[rootlocus]

> They're spending up the wazoo on Xbox

> Windows is hurting as a retail business.

> License costs have been driven down by Chromebooks and resurgent Macs

> That leaves Azure and Office as the big cash cows.

Where are you pulling all this data from? And I don't mean coarse data from various articles, anectodal evidence or personal observations, I mean actual evidence that microsoft's revenue share is dominated by office and azure? Microsoft sells a lot of stuff to a lot of entities, I'm not convinced you can sum up their revenue so neatly without opening their books.

[headmelted]

> They're spending up the wazoo on Xbox

2002 - Rare - $375 million

2005 - Lionhead - ???

2014 - Mojang - $4 billion

2014 - Gears of War - ???

2018 - Compulsion - ???

2018 - inXile - ???

2018 - Obsidian - ???

2018 - Ninja Theory - ???

2018 - Playground - ???

2018 - Undead Labs - ???

Sept 2020 - Zenimax / Bethesda - $7.5 billion

January 2022 - Activision Blizzard - $69 billion

This is just acquisitions, so it isn't exhaustive as it doesn't include first party costs and development expenditure, or Halo expenses / 343, as it assumes they essentially paid nothing to Bungie (or their costs were negative) after that split happened.

Microsoft don't publish extensive separate numbers for the Xbox division, but their Q1 2022 filing nonetheless states $3.6 billion - which is up 8%. They've also been open that they still, 21 years later, make at most break-even on their hardware sales.

That's a lot of expenditure relative to income. To state the utterly obvious: they're not getting nothing for that money, so it's not like they are sunk costs, but I'm not sure what standard would meet "spending up the wazoo" if not 20 times revenue (at minimum, as it only includes spending on acquisitions for which the amount paid is made public).

[deadbunny]

They are building Xbox as a brand/service not as a product these days. Sure they ship consoles but you can subscribe to Xbox Gamepass and and use it on both Windows and Xbox (and I think they also have game streaming? I could be wrong).

[headmelted]

Exactly.

.. and they’re spending up the wazoo to do it!

[blackoil]

Buying companies is not same as spending as the acquired companies are independently profitable. e.g. Mojang in hind sight is a steal for 4B. Same should be true for Bethesda/Blizzard.

These investment need not return profit in excess of the sticker price but increase the valuation of MS proportionally. If MS tries to offload Mojang it will get an impressive ROI.