Xbox Is Crushing It Right Now Ahead Of Series X/S Launch

Xbox made hundreds of millions of dollars in the past three months alone from software and services.

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Xbox is doing great heading into the launch of the Xbox Series X and S consoles in November. Microsoft announced its earnings for the July-September period, and Xbox was a bright spot.

Gaming revenue rose year-over-year by $550 million, or 22 percent, due in part to increased spending on games and services. The content and services department of Xbox specifically saw its revenue rise by 30 percent, which works out to a whopping $649 million increase.

This growth was driven in part by third-party games, Microsoft said, though it did not mention any by name. As a platform-holder, Microsoft gets a 30% cut of every game sold on Xbox, and with games overall flourishing right now during COVID-19, Microsoft is making big profits. The growth was also fueled by an increase in Xbox Game Pass subscriptions, along with first-party game sales.

It wasn't all sunshine and rainbows, however, as Xbox hardware sales dropped by 27 percent due to fewer systems being sold. That makes sense given that the Xbox One is many years into its lifecycle and the Xbox Series X and S consoles are right around the corner, so people may be holding off on purchasing a new Xbox right now.

Xbox is just one division of Microsoft, of course. Overall, Microsoft is crushing it right now, with the company posting revenue of $37.2 billion (+12 percent) for the period and a profit of $13.9 billion (+30 percent).

Microsoft recently dug into its bank account to pay $7.5 billion to acquire ZeniMax and its subsidiary Bethesda. The deal hasn't officially gone through yet, which is why Phil Spencer is limited in what he can say about the acquisition.

The Xbox Series X and S consoles will launch on November 10, priced at $500 and $300 respectively.

For its part, Sony will also report its latest quarterly earnings this week, so it won't be long until we find out more about how PlayStation is faring in the lead-up to the PS5 launch in November.

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RighteousWoman

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Edited By RighteousWoman

Xbox's growth and overall earnings for the last 2+ years have been crazy impressive. They are on a roll...

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johnny0779

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This is excellent news for Xbox.....all while Sony is still trying to play catch up and reversing everything they said before by no longer "Believing in Generations"

Ha ha ha

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bat725

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Just stop. Yes, M$ will always be “crushing it”.

But, Xbox? Don’t make me laugh. That brand is the biggest joke in gaming.

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johnny0779

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@bat725: Don't hate on Xbox by having 2x the number of gaming studios and 3x more exclusives than any other gaming company.

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sladakrobot

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@bat725: "Gaming revenue rose year-over-year by $550 million, or 22 percent, due in part to increased spending on games and services. The content and services department of Xbox specifically saw its revenue rise by 30 percent, which works out to a whopping $649 million increase."

I guess you didnt bother going past the headline....welcome keyboard warrior

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Soulcrusher777

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Yes they are, and they will continue for sure!

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CashPrizes

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Edited By CashPrizes

Ehhh, yeah revenue is way up, but they are also paying devs out the a$$ for licensing all of the Gamepass games they don't own outright.

I don't think all the numbers are available but I bet you if you showed Sony's gaming division PROFIT vs Microsofts for July-September it would be ridiculously lopsided in Sony's favor, like 5 to 1.

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SystemOverload

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@CashPrizes: Because Sony doesn’t do that....

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tjkraz

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@CashPrizes said:

Ehhh, yeah revenue is way up, but they are also paying devs out the a$$ for licensing all of the Gamepass games they don't own outright.

I don't think all the numbers are available but I bet you if you showed Sony's gaming division PROFIT vs Microsofts for July-September it would be ridiculously lopsided in Sony's favor, like 5 to 1.

GamePass is microsoft's endgame. It makes no sense for them to use it as a loss leader.

For years now, both Sony and MS have been giving away dozens of "free" games annually with a Gold / PS Plus subscription priced much lower than GamePass. PS Now is a similar concept for similar $$, albeit with older games.

Revenues from GamePass will largely fund first-party development. High profile titles from third parties are often rotated in a demo-like fashion designed to encourage purchase of the full game (GTA, RDR2, etc.) And many of the other games are Indies which undoubtedly cost little to license.

"Profit" measurement of GamePass would be significantly impacted by all of the studios they've purchased in recent years. But this is a long term plan. MS has every intention of growing subscribers to 20..30..40 million people owning both Xbox consoles and PCs.

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FireDrakeZ

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Edited By FireDrakeZ  Online

@CashPrizes:

Sony mostly sells games and subs on their console platform(with customer numbers in the millions) while MS actually has the luxury of reaching out to the billions of potential customers on consoles, PCs, phones, tablets and eventually TVs with their soon to be released streaming stick.

They have been topping the steam sales charts for many of their first party games on PCs and recently released sales data showing that they are breaking their own records for sales on PCs.

Sony might do well by selling to their established market on console, but MS can double or triple that income from sales and subs by catering to multiple platforms that also included Xbox consoles.

That is the reason Microsoft can justify spending more than $7 billion to acquire Zenimax, and their 8 studios including Bethesda.

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lonewolf1044

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@firedrakez: Yep and if they wish to cater to other companies they can and bring in the royalties. MS does not put all their eggs in one basket and they have many baskets and the Xbox line is not the core of their business.

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SkyHighGam3r

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"Microsoft gets a 30% cut of every game sold on Xbox"
Is this only for sales done through the xbox/windows store - or does this include retail as well?

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jenovaschilld

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Edited By jenovaschilld

@skyhighgam3r: The magic '30'% is from something called a licensing fee. https://en.wikipedia.org/wiki/Video_game_console And any game, or unit, sold in anyway is charged a LF. Saved for used games, which is under the fair use law. This is also the same with books, movie videos, board games, etc etc.

Pass the 2nd gen when Atari's home console, anyone anywhere could make a game for that hardware. Atari did not receive any money nor any say if that game could go on to the console. So you had crazy stuff like a Purina dog chow game that came with every bag of dog food. Or pornographic games that played on the Atari. But the worse was, that console was flooded with very poor crappy broken games that turned off owners of the console and nearly killed the home video game console.

Nintendo was smart, they legal patented their console, so that only they had a say on what -actually comes out on their console. No one can just make a game for nintendo - it has to have a licensing or Nintendo can litigate them into the ground. This serves two very important purposes - first allows a platform to be a gait keeper. It gives PS, MS, NIN, steam, IOS, etc to determine if a game can publish to their platform. This keeps adult only games off nin, and terrible broken games off .... well lets be honest they still slip through. The next is, it allows them to get paid.

Licensing fees are actually around 25-45%, but the industry just says 30%. When a console wants to make a game an exclusive, they will invest in the like a publisher or offer them a lower LF, so that they get a larger cut. Same with timed exclusives. Sometimes a console/platform will take on a risky game that may never find an audience, and bump the licensing fee higher. PS offered a slight bump down if they implemented 'rumble' vibration, to their games to offset any development costs, in order to get their consumers to adopt new controllers.

Hugely popular, MS Xbox one, during early part of 8th gen, back tracked on their previous friendly stance with Indie games by increasing licensing fees, and increasing them more if you cross platformed your game. This pushed Indie into either making their game exclusive or risk not having access to the console because the licensing fee would not be worth the dev cost to port.

Oh, publishers get more money if a game is sold through digital (because your cutting out retail- shippers, clerks, stock room clerks), a platform may increase their LF to capture some of that extra profit, but also if the game was purchased through the platforms store. Developers get paid the same regardless as they get a set amount paid up front for development, set amount depending on how many games are sold, and a set amount for target goals. There are reasons.

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gamer112696

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@skyhighgam3r: Microsoft still gets a cut in this scenario, but the retailer does too. I don't think it affects Microsoft's cut though. While I could be wrong, I think I read somewhere that physical games take more money away from the developers because of the cut that retail gets.

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DoomsdayHell01

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@skyhighgam3r: Might be Both. The rich keeps getting Reacher

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Zorlac

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@doomsdayhell01: You say that like it's wrong that a business wants to make money.

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Barighm

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@Zorlac: There's a difference between making enough money to stay in business and funneling all that money into the pockets of a few people while firing everyone else.

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Zorlac

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@Barighm: God forbid a company be profitable these days. Everyone has to find SOME reason to hate anyone or anything that's successful.

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Atzenkiller

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@Zorlac: Nah, it's you who's twisting his words. A company that is already filthy rich doesn't need to make even more money. Or do they? Is their survival at stake for companies like MS that get to spend billions on buying up other companies? Not really. So is it wrong to obsess over doing anything they can to further increase profits? Decide that for yourself. If money is the only thing that matters to you in life, then you probably will think that view is perfectly fine. If not then you might realize that their efforts might be better spent on things like improving the quality of their products and their customer support. But especially the latter is something where all big companies seem to scrounge as much as they possibly can. Amazon is the one big exception and as we can see their models works perfectly for them, creating the most loyal customers.

Not to say that Amazon isn't only doing this because they know how it impacts their sales, but they're probably spending a lot of money on customer support, returning anything you bought from them within 2 years with no questions asked. And where do companies like MS put all that money? Into buying up other companies while their online support is managed by Indians who are being payed to copy/paste the same crap again and again. Kinda sad that the richest companies tend to have the worst support, don't you think? Yeah, it's perfectly fine that they're so obsessed with making more money that they'd cut costs even in such crucial areas. Gotta please the shareholders after all who also only care about their personal profit.

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lonewolf1044

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@Atzenkiller: One thing that does irk me about MS is outsourcing support to foreign countries as you said to India and not so much here in the States because they know they do not have to pay those folks much as would have here in the States. MS is not the only one that does this as other countries do so as well. However it never hurts to make more money as capitalism is alive and well

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Atzenkiller

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@lonewolf1044: Of course it doesn't hurt if you can make more money by delivering a superior product that people love. But most of the time it does hurt people because in an effort to keep increasing profits companies tend to cut costs wherever they can. And support is one big area that most big corporations try to spend as little money as possible on. If you've ever had to deal with the support of some of those companies then you know how painful that can be. And the same applies to poor product quality, just because saving a few cents on each product is more important to the CEO than delivering a great product. As long as people are stil buying it it's good enough.

Overall making more money is not a bad thing. But obsessing over it always is, and that's what modern capitalism is all about. The initial idea behind it was that people who provide great value get rewarded for it. Nowadays though increasing profits has become the one and only goal of most companies, their religion, and they're willing to do anything to make more money. And it's that kind of attitude that has led us to destroy the planet, brainwash people to turn them into good little consumers whoo always do what they're told and almost wipe ourselves off this planet many times over the past century. All for profit and personal gain, as if that was the only thing that mattered in life.

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Zorlac

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@Atzenkiller: That's the dumbest thing I have ever read in my life. How exactly do expect a business to stay a business if they don't make money? I mean seriously do you expect them to eat from our love and gratitude?

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Atzenkiller

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@Zorlac: Yeah, it doesn't sound like you generally do much reading. Where did I say anything about it being bad to make enough money to cover all your costs? Big companies like MS make billions of $ in profit per year. All their cost are already covered before that. Then they use that profit to buy up other companies or burn it in any other way. Those companies are never struggling to survive, they are actively looking for every possible way to take more of your money. Because that is their sole purpose of existence. Like a tumor that only exists to keep growing until it eventually kills its host.

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Blade_Runner_07

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@Zorlac: Microsoft in particular may be okay not making money.
I don't know how it works out but the United States military uses Microsoft software almost exclusively in every sector. In some ways they have such a monopoly that way, that money doesn't matter the same way it might for Apple or Disney.

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lonewolf1044

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Edited By lonewolf1044

@Blade_Runner_07: I agree but there are situations where it is better to have one supplier and MS has been in business for many years and one situation is the military where you may have to avoid using multiple systems to avoid compliance or compatible issues.

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