Xbox missed annual revenue forecasts by $780 million

Xbox gaming missed management's internal annual revenue estimates by $780 million, and also failed to meet expected Xbox Game Pass subscription growth.

The case file exhibit list includes one very illuminating 80-page internal Microsoft document that outlined where Xbox currently is and where it can grow. The slide deck, which was issued during Microsoft's Q3 FY22 (January - March 2023), has assigned an estimated revenue target of $17 billion for the Xbox games division. Actual results were quite different--Xbox made $16.22 billion in FY22, missing the internal target by some $780 million.

[Outside_ofthe_Box]

Wonder if it had anything to do with this? https://n4g.com/news/255721...

Or we can blame Sony's aggressive competitive business tactics that Microsoft themselves use too!

[just_looken]

Or they can write it off with the pile of cash Microsoft makes.

I am still amazed they have not pulled a kenect were they just pull the consoles.

I mean lets be real with there games on pc and xbox now why would you own said xbox console? they should go with a real digital store front like steam.

Heck sony would be smart let microsoft put a xbox digital store on playstation 5 just like how pc is so you got your playstation store then go too the xbox store to grab there games.

Xbox can split the revenue like valve does but xbox host the games on there server this may let games like starfield on playstation if xbox gets more of the cash from game sales.

Oh also do not post but pc cost so much crap you do not need a 4090 to play pc games amd 6k series am4 rig is more than enough.

Oh the playstation 5 thing your games can be either under 2 ids like pc gamers do steam id battle.net id or if sony would allow it make it so you can use your playsation id and but games on the xbox store though that tech wise its possible but the companies would half to allow it.

[lelo2play]

Their target was $17 billion. They made $16.22 billion... some people will think that was bad.

$16.22 billion without any AAA first party exclusive games, that's quite impressive for the Xbox business... but bad for Xbox gamers that didn't have AAA first party exclusive games.

[mkis007]

Revenue not profit

[SeTTriP]

They not profiting the overhead in game development is steep.

[Nacho_Z]

It depends though, for all we know they needed to make 16.5 billion revenue to turn a profit.

[lelo2play]

@mkis007
Never said it was profit. So how much was the Xbox profit?
When Sony or Nintendo show their revenue, do they announce their gaming profit?

@Nacho_Z
"16.5 billion revenue to turn a profit."
Did you just make that up? Where did you get that number?

[Nacho_Z]

Do you know what "for all we know" means? Point is there's no point celebrating revenue without knowing what the profit margin is.

[lelo2play]

@Nacho_Z
If you include "for all we know", you can just make up numbers?
By curiosity, for all that you know how much does Sony and Nintendo need to turn a profit in gaming?

[Nacho_Z]

Google it and you'll see what Sony's profit for their PS division is, it's very straightforward to find out. Nintendo I have no idea and don't care, no doubt they're raking it in though, they actually make money on hardware for one thing.

[SullysCigar]

@ lelo2play, it IS bad, It's always bad to miss a target. The fact that they had no decent games during that period is irrelevant. That target was set knowing full well they had no decent games releasing. It's a formalisation of expectations, relayed to the shareholders and they haven't met those expectations.

That's the reason "some people will think that was bad" - it WAS bad.

[dumahim]

@lelo2play
"Never said it was profit."

Yes you did.

"They made $16.22 billion..."

A revenue value is not making (made) money. It could be they lost money with that.

[zekk]

I think this has been covered before but revenue is the ability to collect on your a/r (accounts receivable aka what is owed to you). It's used to help measure the health of a company's cash flow. There are other things but that's one of the most important. Revenue doesn't take expenses and liabilities into account. The fact they missed projection is bad especially since from the look of things their expense and liabilities are most likely increasing meaning there is a larger negative gap in profit/loss. Also from a shareholders view this is not great. It means profitable areas of the business are putting money to try to makeup the difference instead of going to investors. Also could effectively cause other profitable areas to shrink or stagnant since money they make is going to Xbox and not their own projects. It can also effect morale and bonuses to other hard working division/workers.

[jznrpg]

Every public company that has a mids that large will make cuts inside the company to make up for it.

During Covid the company I worked for previously had a 500 million dollar miss for the year and they cut a few hundred people, made some retire and cut some bonuses for salary people and lowered some salaries and made other cuts adjustments inside the company.

They just don’t write it off they try to make it up as much as they can one way or another not to hurt their overall bottom line. Xbox can only be funded for so long the something has to give. What that will be is interesting but they are clearly getting desperate and it could get really ugly

[Knushwood Butt]

'Your business is not necessarily meeting its internal targets today?'.

'It is not right now, no.'.

For once, I believe Phil.

[XiNatsuDragnel]

Because you guys need to make quality Games nuff Said.

[just_looken]

they do have alot in the pipline as far as 3rd party stuff maybe one of these might be good?.
https://www.gamesradar.com/...

[just_looken]

So 12 users on this board have time travel powers?

I left a link to over 15 dev teams ms owns we all do not know if one of those devs might make a quality game finally.

[AmUnRa]

Nah MS has found a better way, just buy whole publishers let them make the games for you and call them your own.

[Flakegriffin]

And still come in last place.

[crazyCoconuts]

Target to grow GamePass subs by 73% a year? That sounds really aggressive - it's a hell of a target

[Phoenix76]

Even harder when MS themselves have admitted cutting back on production of the SX.

[jznrpg]

They could produce 50 million doesn’t mean they will sell though. They are sitting on shelves everywhere right now

[ocelot07]

Bring back the £1 subs a month and it will happen ......I think.

[AmUnRa]

The times of £1 ore $1 subs wil de a thing of the past, the price of GP will be growing in the coming years, you can bet on that, and you will not loose.

[dumahim]

If it didn't bring in those extra customers in the past with that deal, why would it now?

[ocelot07]

@dumahim

Oh it probably won't. I just miss paying £1 rather than £3 - £4.

[NextGenCeo]

Microsoft will be out willingly from console market soon. They will go Cloud gaming and be come Biggest Publisher for every gaming platform on the world. Especially PC.

[Godmars290]

Or create the platform, overcharge for it, get lazy and inefficient with it, allowing for someone else - No-no, not you Google or Amazon - to enter the scene with a better, cheaper form of "their" service. As things tend to go with MS.

[jznrpg]

They can offer whatever they want I won’t buy any of there crap.

[Furesis]

That is actually damn close for a forecast. 16 billion huh... that's a lot lol. I can't even comprehend that amount in my head haha, insane

[CantThinkOfAUsername]

Microsoft makes $168 billion a year; this is nothing to them.

[SeTTriP]

MS not xbox.people at this level hate to loss a dollar so it means something.

[gold_drake]

make quality games
do less interviews where u bash the competition

profit.

oh, sorry, forgot, they dont do that, theyd rather just buy out stuff.

[Muadiib]

They need a new leader that didn't rise up through the ranks of corporate (and clueless) Microsoft, an outsider with actual mega success in any kind of a business.

[andy85]

Ngl this headline makes it sound worse. I don't think getting 16.2b of a 17b projection is that far off. What's interesting though is the revenue is lower than last years.

[dumahim]

It shouldn't be that big of a deal, but to investors and their stock price, falling short of expectations isn't good.

[thesoftware730]

Haha, they made a bundle.

All gaming companies missed forecasted sales, if I'm not mistaken both Sony and Nintendo lowered their forecast a while back.

16 bill...something is making money.

[CantThinkOfAUsername]

Third-party and 'Micro'transaction sales make most of PlayStation's and Xbox's revenues.

[Lightning77]

Poor MS how will they eat!

[Destiny1080]

2030 cant come soon enough

[talocaca]

I would love it if they are forced to actually disclose hardware sales AND profits. I mean, if they are trying to spend $70B dollars, the least they should do is explain where the money is coming from....

[AmUnRa]

Where to you think the money for the $70B are coming from?
From the wallet of Xbox daddy....Microsoft

[anast]

Of course they did. Whoever made that projection is an idiot.

[Agent75]

What do you expect when Microsoft forgot the games after the Series X launch?