4 ms·

It’s painful to watch this because the recipe for success at Microsoft is so obvious. They’ve just been fumbling the ball for so many years that it’s catching u

It’s painful to watch this because the recipe for success at Microsoft is so obvious. They’ve just been fumbling the ball for so many years that it’s catching up to them. And the thing is they’re not unprofitable. Gutting their studios and technology development isn’t going to help growth, it’s going to contract the business.

bigbuppo 4mo ago
Have you ever watched Shaq fall?
reactordev 4mo ago
Microsoft’s Modus Operandi.
- __patchbit__ 4mo ago
  Human labor plus AI tokens must double input capital on loop track output.
  - reactordev 4mo ago
    Yeah, see slide 14 of the Microsoft Promise deck
lenerdenator 4mo ago
Growth over a long period of time involves two things: consistency in vision, and willingness to take risks. We do not have a market designed to reward these things, at least not for the likes of Microsoft. For them, it's far easier to simply cut people while collecting on their previous labor. Once the product of that previous labor is no longer as valuable, it can then simply be spun off or shut down permanently.
- eightysixfour 4mo ago
  I actually think this is the wrong diagnosis of this situation. The studios in Microsoft gaming appear to have been given a lot of room to take risks under previous leadership, build passion projects, etc. while letting big franchises sit on the side. Those things ended up being anywhere from abject failures to small successes - where some players and critics loved them - but most don't seem to be commercial successes. In the meantime we haven't seen a new Quake, Fallout, Elder Scrolls, Perfect Dark, Fable, Banjo, Conker, or the myriad of other mainstream IP they owned in decades. Most of these franchises have lost a ton of value after sitting on the shelf for so long without releases.
  - lenerdenator 4mo ago
    The thing is, every time you take a swing on one of those big IPs, you take a risk. Sure, you can do well: Skyrim was a big step up from Oblivion, for example. But you can also screw things up (see: Halo), or fall into the trap that Valve has fallen into with Half-Life 3 where the expectations of the public can never be truly met. I think what they want to do is make the next WoW. Low-risk, customer lock-in, people identifying themselves with their consumption of the IP to an almost ludicrous degree. You see that already in some ways with Fallout 76.
    - eightysixfour 4mo ago
      > The thing is, every time you take a swing on one of those big IPs, you take a risk. I think the entire content production industry, no matter the medium, is aware of the risk/reward of rerunning existing IP vs creating new IP. There's a reason we get retreads of retreads elsewhere, existing IP is lower risk, higher reward, pretty much always. Halo is a good example - they fumbled with Infinite. It just wasn't very good. Yet the remake of Halo: Combat Evolved is getting a ton of attention from the fanbase and broader gaming community. If the next Halo is good, that fanbase will come back around. > I think what they want to do is make the next WoW. Low-risk, customer lock-in, people identifying themselves with their consumption of the IP to an almost ludicrous degree. You see that already in some ways with Fallout 76. This is what they now want from Mojang and Minecraft. Asha even called it out in her letter.
- HumblyTossed 4mo ago
  > consistency in vision, and willingness to take risks. Agreed. If you are looking at a chart of performance and it's flat or slightly increasing year over year for a few years, you're not doing great. You need to see some dips which means you tried and failed. Without those, you won't ever see the big jumps.
dismalaf 4mo ago
In my experience, once organizations have enough history and size, they can't just pivot. Whatever happens within MS the organization makes it impossible for them to become anything other than what they've always been. Their MO will always be EEE and they'll always (attempt to) abuse their monopoly power, while giving corpos and consumers just a glimmer of hope to keep them strung along... Also any company they acquire will be gutted until it looks like the rest of the org.
- tonyedgecombe 4mo ago
  >Also any company they acquire will be gutted until it looks like the rest of the org. I'm trying to think of a Microsoft acquisition which has been a success. Nothing comes to mind.
  - inigyou 4mo ago
    Minecraft didn't get shut down yet, only enshittified. I believe it's still very profitable due to the enshittification? I heard they sell skyblock maps for $8
    - Grombobulous 4mo ago
      I don’t fully agree with this because the original experience (Java version, private servers, 100% free content) is still extremely popular and the same as it always was. I think it would be enshittification if Microsoft said “sorry, you now have to rent servers through us and all content comes from our content shop,” but that’s not the case. Merely offering a product that has a bad value is not enshittification.
      - inigyou 4mo ago
        Is it enshittification if you heavily advertise the enshittified product and attract all the new users there? Like IRC and Discord, can we say Discord enshittified chat even though IRC is still around?
  - 4mo ago
TylerE 4mo ago
They are unprofitable though. Profit margins of the entire Xbox division are less than just sticking the money in the bond market.
- gruez 4mo ago
  margins can't be compared to interest rates, because it's comparing revenues against costs. Comparing that with interest rates yields nonsensical results. If you want a proper comparison, you'd need return on capital, which requires you to figure out how much capital is in the gaming division.
  - TylerE 4mo ago
    Why not? If you input $1000 into process A which returns $20, and inputing $1000 into process B returns $30, you'd be insane to invest in process A and not process B, right?
    - gruez 4mo ago
      That example only says 3% margin is better than 2% margin, not whether the hypothetical process yields better results than a bond paying 4% (or whatever). If the said process takes exactly 1 year to complete, and requires all the inputs to be provided upfront, then its margins can be directly compared to bond yields, but businesses are rarely that simple.
      - TylerE 4mo ago
        It's not hypothetical. Xbox's margin last year was 3%.
        gruez 4mo ago
        See: >If the said process takes exactly 1 year to complete, and requires all the inputs to be provided upfront, then its margins can be directly compared to bond yields, but businesses are rarely that simple. Something tells me the xbox division isn't some sort of machine that takes in $x in costs at the start of the year and spits out $1.03x in revenue at end. Capital costs could be higher (eg. game takes 4 years to develop before you can sell it), or lower (eg. you pay foxconn $400 to make an xbox then immediately turn around and sell it to best buy for $450).
realo 4mo ago
But it will result in a fat bonus for Asha Sharma. The only thing that truly counts, for her.
- nozzlegear 4mo ago
  What makes you think that?
  - jayd16 4mo ago
    If she didn't get paid to be the face of the blood letting then she didn't negotiate well enough.
  - globular-toast 4mo ago
    She works for Microsoft. It's kinda their thing.
    - deleted 4mo ago
      [deleted]
  - baggachipz 4mo ago
    Classic "glass floor" hire. Take the fall, get paid.
    - urbnspacecowboy 4mo ago
      Almost! The common term is "glass cliff": > The glass cliff is a phenomenon described by psychologists Michelle K. Ryan and S. Alexander Haslam, in which women are more likely to break the "glass ceiling" (i.e. achieve leadership roles in business and government) during periods of crisis or downturn when the risk of failure is highest. https://en.wikipedia.org/wiki/Glass_cliff https://en.wikipedia.org/wiki/Glass_cliff
  - bigstrat2003 4mo ago
    She's a corporate executive. Maybe she's not willing to crash the business and take a golden parachute, but if so she's one of a vanishingly small crowd. I would personally bet that she's willing to slash and burn just like other corpos are.
satvikpendem 4mo ago
What is the recipe?
- stronglikedan 4mo ago
  1) success 2) ... 3) profit!
  - deleted 4mo ago
    [deleted]
- _joel 4mo ago
  Doing the opposite of what they have been doing.
  - satvikpendem 4mo ago
    So in other words, no one actually knows besides making pithy statements like this.
    - _joel 4mo ago
      Why, has what they have been doing, working so well for them?
      - satvikpendem 4mo ago
        No, but it doesn't mean the opposite will either. Some solutions are orthogonal and in reality commenters online have no idea what to do in these sorts of business situations and therefore resort to making pithy statements.
        Grombobulous 4mo ago
        I know these other commenters gave you a non-answer but my reply to you further up the thread is hopefully more of a tangible example of the strategy Xbox should be taking. Some of that is potentially 5-10 years too late, but even with the pessimism around new consoles I think Microsoft could still reset their fortunes with new console hardware and new exclusive games as the anchor. The next Xbox shouldn't just be a box that's equivalent to a PC or a PS6, it should have something unique, the kind of uniqueness that Nintendo has delivered with every new console. Sometimes it works, sometimes it doesn't, but when it works, it works. The next Xbox should launch out of the gate with 1-2 must-have games, completely exclusive. Can't get them on PC, can't get them on PlayStation or Switch, if it’s on GamePass it’s only on Xbox console. This is more easily justified if the Xbox hardware is truly unique. "Sorry, we can't put this experience on PC or PlayStation, because only Xbox can do XYZ"

bigbuppo 4mo ago

Have you ever watched Shaq fall?

reactordev 4mo ago

Microsoft’s Modus Operandi.

__patchbit__ 4mo ago
Human labor plus AI tokens must double input capital on loop track output.
- reactordev 4mo ago
  Yeah, see slide 14 of the Microsoft Promise deck

lenerdenator 4mo ago

Growth over a long period of time involves two things: consistency in vision, and willingness to take risks. We do not have a market designed to reward these things, at least not for the likes of Microsoft. For them, it's far easier to simply cut people while collecting on their previous labor. Once the product of that previous labor is no longer as valuable, it can then simply be spun off or shut down permanently.

eightysixfour 4mo ago
I actually think this is the wrong diagnosis of this situation. The studios in Microsoft gaming appear to have been given a lot of room to take risks under previous leadership, build passion projects, etc. while letting big franchises sit on the side. Those things ended up being anywhere from abject failures to small successes - where some players and critics loved them - but most don't seem to be commercial successes. In the meantime we haven't seen a new Quake, Fallout, Elder Scrolls, Perfect Dark, Fable, Banjo, Conker, or the myriad of other mainstream IP they owned in decades. Most of these franchises have lost a ton of value after sitting on the shelf for so long without releases.
- lenerdenator 4mo ago
  The thing is, every time you take a swing on one of those big IPs, you take a risk. Sure, you can do well: Skyrim was a big step up from Oblivion, for example. But you can also screw things up (see: Halo), or fall into the trap that Valve has fallen into with Half-Life 3 where the expectations of the public can never be truly met. I think what they want to do is make the next WoW. Low-risk, customer lock-in, people identifying themselves with their consumption of the IP to an almost ludicrous degree. You see that already in some ways with Fallout 76.
  - eightysixfour 4mo ago
    > The thing is, every time you take a swing on one of those big IPs, you take a risk. I think the entire content production industry, no matter the medium, is aware of the risk/reward of rerunning existing IP vs creating new IP. There's a reason we get retreads of retreads elsewhere, existing IP is lower risk, higher reward, pretty much always. Halo is a good example - they fumbled with Infinite. It just wasn't very good. Yet the remake of Halo: Combat Evolved is getting a ton of attention from the fanbase and broader gaming community. If the next Halo is good, that fanbase will come back around. > I think what they want to do is make the next WoW. Low-risk, customer lock-in, people identifying themselves with their consumption of the IP to an almost ludicrous degree. You see that already in some ways with Fallout 76. This is what they now want from Mojang and Minecraft. Asha even called it out in her letter.
HumblyTossed 4mo ago
> consistency in vision, and willingness to take risks. Agreed. If you are looking at a chart of performance and it's flat or slightly increasing year over year for a few years, you're not doing great. You need to see some dips which means you tried and failed. Without those, you won't ever see the big jumps.

dismalaf 4mo ago

In my experience, once organizations have enough history and size, they can't just pivot. Whatever happens within MS the organization makes it impossible for them to become anything other than what they've always been. Their MO will always be EEE and they'll always (attempt to) abuse their monopoly power, while giving corpos and consumers just a glimmer of hope to keep them strung along... Also any company they acquire will be gutted until it looks like the rest of the org.

tonyedgecombe 4mo ago
>Also any company they acquire will be gutted until it looks like the rest of the org. I'm trying to think of a Microsoft acquisition which has been a success. Nothing comes to mind.
- inigyou 4mo ago
  Minecraft didn't get shut down yet, only enshittified. I believe it's still very profitable due to the enshittification? I heard they sell skyblock maps for $8
  - Grombobulous 4mo ago
    I don’t fully agree with this because the original experience (Java version, private servers, 100% free content) is still extremely popular and the same as it always was. I think it would be enshittification if Microsoft said “sorry, you now have to rent servers through us and all content comes from our content shop,” but that’s not the case. Merely offering a product that has a bad value is not enshittification.
    - inigyou 4mo ago
      Is it enshittification if you heavily advertise the enshittified product and attract all the new users there? Like IRC and Discord, can we say Discord enshittified chat even though IRC is still around?
- 4mo ago

TylerE 4mo ago

They are unprofitable though. Profit margins of the entire Xbox division are less than just sticking the money in the bond market.

gruez 4mo ago
margins can't be compared to interest rates, because it's comparing revenues against costs. Comparing that with interest rates yields nonsensical results. If you want a proper comparison, you'd need return on capital, which requires you to figure out how much capital is in the gaming division.
- TylerE 4mo ago
  Why not? If you input $1000 into process A which returns $20, and inputing $1000 into process B returns $30, you'd be insane to invest in process A and not process B, right?
  - gruez 4mo ago
    That example only says 3% margin is better than 2% margin, not whether the hypothetical process yields better results than a bond paying 4% (or whatever). If the said process takes exactly 1 year to complete, and requires all the inputs to be provided upfront, then its margins can be directly compared to bond yields, but businesses are rarely that simple.
    - TylerE 4mo ago
      It's not hypothetical. Xbox's margin last year was 3%.
      - gruez 4mo ago
        See: >If the said process takes exactly 1 year to complete, and requires all the inputs to be provided upfront, then its margins can be directly compared to bond yields, but businesses are rarely that simple. Something tells me the xbox division isn't some sort of machine that takes in $x in costs at the start of the year and spits out $1.03x in revenue at end. Capital costs could be higher (eg. game takes 4 years to develop before you can sell it), or lower (eg. you pay foxconn $400 to make an xbox then immediately turn around and sell it to best buy for $450).

realo 4mo ago

But it will result in a fat bonus for Asha Sharma. The only thing that truly counts, for her.

nozzlegear 4mo ago
What makes you think that?
- jayd16 4mo ago
  If she didn't get paid to be the face of the blood letting then she didn't negotiate well enough.
- globular-toast 4mo ago
  She works for Microsoft. It's kinda their thing.
  - deleted 4mo ago
    [deleted]
- baggachipz 4mo ago
  Classic "glass floor" hire. Take the fall, get paid.
  - urbnspacecowboy 4mo ago
    Almost! The common term is "glass cliff": > The glass cliff is a phenomenon described by psychologists Michelle K. Ryan and S. Alexander Haslam, in which women are more likely to break the "glass ceiling" (i.e. achieve leadership roles in business and government) during periods of crisis or downturn when the risk of failure is highest. https://en.wikipedia.org/wiki/Glass_cliff https://en.wikipedia.org/wiki/Glass_cliff
- bigstrat2003 4mo ago
  She's a corporate executive. Maybe she's not willing to crash the business and take a golden parachute, but if so she's one of a vanishingly small crowd. I would personally bet that she's willing to slash and burn just like other corpos are.

satvikpendem 4mo ago

What is the recipe?

stronglikedan 4mo ago
1) success 2) ... 3) profit!
- deleted 4mo ago
  [deleted]
_joel 4mo ago
Doing the opposite of what they have been doing.
- satvikpendem 4mo ago
  So in other words, no one actually knows besides making pithy statements like this.
  - _joel 4mo ago
    Why, has what they have been doing, working so well for them?
    - satvikpendem 4mo ago
      No, but it doesn't mean the opposite will either. Some solutions are orthogonal and in reality commenters online have no idea what to do in these sorts of business situations and therefore resort to making pithy statements.
      - Grombobulous 4mo ago
        I know these other commenters gave you a non-answer but my reply to you further up the thread is hopefully more of a tangible example of the strategy Xbox should be taking. Some of that is potentially 5-10 years too late, but even with the pessimism around new consoles I think Microsoft could still reset their fortunes with new console hardware and new exclusive games as the anchor. The next Xbox shouldn't just be a box that's equivalent to a PC or a PS6, it should have something unique, the kind of uniqueness that Nintendo has delivered with every new console. Sometimes it works, sometimes it doesn't, but when it works, it works. The next Xbox should launch out of the gate with 1-2 must-have games, completely exclusive. Can't get them on PC, can't get them on PlayStation or Switch, if it’s on GamePass it’s only on Xbox console. This is more easily justified if the Xbox hardware is truly unique. "Sorry, we can't put this experience on PC or PlayStation, because only Xbox can do XYZ"