That actually seems... tiny? Xbox is nearly 17,000 employees. That's like $8k in profit per employee. That's worse than big box retailers and like 1/100th of what is common in big tech and (to the letter's point) far worse than their biggest competitor.
Like sure at least you can say they aren't losing money, but Nadella can't be looking at that after just spending 75 billion on Activision Blizzard and be happy with it as the status quo.
EDIT: BTW these numbers you quoted from OP are quarterly, not annual
The issue is rate of return. They are evidently spending $4.85bn on Xbox per year. The US federal interest rate is 3.5% so if you just put that money in US bonds you would get about $175M per year of much purer simpler gravy.
Richard: "Okay. Well, that's a gain of $200 million over 20 years. Um, 16.66 repeating. That's less than 1% return. Inflation is, like, 1.7. I think CDs are 2%. So that's less than a CD."
If I had 1.2 billion dollars I wouldn't care what investment strategy I had. I've got enough to spend $30k a day for 100 years. At any age, that'll do.
It sounds like a nice problem to have, but it appears to be very stressful from what I can tell. (I'd still like to have it, and like most I think that I personally wouldn't get that far over my head)
Two things, stand out to me though.
1. how you frame it might help with how you spend it. Which is to say that when shopping for a mansion "I've got 1.2 billion" likely leads to a different outcome than "I have 30k per day. I'll have to save up for it."
2. once chasing money is not a major thing in your life, what do you do for meaning?
sounds like there is a win-win in there somewhere. I wonder what that would look like.
for real though, what are we talking about here? 30k a day is not enough because ... habits? plus, it's incredibly hard to spend that much. that's exactly why, after a certain point, it's basically impossible to get rid of wealth.
I'm not arguing your idea that there is a point where you no longer can find anything to spend money on. However that point is different for different wealthy people and I don't know and you don't likely don't know either where your limit is or my limit would be. It would not surprise me if I personally had the money and decided to buy a yacht and then later sold it when I realized that while it sounds good I wasn't actually using it. But I don't know. Maybe if I had the money to afford a nice yacht I would use it all the time. Similar for those mansions. Would I live in a mansion or would I buy one first test symbol and then realize I didn't actually care and downgrade? I know someone who has made a lot of money remodeling the mansions of rich people who have decided downsize. For them downsize includes a master bedroom that is bigger than my entire house. And there were other bedrooms in that mansion, but it is still a down size.
I can't argue the point as well as educated economists can. I'd like to point you to Gabriel Zucman, for instance. What really got me in the end is this: he proposes a 2% wealth tax. It's not a number out of thin air, he actually reasons very well how he got there. You know how much the average billionaire wealth increased over the last years, annually? It's 6%. So it's not even suggesting "you need to have less". It's suggesting "you should accumulate more a little slower than before".
Also, sorry, I really can't emphasise with people who got so used to having a yacht that they cannot imagine life without one anymore. It's peak consumerism, individualism, capitalism. My take is that we need to rethink _some_ things.
And if Russ is blowing $100M a year on lifestyle and still has those numbers then he’s winning at life.
What a take. Of a character that is, albeit incredibly entertaining to watch, not displayed in a good light at all.
Alternatively, he's everything that's wrong with the system. He's certainly not generating any value to society.
But yeah, in a purely individualistic take, he's certainly winning at life. While making everyone else's a bit worse.
Value that is created but not captured (e.g. the value of consumers enjoying games and consoles above and beyond the price that those consumers paid) is typically not considered when making business decisions.
You're neglecting to consider that any time they acquire a studio or have a flop or two -- poof goes that $150M and probably more. It's not a risk-free venture. Entertainment is all about hits, and misses hurt.
Would you put up $5K to win $150 on a hypothetical roulette wheel that hits 90% of the time? The math's not perfect obviously but Xbox is a somewhat similar situation. Microsoft is putting up nearly $5B a year to make $150M. They'd be better off stuffing the $5B into bonds or something. There is a point where the returns aren't high enough to justify the expenses when risk is taken into consideration.
As said elsewhere in the thread:
> You’re saying that they should take the money people pay to buy Xboxes and put it in T-bills instead of delivering Xboxes?
So they could do that and invest the income they still get into bonds, and then that would be where the returns come from.
They don't want to do that obviously, hence why Xbox needs reform.
Wherever it comes from now! They're spending about $4.85B to bring in $5B.