I keep repeating this but they are actively restricting console production as each sale costs them an average of $230 in losses.
If they sold a shed load of consoles Phil has to deal with a quarterly profit and loss statement that is way below his target.
This was all in the leaked emails. We are not in a supply and demand situation we are looking at Xbox curtailing supply and doing no real promotional or discount based effort to shift consoles. For this reason. If we were in the console era twenty years ago they’d have packaged Starfield up in a combo and spent months doing console sale PR with Starfield and a discount to boot. It would have sold a lot.
But they simply don’t want to do that. Because money.
You’re obviously right. Both the emails and the actions of Phil and the rest of the Xbox team confirms it.
It will be interesting to see what happens next generation.
Currently it certainly seems like Xbox is more concerned with shoring up the brand and stable of franchises and being less concerned with console sales.
But is this just a transitional period, to recover from last gen? Or is it the long-term play?
When the next gen consoles launch we’ll have the answers to these questions.
Yeah the fear is that at the start of the gen the plan was clearly to sell consoles but not to be selling volumes they previously had of the top end model, sell series s, and then to shore up your userbase via the cloud,
But the series s has sold well but clearly the inflationary hit on production prices is problematic for them in that they can’t increase volume without huge losses. And cloud hasn’t taken over enough to compensate.
So they are in a rock and a hard place now. They need to keep console sales high enough to maintain 3rd party support, because without that they are not going to compete with an ecosystem but not sell so many that Phil is reporting losses or sub par P&L performances each quarter.
Added to this they need to seriously work on their next gen in some way trying to get PC ports as close to the Xbox version as possible so developers can essentially make the Xbox version from the PC one with little work. That would shore up their support and establish their broader ecosystem. Without that I fear that their console will struggle to gain enough traction for third parties across the board to always support it and even if they do it will be second class level of support.
We heard from Phil just how dire the situation is in mainland Europe. They had to fight to keep their consoles still being stocked in that region.
It’s alway been bad in the EU . Even the 360 was crushed by PS3. But now it’s on life support.
And to be clear again, I’m not sure how much this matters to the big wigs at Xbox/MS. But I will say that the ABK deal going through was huge in a number of ways for the futrue of Xbox.
After ABK we really should not care anymore about hardware sales. Xbox has a self sustaining portion of the game industry now, they will be rolling in money and can continue Consoles as a loss leader and entry point into the eco system.
Yeah but that’s not true though. We saw in the leaks that isn’t the case and just the addition of ABK doesn’t change that. Yes it’s a big revenue boost but also has huge cost implications and they have to hit P&L targets which means they don’t have scope to lose money within Microsoft.
Xbox ain’t going anywhere in gaming but the hardware and consoles is in a difficult spot for them and it wouldn’t be the first time MS abandoned hardware in these circumstances.
I don’t think it will happen, and certainly hope not but the realities are that they’ve got a box losing them way way more money than the competition that has lower demand so they can’t even necessarily bank purely on volume based cost reductions. And they have the issue of entrenched PlayStation buyers not likely to change next gen but them needing to source 3rd party support potentially from diminishing returns.
Sony have big issues of their own don’t get me wrong but I don’t think we can ignore the hardware hole Xbox have put themselves in here.
I mean by the end of this gen it’s not infeasible that hardware wise they are outsold 3:1. I mean this probably doesn’t matter that much for Microsoft and their strategy but we might care when it means they want a much cheaper less lossy box next time, maybe even in essence a cheap PC….because they can’t justify building a really top premium console that will lose money without the likelihood of greater market capture with that device,and equally by that point…are third parties still supporting their hardware as strongly?
I don’t see why though. Gamepass increasing sales is a longer play. You aren’t going to have people rushing out to spend £450 or whatever to get a console so they can spend a monthly fee to include cod.
People that only play cod already do so there is no cost saving there.
People that want to play it but don’t maybe might choose an Xbox at that point but I mean there won’t be a lot of those people in 2024.
we will be halfway into this console gen as the new consoles won’t launch until 2028. so a lot of people still havent upgraded to a next gen console yet. Why not buy an Xbox if you are a CoD player especially when you can get a Series S for $200 with a new CoD during black friday/holiday deal season. 2) Just like online gaming was the selling point for Xbox 360, motion controls wii, Switchability with the Switch I truly believe consumers will see GamePass as the next big thing for consumers. In other words Netflix for gaming type services. CoD is the kind of IP that can bring in lots of news coverage, make Game Pass a household name and lead to word of mouth.
I really honestly don’t think gamepass is moving or shifting the market you are discussing. If you haven’t upgraded yet why would you care about a sub service when the likelihood is you don’t know much about it, certainly most of the games in it you’ve not heard of and you only play two games a year anyway?
Xbox does need to market better so more people know about it. But there is a thread for that so i wont go into it here.
But in a way CoD markets itself. If Game Pass has the best selling game for most of the last 20 years then yes you would be interested. And its the multiplier effect. People buy an Xbox to play CoD on Game Pass and say good things about Game Pass to their friends and family and then they do the same thing as well to their friends and family. Also its been well documented that people that sign up for Game Pass actually start playing more games and in different genres.
Even though it’s not true, there will be gamers who believe Call of Duty is now an Xbox exclusive. Look at how many people, even on “enthusiast” websites, still believe Spider-Man is a Sony IP no matter how many times the idea is debunked.
What CoD usually sells on all platforms combined, I expect that number just on Xbox/PC game pass as of next year. It will be like having an Animal Crossing 40m seller, exclusive to Xbox, every year, for a few years.
Yes, but not immediately. They will push the ads and messages to all when the time is right alas Game Pass drop and rights to advertise CoD in all of its glory. Down the road, it will go up and up.
The only ways ABK will change their console fortunes is if they start producing a consistent number of exclusives and Xbox goes hard on Game Pass Ultimate perks and Microsoft Rewards discounts to really incentivize playing on Xbox over Playstation.
You get solitaire premium if you’re a GPU member. They need something like that for COD/Overwatch/Diablo. Like automatic double XP, a free monthly skin, or a discount on store currency. Otherwise, there’s no reason for people to really switch platforms.
Honestly, I don’t think they’re trying to shift things that much. They could easily make everything exclusive and immediately gain console ground, but they haven’t done that. As long as the money is coming in if they gain ground good, if not oh well.
People keep talking about exclusives but I don’t think the majority of the market cares. I’d wager that Xbox beating their sales records in 2020 and 2021 was to the core market that do care about exclusive potential and that market responded because of the acquisitions and future stuff. But after that I don’t think there are many of any exclusives that really matter. People buy a PlayStation by default. To break that cycle I think you’d need exclusives at a level that is so large (say GTA 6) that it probably isn’t happening.
You can have Starfield, Fable, Indiana Jones, FORZA etc all smashing it out the park but does that mass market care much? I don’t think they do. I don’t think they buy a PS5 cos it’s got exclusives they buy it cos it’s their default brand purchase. And I think changing that is probably in all reality outside Xbox’s control.
That’s essentially what the first Xbox was, and I loved that thing, and I think devs did too, so this is certainly something I personally wouldn’t mind. At least I say that now, without truly knowing the implications, but it sounds fine to me from a layman’s POV.