assuming the numbers they provided are reported with the methods above, they would have to have averaged 24M gamepass subscriptions at $120 per subscription during 2021, which goes against the number reported here.
I think @thicc_girls_are_teh_best hit the nail in the head when they said the gamepass revenue part could includes DLC and MTX revenue as well.
As for the hardware side of things, I'd love to see a breakdown of consoles vs hardware and peripherals. If we assume an average of $350 per console sold and for that revenue to be console exclusive, they'd have sold 10.5M consoles in 2021. My guesstimate would be at least $500M for revenue related to peripherals, which would put console sales at a maximum of 9M at the same average.
Sony reported on FY22 around $1.3B in "others" for their Playstation sales, which report on peripherals, PS VR and software on other platforms (PC), for example.
Not if you are a big company and you are required to have an audit certificate. IFRS can be very creative, BUT, income under services credit group 73 and debit group 30. Under no circumstances expenses (group 6) are involved when providing services (as opposed to providing ONLY product samples which credits 78 and debits 64), plus selling to customers includes VAT (even if it's a dollar), so we are talking for tax evasion, which does NOT happen this blatantly.
Investors do not care less about those but mostly ratios and long term profits.
Both subscriptions at this point are a buble about to burst. This is the best they are both gonna get, we get immense value (if you have the time to play them).
I personally dislike them both, at some point we are gonna get tight budget games that are solely for these services. Kinda like Apple Arcade or the majority of those crappy netflix movies.
But the ratios are based on total revenue. And if total revenue is inflated with practices like these (which happen), so do the ratios, which may influence investors' decisions.
Note that this is all within legal confines, so there's nothing illegal here. Just an accounting practice that doesn't always relay the full, transparent picture.
Not really. Ratios can be on whichever two numbers you want to compare. Cash reserves to loans, cash to cheques, suppliers to clients etc.
In any case, revenue alone says jack shit about the survivability of a service or a product. The good part about this is that whatever happens, on the next month MS is gonna have another aproximate $241million as a revenue of prepaid service because of the best part about this: these kind of services have an anelastic slow reaction response from the market.
I trust this guy though: https://gametiptip.com/xbox-game-pass-isnt-exactly-profitable-at-the-moment/
Lol, basically its not making profit. no actual profit numbers. I know some of people who sub to xbox for much lower than the normal price, so not buying into it.
Considering they spent 80-90+ billion the last decade ( Minecraft, Studio acquisition and Bethesda/Activision), i doubt not making profit on gamepass matters right now, they just want to squast the competition.
Whats the easiest way to do that, do something something the competition cant afford, lose money until you control the market.
Considering they spent 80-90+ billion the last decade ( Minecraft, Studio acquisition and Bethesda/Activision), i doubt not making profit on gamepass matters right now, they just want to squast the competition.
Whats the easiest way to do that, do something something the competition cant afford, lose money until you control the market.
Lets use common sense here lol. Revenue alone does not paint the picture of how good a company is doing if not attached to info on expenses. You can have a revenue of 3 billion but if you spend 4 billion on expenses you are seeing no profit and digging a hole for yourself. It's like seeing a monthly management report and in the bank the company has 1mil and everyone is like "wow thts good" but what they fail to realize is that they haven't looked at the "unpaid bills" portion which sits at 2 million and is money they owe.
Revenue seems good but everytime we hear numbers it's always revenue and we never get profit info which is telling in itself. Some of the deals to get games on gamepass have cost hundreds of millions and that adds up fast.
Netflix started the same way (losing money) but in the last few years they have been turning a hefty profit so it pays off of done right This year they turned a 5 billion net profit. Let's see how this turns out for Microsoft.
Revenue seems good but everytime we hear numbers it's always revenue and we never get profit info which is telling in itself. Some of the deals to get games on gamepass have cost hundreds of millions and that adds up fast.
Netflix started the same way (losing money) but in the last few years they have been turning a hefty profit so it pays off of done right This year they turned a 5 billion net profit. Let's see how this turns out for Microsoft.
In my opinion they know how to manage the tech, the service part of gamepass. Just like the rest of the enterprise division. When it comes to art form, creativity, and consistency in their management of projects/studios they have no clue.
Partly because the division has never understood what it means to strive for artistic excellence. Also don’t run Xbox with a entertainment mindset like Sony(entertainment, film, consumer electronic company), and Nintendo (toy, entertainment company).
Gamepass will definitely be a force to recon with. But if they don’t change the way they manage content they will have the same issues Netflix has. And damage the landscape in the process by buying up the industry and not striving for excellence first profit second.
Why do any of you care about profits 
1. It’s normal for these services to be loss leading for years to build a subscriber base.
2. It’s fucking Microsoft, they can afford it.
3. It creates insane value for gamers.
I’m not surprised to see the FUD and downplaying here or on GAF, but I’ll never really understand that type of warrior mentality.
1. It’s normal for these services to be loss leading for years to build a subscriber base.
2. It’s fucking Microsoft, they can afford it.
3. It creates insane value for gamers.
I’m not surprised to see the FUD and downplaying here or on GAF, but I’ll never really understand that type of warrior mentality.
Boasting about making cash like. Phill gonna roll out on stage in his Rolls, covered in gold chains like it’s 1980’s Mr T
That’s it? Just revenue too.
No wonder they hardly talk about gamepass numbers.
No wonder they hardly talk about gamepass numbers.
If I bought 3 years of Gold on 1 January 2022 then assuming no other sales and expenses revenue would be $60 for 2022 (with $60 per year prepayment for 2023 and 2024)
Now if I upgrade by 1 dollar to 3 years gamepass on 1 January 2022, MS now has sales of $240 (Gold & Gamepass) with another $180 prepayment per year carried forward for 2023 and 2024.
Now the 2022 Gross Sales figure is $240. The net sales figure is $240 - $60 = $180 (sales returns of gold for 2022)
Expenses:
Discount allowed for 2022 is $180 - $60.33 (1 dollar divided by 3 years and gold paid for 2022) = $119.67
Gross Profit/Loss : $60.33 profit
Rinse and repeat the next 2 years
These revenue figures just show there were 16m monthly subscribers on average in 2021.
@Yurinka is right here.
The chart is about all revenue with subscriptions that is why it includes even Nintendo.
So in MS case it is counting Gamepass and Live/Gold/Ultimate/XCloud or whatever paid subscriptions related to games MS have.
But the key question is how much they spend with royalties and upfront payments with games for Gamepass in 2021.
The chart is about all revenue with subscriptions that is why it includes even Nintendo.
So in MS case it is counting Gamepass and Live/Gold/Ultimate/XCloud or whatever paid subscriptions related to games MS have.
But the key question is how much they spend with royalties and upfront payments with games for Gamepass in 2021.
Why do any of you care about profits
1. It’s normal for these services to be loss leading for years to build a subscriber base.
2. It’s fucking Microsoft, they can afford it.
3. It creates insane value for gamers.
I’m not surprised to see the FUD and downplaying here or on GAF, but I’ll never really understand that type of warrior mentality.
I'd argue that it doesn't create any value for gamers, the same way Playstation Plus Extra and above don't. These services create the perceived notion of value but they simply have the user not own the games they play. They also have the added bonus (not a positive one) of devaluing gaming as a whole, pushing developers to rely more on microtransactions (since they're not making as much money by putting their games day 1 on subscription services). IMO I don't see having more and more freemium games with lower budgets as being valuable to me as a consumer.
This service model worked so well for other companies that older streaming services are downsizing or adding other sources of revenue, including paid ads on a paid service that was supposed to be ad free (netflix). Services like these are not designed to be profitable while growing and offering you the world, they are designed to capture market share and then extort the user when there's little to no choice. That's when they become profitable, like Netflix, which is an absolutely horrendous service nowadays.
As for FUD, you're the one crying about it. People are rightfully mentioning that while MS released data on revenue, they failed yet again to disclose profits or losses. You are more than welcome to join the discussion.
Plus server costs. They own Azure, but they still need to increase Azure's running costs to offset the higher capacity needed for the service.
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Yeah agreed. The other thing I think people forget is that going forward you will see people subbing on and off the service between big releases. That means it won't always be easy to predict what actual profits are going to be.
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peter42O
Guest
I completely agree with you but before Microsoft gets to that level of excellence, they need to be good and great first. I do believe that they're currently good and getting closer to being great but like everything, it takes time. Sony didn't give you the excellence of PS4 during the PS/PS2 generations outside of God of War. It took them generations to get where they are. I know that Xbox has existed for 21 years but let's be honest, compared to 2018 to present day, Microsoft were never all in like they are now.
For me personally, im not expecting Microsoft to be at Sony's level this generation for their exclusives. I see this generation for Xbox as closer to what Sony had with the end of PS3 and the PS4 generation. Building the excellence for future generations. While majority here would obviously disagree with me, Halo Infinite (campaign only) was my 2021 game of the year so they've already surpassed the Xbox One generation for me personally as they didn't give me a single game of the year. The last one I had was 2009 with Gears of War 2. If you want to just go based on exclusives, then it would be 2010 with Splinter Cell Conviction.
Point being is that at least for me personally, they're already starting off better than I expected or anticipated and we're only two years into the generation. I'm expecting at least one more game of the year from Microsoft this generation to where as long as I get at least two minimum, it would match what I had with Xbox 360 and anything else would be a bonus. I do believe that there will be games that could be my game of the year getting released in the same year (like potentially Hellblade 2 and Fable in 2024 as an example) to where one gets knocked off by simple process of elimination.
We'll see how this generation continues to play out but as an Xbox fan, I haven't been this excited or confident with Microsoft and Xbox since 2010/2011.
As for the creativity and whatnot, this is much more known and seen with Indies and whatnot than AAA games because the monetary risks are just too high. I do believe that Microsoft will have more creativity and whatnot due to Game Pass because they're no longer bound to being required to sell a set amount of copies to break even and turn a profit. I look at a game like Pentiment and that's absolutely creative. Granted, not the type of game that's for me but I can say looking that game over, I don't recall seeing anything quite like it especially in the artistic choice and style.
It's simply going to take time for Microsoft to get where they want to be. It's not going to happen overnight.
This comes down to each individual person and what their preferences are. I don't own a single physical game from any generation. I stopped collecting games during the Xbox 360 era because I realized that when I had a collection, I would never play anything. It was fucking weird. Going one game at a time though is great because I can fully concentrate and focus on the game im playing and once completed, trade it in and move on to my next new game.
While I won't be playing A Plague Tale Requiem until January, being able to just play and complete it for a $10 monthly rental via Game Pass is simply worth much more than me owning the game that im most likely only going to play once anyway and all seeing it on my shelf would do is piss me off due to the fact that it would literally decrease in value with every passing day.
So while I fully understand what you're saying and your point of view, it simply doesn't apply to every individual gamer.