Photek wrote:jawa_ wrote:Photek wrote:Phil Spencer is doing fine. Xbox gaming revenue was up 50% from last year, this is just shareholder greed.
On that face of it that 50% figure sounds like an incredibly good performance, but when you like behind the headlines there are issues worth highlighting, as The Verge shared:
Despite some early successes for Xbox games on rival platforms, Xbox hardware is down by a massive 31 percent this quarter, a big drop following a soft quarter for Xbox sales during the all-important holiday season last year. Microsoft admits the obvious in its earnings filing: that the big drop was “driven by lower volume of consoles sold.”
Overall, gaming revenue is up 51 percent, bolstered by the additional Activision Blizzard revenue, which contributed 55 points of net impact. That means without Activision Blizzard, Microsoft’s overall gaming revenue would have actually declined this quarter. The newly acquired division recorded $1.97 billion in revenue during Q3, but the cost of integration, transaction costs, and other costs of revenue all total $980 million. With other operating expenses ($1.34 billion), it calculates to an overall operating loss of $350 million for Activision Blizzard.
Xbox content and services would have only been up a single percent without Activision Blizzard, so it’s clear that this giant purchase is already having a big impact on Microsoft’s overall gaming revenues. It looks like next quarter is going to be a similar story for gaming at Microsoft, too.
Source:
The Verge
Pointless article, without Activision Blizzard, King it would be worse… good thing they own them then.
Some points to consider are:
> The ABK profits are holding up underlying poor performance in the Xbox division. Yes, ABK is part of Xbox, but how does this major cross-platform gaming sector tie in with improving the fortunes of the core Xbox platform?
> ABK income (not profit) of $1.97bn is huge... but it will be many years before there is real profit on the purchase, recognising the circa $70bn takeover expense.
> Xbox console hardware sales are in a pattern of significant decline.
> Microsoft must be looking for the Xbox platform to be better positioned in the market recognising the expenditure on gaming over past years. MS are a goliath business and they need to identify the reasons as to why they're not performing far more strongly.