It seems that every time Microsoft appears in the news hundreds of social media junkies declare that Microsoft is getting ready to abandon console gaming (a claim that has been happening for at least five years now with no end in sight). While the fear mongers post their click bait articles and YouTube videos, a simple perusal of the facts show us that Microsoft is going to be in the game for a very long time.
The esteemed Mr. ED Bott has gone over the most recent financial reports for three major technology companies – Google, Apple and of course, Microsoft.
It should be noted that Microsft’s finances put the company in a unique position compared to the other main console makers of this generation. Sony depends on gaming revenue to help keep the entire company afloat and almost all of Nintendo’s income is derived from its video games and related products such as Amiibos. Microsoft takes a very different approach in that their income comes from a diverse line of products and none of these lines contribute more than one-fifth of the company’s total revenue. A key advantage to this approach is that if even one of these product lines were to completely falter then Microsoft still has several other divisions to keep the company afloat.
By The Numbers
Quick… Can you guess which Microsoft divisions brought in the most revenue last quarter? Windows was not one of them. Neither was Office. Nor did Microsoft’s vast patent portfolio bring in the most revenue.
The single largest revenue driver for Microsoft last quarter was their cloud services business. The next highest source of the company’s revenue was gaming.
You read that right. The second largest source of revenue for Microsoft last quarter came from gaming. Ed Bott has illustrated the breakdown of Microsoft’s revenue in this chart:
Naysayers can argue that all of this revenue did not come from console games and that is a fair point. However, when you look at the market share of Windows mobile devices and the Windows 10 app store, it is fair to say that Xbox console game revenues make up a large share of that revenue – if not the largest share for that division.
Others might point out that revenues are not the same as profits. That is a good point as well. That said, revenues are a big part of the profitability equation and the point here is that Microsoft is not going to burn down such a large source of their own income. They are playing the long game.
The news can be tough sometimes. Some fans are upset about games like Quantum Break going to Windows 10. I was particularly saddened by the closure of Press Play. The nature of innovation often requires taking big risks and making tough decisions. I am not saying consumers should be happy with every decision Microsoft makes but it is clear that the company is building a foundation for the future of gaming and the impact that emerging technologies will have on our beloved hobby.
If you’re not happy about Microsoft’s decisions then by all means keep the feedback coming. Xbox players are very passionate about their platform (Yes, Microsoft owns the Xbox platform but it is the community that makes it great).
But whatever you do, don’t let anyone tell you that Microsoft is killing the Xbox or abandoning console gaming. The numbers from Microsoft’s own financial reports is proof that it is in the company’s best interests to keep the Xbox brand healthy. Great things are coming. I hope you will all be a part of it.