MSFS = Loss Leader?

[Cruachan 705]

Hi,

More musings from a curious simmer.

Notwithstanding all the arguments surrounding how we access MSFS when it is eventually RTM, we might feel inclined to consider how Microsoft/ASOBO will recoup their undoubtedly huge existing and ongoing development costs. Why did MS revisit this franchise when history and, arguably, a lack of vision had soured their experience with financial losses and consequent abandonment of the product?

From Wikipedia: Where implemented, a franchisor licenses its know-how, procedures, intellectual property, use of its business model, brand, and rights to sell its branded products and services to a franchisee.

In this instance, I am assuming ASOBO became the franchisee. A fresh approach was necessary and their submitted proof of concept demonstrated what was possible using currently available modern cutting edge technologies. 

Microsoft, to their credit, recognised the potential inherent in ASOBO’s impressive contemporary vision of their venerable simulator and so decided to commit medium to long term. However, they must have known that, as in the past, enthusiasm alone for a product such as this would not be enough to guarantee recovery of their substantial financial investment, but it would help if ways could be found to sustain the interest of potential customers beyond the hardcore flight-simming community.

Enter the ‘Microsoft Game Pass’. MSFS could be marketed as their flagship product that serves to attract millions of new customers. Undoubtedly this presentation of their simulator is unique and with the exploitation of modern technologies is impressive in so many ways. The desire out there to experience what it has to offer will be strong. To this end, their clever advance marketing campaign is fulfilling its objective and virtual queues of customers are growing by the day. However, it is likely that the majority of those paying customers will be unable to sustain their interest for more than a few weeks and so decisions will be made, in effect, to ‘try-before-you-buy’ by following the ‘Game Pass’ monthly subscription route rather than by purchasing MSFS outright. Everyone wins: Microsoft/ASOBO, their burgeoning numbers of Microsoft customers who have access to numerous games via their ‘Game Pass’ and last, but not least ourselves, the flight-simming community who will, as ever, help to sustain and promote further ongoing development (third party and core) of what is likely to become a hugely significant milestone in flight simulation.

It has to be underlined that none of the foregoing can be regarded as being factual, merely further idle speculations on my part. 

Mike

Edit: Don’t know why I overlooked another likely bonus: Highlighting this new sim will certainly attract significant numbers of new simming aficionados who will be visiting dedicated sites such as AVSIM. We have been noticing additional income generating initiatives such as the appearance of non flight sim-related advertising. While some may dislike this trend, the rise in visitors and membership numbers will attract much needed funds to maintain these free at the point of use sites for our pleasure and edification.

 

Edited May 24, 2020 by Cruachan

[highflyer2020 607]

I think there are 2 things at play here with how MS/Asobo will make their money:

1. There is money to be made from re-creating the entire world in a digital form with regards to Bing imagery + AI + real world data such as weather, ship data, bears etc. they can then bundle and sell off for other uses. 

2. Allowing 3rd party devs to created payware for FS2020 and sell it via the Windows Store for which MS will get a small percentage. I imagine this will be tempting for some as it means they don't need to spend money on their own market place or investing heavily in DRM to protect their products from pirates. 

Edited May 24, 2020 by highflyer2020

[devgrp 1,233]

If Ms spent 10 million to develop and maintain this sim, they would probably make a lot more in licensing the tech to other companies which I suspect they will do. 

[Rudiii 257]

I think they will find a way to get their bit. I wouldn't worry too much about how much money they will make.

I'd be more concerned that the partnerships may have a time limit on their contracts. If say the flight tracking contract runs out or one of the companies goes bust then what happens at that point.

But everything is a risk. Not everything works out. That's just life and business. Very little we can do about it.

Edited May 24, 2020 by wainwj

[overspeed3 410]

I've been using FSX-Steam since the end of 2015 and I'm concerned about the possible end of a contractual agreement that Microsoft has with Dovetail Games once 2020 is launched...

[pmb 5,137]

30 minutes ago, overspeed3 said:

I've been using FSX-Steam since the end of 2015 and I'm concerned about the possible end of a contractual agreement that Microsoft has with Dovetail Games once 2020 is launched...

That contrat was already canceled. Microsoft took back ownership of FSX:SE. It was in one of the early announcements on MSFS and is written on the Steam page. Publisher: X-Box Game Studios.

Kind regards, Michael

Edited May 24, 2020 by pmb

[Krakin 5,748]

They're gonna make a really good product and hopefully push a lot of units/get a ton of downloads via gamepass. It is very rare for a company to loss lead on software like this. Hardware that can run software? Sure.

There's no reason to think MSFS costs more than the typical AAA game to make and most of those need to sell about 5 million units for publishers to be happy.

[zemez 184]

I kind of hope that all the addons will be in applications own marketplace. It would be much easier for customer to control addons and update would be easier.

[nonflyingdutchman 40]

I'm sure ms did alot of research before embarking on such a huge mission, but so did Airbus before starting building the A380.....

[ca_metal 2,015]

1 hour ago, wainwj said:

I think they will find a way to get their bit. I wouldn't worry too much about how much money they will make.

I'd be more concerned that the partnerships may have a time limit on their contracts. If say the flight tracking contract runs out or one of the companies goes bust then what happens at that point.

But everything is a risk. Not everything works out. That's just life and business. Very little we can do about it.

They’ve said, since the beginning, it was a 10 years project. I think all their partnerships will last until this project is over.

If they succeed, we will hear about a new version coming before the 10 years have passed, with new or extended partnerships.

I wouldn’t worry much about the partners. They will take care of it as long as the project is alive. Be it the version they are currently working at, or new versions coming in the future.

[ca_metal 2,015]

18 minutes ago, zemez said:

I kind of hope that all the addons will be in applications own marketplace. It would be much easier for customer to control addons and update would be easier.

Me too, also I would like to “fund” their project as much as possible.

[Christopher Low 5,352]

33 minutes ago, Krakin said:

They're gonna make a really good product and hopefully push a lot of units/get a ton of downloads via gamepass. It is very rare for a company to loss lead on software like this. Hardware that can run software? Sure.

There's no reason to think MSFS costs more than the typical AAA game to make and most of those need to sell about 5 million units for publishers to be happy.

It will if they had to pay PMDG for that plaque on the 747 🤣

[DaveCT2003 1,820]

Does anyone remember that before circa 2001 the MS code name for the Xbox was DirectXbox?

Dwell on that one for a few minutes and the light comes on bright!

 

 

[Stratocruiser1 134]

28 minutes ago, DaveCT2003 said:

Does anyone remember that before circa 2001 the MS code name for the Xbox was DirectXbox?

Dwell on that one for a few minutes and the light comes on bright!

 

 

Not seeing any light yet.

[mp15 138]

This is only a toy for MS, probably Bill likes to flight sim once in a while..