Microsoft's full-year gaming revenues nearly flat for fiscal 2020

Minecraft, subscriptions, and COVID-19 saw content and services up, but hardware was down

[THC CELL]

Everyone saving for next gen
And new next gen ready TVs

[cesar4]

Yeah but if you believe vgchartz their actual console sales have been up yoy by double digit percent. So their actual revenue is down from that percent at 2%. So revenue doesn’t paint the picture you would expect.

[RazzerRedux]

I'm no fan of vgchartz, but where are they saying console sales are up? Their yearly change in sales shows Xbox down 11%.

"XOne 6,829,443 (-11%)&q uot;

https://www.vgchartz.com/ye...

[cesar4]

https://www.vgchartz.com/ar...

This link is what I was using which states a 23.9% increase in yoy sales.

Not that I particularly believe that. I think vgcartz is over tracking xbox to get them to 50m or something.

[Stanjara]

Retailers are selling their stock that they bought from Microsoft who knows when.

That's why shipped units means sold for manufacturer.

[Abracadabra]

Nobody "believes" vgchartz numbers... but everybody use vgchartz numbers to "prove" their point. LOL.

[bouzebbal]

xbox performing poorly in 2020 with 0 game available.. PS4 really strong with a massive number of big exclusives.

[RazzerRedux]

@cesar4

"This link is what I was using which states a 23.9% increase in yoy sales."

Yes, but those are year to date numbers. Microsoft is reporting fiscal year numbers. These periods overlap, but are not the same.

[alb1899]

It calls gamepass. That's the answer about sells declined on XBOX.

[Apex13]

What are you smoking? They totally messed up their momentum of the 360. They had a poor reveal of Xbox one and then had terrible exclusives/no games in the last couple of years, they had a 4 year head starry and got out sold by the Nintendo switch bin under 3 years. But hey, I guess people are saving for the next generation 🤣🤣 If XSX fails they wool be more focused on game pass as a service and step out of the hardware business and that may work out better.

[rainslacker]

Weren't other consoles selling out though? Or at least the switch was, and thought the PS4 saw a rise.

[jznrpg]

PS4 was sold out for awhile as they were selling on EBay for more than cost . Used prices also went up considerably . I’m not sure what the situation is now but it was like that for some time

[Abracadabra]

Did people read the article before commenting on N4G?
... most important question... did people actually understand what was in the article?

[Weapon_of_choice]

My body and LG C9 are ready.

[Father__Merrin]

They would be better off going software and services

[gamer7804]

Technically everyone would do better if they didn’t have the cost of hardware... they make their money off content and services mostly. But you need the hardware to sell your services. People still need boxes, and it will be that way for decades to come.

[Zulu]

So would Sony, console sales are a very small portion of profit, and that only occurs towards the end of a consoles life cycle. At the beginning both firms will be losing money on each console sale, so services and software are pretty much the name of the game for these company’s

[Nebaku]

You mean like when people said the same thing about Nintendo before the Switch?

[Stanjara]

But their hardware is great, their software sucks

[rainslacker]

They kind of are.

[Rocosaurus]

Would be very bad for competition.

[stuna1]

But nooooo, no one wanted to believe that gamepass is actually a money pit for not just Microsoft, but the industry as a whole! No one in their right mind could think gamepass is profitable in the sense that Microsoft is making lucrative income off of it.

[gamer7804]

Hello! Welcome to The Cloud! This is how these business models start off... Lol

[rainslacker]

Did you know that roughly 85% of new tech investment and ideas tend to fail?

Silicon valley tends to be a throw everything at the wall to see what sticks, with companies chasing after the next big thing, which is often just a reimagining of some other existing thing for a different market...say the netflix of gaming for a relevant example. 100 failures is usually chump change when the big one hits.

Its not to say itll fail, and of course MS has the financial backing in spades, just to say that tech business models tend to be highly unreliable.

[gamer7804]

@rainslacker i don't know about fail but the amount of success rate varies for sure with only a handful really taking off. i was at a hardware comapany that went to SaaS then all the way to cloud. some of our competitors failed, but ours took off and was bought by a huge corporation in Cali, so sure i know that it is a risk, but if you can have business model that involves reocurring subscriptions its great for finance, but only after several years because you don't have the giant up front sale, but continued sales over time.

[CaptainObvious878]

From a common sense perspective, it's hard to believe xgp can be sustainable, even in it's current form of very little exclusives, let alone AAA experiences.

Halo infinite cost MS 500 mil. How many years would it take for them to recoup that cost for that single game? Not to mention all their other dev teams that won't have any releases for maybe another 2-3 years and all the 3rd party subsidy they have to constantly pay

It's very clear quality is most likely going to have to suffer in order to make this profitable.

[fiveby9]

Bear in mind xgp excludes expansions and other mtx. So MS will increasingly rely on such additional purchases after someone subscribes to xgp.

[Ausbo]

They also still sell games on Xbox and on steam. It’s not an exclusive revenue stream.

[Christopher]

@fiveby9: First party games include all DLC, but not MTX. For Halo, they tend to allow all content for everyone but have MTX (cosmetic stuff you can buy) to offset the costs of getting everyone to have the same content always for MP. Gears 5 DLC is free on XGP, for example.

[crazyCoconuts]

We don't even know net income/ profit for the Xbox division, just revenue. They don't share the breakdown by division as far as I can tell. So they could be losing money and we wouldn't know it

[rainslacker]

Even if they showed a profit in an investor report, they may have lost money on it overall. Corporate profit is done by the quarter or year, so if they wrote off a hundred million the prior year, and then made 500K this year, it'd show a 500K profit....disregarding all other costs involved.

Allows for fancy accounting, but is probably how businesses have to operate. Usually only a problem when looking at liquid assets, or if debt was incurred.

[crazyCoconuts]

And there's the ability to capitalize certain expenses over multiple years. But at least if they showed the breakdown you'd be able to get some idea of the profitability of the division.

[rainslacker]

Yeah, there's a lot that goes on with corporate financing that wouldnt be good for the average person to try and do. Most people dont look at things in that scale, nor have enough money to make it worthwhile. Any capitalization tends to be on very specific things, and not thought of as capitalization.

I've always found corporate financing fascinating, but glad I dont have to deal with it personally. So long as my stocks pay their dividends and dont lose value I'm usually content.

[akurtz]

when something is subsidized for too long, it creates a bubble which will burst and the industry crashes. am i rite?

[Minute Man 721]

"Industry crashes"

Nah it won't.

Fun Fact : the video game crash in the 80s was only in America. It was going strong everywhere else

[rainslacker]

Probably not the whole industry. Its grown to big for that. A crash now would be very different than the one from 30 odd years ago, and would likely just be a bunch of companies shutting down or selling off. The consumer isnt likely to change their buying habits quick enough that much of the industry couldn't adjust.

[addictedtochaos]

Not surprising, no consoles to sell, (though that applies to Sony and Nintendo as well) game sales are undoubtedly down due to Game Pass, which Microsoft has stated isn’t making much money.

[anast]

That new halo 'cell-phone' game will surely turn things around.

[iagainsti120]

Surprised Pikachu face

[FightFans]

They should have making software for PS5, PC or Switch.

[QUIMICOMORTAL]

Who would have thought that abandoning support for a console that had already the worst exclusives lineup of the gen would result in no sales?

[Profchaos]

Next gen and they even discontinued current gen one X consoles so hardware growth to fall is expected. The real interesting stats are next year I think ps5 us currently trending higher in public perception so let's see

[rainslacker]

Think it was revenue, not actual unit growth. A drop in price would explain a drop in revenue, unless that drop saw a surge of buyers that made up the difference...which is what companies want to see when they drop price.

[shiva1]

Out of top 10 sold on steam there are 4 games from MS. So XGS is making money for MS elsewhere.

[Tyrant 8 RDFL]

I'am an XBOX guy, but I will admit they are really dropping the ball with XSX. I lost all hype I had for the system especially after the 7/23 showcase. Right now im leaning towards a gaming PC subscribing to gamepass, and for my console a PS5.