No he isn’t. Do the math yourself. It checks out. No need to pretend math stops working just because he based his claims on stupid assumptions. And your own math doesn’t work btw…$70k/employee for 320 employees across 6 yrs isn’t $70mil.
Worth reiterating
- Netflix, a dvd rental startup company has a streaming service and is now worth more than double Sony entirely.
- Disney has a streaming service (two cos Hulu)
- Amazon has a streaming service
- Warner Brothers has a streaming service
- Paramount has a streaming service
- Universal has a streaming service
- CNBC has a streaming service
Sony, the champion of physical media does not. If they are behind - to massive detriment - the times in film and tv, why expect a cutting edge response to gamepass?
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Very good point. They have built their business around being incentivized not to follow this route. It won’t be easy for them to pivot anytime soon.
Omg.
Ok
For a $120million game with a dev time of say 3yrs That would be $40 million a year
So to break even on just that one game a sub service would need 333,333 subs just to break even on that game, obviously thats not how game sub services work, more games are needed so more subs would be required, but not anything like laydens 500million subs would be required. Even with the current 25 million gamepass subs and $3 billion/year revenue multiple $120million games oer year are possible on service at a profit, within reason.
As for outriders dev costs, marketing, epics cut, rent etc etc also add to the overall dev cost. But outriders dev costs is not part of the conversation anymore, so it odd you keep on bringing it up, it just seems you’re bringing up as a “gotcha” attempt. But even if my figures are wrong, you really think outriders was not in the ballpark of $50-100million? Its not even on the same level as saying 500 million subs is required to make $120million viable.
The assumptions made by Layden ignore significant details.
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ignore the substantial discount available to Microsoft in paying upfront (with overs probably).
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ignores that gamespass strategy is to be the exclusive subscription service, but non-exclusive platform. Games don’t need to recover there whole cost on the service (even first party titles)
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ignores tax treatment available for first party games. Any losses on first party titles are almost certainly written off as marketing expenses to minimise tax liabilities
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ignores the substantial local server presence that supports gamepass and xcloud. MS likely gets a discount from server for these services.
All of the above substantially reduce the costs of gamepass to Microsoft
My additional 2 cents,
Microsoft has an opportunity to provide and operate live service and episodal games in a very different way then the rest of the industry. I suspect they will move to more stand alone expansions between big releases to increase releases without increasing costs. This is telegraphed by halo, which ms has described as 10 year game, by decoupling multiplayer and campaign releases by making multiplayer FTP. Expect additional shorter standalone campaigns, as the basis for the next two to three years of seasonal content in the multiplayer.
With respect to xcloud, I wouldn’t underestimate the potential for other sources of revenue for xcloud hardware. Game streaming is a very peaky service, with large demand in the evening and low demand in the morning and day time. Combined with game streaming being location sensitive, Microsoft will have to substantially over build their streaming hardware. This provides an opportunity to make significant secondary revenue selling servers or other location sensitive services.
It’s my belief that this hardware is also the foundation for their windows 365 service, which will be a daytime peak. It’s entirely possible they make more cash of the secondary services then the game streaming.
Anyways, every one is overestimating MS’s cost and underestimating their opportunities.
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This only works if you don’t sell games anymore. They still do, more than ever. So using subs only maths is pointless.
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Thats true, but even it was only subs his math dont make sense, $5 billion/month is not necessary to make gamepass style services viable, not saying u dont know, but it needs to be repeated because some people are denying this fact.
Your claim was that Outriders (a team with 320 ppl) at $70k/yr for 6 yrs of dev time was $70mil. I’m saying that is not correct math. I’m just using your own numbers that you assure us aren’t pulled from your ass. do the math yourself and you get north of $130mil for the game given what you imagined were sensible figures to use.
This isn’t a “gotchya” moment. It’s about calling someone out for accusing Layden of making up numbers out of thin air while they themselves literally made up figures out of thin air in the exact same post, lol.
I laid the math Layden likely was using already. The problem is not his math, it is his model. There is a difference (a big one). Bad assumptions underlying his premise is the issue, not his arithmetic.
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Literally zero ppl are denying that fact, lol. You just suck at reading what you are replying to beforehand.
I never said it was based 320 workers over six years. Outriders started in 2015 when pcf had 40devs, square wanted them to be more ambitious so they grew to 200+ devs to make the game, now in 2021. But it was an estimate, and its accuracy is not important to the point I was making, even if outriders was $140 million my point would still stand.
I never said layden made numbers out of thin air I just said they are wrong, which they are…
My outriders estimation is actually grounded in reality unlike laydens claims, which are way off.
“Layden was likely using” Now this is pure horseshit, you dont know what layden likely meant, its just something you added, and what you added makes zero sense from a business perspective anyway.
No, his math is wrong, because if it were correct he wouldn’t think 500million subs is necessary for a $120 million games, you are literally denying reality at this point, lol.
And Tavish I aint gonna stop on this, most people in this room can see you are incorrect so stop continuing to embaress yourself.
Well you were when you said this
“His math isn’t as broken as everyone thinks”
To think a sub service needs $5 billion/month, then his math must be really broken.
And you can think layden meant this or that, it makes no difference to what he actually said.
So, no I dont suck at reading, you just suck at thinking.
I think Shawn fails to understand the concept of gamepass being an optional service.
Guess what. Stsrfield yes will be a 150m dollar game on gamepass…BUT IT WILL BE SOLD SEPERATELY. It will still make money being sold as a 60 dollar game
Amazing how people fail to grasp this concept. Gears 5 still sold millions and made profit from its raw sales alone despite being on gamepass.
Believe it or not people still buy games. Even if its on gamepass.
You claimed his math was wrong like many others. It isn’t. It checks out. This is not debatable. Arithmetic is not up for debate. What everyone agrees is that his underlying assumptions behind where his figures come from is dumb. That is not the same thing as making his figures up out of thin air, which you are accusing him of when you claim his math ‘doesn’t make sense’.
And the dev team had 320 workers during development of Outriders. They ha 40 workers when making the prototype but not in actual development. And if you use 40 workers your math doesn’t work either.
You just made up your numbers out of thin air which is worth calling out when you are making claims about Layden. I’m not worried the accuracy of your guesstimate, I am annoyed that you accuse ppl of making up numbers and then immediately make up your own numbers as if that contributes to the thread topic at all.
It isn’t mysterious where Layden got his figure from. The core issue isn’t some “miscalculation” as you foolishly insist, rather it is how out of touch/siloed Layden’s assumptions are. The notion that the bean counters at Sony never actually did the math here is naive. They did. We know they did. Jim Ryan and Layden both show us that.
How does his math check out when he is claiming that 500 million subs would be needed In order to recoup a $120 million investment?
333,333 subs would be needed for a 120million
Heres my math 120,000,000 ÷ 3 yrs of dev = 40,000,000/year 40,000,000 ÷ 12 = 3,333,333 $3,333,333 ÷ $10 sub = 333,333 subs
Not 500,000,000 subs. So laydens math does not work out, because if it did he would of said 333,333 subs or at least a more realistic number.
So if u still say laydens math is correct please show how he arrived at the 500,000,000 sub number (based on what he said and not on conjecture)
I based my outriders estimation on 200 devs over 5yrs because the Wikipedia page said they grew to 200+. But even if you use 320 devs over 6 years, it is still an estimation, and how accurate the estimation was, is not important to the point i was trying to make, so I dont know what your “calling out” when there is nothing to call out.
You are being really disingenuous comparing my outriders development cost estimation of $70million to Laydens 500 million sub claim. Its well know from developers like Cerny, David Jaffe and others that modern AAA games cost $50 - 200million these days, so its not like what im saying is complete fiction, so you look really stupid trying to frame my estimation as some complete fiction.
But Laydens 500 million sub requirement for a $120 million game is completely wrong as I show in the 3rd paragraph.
I literally explained it multiple times. A service with 500 games on it and $5bil in revenue monthly works out to $10mil/mo per game, which is where his $120mil figure likely comes from (the year 1 revenue for breaking even). If your position is that $5bil/500 is not equal to $10mil/mo per game, then you’re just wrong and need to learn basic math skills. When you insist ‘his math is wrong’ this is what you are implying, which is what makes that argument so stupid since it quite literally isn’t debatable how math works.
This is why I keep repeating that the actual issue with Layden’s commentary is his underlying assumptions that I also outline in the thread already. Those are all not only dumb, but falsified with the real world case study of Game Pass. Ppl hung up on basic math are missing the much more important context which relates to how narrow the view of the subject is even from execs at Sony.
This 500 games @ $10 million each is your additional conjecture, not what layden said. Im talking about what layden actually said. Your math is fine, but im not talking about your math, im talking about laydens maths.
Did this Layden boy not realize MS has a treasure chest with pretty much infinite money? Didn’t Xbox basically earn back another Bethesda as per their financial details earlier this week?
Xbox and the playerbase are in a superb position because the big boss of MS is all in on gaming, games costing millions WILL happen, starting this year.
He is just ignoring the elephant in the room.
So hard to admit that MS with its treasure chest can steal a good chunk of the gaming market this way.
Two Bethesdas. In Q4 alone. Net income for the year was 61.3 Billion (profit). For Q4 it was 16 Billion.
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Shawn Leyden hasn’t got a clue when making ridiculous statements like that. With a nonsensical view like that no wonder Sony pushed him out the door.