You don’t buy internal emails outlining the issue? I’m not sure what there is to buy. It’s a fact.
In 2020 and 2021 Xbox limited how many they produced because they wanted to reduce losses. That’s not an opinion. It’s on the record. They could have sold more (their opinion) but they chose not to so Phil had a better P&L within the agreed Microsoft budget and reporting.
Thats all fact. It happened. It’s recorded. They weren’t producing as many as Sony in any year. They have restricted their production more. And you may ask why - primarily i think for two reasons. One they are making more substantial losses per unit than Sony who already have a cheaper revision. Secondly PlayStation exists within Sony as a large market share but low margin business. They are still content with that approach. Capture the market and slowly recoup value over time. Low margins. But it’s their most successful thing. Xbox doesn’t exist in that world. As Phil says they are not a successful Microsoft business not because of their console sales figures but because its lower margin than Microsoft would like. The difference in businesses and approach, context and background is critical here.
If Xbox is just about selling consoles and taking the hit and slowly recouping value at low margins then why would Nadella allow them to exist? Microsoft doesn’t need a low margin business that is a drain for them. And Phil has basically said as much.
The need for Xbox to make a business case within Microsoft’s wider business is a completely different situation to Sony or Nintendo.
Not really not when you had Phil Spencer on record saying that it was a supply issue causing a stock problem and how Phil wished he could more Series consoles to retail and Microsoft was working hard to get more stock in shops
A country that has actively disliked xbox from the beginning i have no sympathy. Ma did use proper spanish for decades until thwy realised whats the point. Most of their gaming journos actively mock xbox so dont blame ms. Its a uninportant market for games anyway
To add a bit more info from the leaked documents from additional context:
Microsoft planned to lose $1.5B on Xbox Series hardware in FY2021 (first 9 months on the market). Though the lifetime value of a console user exceeds the initial subsidy, selling more consoles that year would have meant higher short term loss which Microsoft’s headquarters were not willing to take. Phil called it an “innovator’s dilemma”
The long term plan for the gaming division is to achieve similar profitability to the rest of the corporation (profit margins in the 30s). At the moment it’s in “single digits”, so anywhere between 1 and 9%. For comparison, Sony is sitting at 5% and Nintendo at 31%.
For me personally it seems obvious that Microsoft is simply not interested in making the console war against Sony a bloodbath for both companies, they’re focusing on expansion on PC and mobile (which is what they’ve been saying for years). Again, the documents revealed that they were only planning to sell 60M Series consoles by June 2027, which does not seem far fetched and unrealistic even today.
Short term, I think we’ll see an uptick in sales vs last year as the Black Friday deals are far better. We’ll have to see how receptive the market is to XSX at that price point.
Thank you. That’s exactly the detail in referring to.
For me and I’ve heard this from some in the industry one of the big issues is Xbox and MS chose not to capitalize on the huge demand the first couple of years and instead just went at normal numbers. Obviously to keep their P&L in check. It’s worth noting that extra production in Covid times would have been more expensive on top of the loses their box already incurs. Had they capitalized on how popular consoles were and particularly gamepass they’d have hit 2022 with huge sales momentum and we’d not be talking about this now.
The problem was they didn’t do that and lost what I’ve heard as something like 8M-10M potential sales.
They had good reason as you say. But they’d have ridden out the 2022 drought with that sales momentum and the chatter around third party on the box.
Note now how many PS owners are admitting it’s pretty dry for them exclusives wise but given it’s their main box they are just using third party games to fill the blanks. That’s the privilege of maximising those early sales.
Going back to the discussion about how bad Xbox is doing in Europe. I just saw some numbers on ResetEra and another forum and it’s shockingly bad. Some are saying the brand is basically dead over here. And honestly I can’t pretend that it’s doing exactly great when in my country the section for Xbox in big stores is insanely small. It’s a damn shame, but it’s also something that IS on them. I never ever see a Xbox ad here, for starters.
Xbox One clearly did lots of damage, lots of people went with PS4 and didn’t look back. And I see people starting to wonder how much longer until MS just doesn’t bother at all anymore with Xbox here, and that could mean a next gen Xbox won’t be launched here.
And then there’s Game Pass, I see people claiming that it isn’t doing as well as MS hoped and that the sub numbers have stagnated. Is this there any truth to this?
Hoping it can at least pick up a little in the next upcoming years but…
That’s the result of Xbox neglecting Europe since nearly a decade. As expected, Xbox console has slipped into irrelevancy. That’s 100% on them and that is also deserved.
Yeah, it fucking sucks. Phil really turned that ship around, but it seems he didn’t realize or just didn’t think it was needed? I just don’t get it. I don’t want to jump to conclusions on that, because he did make real effort to get Japanese games, but they didn’t exactly break through in Japan itself though, despite those efforts.
I find it hard to believe that Phil doesn’t care at all about Europe, to be honest. We probably also shouldn’t forget that by making all these games available for PC, Steam, etc that people will just stick with their PC and have no need for the console at all. But not everyone wants to game on PCs, you’d think those people would get the console.
And you’d think Game Pass at least would be growing nicely, right?
Xbox is doing really badly in EU but they’ve never done particularly great there, the vast majority of their sales come from UK/USA and always has
Without a completely new strategy in EU I don’t see much changing but I’m not convinced they are particularly bothered by EU considering their history there and quite frankly console isn’t their one and only focus the way it is for PS/Nintendo
As for GP stagnation, Phil himself said console subs had slowed down but that was last year I believe or at least sometime ago when they hadn’t released a major game in forever
GP subs were always going to slow down, just look at PS, they are selling record amounts of consoles but their sub growth has got so bad that they don’t even report on it anymore, pretty sure it even went down despite all the console sales
That being said, xbox still has to release the majority of their major games this gen as well as CoD, literally the biggest series they could have for GP every year, talking about GP stagnation at this point is kind of pointless
It’s true, but I guess I never realised it was this dire. And as for UK, well, if what you can read on those links is true, it’s not doing very great there either. Perhaps things just stay as they are and next gen everything will be launched here too. Otherwise I’m looking at a scenario where I need to import a USA console, quite a hassle.
Iirc Germany was always a country that likes Xbox, certainly with Xbox One. But I’m guessing when people say Europe, they mean all of Europe? I don’t like it, that’s for sure.
I hear you about CoD, but the fact is that franchise will keep coming to PS for many years. People with a PS won’t flock to GP for that. But we’ll have to see what other players do.
Xbox havent given people much reason to purchase the xbox quite frankly, at least compared to PS, that might sound harsh but it’s the truth at least to casuals
With PS people have the brand history/loyalty, massive third party marketing with CoD/Fifa/Hogwarts etc, as well as huge sequels to very popular titles in GoW, Spiderman, Horizon etc
For xbox they’ve had Halo which has only really started showing its true potential this year, FH5 and Starfield in terms of system sellers, they are coming of a gen where nobody liked them and they messed up and the average consumer still has no idea what GP is
I’m not sure why people expect Xbox to be going toe to tow with PS, especially after last gen and that absolutely dire 2022
In the short term, Xbox isn’t going to sell huge amounts of consoles, what they should be doing is using the rest of this gen as a builder and off ramp for the next gen, get a big line up off exclusives and CoD on GP and go into next gen with plenty of momentum and confidence
Do that and launch next gen with ES6 and a CoD on GP, people will buy what you’re offering whether it’s a Series S or X equivalent
Xbox 360 did well, in my country it outsold the PS3 afaik. Xbox had a huge presence back then.
As for the EU as a whole, it is very PC-heavy and when Xbox started to release their games on PC day one the need for a backup console disappeared for a lot of people. They still buy PS and Nintendo consoles though, and more importantly so does the casuals. The latter is something Xbox could still reach, like they did in the 360 era.
As for Game Pass, I don’t know… More must play games, more often, I would guess is what it will take. We know that’s coming so it should increase subs.
True. All we European Xboxers can do is hoping Xbox stays not giving a damn about the losses and just introduce next gen here as well. I probably shouldn’t worry too much about that. Xbox not launching their next system in Europe at all? Naw.
Now I really want this to happen. And they just might. Phil has given some details on their expectations of when next gen starts and I believe they also implied TES VI around 2028? I can absolutely see it, since according to Alanah Pearce there are still more than 200 devs on Starfield as we speak.
I don’t think the One did as bad as some make out. It is still Xbox’s most profitable console It was just people weren’t expecting the PS4 to sell so many consoles as it did Last gen was meant to be the gen where consoles were old news and gamers were going to go all mobile and it never happened It was also the gen where many developers bet big on online multiplayer games and SONY showed that gamers not only wanted a console but also a true single player game.
It is a trouble that the Series consoles are doing worse than even the XBox One no matter what type of picture people try to paint No one expected this to happen if we are honest about it. Getting that ABK deal has come at a great cost to XBox sales and PR image and it looks like it may never recover, but hopefully sales really pick up now
I don’t like the talk of XBox is now all about PCs and Phones I did not invest in an Xbox console to be told by XBox fans of all people I made the wrong choice and should have spent my console money on SONY or Nintendo instead XBox doesn’t care about consoles anymore its PC’s don’t you…
Sad what happened to the best brand in console gaming.