Phil Spencer himself admitted that they lost the worst generation to lose during the Xbox One era because most gamers built their digital libraries on PlayStation, tying them permanently to the PS ecosystem for future generations.
Actually, you're wrong. Check my other comments. I understand and agree with Microsoft's decision to become a multiplatform publisher. However, I strongly disagree with the layoffs and the closure of small studios, as Nadella seems like a paranoid puppet aiming for unrealistic high profit margins for Xbox just to satisfy shareholders.
The company I respect most is Nintendo, which takes a traditional approach to corporate culture. No massive layoffs, no focus on short-term profits, but instead, a steady long-term vision for its ecosystem. Sure, Nintendo can be pretty greedy, as seen with the high prices of their games, but they have a clear strategy for their product lineup. You don’t see major restructuring with massive layoffs, canceled projects, or studio shutdowns.
Microsoft's multiplatform "play anywhere" strategy is a smart business move, and I fully support it. However, it's puzzling that Nadella and the executive board seem disconnected from the gaming industry, expecting an unrealistic 30% profit margin on total revenue. No other company has been able to maintain such high profit margins while staying viable. This is why Microsoft made layoffs and closed studios like Tango to focus on highly profitable IPs while also raising the price of Game Pass to boost revenue and profits. It's all about achieving short term profit from the gaming division to make big returns for the shareholders.
I believe Phil Spencer had a completely different vision for the future of Xbox, but Nadella and the Microsoft leadership prioritized short-term profits over a long-term plan. A long-term strategy could involve reinvesting all the gaming division's profits back into Xbox for the next decade to develop high-quality games and enhance services, driving growth for the division. Xbox needs a growth-focused CEO, like Jeff Bezos, whose approach would be to reinvest all profits back into the business to expand the Xbox division.
The PS5 generates revenue primarily from third-party sales and microtransactions, where they take a 30% revenue cut, rather than from exclusive game sales.
Most PS5 first-party games or timed exclusives have small profit margins or barely break even. The PS5 user base is around 80 million, but most exclusive games sell between 3-5 million copies, meaning less than 6% of PS5 users buy these games on day one. The majority of PS5 owners are playing 4-5 major live service games like Fortnite, EA FC, Call of Duty, and GTA Online, spending heavily on microtransactions, where Sony takes a 30% revenue cut, similar to Steam or Nintendo.
Let’s review the state of PlayStation exclusive sales:
1) Final Fantasy 16 and Rebirth struggled to achieve sufficient sales and profitability, prompting Square Enix to adopt a multiplatform strategy for future games to maximize sales and profit across all platforms.
2) Astro Bot, a AA game with a budget under $50 million, managed to break even with 2.5 million sales. Nothing remarkable, as it was never intended to be a AAA game.
3) Rise of Ronin turned out to be a commercial failure.
4) Stellar Blade, another AA game, sold fewer than 3 million copies on PS5. Interestingly, it’s seeing more success on PC, where modding of female characters has gained popularity.
5) Death Stranding has shown modest sales, estimated at just 2 million. This mirrors the performance of the first game, which achieved 5 million sales during its first year as a timed exclusive on PlayStation.
6) Ghost of Yotei hasn’t surpassed the sales of Ghost of Tsushima. While exact numbers are unavailable, reports suggest it’s selling more than Assassin’s Creed Shadow, a commercial failure for Ubisoft.
The only PS5 exclusive game to hit 12 million sales was Spider-Man 2, but its massive $300 million budget resulted in a low profit margin, making it a high-risk investment. One failed project could cause Sony significant financial losses. The risk is too great, which is why Sony decided to heavily invest in live service games, hoping to create a successful title like Fortnite or COD that could become a cash cow for the company.
Microsoft's gaming division achieved record revenue and profits in the last fiscal year, and their "Play Anywhere" multiplatform strategy seems to be working well. The next big move for Xbox is to develop high-quality first-party games. I'm excited to see what's in store for the next Fable, Gears, Halo, and Elder Scrolls.
@Skippermonkey
I respect your opinion. The relatively high price of Game Pass can be justified if you play and complete at least two day-one games each month. People who don't have enough time to play multiple games per month don't really have a reason to subscribe to Game Pass.
It doesn't really matter whether you buy Halo at full price on PS5 or play it through Game Pass—Microsoft benefits either way. Sony takes a 30% revenue cut for any Xbox game sold on the PlayStation ecosystem, while Microsoft takes the remaining 70%, just like any other third-party publisher. It's a win-win situation for everyone. The console wars are over; we've entered an era of live services, subscriptions, and hybrid PC-console models with open ecosystems.
Microsoft understands that the future lies in an open ecosystem where different services compete with each other. Hardware platform holders are no longer sustainable. Even Sony struggles with exclusivity because their high-budget games don’t generate enough sales, leading to reduced profit margins or barely breaking even. Nintendo remains the last hardware platform holder likely to survive because their first-party games aren’t AAA but have extremely low budgets and higher profit margins. For example, the last Pokémon game had a $13 million budget and has already achieved 5 million sales, delivering an incredible return on investment for Nintendo franchises.
Selling games at full price on Steam? That's an XBOX.
Selling games at full price on PS5? That's an XBOX.
Selling games at full price on Switch 2? That's an XBOX?
Selling microtransactions across all platforms? That's an XBOX?
Subscribing to Game Pass on PC? That's an XBOX.
Subscribing to Game Pass on Series S/X? That's an XBOX?
Subscribing to Game Pass on a PC-handheld (XBOX ROG ALLY)? That's an XBOX.
Subscribing to cloud Game Pass on your phone? That's an XBOX.
Spending money on Candy Crush? That's an XBOX?
Console wars are over. Microsoft struggled to compete with the traditional model of hardware platforms and exclusives. Phil Spencer mentioned that losing the Xbox One generation was critical since most gamers built their libraries on PlayStation. Additionally, the console market has stagnated, while the cost of developing AAA games has more than doubled, leading to lower profit margins.
Xbox has evolved into a multiplatform publisher, and its next home console will be a hybrid model featuring Steam and Game Pass to deliver a "PC experience" and greater flexibility for console gamers. With this hybrid approach, PC gaming is becoming the new console market. Traditional consoles like PlayStation and Switch will need to rely on their loyal fanbase to support their closed ecosystems, which are more costly compared to PC services. Third-party games are more affordable on Steam, key stores, and Game Pass. Sony and Nintendo, if they lose third-party sales from PC consoles and Steam, will have to depend even more on their loyal fanbases, who are willing to buy exclusive games at full price to generate decent revenue. Nintendo has already been doing this for years, as its relatively weak hardware doesn't support AAA third-party games. Instead, Nintendo relies heavily on its first-party titles and iconic franchises like Mario, Zelda, Metroid, and Pokémon to make most of its profits.
Comments 110
Re: 'Our Biggest Competition Isn't Another Console': Xbox Doubles Down on Multiformat After Halo PS5 Shock
@daveofduncan @TrollOfWar
Phil Spencer himself admitted that they lost the worst generation to lose during the Xbox One era because most gamers built their digital libraries on PlayStation, tying them permanently to the PS ecosystem for future generations.
Re: 'Our Biggest Competition Isn't Another Console': Xbox Doubles Down on Multiformat After Halo PS5 Shock
@PuppetMaster
Actually, you're wrong. Check my other comments. I understand and agree with Microsoft's decision to become a multiplatform publisher. However, I strongly disagree with the layoffs and the closure of small studios, as Nadella seems like a paranoid puppet aiming for unrealistic high profit margins for Xbox just to satisfy shareholders.
The company I respect most is Nintendo, which takes a traditional approach to corporate culture. No massive layoffs, no focus on short-term profits, but instead, a steady long-term vision for its ecosystem. Sure, Nintendo can be pretty greedy, as seen with the high prices of their games, but they have a clear strategy for their product lineup. You don’t see major restructuring with massive layoffs, canceled projects, or studio shutdowns.
Re: 'Our Biggest Competition Isn't Another Console': Xbox Doubles Down on Multiformat After Halo PS5 Shock
@Discol76
Microsoft's multiplatform "play anywhere" strategy is a smart business move, and I fully support it. However, it's puzzling that Nadella and the executive board seem disconnected from the gaming industry, expecting an unrealistic 30% profit margin on total revenue. No other company has been able to maintain such high profit margins while staying viable. This is why Microsoft made layoffs and closed studios like Tango to focus on highly profitable IPs while also raising the price of Game Pass to boost revenue and profits. It's all about achieving short term profit from the gaming division to make big returns for the shareholders.
I believe Phil Spencer had a completely different vision for the future of Xbox, but Nadella and the Microsoft leadership prioritized short-term profits over a long-term plan. A long-term strategy could involve reinvesting all the gaming division's profits back into Xbox for the next decade to develop high-quality games and enhance services, driving growth for the division. Xbox needs a growth-focused CEO, like Jeff Bezos, whose approach would be to reinvest all profits back into the business to expand the Xbox division.
Re: 'Our Biggest Competition Isn't Another Console': Xbox Doubles Down on Multiformat After Halo PS5 Shock
@MrPeanutbutterz
The PS5 generates revenue primarily from third-party sales and microtransactions, where they take a 30% revenue cut, rather than from exclusive game sales.
Most PS5 first-party games or timed exclusives have small profit margins or barely break even. The PS5 user base is around 80 million, but most exclusive games sell between 3-5 million copies, meaning less than 6% of PS5 users buy these games on day one. The majority of PS5 owners are playing 4-5 major live service games like Fortnite, EA FC, Call of Duty, and GTA Online, spending heavily on microtransactions, where Sony takes a 30% revenue cut, similar to Steam or Nintendo.
Let’s review the state of PlayStation exclusive sales:
1) Final Fantasy 16 and Rebirth struggled to achieve sufficient sales and profitability, prompting Square Enix to adopt a multiplatform strategy for future games to maximize sales and profit across all platforms.
2) Astro Bot, a AA game with a budget under $50 million, managed to break even with 2.5 million sales. Nothing remarkable, as it was never intended to be a AAA game.
3) Rise of Ronin turned out to be a commercial failure.
4) Stellar Blade, another AA game, sold fewer than 3 million copies on PS5. Interestingly, it’s seeing more success on PC, where modding of female characters has gained popularity.
5) Death Stranding has shown modest sales, estimated at just 2 million. This mirrors the performance of the first game, which achieved 5 million sales during its first year as a timed exclusive on PlayStation.
6) Ghost of Yotei hasn’t surpassed the sales of Ghost of Tsushima. While exact numbers are unavailable, reports suggest it’s selling more than Assassin’s Creed Shadow, a commercial failure for Ubisoft.
The only PS5 exclusive game to hit 12 million sales was Spider-Man 2, but its massive $300 million budget resulted in a low profit margin, making it a high-risk investment. One failed project could cause Sony significant financial losses. The risk is too great, which is why Sony decided to heavily invest in live service games, hoping to create a successful title like Fortnite or COD that could become a cash cow for the company.
Re: 'Our Biggest Competition Isn't Another Console': Xbox Doubles Down on Multiformat After Halo PS5 Shock
Removed; user is banned
Re: 'Our Biggest Competition Isn't Another Console': Xbox Doubles Down on Multiformat After Halo PS5 Shock
@Discol76
Microsoft's gaming division achieved record revenue and profits in the last fiscal year, and their "Play Anywhere" multiplatform strategy seems to be working well. The next big move for Xbox is to develop high-quality first-party games. I'm excited to see what's in store for the next Fable, Gears, Halo, and Elder Scrolls.
Re: 'Our Biggest Competition Isn't Another Console': Xbox Doubles Down on Multiformat After Halo PS5 Shock
@Skippermonkey
I respect your opinion. The relatively high price of Game Pass can be justified if you play and complete at least two day-one games each month. People who don't have enough time to play multiple games per month don't really have a reason to subscribe to Game Pass.
It doesn't really matter whether you buy Halo at full price on PS5 or play it through Game Pass—Microsoft benefits either way. Sony takes a 30% revenue cut for any Xbox game sold on the PlayStation ecosystem, while Microsoft takes the remaining 70%, just like any other third-party publisher. It's a win-win situation for everyone. The console wars are over; we've entered an era of live services, subscriptions, and hybrid PC-console models with open ecosystems.
Re: 'Our Biggest Competition Isn't Another Console': Xbox Doubles Down on Multiformat After Halo PS5 Shock
Removed; user is banned
Re: 'Our Biggest Competition Isn't Another Console': Xbox Doubles Down on Multiformat After Halo PS5 Shock
Microsoft understands that the future lies in an open ecosystem where different services compete with each other. Hardware platform holders are no longer sustainable. Even Sony struggles with exclusivity because their high-budget games don’t generate enough sales, leading to reduced profit margins or barely breaking even. Nintendo remains the last hardware platform holder likely to survive because their first-party games aren’t AAA but have extremely low budgets and higher profit margins. For example, the last Pokémon game had a $13 million budget and has already achieved 5 million sales, delivering an incredible return on investment for Nintendo franchises.
Re: 'Our Biggest Competition Isn't Another Console': Xbox Doubles Down on Multiformat After Halo PS5 Shock
Selling games at full price on Steam? That's an XBOX.
Selling games at full price on PS5? That's an XBOX.
Selling games at full price on Switch 2? That's an XBOX?
Selling microtransactions across all platforms? That's an XBOX?
Subscribing to Game Pass on PC? That's an XBOX.
Subscribing to Game Pass on Series S/X? That's an XBOX?
Subscribing to Game Pass on a PC-handheld (XBOX ROG ALLY)? That's an XBOX.
Subscribing to cloud Game Pass on your phone? That's an XBOX.
Spending money on Candy Crush? That's an XBOX?
Console wars are over. Microsoft struggled to compete with the traditional model of hardware platforms and exclusives. Phil Spencer mentioned that losing the Xbox One generation was critical since most gamers built their libraries on PlayStation. Additionally, the console market has stagnated, while the cost of developing AAA games has more than doubled, leading to lower profit margins.
Xbox has evolved into a multiplatform publisher, and its next home console will be a hybrid model featuring Steam and Game Pass to deliver a "PC experience" and greater flexibility for console gamers. With this hybrid approach, PC gaming is becoming the new console market. Traditional consoles like PlayStation and Switch will need to rely on their loyal fanbase to support their closed ecosystems, which are more costly compared to PC services. Third-party games are more affordable on Steam, key stores, and Game Pass.
Sony and Nintendo, if they lose third-party sales from PC consoles and Steam, will have to depend even more on their loyal fanbases, who are willing to buy exclusive games at full price to generate decent revenue. Nintendo has already been doing this for years, as its relatively weak hardware doesn't support AAA third-party games. Instead, Nintendo relies heavily on its first-party titles and iconic franchises like Mario, Zelda, Metroid, and Pokémon to make most of its profits.