30% is a crazy aggressive profit margin target for such a competitive space. It's a pretty aggressive profit margin for just about anything. Feels like those studios are being set up to fail.
30% is a crazy aggressive profit margin target for such a competitive space. It's a pretty aggressive profit margin for just about anything. Feels like those studios are being set up to fail.
This is such a shitshow. Basically telling the world "We set unrealistic targets, so you all need to match our unrealistic expectations or get shut down" Now they are adrift with no focus, no...
This is such a shitshow. Basically telling the world "We set unrealistic targets, so you all need to match our unrealistic expectations or get shut down"
Now they are adrift with no focus, no identity and no future. There is no way at this point that Xbox can recover. The identity, brand, and mission are beyond saving. This is the end of an era. Xbox will be missed.
It seems that that's kind of par for the course in the industry when it comes to acquired studios. They'll let them make a game or two, then decide that it doesn't meet their ultimately arbitrary...
It seems that that's kind of par for the course in the industry when it comes to acquired studios. They'll let them make a game or two, then decide that it doesn't meet their ultimately arbitrary desired ROI and then use it as an excuse to stop paying people. That way they have full control over the IP and there isn't a studio left over with the expertise to make similar games.
That's a bit unfair, admittedly, because this kind of thing doesn't always happen. But I've seen so many publisher-owned studios that I've loved get shut down because of one low-performing game. Right now the example I'm thinking about is Volition, who got tossed all around the corporate chart when Embracer bought them, got the chance to make a single game which was profitable and they still got shuttered because they didn't make enough money to make the C suite people happy.
Technically they are making more money than ever sadly... Hopefully that changes in the next few months. As a long time gamer I'm not interested in their new direction, as cloud gaming simply...
Technically they are making more money than ever sadly... Hopefully that changes in the next few months.
As a long time gamer I'm not interested in their new direction, as cloud gaming simply isn't good enough where I live (even on fast internet). I also have no interest in being tied to more subscriptions. And who has the money for a $1000 windows console right now?
If there's a silver lining in the massive corporate consolidations that resulted from the Bethesda and ABK purchases is that Microsoft probably regrets them. Not much of a consolation.
If there's a silver lining in the massive corporate consolidations that resulted from the Bethesda and ABK purchases is that Microsoft probably regrets them. Not much of a consolation.
I originally saw this post by Danny O'Dwyer from noclip over on Bluesky. Made for an interesting read and seemingly goes some way to explain recent MS behaviour when it comes to Xbox. Used the...
I originally saw this post by Danny O'Dwyer from noclip over on Bluesky.
Made for an interesting read and seemingly goes some way to explain recent MS behaviour when it comes to Xbox.
Used the clean version of the article link for the post.
Here's the version Danny provided on bluesky article link
Something I realised after the fact is that it was actually Jason Schrier that shared the link initially, what I saw was Danny retweeting (or whatever the Bluesky equivalent is) his post.
Something I realised after the fact is that it was actually Jason Schrier that shared the link initially, what I saw was Danny retweeting (or whatever the Bluesky equivalent is) his post.
Can't divorce the mixed bag cold from its awful patents. There were some shining moments for XBox, but frankly, I never felt like they were doing anything but playing it safe and when that failed,...
Can't divorce the mixed bag cold from its awful patents. There were some shining moments for XBox, but frankly, I never felt like they were doing anything but playing it safe and when that failed, they played dirty. Good riddance.
My initial thought before this was concern for Mojang, since it is a studio owned by Microsoft that probably has really poor margins since they release new content for free. However, after reading...
My initial thought before this was concern for Mojang, since it is a studio owned by Microsoft that probably has really poor margins since they release new content for free. However, after reading the article, there are bigger concerns.
In the past, game makers at Xbox weren’t asked to hit specific numerical targets, said the people, and were largely told to focus on making the best games possible without worrying too much about finances. The new target was implemented in fall 2023 by Microsoft Chief Financial Officer Amy Hood, whose team has taken a larger role in the gaming business in recent years.
I think going from a hands off approach of make great games to having the CFO become more involved is something that could ruin Microsoft's gaming division. Especially when you consider while it performs below industry average, Microsoft is still turning a profit:
Microsoft’s gaming business had a 12% profit margin for the first nine months of the company’s 2022 fiscal year.
Also, I think this new approach is at odds with their old approach:
An Xbox spokesperson said in a statement that they take a long-term view of their business and that success “doesn’t look the same across every project or priority. We look at the business as a whole, balancing creativity, innovation, and sustainability across a diverse portfolio of offerings,”
Good connection. I think that CFO's MBA angle is at odds with not just Microsoft's old policy, it's at odds with the gaming industry itself. An industry that by default has incredibly slow...
Good connection. I think that CFO's MBA angle is at odds with not just Microsoft's old policy, it's at odds with the gaming industry itself.
An industry that by default has incredibly slow turnarounds on product that turns it into an even more unstable seasonal cadence than an ice-cream parlour cannot be managed the same as a growth sector in, say, an apparel brand.
You can't just say you want 30% more! And then just leave it at that. It's a fundamental misunderstanding of what games are.
It's the entire reason you see these triple A companies struggle across the board.
30% is a crazy aggressive profit margin target for such a competitive space. It's a pretty aggressive profit margin for just about anything. Feels like those studios are being set up to fail.
This is such a shitshow. Basically telling the world "We set unrealistic targets, so you all need to match our unrealistic expectations or get shut down"
Now they are adrift with no focus, no identity and no future. There is no way at this point that Xbox can recover. The identity, brand, and mission are beyond saving. This is the end of an era. Xbox will be missed.
It seems that that's kind of par for the course in the industry when it comes to acquired studios. They'll let them make a game or two, then decide that it doesn't meet their ultimately arbitrary desired ROI and then use it as an excuse to stop paying people. That way they have full control over the IP and there isn't a studio left over with the expertise to make similar games.
That's a bit unfair, admittedly, because this kind of thing doesn't always happen. But I've seen so many publisher-owned studios that I've loved get shut down because of one low-performing game. Right now the example I'm thinking about is Volition, who got tossed all around the corporate chart when Embracer bought them, got the chance to make a single game which was profitable and they still got shuttered because they didn't make enough money to make the C suite people happy.
Technically they are making more money than ever sadly... Hopefully that changes in the next few months.
As a long time gamer I'm not interested in their new direction, as cloud gaming simply isn't good enough where I live (even on fast internet). I also have no interest in being tied to more subscriptions. And who has the money for a $1000 windows console right now?
If there's a silver lining in the massive corporate consolidations that resulted from the Bethesda and ABK purchases is that Microsoft probably regrets them. Not much of a consolation.
I originally saw this post by Danny O'Dwyer from noclip over on Bluesky.
Made for an interesting read and seemingly goes some way to explain recent MS behaviour when it comes to Xbox.
Used the clean version of the article link for the post.
Here's the version Danny provided on bluesky
article link
For anyone else wondering what makes this link different than the topic link: it has an access token for bypassing the paywall.
Something I realised after the fact is that it was actually Jason Schrier that shared the link initially, what I saw was Danny retweeting (or whatever the Bluesky equivalent is) his post.
Mirror: https://archive.is/KJoeE
Can't divorce the mixed bag cold from its awful patents. There were some shining moments for XBox, but frankly, I never felt like they were doing anything but playing it safe and when that failed, they played dirty. Good riddance.
My initial thought before this was concern for Mojang, since it is a studio owned by Microsoft that probably has really poor margins since they release new content for free. However, after reading the article, there are bigger concerns.
I think going from a hands off approach of make great games to having the CFO become more involved is something that could ruin Microsoft's gaming division. Especially when you consider while it performs below industry average, Microsoft is still turning a profit:
Also, I think this new approach is at odds with their old approach:
Good connection. I think that CFO's MBA angle is at odds with not just Microsoft's old policy, it's at odds with the gaming industry itself.
An industry that by default has incredibly slow turnarounds on product that turns it into an even more unstable seasonal cadence than an ice-cream parlour cannot be managed the same as a growth sector in, say, an apparel brand.
You can't just say you want 30% more! And then just leave it at that. It's a fundamental misunderstanding of what games are.
It's the entire reason you see these triple A companies struggle across the board.