Gaming - Page 298

New internal documents from Microsoft's business leadership shows that Xbox has missed revenue forecasts by over $700 million.

The Microsoft-Activision merger is being challenged in federal courts, (FTC v Microsoft, 3:23-cv-02880-JSC) and a lot of interesting information is being released to the public as a result. Court exhibits have uncovered the dynamics of the Xbox gaming business and the performance expectations from Microsoft's SLT, or Senior Leadership Team. One such metric is Xbox revenues.

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.

Diablo IV will eventually get DirectStorage support on PC, according to a report that cites a developer from the team.

PC Gamer delved into the issue - we already know that DirectStorage files are in the code for the action RPG, thanks to keen-eyed data miners - and came up trumps with a confirmation direct from the horse's mouth.

A member of the Diablo IV team told the gaming website: "MS DirectStorage is currently not enabled, but we are planning on enabling it in the future."

Microsoft plans to make Xbox the leader in the global games industry in terms of revenues by 2030, and Xbox has already beaten Nintendo revenues for the past two years running.

California District Courts today published a wealth of documents from the FTC v Microsoft federal case exhibit list, and included in packet is a lengthy internal presentation deck from Microsoft's SLT (Senior Leadership Team) that outlines its ambitious plans for Xbox gaming.

According to the document, which was published in June 2022, Microsoft aspires to have the Xbox ecosystem become the top inter-connected video games platform by revenue by the year 2030. "Our ambition is to reach industry leadership, as defined by global revenue, by 2030. This implies doubling our total revenue during that timeframe," reads the slide deck.

Microsoft was considering a massive slate of video games developers and publishers as potential acquisition targets, a new exhibit filing from the FTC v Microsoft federal court case reveals.

Before it settled on trying to buy Activision-Blizzard for $68.7 billion, Microsoft had over 100 gaming companies on its list for M&A consideration. The list is part of a confidential internal Xbox Game Studios M&A briefing from April 2021 that was published as a public exhibit in the FTC v Microsoft federal preliminary injunction case.

In the slide deck, which is woefully outdated by over 2 years, Microsoft outlines what it considers to be some of the top choices for potential mergers and acquisitions buyouts in April 2021, including Japanese games publisher SEGA, Destiny and Halo developer Bungie, Elden Ring and Dark Souls developer FromSoftware, Witcher and Cyberpunk 2077 developer CD Projekt RED, No Man's Sky developer Hello Games, Hitman developer IO Interactive, Crysis developer Crytek, Warframe developer Digital Extremes, Divinity and Baldur's Gate 3 developer Larian, Control and Alan Wake developer Remedy Entertainment, Dying Light developer Techland, Borderlands developer Gearbox, and many more.

Xbox gaming CEO Phil Spencer outlines the stark realities of Microsoft's games business, confirming that the Xbox games division is a seperate operating unit with its own budgets, profit and loss accounts, and expectations.

It's a common misconception that because Xbox is part of Microsoft, a tech giant with a $2.45 trillion market capitalization, that the Xbox games division has an unlimited budget and can constantly lose money. This isn't the case. The reality is that the Xbox business is under constant pressure to deliver profits and growth.

In day 2 of the federal FTC v Microsoft case's evidentiary hearing, Xbox gaming CEO Phil Spencer offers an eye-opening look at Microsoft's gaming business. Typically, Microsoft does not divulge very much information on Xbox outside of a few earnings metrics--hardware, content and services revenue, and if we're lucky, an update on Game Pass subscribers. Spencer's testimony in the hearing sheds light on the stressors in running the Xbox business, and what ultimately led up to the $68.7 billion bid for Activision-Blizzard.

Minecraft is the best-earning Xbox game of all time and delivers considerable profits to Microsoft's games division.

At the recent FTC v Microsoft hearing in federal court, Xbox gaming CEO Phil Spencer confirmed that Minecraft earns more revenues than any other Xbox game and that it drives "significant profits" for Microsoft.

Considering the breadth of Minecraft's releases and widespread reach on practically every platform where games are made available, this small tidbit isn't exactly a surprise. The game is (and has been) everywhere, including the best-selling Nintendo Switch and the market-leading PlayStation. In a previous interview from March 2023 with Xbox On, Phil Spencer said that Minecraft had 'maybe 120 million MAUs.' Matching that up with previous statements that first-party Xbox games have a total of 150 million monthly active users (MAUs) on all platforms, we can see that Minecraft accounts for almost all of Xbox's current active players.

In a recent federal court hearing, Xbox gaming CEO Phil Spencer says that he has no interest in using Sony's own exclusivity practices against PlayStation.

The recent FTC v Microsoft evidentiary hearing has unearthed lots of interesting details about Xbox, PlayStation, and the games industry in general. Based on key info and testimony presented in the case, we've surmised that Sony and Microsoft are very likely to sign a publishing agreement for Call of Duty on a post-merger basis.

Other revelations include Microsoft's view on Sony's exclusivity practices. According to the Xbox CEO, there's two sides to Microsoft's relationship with Sony. There's the cordial, lucrative, and mutually-beneficial side where big Xbox games like Minecraft see the two companies joining together in a strong symbiotic publishing agreement. Then there's the side that gets publicized the most, the one where Sony snaps up third-party exclusivity deals to further detrimentally impact Xbox. This behavior has made Microsoft see Sony as a "hostile and aggressive" competitor.

If you've recently installed Super Mario 3: Mario Forever on your Windows PC, then you need to scan for viruses, as there's a version of the installer circulating that's laden with malware.

Bleeping Computer spotted that security firm Cyble flagged up the dodgy installer in a lengthy blog post explaining how it works, and what it exploits and steals.

Unfortunately for anyone who has been hit, this is a nasty infection that pulls a couple of stunts. The first is to install SupremeBot, a crypto-miner (using your PC's system resources for the attacker's mining gain), and the second line of attack is Umbral Stealer.

Blizzard Entertainment confirmed that Battle.net was hit with an attack that was kicking gamers off Diablo IV over the weekend.

The company first confirmed its servers were being attacked on Twitter, writing that Battlen.net was experiencing a distributed denial of service (DDoS) attack that may result in players experiencing high latency and disconnections. About half an hour later, Blizzard took to the same Twitter account and announced that the DDoS attacks that it was monitoring "have ended" and that players who were struggling to log in should try again now.

Notably, Blizzard warned players the servers were experiencing an attack in-game, which came after a myriad of reports from players that were repeatedly being kicked off the game for what at the time seemed like no apparent reason. As for who is behind the DDoS attack, Blizzard didn't officially announce anything, but judging from the company announcement of the attack stopping, it seems like the attackers stopped out of their volition.

Microsoft does not expect the Activision buyout to help grow its Xbox console business, and the deal is instead focused on buying out the largest independent non-Chinese mobile games publisher in the world.

Due to its size, successful history, and breadth of AAA hit content, Activision is a unique video games publisher. The company's games catalog includes 8x separate franchises that have grossed over $1 billion across PC, console and mobile, including Call of Duty, Overwatch, Diablo, Warcraft, and Candy Crush. Based on revenues, Activision has been the top-earning, non-platform-holding video games publisher for many years now.

Interestingly enough, Microsoft does not fully expect the $68.7 billion buyout of Activision to help grow its console share. According to testimony from Xbox gaming CEO Phil Spencer, the acquisition's deal model does not include an uptick in console share.

Based on assessment of key business figures, testimony from Xbox CEO Phil Spencer, and a recently-published bombshell email from Sony Interactive Entertainment CEO Jim Ryan, Sony is likely to sign a Call of Duty deal with Microsoft to ensure the $31 billion franchise says on PlayStation.

Microsoft has said it wants to keep Call of Duty on PlayStation, and Xbox Gaming CEO Phil Spencer's recent testimony at a court hearing over the Activision merger adds more weight to this assertion.

The evidentiary hearing has been a boon for information on the Xbox business and the complex, highly-secretive inner workings of the video games industry. At the trial, Spencer disclosed key internal acronyms like CSA (Consumer Solutions Area), GLT (Gaming Leadership Team), and PLA (Publisher's Licensing Agreement). Listeners also learned fundamentals on how the Activision merger proposal was put together.

Sony has used its market-leader position to negotiate exclusivity deals that block games from releasing on Xbox. Due to these deals, in which Sony pays companies to keep their games off of Xbox, Microsoft leadership sees Sony as a "hostile and aggressive competitor." That's why Microsoft fought back by purchasing Bethesda parent company ZeniMax for $7.5 billion.

Sony is no stranger to exclusivity deals. We've seen Sony make wide-sweeping deals that range from timed to full-on exclusivity. Microsoft already misses out on select Call of Duty content, with PlayStation receiving preferential treatment for in-game content and early access betas. Sometimes this exclusivity also makes a game skip Xbox, further weakening Microsoft's position and increasing costs for any exclusivity deals the company wants to offer. We've seen high-profile games like Final Fantasy 7 Remake and the more recent Final Fantasy 16 avoid Xbox entirely.

In the recent FTC v Microsoft evidentiary hearing, Xbox gaming CEO Phil Spencer gave rare insight into Microsoft's business structure and the rationale behind its recent acquisitions, including the $7.5 billion ZeniMax buyout, and the proposed $68.7 billion offer for Activision-Blizzard.

Xbox Cloud Gaming (Project xCloud) was originally created to deliver Xbox console games to mobile devices, but the service has not gone according to plan.

Microsoft's game streaming initiative was born out of necessity. The company--and the rest of the industry--has identified mobile gaming as the largest area of growth, with mobile expected to rise to $113 billion by 2027. While Microsoft has a presence on console and PC, it is significantly lacking in mobile. In an attempt to solve that, the Xbox games division decided to try to bring its existing content library to mobile using cloud gaming instead of creating a smattering of native mobile games.

During his testimony in the federal trial between the FTC and Microsoft/Activision, Xbox gaming CEO Phil Spencer delivered an insightful history lesson on Xbox Cloud Gaming and revealed why the service was made and why the xCloud platform hasn't gained traction.

Bethesda's Todd Howard reveals that most of Starfield's planets will be devoid of life, and that's as much as a design decision as it is a technical one.

Starfield promises a lot. The game is supposed to have 1,000 planets with exotic flora, fauna, resources, and possibly even strange ancient alien artifacts. We might find things like derelict ships in space, colonies of adventurers that died in mysterious ways, and other forms of unique environmental storytelling that Bethesda is known for.

One thing that Starfield will also have are those lonely, introspective moments of exploration in a vast world--or in this case, galaxy. This is something Bethesda RPGs have, and not all of your expeditions are going to be exciting encounters with life. Your explorations might end up with you being mostly solitary. In a recent interview with Kinda Funny Games, Bethesda's Todd Howard talked more about what gamers can expect when it comes to Starfield's planets and how the team is looking to a distinct Buzz Aldrin quote for inspiration.

Before Take-Two Interactive bought Zynga for $12.7 billion, Microsoft had its eye on the mobile-maker.

Xbox gaming CEO Phil Spencer made one thing clear in today's court testimony: Console gaming is not growing. In the hearing, Phil Spencer laid out the rationale behind Microsoft's $68.7 billion merger proposal with Activision, saying that despite his best efforts, the Xbox console business has remained stagnant.

Despite beating Nintendo in games revenues in 2022, things apparently aren't going well for Xbox. In the hearing, Spencer admitted to FTC laywer James Weingarten that Xbox has missed its internal targets. Microsoft's board of directors and senior leadership, including CFO Amy Hood and CEO Satya Nadella, pressure the Xbox unit to continue growing. That's just not happening on console.

The Elder Scrolls VI's release is so far away that Microsoft is not ready to fully commit on Xbox exclusivity.

Bethesda's next Elder Scrolls RPG could also release on PlayStation. Even Xbox gaming CEO Phil Spencer has no idea when Elder Scrolls 6 will release--it's pretty far out there, and right now Bethesda is full steam ahead on Starfield. TES6 may not launch on Gen9 consoles, and could move to Gen 10, which is expected to begin in 2028.

As part of his recent testimony at the FTC v Microsoft court evidentiary hearing, Phil Spencer cautioned that a decision hasn't been made on The Elder Scrolls 6 skipping PlayStation.

Xbox Gaming CEO Phil Spencer says that PlayStation is a hostile competitor.

Note: The quotes taken here were transcribed via live audio call and are not wholly representative of what was said, and there are paraphrases.

Microsoft believes that Sony is a hostile competitor due to its myriad of exclusivity deals, which sees Sony buying up platform and timed-exclusivity for big-name games like Final Fantasy and Call of Duty. Spencer says that Sony outright pays developers to skip Xbox, a controversial business practice also referred to as "blocking rights."

Xbox gaming boss Phil Spencer gives a quick explanation on how developers make money from Xbox Game Pass deals.

Xbox Game Pass can be risky or rewarding depending on many factors. The service can bring negative effects like "cannibalization," which reduces overall premium full game sales as a result of the business model--gamers are less likely to buy a game for full price if they can access it on Game Pass. To help make up for this effect, Microsoft offers specific deals to developers as incentives to bring new content to the value-driven service.

In the recent FTC v Microsoft evidentiary hearing, Xbox CEO Phil Spencer outlines the kinds of revenue deals that developers can take advantage of on Game Pass. When asked specifically about a revenue share split by FTC legal counsel James Weingarden, Spencer replied that Game Pass actually doesn't adhere to the standard 70-30 storefront model because it's a subscription.

ZeniMax's Head of Publishing Pete Hines explains why some Bethesda games go exclusive, and highlights the general merits of platform exclusivity that apply to all independently-operated game developers.

Starfield is a full-on Xbox exclusive, but it wasn't always going to be. Microsoft's $7.5 billion buyout of ZeniMax, Bethesda's parent company, changed things. In yesterday's evidentiary hearing in the FTC v Microsoft trial, ZeniMax's Pete Hines revealed key information about exclusivity deals, how such deals benefit ZeniMax, and how the publisher fits into Microsoft's games division.

Hines' testimony first reveals that ZeniMax is a limited-integration company, meaning that ZeniMax's studios--Bethesda Game Studios, id Software, Tango Gameworks, ZeniMax Online, Arkane, etc--do not report or answer to Xbox Game Studios head Matt Booty. Instead, ZeniMax reports directly to Phil Spencer.

Microsoft's Xbox Cloud Gaming (also known "as xCloud") may not ever become a standalone subscription service due to the constrained logistics of the business.

During yesterday's evidentiary hearing the FTC v Microsoft case, Xbox SVP Sarah Bond highlighted the practical realities of Microsoft's game streaming initiative. The Xbox executive highlights how xCloud operates, reiterating that Xbox's game streaming fork is powered by actual Xbox Series X consoles and not Azure servers. Microsoft has made it clear that it makes no money from Xbox hardware sales, and since these servers are powered by Xbox consoles, Microsoft themselves must acquire Xbox units for the service and potentially reduce consumer product availability in the process.

This could put constraints on the practicality of the business. It's unclear that xCloud is even profitable, which is likely why the delivery method is combined with Xbox Game Pass Ultimate--the premium value-oriented part of Game Pass could offset any losses from xCloud, the same way that software sales and services help Microsoft offset the losses from console hardware sales.