Microsoft confirms Xbox business is profitable!

In its pitch to Wall Street, Microsoft is sticking up for its video gaming business.

At a briefing for financial analysts on the sidelines of the company’s Build developer show, chief executive Satya Nadella prominently highlighted the company’s efforts to get more value out of its gaming franchise.

And, politely, he suggested that financial analysts – some of whom had called in years past for Microsoft to package and sell its Xbox unit – were looking at the business the wrong way.

Most of you view gaming as ‘Microsoft has .. .an Xbox business,’” Nadella told the crowd of mostly investment bank analysts who track Microsoft’s finances. “I think you understand the console economics. But it’s a much broader thing for us.”

Nadella, in his fourth year at the helm of the Redmond company, has narrowed Microsoft’s focus to the areas where it can bring something different to the market. He’s also tried to build greater connections between the company’s wide range of products.

Nadella threw up a PowerPoint slide to illustrate his point, using the Xbox business as an example.

The company’s Xbox Live service, initially a subscription program for console gamers to compete with each other online, has been broadened to a social network that connects Xbox and personal computer gamers. The company has also moved to enable gamers playing on the two platforms to square off against each other.

http://www.dualshockers.com/microsoft-ceo-xbox-live-biggest-gaming-social-network-talks-connecting-dots-around-gaming/

http://www.seattletimes.com/business/microsoft/nadella-defends-value-of-xbox-gaming-to-microsoft/

http://www.dualshockers.com/xbox-boss-phil-spencer-talks-future-opportunities-e3-cloud-broadcasting/

Best to click the links you find charts and more information in there.

That's good and one can only wonder just how much better they would be doing without such a horrible, stumbling outta the gate this gem tho since then, they've come a long way baby.

I say MS made more money through Windows 10 when they started porting games for PC and so I could say they made some money off of it but Xbox One console selling point is another story.

https://www.microsoft.com/en-us/Investor/events/FY-2017/fam-fy-2017.aspx?EventID=181160 If you got time can watch the presentations here. Phil Spencer outlines the future for xbox.

They just need more Scalebounds to cancel. It all makes sense to me now.

@loe12k:

Oh please don't mention charts!

Wait, I just mentioned charts!

Ack, I said charts again!

Oh crap, incoming barrage soon I expect....Get in your bomb shelters, under tables or stand in doorways before they rain down upon us like a biblical plague!!!

Getting a lot of mileage out of Scalebound still I see. Hopefully MS will cancel another games soon just so people can change the record.

When you have such little ammo, you need to keep using that one bullet casing over & over & over and many times about shoot yourself in the foot...

Lolol :P

@SecretPolice:

@Boycie

Well, when you have so few exclusives, every loss is a big one.

I think they canceled Scalebound to fun Eight Days and Getaway.

Indeed. Sony needs to step up to the plate.

I read the article and where does he mention Xbox being profitable? I mean at this point it likely is but this article is a very poor example of that.

Yeah, I didn't read anything about being profitable either. Though I know they said they were profitable a couple years ago, so I imagine they are even more so now.

Good to see them do well. I've been enjoying their systems, games, and service so I want to see that continue.

Where in the article does it say Xbox is profitable? Oh, another shitty loe12k thread, nothing to see here folks.

They pull in revenue from Havok and Simplygon constantly. Sony and Nintendo use Simplygon for developing games and MS owns Simplygon.

Took them long enough :s

2001-2016: I dunno guys. We'll have to wait and see...
2017: Hey! It's worth it!

Can you name some games, cause i can't find any that use Simplygon Or Havok. All i found was Simplygon is in Unity and Unreal. And neither Sony or Nintendo have games on those engines.

In the links and video i provided. You have to listen to what they're saying, look at the charts provided. Microsoft says xbox businessis booming and profitable.

Nadella says he’s trying to “connect the dots around gaming.”

That approach, he says, brings Microsoft more cash per customer than the old world of simply selling someone an Xbox console.

Overall, Microsoft’s gaming business brought in $6.6 billion in revenue in the nine months through March

@loe12k:

Of course it's profitable! Why the hell would Microsoft continue with Xbox One if it wasn't!? ?

Sony uses Havok, Simplygon and Visual Studio which are owned by MSFT.

http://marketrealist.com/2017/01/how-microsoft-could-benefit-from-simplygon-acquisition/

PS4 is almost like another Xbox i.e. PS4 is the superior "Xbox" when compared to XBO.

Say to Quad and gamer's like him they think xbox is doomed.

@loe12k: For the 100th time, Microsoft rolls all research and dev costs associated with Xbox into one big R&D pool.

Essentially they can say whatever they want, and nobody but upper management within Microsoft actually know if it's profitable or not.

Not saying it isn't profitable, just saying that MS can say whatever the hell they want, and nobody can disprove it. The same is probably true of Sony.

edit: The fact that MS is even still in the console business indicates that it must be profitable, or at least strategic to remain in this market segment. If not on the consoles themselves, license fees, subscriptions, etc.

Not true we can got gaming revenues for Sony and Microsoft for the whole of 2016. They made 6.6 billion from software, dlc, and subscriptions. We know most of the revenue is generated by xbox.

Nope, we know jack shit. Revenue != profit.

As only Microsoft knows the true expenses, only they know how much profit there is.

Revenue is profit ( it's external money coming in from different sources) Where that money goes after it comes in i don't know.

@Archangel3371: Indeed

profit = revenue - costs.

If you would sell an xbox for $300, but it costs $400 to build you wouldn't be profitable. Else every company in the world is profitable just because they sell stuff

6.6 billion gaming revenue don't include hardware.

6.6 billion paying 1 year wages, xbox live structures, games. MS is profitable to me looking at all the areas they pay out to.

A game like Gears of War took 2+ years to develop would cost them 50 million. How many Gears of War games do we get every year? Xbox has maybe 2,000 employees may 5000 at most maybe?

No, its not.

Anyone else getting a kick out of the OP making a thread about Sony actually using the right word for something while this thread title alludes to profit that isn't mentioned anywhere?

Still won't report the great XBox One sales though.

Revenue can be profit. Say i gave you 100 dollars right now for free and you put in your pocket. You have no expense on that you just gained 100 free dollar's from me.

This is the equivalent of plugging your ears and shouting "liar liar liar!"

Wrong, but continue.

http://www.investopedia.com/ask/answers/122214/what-difference-between-revenue-and-profit.asp

As you can see, by Microsoft trying to change what the definition of the XBox business is, they can fudge with what they account for as a revenue stream to it. It's funny math. Not sure how well it will go over with investors but that's how they justify the business to the board at this time.

This is important- gaming is profitable for Microsoft, that's what they say. That includes Xbox, Xbox Anywhere, Xbox Live, and Minecraft. They say nothing of just the Xbox business.

Nonetheless, this is good news, and hopefully it leads to Microsoft increasing their investment in video games even more going forward.

Again another example. Say you worked for me a week and i was a good boss. I said here's 400 dollars, keep it don't pay tax nothing. That's revenue= profit you got the full 400 dollars.

With company's we don't know what taxes they pay? Some companies might not even pay 1% on revenue coming in (could be 0%)

They also pull in money for every version of Minecraft that is sold on Playstation and Nintendo platforms.

Profit is what I would account for after paying for the gas to get to and from work as well as the differential I am spending to be at work as opposed to not being at work in terms of life expenses. Your model doesn't hold up. FYI, I work for a consultancy. I could make this conversation a living nightmare.

I know what different definitions mean. You guys look it up on the internet and think this person wrong., no. Depending on the circumstances revenue can be profit, it also be opposite. Revenue-expense's= profit ( net)

If you think revenue can be profit for a multibillion dollar company I just don't know what to tell you because you have to be touched in the head. A company like Microsoft is ALWAYS going to have expenses that are going to eat at that revenue. So theres absolutely no way for revenue to equal profit here. You're making a fool of yourself.

In the console wars it is hard to see that Microsoft is changing the game and setting themselves up for the future.

If I was an investor in the biggest software company in the world and we were not involved in a 200+billion dollar anual industry I would be pissed for not going for a piece of that pie.

No way Xbox is going away. They are making billions!

Not sure what that means but Phil stated Xbox live for the first time ever "monetized" over a billion dollars alone.

Can be depending on the taxes and expenses they have. You be surprised how little tax companies pay.

You have to be arguing for the sake of it here. There are ALWAYS going to be expenses at Microsoft. No if ands or buts here bud. There is no situation where revenue = profit for them. Just quit this, admit you're wrong, and move on. This is just sad.

There is no situation where revenue = profit for them ( False) Microsoft avoids paying Corporation tax too.

https://www.forbes.com/sites/timworstall/2014/12/23/more-than-90-of-us-businesses-dont-pay-the-corporate-income-tax/#143c18675e48

Do you really think that their only expense is taxes? Please stay in school

This took no time at all to find. A lot of games, including PlayStation exclusives use the Havok physics engine

As for Simplygon, that didn't take much effort either. There are loads more games running on Unreal Engine 4, and Simplygon, on the PS4 (exclusive and multi-platform).

Try it yourself, just google "Unreal Engine 4 games" and follow the link to the wiki page, it's really easy.

Corporation tax is a tax on profits and capital gains. Telling me to stay in School? If they not paying the tax the xbox revenue coming in is profit..

Its clear I'm arguing with someone who doesn't understand even the fundamentals of economics which is my mistake I suppose.

Let me put it this way. If they pay their employees at the xbox division there are expenses. If they pay property taxes for the buildings for the division those are also expenses. If they pay for water, electric, utilities, anything those are expenses. Everything they pay to do business is an expense. If it totals to just one cent, revenue /= profit.

Edit: I hope I'm being trolled here because the other option depresses the hell out of me.