Microsoft Gaming CEO Phil Spencer has discussed the challenges of attracting PlayStation and Switch owners to Xbox consoles.
With PlayStation 5 sales more than double those of the Xbox Series X/S, Microsoft has pivoted Xbox into a broader multiplatform publisher, untethered from its own hardware.
We’ve seen this in action through Xbox marketing which downplays the console, along with the increasing amount of Xbox games heading to other platforms. This strategy seems to be working from a financial standpoint, mostly thanks to the acquisition of Activision Blizzard, but the big question is whether this could lead to a gradual exit from the console race.
In a new interview, Microsoft Gaming CEO Phil Spencer acknowledged the difficulty in getting PlayStation owners to switch to Xbox and reaffirmed how the company isn’t trying to ‘move them all over to Xbox anymore’.
Speaking on the XboxEra podcast, Spencer explained that while selling games on rival devices means they lose 30% of the sale to the competitor’s storefront, the remaining 70% helps Xbox ‘build great portfolios’ of games. By which he means it earns them money.
‘There are people – whether it’s their libraries on a PlayStation or Nintendo, whether it’s that they like the controller better, they just like the games that are there – and I don’t want to then look at that say, ‘well, there’s no way that we should be able to build a business there, find fans of our franchises there’,’ Spencer said.
‘I’m not trying to move them all over to Xbox anymore. We’re all so invested in where our games are, let’s just allow more people to play. And yes, the 70% that we make on games on other platforms is helpful to us being able to build great portfolios, like we showed at Developer Direct, and I hope this will continue to show through the rest of the year.’
Spencer went onto echo concerns around Xbox’s future, before directly addressing worries around its Xbox Game Pass subscription service being detrimental to game ownership.
‘I just want to show respect to people who voice their concerns to me,’ Spencer added. ‘Like, I get it. I would never disrespect anybody who comes to me with concern [like], ‘I’ve got a library of games on Xbox console, I want to make sure I’ll continue to be able to play those games, are we going to still do hardware? Are we still going to be able to play the games we’ve always played? Am I going to have to rent all my games, can I still buy games? I get it. I get the questions.
‘I think we’ve shown respect for people’s libraries over the generations with backwards compatibility and play anywhere, and I want to continue to do that. You can buy every game that’s in Game Pass, we’re not trying to funnel everybody into one business model. Play the games the way you want to play them.
‘We obviously have to run a good business, so we’ll have our pricing and everything that we do, but I want to make as many options as possible for the games that we have so they find more and more players.’
With declining Xbox hardware sales and stagnant Game Pass subscriber numbers though, it seems Microsoft is pinning its hopes on Xbox Cloud Gaming to expand its audience.
‘It’s why us embracing Windows and embracing cloud has allowed us to grow,’ Spencer claimed. ‘One of our fastest growing regions for us right now is Asia and it’s not because we’re selling more consoles in Asia, but through cloud and PC, we’re finding more users year over year than any other place.
‘The fastest kind of platform is cloud. That’s the thing that’s growing the fastest year over year and those are players like you were talking about, that presenter in the UK. We were never going to catch that person with our console. So let’s find them in a way that works, and it’s better for Indiana Jones. It’s better for Xbox.’
According to Microsoft CEO Satya Nadella, Xbox Cloud Gaming recently broke records for the platform with 140 million hours streamed in the last financial quarter. The company also touted a 30% increase in Game Pass subscribers on PC, but the absence of a new overall figure across all platforms suggests it hasn’t grown much (if at all) since the 34 million figure from February last year.
Xbox Cloud Gaming is only available to Xbox Game Pass Ultimate subscribers, so while the appeal of cloud gaming might be on rise, it isn’t translating to a significant boost in Xbox Game Pass subscribers. As such, it’s unclear how much cloud gaming will actually benefit Xbox in the long term.
The big question is whether this matters considering Microsoft is now one of the biggest game publishers in the world, thanks to the acquisition of Activision Blizzard and Bethesda. With all the money it’s earning on the publishing side, the company may now see its planned future consoles as merely a minor side business to its main role as a third party publisher.
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