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XBox (Games) Microsoft Games

The Numbers Show Xbox's Current Plan Isn't Working (gizmodo.com) 49

Posted by BeauHD from the not-looking-good dept.
An anonymous reader quotes a report from Gizmodo: It's time for Xbox to eat some humble pie and perform some real soul-searching. Microsoft released its latest quarterly earnings report and proved the worst of our fears about its gaming brand. Not only are Xbox hardware sales down significantly, but the brand itself is barely treading water. Gamers are voicing their displeasure with their wallets, but Microsoft's top brass is still only thinking about the margins. Microsoft was more keen to promote the scale of its cloud and AI services revenue -- which was up 28% year over year -- than talk about its beleaguered gaming brand. The company's overall gaming revenue fell by 2% compared to the same time last year. This was precipitated by a "decline in Xbox hardware," which was down by 22% following a steady decline quarter after quarter. Its first-party games and its Game Pass subscription were doing better, though the overall growth was only up by 1%, and even that was driven by the "better-than-expected performance" of third-party games. You can give credit to titles like Clair Obscur: Expedition 33 for why Xbox isn't in an even deeper hole than it is now.

The tech giant has no expectation that its Xbox brand will start making more money anytime soon. In its earnings call with investors, Microsoft Chief Financial Officer Amy Hood said the company expects Xbox will continue to decline "in the low to mid-single digits" for the following quarter. That's mostly due to the lack of landmark first-party titles. Just this month, Xbox released Ninja Gaiden 4, The Outer Worlds 2, and Double Fine's The Keeper. Xbox also made a huge marketing push for its first handheld, made in partnership with Asus, the ROG Xbox Ally and Ally X. In any other year, this would be a big month for any gaming company. The dour outlook comes after months of bad news. After two subsequent price hikes, Xbox Series S and Series X consoles now cost between $100 to $150 more than they did at launch five years ago. Microsoft also pushed prices of its Game Pass Ultimate subscription tier from $20 to $30 per month. A full-year's subscription would now demand $360. In a separate article, Gizmodo reviews Microsoft's new ROG Xbox Ally X handheld, which "offers a better experience overall" than the "other small-scale Windows PC gaming devices released this year." However, "it's still nowhere close to what you truly want from a console."
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The Numbers Show Xbox's Current Plan Isn't Working More

The Numbers Show Xbox's Current Plan Isn't Working

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  • Old hardware at inflated price, subscription that is not adapted, I have an Xbox One and I have been on Game Pass and Live Gold for as long as I remember, had a 360 and an Original before that, and was finally looking to upgrade to a Series after using Xbox Cloud for new titles, but the recent price hike makes me reconsider. I was first looking at second hand, but with the new Game Pass prices, I am not even sure, I stopped it and this month I finally bought Minecraft for the kids instead of the Game Pass v

  • Make games your customers want to play. Don't play games with your customers.

  • It's why Konami got out of it. You can have a bunch of talented people with a ton of money and even a good chunk of time and the end results and still flop.

    That means Microsoft hasn't been willing to pony up cash to make big games or even modest games.

    And it's those big tent pole games like God of war and horizon zero Dawn and whatnot that bring people to your platform.

    What Microsoft wants is somebody else to take all those risks and for them to get a 30% cut of all their sales and all their har

    • Re:Video games are a huge Gamble (Score:5, Informative)

      by timeOday ( 582209 ) on Saturday November 01, 2025 @12:20AM (#65765712)
      Microsoft is paying a ton to develop games. They bought Activision Blizzard for $68.7 billion dollars a little over 2 years ago. That's Call of Duty, Diablo, and World of Warcraft. Those are all Microsoft franchises now.

      According to this XBox first-party studios has 22,000 employees.

      https://x.com/LegalGamerUK/sta... [x.com]

      • You do that to control the market, not to gain share through good games.

        If anything buying a studio that big starves your company of the funds to make games. Blizard and Activision both haven't put out much of anything lately. Anemic WoW expansions, desperately adding cartoon skins to COD for quick cash, and Diablo 4 is pushing 2 years, expansions can only take you so far.

        Moreover those games are multi-platform, they have to be to have a prayer of breaking even, but that doesn't help the Xbox brand.

      • Re: (Score:2)

        by ffkom ( 3519199 )

        They bought Activision Blizzard for $68.7 billion dollars a little over 2 years ago.

        And that made it so unfathomable they gave up the console market at pretty much the same time. And still try to instill the illusion that, somehow, arbitrary 3rd-party PCs running a shitty office operating system are "Xbox" now.

      • Diablo hasn't been good since Diablo 2. I quit official wow during MOP (5th expansion), though I play a solo wow wotlk setup when that urge hits. COD single player was fun like 15 years ago. I blame Activision for making Blizzard irrelevant. Microsoft buying them was just dancing on the grave.

        Microsoft as a company offers me less and less I want every year. I haven't used Windows as a primary desktop since Win 7. I've never done multiplayer xbox online and only do multiplayer with my nephew in person. Their

        • Come on now... Diablo 3 might have had a terribly rocky start, and some less than stellar moments, but it found its way. Was it great? Debatable... but it was at least good. In terms of entertainment hours per dollar it was staggeringly successful. I got a whole hell of a lot for my $69. And I firmly believe Diablo 2 was always better in nostalgia than it was live. Rose tinted glasses, and all. It had some bad warts. Not that it stopped me... my D2 characters were fully tricked out. But replaying it with t

          • What killed D3 for me was the auction house feature. I understand why they put it in but as someone that didn't really care about my gear that much or bother to trade or collect sets, it wasn't made with me in mind. Sure, I could just ignore it but once you know you could play the min/max game even more, it was hard to do so. It's been so long I forget what else about the game that turned me off.

            I played through a two or three times and just couldn't stay hooked. Compared to D1 and D2, I couldn't stop playi

    • > It's why Konami got out of it. You can have a bunch of talented people with a ton of money and even a good chunk of time and the end results and still flop.
      If they're talented, it's not a flop. Look at Baldurs Gate 3, Elden Ring, Astro Bot, Hollow Knight: Silksong and so forth.

      If you treat your playerbase right and the game is good, you'll sell. If you push out garbage AAA/AI/DEI slop, it won't: look at Dragon Age if you want to see the difference.

      • Baldur's Gate 3 was pretty. The mechanics were a bit tedious but I can chalk this up to just not my play style (NWN style with pause was perfect). I most certainly did not like that every single companion pretty much immediately starts to hit on you. Sure, I was a white male elf, but I could of made the ugliest character and I suspect I'd of gotten the same treatment. It was just really off putting and weird.

        I've heard tell you can be "mean" and they will back off. I will say it was very unique in this fash

    • Way to make your point. (Score:4, Interesting)

      by thegarbz ( 1787294 ) on Saturday November 01, 2025 @03:53AM (#65765814)

      It's why Konami got out of it.

      That will be a surprise to all those people who bought one of the 14 video games Konami made this year. Your point is silly on the face of it, not just because Konami still is in video games, but because video games aren't a huge gamble when you have talented people making them.

      Video games are a disaster when you:
      a) chase trends as a loser - the best developer can't turn a profit if the corporate overlords demand you produce some rubbish.
      b) chase margins - video games aren't high margin, never were. Mobile games are. Focusing on margin is the wrong approach in this industry, you need to focus on volume.
      c) emphasise eye candy over content - which is the major problem, games flop when they aren't fun. It's easy to make fun games, all you need is for corporate head office to fuck off and let the talented people do their work.

      And it's those big tent pole games like God of war and horizon zero Dawn and whatnot that bring people to your platform.

      Microsoft isn't chasing a platform. In fact that would be the direct antithesis to their margin focus. That hasn't been their strategy for a while. FYI the next Halo is coming to the PS5. Think about that sentence for a moment when you next talk about platform.

      Microsoft just doesn't treat partners that well and everyone knows they never will.

      Microsoft actually pays their partners a small fortune compared to actual sales for anything they put on their subscription system. It's why they are effectively losing money on it (the hint is, it's always bad when someone mentions only revenue and growth and not profit in their earnings call, which is precisely what happened). Microsoft's problem isn't their partners, it's that they overspent billions buying game studios only to kill them.

      • they license IP to other studios who make games.

        They did do a remake of an old MGS game, but that's not a major risk or investment.

        They were pretty clear after MGS V. The cost was too high and therefor risk, so they focus on their pachinko business.

    • Re: (Score:2)

      by dnaumov ( 453672 )

      It's why Konami got out of it.

      Konami that got right back into it after covid killed their pachinko business? THAT Konami?

    • I'm just an old guy but at this point in time, there are more then enough games already released that if I never bought a new one, would still be unlikely to ever exhaust my steam library. This is even more true as more and more windows games run perfectly under steam proton.

      I actually have an xbox one, but I rarely connect it to the Internet. I play a lot of Madden 25 on it. I think I've finally hit the last iteration this console will receive and yet, I'm not worried.

      I don't play multi-player games beside

  • If Microsoft wants to let Xbox die, then let it die.

    • Re: (Score:2)

      by gweihir ( 88907 )

      Microsoft has a real problem: A long history of failures. The most dangerous are the numerous Cloud failures (including the successful attacks and abysmally stupid vulnerabilities), but if the XBox and/or gaming division fails, that sends signals too.

      Now, Microsoft products are pretty bad overall and pathetic in places. What keeps them in business is selective perception, belief, and ignorance on the customer sides and ossified structures at customers. All of these are all fragile. Each additional failure c

  • I bought Sea of Theives from the microsoft store on windows a while ago because I didn't realize they had put it on steam.
    Man what a fiasco that was.
    The store takes white a while to load. When I go to my library it is crammed full of garbage like "Microsoft game bar" and "Microsoft Gaming services" and "Microsoft 3d viewer" - stuff that just automatically came with windows including stuff that microsoft won't let you remove without considerable effort like cortana andcopilot, as well as weird junk like vide

  • A Side Note (Score:3)

    by magusxxx ( 751600 ) <magusxxx_2000@ya ... G.com minus poet> on Saturday November 01, 2025 @02:00AM (#65765754)

    If you go over to Reddit's forum for 4k Blu-ray you'll see lots of talk about how Playstation's disc drive is better than Xbox. Some are buying the Playstation as a 4k player first, gaming machine second, and streaming services third.

    They do say a dedicated player is best. The most affordable one suggested (Panasonic 450) is about $250. Except knowing you can add $150 and get a refurb PS5 with full warranty might sound more appealing to many households.

    • I forgot Blue-ray was even a thing.

      • The PS5 has a 4K Blu-ray which is the best quality home movie experience the majority of people can afford. More and more people are getting into physical media and especially Steelbooks.

      • For all of us adult non-gamerz , of a certain age , BLUE-RAY is still the gold standard for portable memory. Remember when Ubuntu came on its own set of discs ?

  • Which will be cheaper early next year; a second hand Xbox or PS5? I need something to temporarily play GTAVI on until it's released on the superior platform (PC).

    • I know a few people who want to move from a PS5 to a PS5 Pro, or have already done so and sold their base PS5.
      My gut feeling is that there are a lot more PS5s out there, just offer someone you know $200 and everyone is happy.

    • Re: (Score:2)

      by ffkom ( 3519199 )

      Which will be cheaper early next year; a second hand Xbox or PS5?

      Probably the second hand PS5, because Microsoft apparently does not manufacture Xbox hardware anymore, so they have become unavailable already in some places, and what little stock is left is sold at inflated prices to die-hard fanboys, collectors and such.

  • Gamepass is so expensive now (Score:3)

    by internetd00du ( 7659518 ) on Saturday November 01, 2025 @06:09AM (#65765898)

    2 years ago I paid €12.99 a couple times for ultimate. It seemed like a nice way to access a large library of games - as is their sales pitch.
    Eventually I got bored with the few interesting games I saw there. It was cheaper to buy one specific game on sale for €10.

    Now the price is €26.99 for gamepass ultimate.... haha. I'll stick with buying a €10 game during a sale.

  • Microsoft needs to fire their marketing team and come up with a better name

  • I bet Xbox is dead short of being a software brand (Score:3)

    by jdawgnoonan ( 718294 ) on Saturday November 01, 2025 @08:42AM (#65766012)
    I have owned every generation of XBox since the beginning and I think that I am done with the platform. I buy consoles because I do not want to deal with gaming PCs and Microsoft cannot get out of their own way in trying to promote gaming without trying to halo it into their other (mediocre) products. When my Series X is finally at EOL I will move to PS or maybe to a Steam device. Screw Microsoft and all of the garbage they try to cram at people. I believe that “XBox” as a brand is basically ready to become some kind of cheesy game ready certification for third party device (like the crappy “PlaysForSure” was in Microsoft’s failed music player business in the 2000s). I only use Windows based products when forced to with the exception of XBox. I am done with that product too. Microsoft is a decision by committee company and their products suck because of it.

    • Those are all problems which Microsoft has, which XBox actually made worse. XBox competed with Windows gaming, for what purpose to Microsoft?

      Xbox made them no real money, if it can't help keep people using Windows/Office/365 it's dead weight.

      • Microsoft need to do something about their constant churn of "services." They make a thing, people use the thing, then they make a new thing and the old one gets turned off with no migration path. They just have this corporate culture that says anyone with a slick presentation gets to gazump an existing thing and nobody has the wherewithal to point out that maybe all they are doing is teaching people not to invest in their platforms unless forced to. After GfWL making it the community's problem to patch the

        • XBox was never part of an ecosystem. The Apple TV is cheap enough to be part of an ecosystem, a console sits in an awkward place of being competition for higher end PCs. You can get the console and then switch to Macbook ... where is the advantage to Microsoft in that?

          Having no coherent ecosystem is part of their problems, XBox very much a part of that. Something like Steamlink to use the gaming capabilities of a PC and fill the same niche as AppleTV would make much more sense at the moment. WiFi wasn't rea

      • They also have the problem of releasing half assed services that were not ready for prime time and then killing them before they fix them. I experienced that back in the Windows Phone era with XBox Music, the crappiest music service I have ever used.

    • I peaced out on all consoles with the PS3. I was in the middle of Iraq and bought a secondhand PS3 for dirt cheap. I went out and bought a game disc for it to play... and the game wouldn't even launch without getting an update. An update. In a combat zone. In the middle of the desert. From a freshly bought disc.

      The disc was useless. It didn't have to have any data on it at ALL because it was programmed to download the game when you inserted the disc. They had no intention of all of providing a playable game

  • I helped a friend set theirs up. It refused to connect to wifi out of the box until it had a firmware update from a wired connection. Every step of the way this product has sucked starting with setup.

  • There is a path to higher overall division profits (Score:3)

    by Hasaf ( 3744357 ) on Saturday November 01, 2025 @10:59AM (#65766188)
    It is a bit paradoxical, but to keep the division alive, they need to accept lower per-unit margins.

    Very simply, they have exhausted their potential customers' willingness to pay. Raising the prices while sales slump is an Econ 101 type of mistake. This is particularly true when there is a strong marginal profit. There is no Velben effect going on here. It is simply poor marketing (in this, I mean the 4Ps' type of marketing).

    Everyone has become addicted to ever-growing profits and margins. However, there are limits, and those limits will first be seen in discretionary goods. Those limits are beginning to show through the economy. They are not alone. However, they still have time to respond.

    They won't fix it, but they have the time to do so if they want to.

    • Re: (Score:2)

      by ffkom ( 3519199 )

      Raising the prices while sales slump is an Econ 101 type of mistake.

      Not if you internally already decided on abandoning the product, and just want to milk the most out of the fans who buy the rest of your stock.

    • This wouldn't be the first project Microsoft killed with their own greed and it won't be the last.

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