Phil Spencer: "We have more Xbox console players than ever," as fans question Microsoft's multi-platform strategy
Xbox CEO Phil Spencer said in an interview today that Xbox has more players than ever, despite a general negative mood over the platform.
It should be a celebration of Xbox's massive upcoming games list, but instead the discussion is once again focusing on Microsoft's overarching strategy.
Many Xbox fans are angry right now over the direction of the brand. Microsoft has put an increasing emphasis on platforms beyond Xbox console, focusing engineering efforts on fixing their PC offering, and repurposing Xbox console stock into cloud servers for their Xbox Cloud Gaming push. Since Microsoft's bungled 2013 Xbox One messaging, it has felt like Xbox has been on the backfoot, switching strategies on a regular basis to accommodate a variety of predicted game industry trends — with said predictions not always panning out. A lack of transparency over Microsoft's Xbox strategy has led to a generalized sense of confusion, culminating in diminished trust.
Xbox fans have begun extrapolating their own theories about Microsoft's direction of late, which revolves around putting some of its core exclusive titles like Sea of Thieves onto its primary console competitor, PlayStation 5. The general common sense idea is that with fewer exclusive Xbox games, there are fewer reasons to buy an Xbox console. With Xbox Series X and PS5 virtually identical in performance in real terms, why buy the console that has fewer games? And stemming from that, if Xbox Series X|S sells fewer units, it decreases the likelihood of developers wanting to even support Xbox. Games like Black Myth Wukong, currently doing numbers in the millions on Steam, has famously prioritized PS5 over Xbox, for example. Last year, Baldur's Gate 3 also prioritized PS5 over Xbox. Fans worry that the situation of "Xbox last" will only get worse, as console sales decrease. Wildly popular gatcha game Genshin Impact will finally arrive on Xbox in November, which is great — but it's years late. Indeed, Microsoft itself admitted in a quarterly earnings call that Xbox hardware sales had decreased over 40% year-over-year.
Despite all the gloom on social media, Xbox CEO Phil Spencer outlined some of the thinking behind Microsoft's current strategy, and why ultimately, you shouldn't expect Xbox to change course any time soon.
The refreshed doom and gloom over Xbox comes in the form of Indiana Jones and the Great Circle, built by MachineGames — wholly owned by Xbox. Indiana Jones was announced as an Xbox and Windows exclusive, but rumors began to swirl last week that the exclusivity period will be limited. And indeed, Indiana Jones was confirmed for PlayStation 5 yesterday. The drip feed of broken promises and expectations continues to feed this idea that Xbox's comments can't be fully trusted, which is why I suspect that some of Xbox CEO Phil Spencer's statements today may fall on deaf ears in some quarters.
In a new interview with Microsoft's Xbox On channel, Xbox CEO Phil Spencer discussed the firm's multiplatform strategy, and ultimately why you should expect even more games to hit PS5 in the future.
"I'll start by saying MachineGames is doing such a nice job with [Indiana Jones], I thought it showed really well. That's the most important thing, the quality of the games. It was just nice to get a long gameplay segment. Going to the PlayStation announcement, obviously last Spring, we launched four games, two of them on Switch and four of them on PlayStation. We said we're going to learn. During the [June Xbox Showcase] I might've said 'from our learning, we're going to do more.' What I see when I look, our franchises are getting stronger."
Get the Windows Central Newsletter
All the latest news, reviews, and guides for Windows and Xbox diehards.
Indeed, trusted sources have indicated to me that Sea of Thieves has crossed a million sales on PlayStation since its launch over there, and is most likely higher still since this information came to me. The game is currently selling for $40, so even when you disregard in-app purchases from the Sea of Thieves emporium, that's at least around $40 million dollars additional revenue (minus platform fees of course) for Rare to hire and invest in growing that game out. You might wonder if the brand damage to Xbox is worth the income, though. Well, echoing previous comments made to investors by Microsoft CEO Satya Nadella, it doesn't seem to be having a material impact on the growth of total Xbox One and Xbox Series X|S console players — at least for now.
🎒The best Back to School deals📝
- 🕹️Xbox Game Pass Ultimate (3-months) | $32.39 at CDKeys (Save $18!)
- 📺Amazon Fire TV Xbox Game Pass bundle | $82.85 at Amazon (Save $37!)
- 💻HP OmniBook X 14 (X Elite) | $899.99 at Best Buy (Save $300!)
- 📺TCL Class Q6 4K QLED TV (55-inches) | $319.99 at Target (Save $130!)
- 🎮 Seagate Xbox Series X|S Card (2TB) | $249.99 at Best Buy (Save $110!)
- 🖱️Razer Basilisk V3 Wired Mouse | $48.99 at Best Buy (Save $21!)
"Our Xbox console players are as high this year as they've ever been," Spencer emphasized. "So I look at it, and I say 'our player numbers are going up for the console platform, our franchises are as strong as they've ever been.' We run a business. It's definitely true inside of Microsoft, the bar is high for us, in terms of the delivery we have to give back to the company. We get a level of support from [Microsoft] that's just amazing in what we're able to go and do. So I look at this like, how can we make our games as strong as possible. Our platform continues to grow on console, PC, and cloud, and it's just a strategy that's working for us."
It's certainly true that the total number of "console" players hasn't grown in years, sitting at roughly 250 million at any one time. That's why you've seen a lot of publishers in the industry quit their own PC launchers and return to Steam, such as EA. You've seen even PlayStation itself begin launching its titles on Windows PC to find new users. Costs inevitably always go up, which is why microtransactions, increased prices, and strategies like the above end up coming with it.
RELATED: New Xbox Series X|S consoles for 2024 go up for preorder
"I will also say that in our industry, there's a lot of pressure within the industry. People are looking for ways to grow. Us, as fans, and players of games, we just have to anticipate that there's going to be more change, and some of the traditional ways that games were built and distributed are just going to change. That's going to change for all of us. The end result has to be better games that more people can play. If we're not focused on that, we're focused on the wrong things. So for us, health of Xbox, health of our platform, and growing our games are the most important things."
When you take something away, you have to give something back
I would argue that most people knew that it wouldn't end at "4 games" as suggested in the Xbox Spring business update from earlier in the year. We all pretty much knew Indiana Jones was the rumored game for announcement this week. I heavily hinted that Indiana Jones and the Great Circle was the game I was receiving rumors about in my write up from last week, although I really wanted some physical evidence before putting a full report together. It seemed a little odd, since Microsoft explained to the FTC in its Activision court case last year the lengths they had to go to to secure exclusivity on the game previously. Either way, it turned out to be true, and most core fans ultimately expected it.
RELATED: Indiana Jones and the Great Circle has way more depth than you thought
What I suppose they didn't expect was the way Microsoft framed it at their Gamescom event. Announced as a "one more thing" hype beat after showcasing the game itself (which looks fantastic by the way), Microsoft revealed Indiana Jones' is coming to PlayStation 5 in the spring. Now, nobody is talking about the game itself, they're all just talking about the implications for Xbox's strategy, and what game will go next to PlayStation.
I think most people understand why the industry is changing, but the lack of visible investment in features for the Xbox console platform is driving a lot of this fear that Microsoft is operating Xbox console in some form of managed decline. This is basically the inverse of the momentum-building marketing beats Microsoft had crafted with its Xbox backward compatibility program, where players speculated on which Xbox 360 games would hit the Xbox One and Xbox Series X|S emulator. The positivity and excitement those nostalgic beats brought to the community gave Xbox a burst of momentum. Now instead, the community is speculating when games like Forza, Starfield, or Halo will hit PlayStation, further diminishing the value of the Xbox platform in earnest. Maybe it would be better if Microsoft just ripped the band aid off and delivered a full roadmap of what to expect. The current strategy is just misleading at best. It's deceptive to say something is exclusively Xbox and Windows, only to then back track it quite bombastically with a "one more thing" hype beat. How are customers supposed to trust comments that everything is just swell and dandy at Xbox HQ?
Ultimately, the way all of this is being framed as a firehose of quarterly negativity is a masterclass in bad product marketing. Microsoft's drip feed of "bad" Xbox news is dismantling every scrap of goodwill Xbox fought to recover with its core after 2013's disastrous viral DRM debacle, while unmaking Xbox's best exclusive in the process — its community. It's overshadowing and undermining discussion around its actual games line-up, doing a disservice to developers under the Xbox umbrella, and a disservice to fans who have stuck through the platform through a decade of pure faith. This is without getting into things like the handling of Halo, and years of mediocre game launches. Xbox has done a lot of great stuff and had a lot of wins, but so few of those "wins" fall represent exclusive investment in console customers these days, whether it's via features or otherwise.
Just as Xbox finally gets its games pipeline in order, the impression that Xbox console is on the lowest rung of Microsoft's priority list is hard to overlook. I've pleaded the case that if Microsoft is going to take reasons to own an Xbox over other platforms away from its console customers, it needs to explore ways it can give back. Increasingly, I'm not sure that'll happen. But hey, maybe none of it matters, and I'm just an old man yelling at the Xbox cloud.
Jez Corden is a Managing Editor at Windows Central, focusing primarily on all things Xbox and gaming. Jez is known for breaking exclusive news and analysis as relates to the Microsoft ecosystem while being powered by tea. Follow on Twitter (X) and Threads, and listen to his XB2 Podcast, all about, you guessed it, Xbox!
-
GraniteStateColin And with the exception of King's mobile games (from the Activision-Blizzard-King acquisition), what was the point of acquiring the other studios if MS is going to release these non-exclusive exclusives on PS? I suppose it prevents them from becoming PS exclusive. I would say that it gives MS negotiating leverage with Sony, but no evidence that Sony is releasing any games on Xbox, so that's not relevant (unless they used this to get Sony to put the games on Windows, but I suspect Sony reached that decision all on their own).Reply
It's all strange and seems like poor marketing, as Jez wrote.
The only logic I could see before had been if the idea were to bring old versions of franchise games to PS, then at those PS gamers' next console upgrade, if the PS gamer thinks, "I love Elder Scrolls or Halo and want to be sure to be able to get the new version at launch, so I'll switch to Xbox," that might be a strategic objective. But with Indiana Jones going to PS5 (even if a brief period of exclusivity on Xbox, it's apparently not waiting until a sequel comes out to jump to PS5), even that strategy no longer flies.
MAYBE they view Xbox and the acquired studio's games primarily as varied ways to sell Gamepass subscriptions, with no concern for console dominance, and figure more exposure to all games just increases the value of a Gamepass subscription: if I play on PS5 and have come to love Forza and Fallout and Elder Scrolls and Halo on my PS5, then when I go to upgrade, if I know I can get all of those at no add'l charge with a Gamepass subscription, I won't bother with a PS6. In that case, my only logical choices would be Xbox or PC, with my choice probably being more a function of where I like to play than anything else (if on couch, then Xbox, if at a desk, then PC). I suppose that logic still tracks, but not sure it's going to work out for the win MS hopes.
Microsoft repeatedly demonstrates that it places zero value on customer loyalty. I know Dan often says, "Companies don't care about loyalty, they just want to make a profit." Of course he's correct with that point, but it's also missing half the story. That line of thinking makes the same marketing mistake that it would seem MS keeps making: a loyal customer is also the most profitable customer. There is economic value in courting your loyal, big-spending customers. They are also influencers, providing free word-of-mouth promotion. And finally, it's ALWAYS more expensive to win a new customer than to retain or upsell an existing customer (much higher CCA -- cost of customer acquisition -- for a new customer), and even higher still to win back a customer you previously had and lost.
Best to care for and nurture your loyal customers. That way, instead of risking losing them to competitors, they become your biggest evangelists, spending their own money on you in the process. To paraphrase Rocky, that's how profiting is done. uyTAfX7cniI -
Ron-F
I don't think Microsoft is even trying to hide that the platform they are selling is GamePass, not Xbox. Moreover, many recent Windows's apps are now WebApps, such as the terrible new mail client, or even complete online services, such as the movie editor. Microsoft is moving from the customer's hardware to its cloud machines. Ideally, they want you to run all your software remotely.GraniteStateColin said:MAYBE they view Xbox and the acquired studio's games primarily as varied ways to sell Gamepass subscriptions, with no concern for console dominance, and figure more exposure to all games just increases the value of a Gamepass subscription: if I play on PS5 and have come to love Forza and Fallout and Elder Scrolls and Halo on my PS5, then when I go to upgrade, if I know I can get all of those at no add'l charge with a Gamepass subscription, I won't bother with a PS6. In that case, my only logical choices would be Xbox or PC, with my choice probably being more a function of where I like to play than anything else (if on couch, then Xbox, if at a desk, then PC). I suppose that logic still tracks, but not sure it's going to work out for the win MS hopes.
-
Ron-F I can foresee the Nintendo Switch 2 reveal direct. It will show all the third-party support and Microsoft will be proudly there with "one more thing".Reply -
dennarai I don’t have any problem with them going multiplatform. The problem is that EVERY PART OF THE XBOX ECOSYSTEM SUCKS.Reply
Xbox apps on PC is still terrible. The app is bad. They constantly pay for Game Pass deals where the console and PC games are separate. Games often just do not work or do not show up in the Xbox app.
The console experience is becoming an ad-fest and developers are abandoning even making Xbox console ports like crazy.
Cloud gaming is still in beta and it doesn’t feel close to good enough for prime time.
There is not a single part of the Xbox ecosystem that feels polished or worth investing in. They don’t care about any of this stuff and it shows.
It does not matter what these people say. It is literally just PR talk. They are just trying to milk money out of people who are already invested. They can’t come out with a road map saying “yeah we are killing all this” because then no one will spend anymore money. -
GraniteStateColin Ron-F said:I don't think Microsoft is even trying to hide that the platform they are selling is GamePass, not Xbox. Moreover, many recent Windows's apps are now WebApps, such as the terrible new mail client, or even complete online services, such as the movie editor. Microsoft is moving from the customer's hardware to its cloud machines. Ideally, they want you to run all your software remotely.
Agreed. Hard to know if that's a winning or losing proposition in the long-run. I think it's smart to bolster their cloud offerings, but a significant mistake to ignore related core strengths they have with physical systems in front of users. For the New Outlook you reference as a web app, that strength is being the dominant home and office OS -- running natively can (if properly coded) ALWAYS produces a better UX than a web version of an app, simply because it removes layers that slow performance (this is why Apple's hardware+software UX is so good, for those who like Apple's UI, which does not include me). By leaving this behind and moving to web apps, they are slaughtering their own competitive advantage over cloud-only Google, and effectively helping Google take away their customers.
And in the gaming world, they are doing the same for Sony by making their exclusives available on PS. They have consoles hooked up to millions of TVs in the spot where people are most comfortable and where many prefer to play their games. That's incredibly valuable real estate even for Gamepass (and other things), which they sacrifice if they lose the console market to Sony. That is, if PS gains further dominance over Xbox as the family room gaming station, that REDUCES THE AVAILABLE GAMEPASS MARKET. Further, Xbox customers are far more loyal "fans" than Windows users. Where many Windows users are indifferent or even somewhat anti-MS, that's rarely the case with Xbox users. MS does not seem to understand the Goodwill value (an actual line on the balance sheet -- some companies are acquired purely for their Goodwill, which is a market value ascribed to their customers' loyalty as it is projected to translate into sales).
Even if the goal is purely for bolstering Gamepass, a long-run way to win there is to make fantastic games that are only available on Gamepass. They're not doing that either.
I don't see any other way to describe this but poor strategy. That's not to say it can't work. Bad strategies sometimes still succeed in spite of themselves, usually due to worse strategy by competitors, excellence in execution (this correlates better with success than excellence in strategy), or luck with external events outside their control, but the odds of a good strategy leading to market dominance is obviously higher than the odds of a bad strategy getting there.
Frustrating for me to watch as a strategist. These are such obvious and junior level mistakes. For a time, I thought perhaps MS has a bigger strategy that I'm missing. They have obviously done very well overall as evidenced by their sales growth and market cap, but with roughly a decade under Nadella, I can see that there is no larger strategy. There's just a focus on cloud (Nadella's background in MS before he was CEO, and props to his excellence there -- probably better than I could have done) but with no strategy to leverage other strengths. And whenever a company fails to leverage its core strengths, that's BAD strategy. MS is winning in the areas where it focuses (good) but could be winning bigger if they also properly leveraged their strengths. Worse, they are degrading their goodwill year after year, which makes each future success harder and harder for them. Nurtured fans make future successes with new launches almost a sure thing (see Apple, who does this right). -
fatpunkslim @Jez Corden The problem with many influencers and some commentators is that they think too binary, it's all or nothing!Reply
Please someone Explain one thing to me, why does Xbox sign exclusivity contracts with third partiy studios like stalker 2, ark 2, dungeons of hinterberg, palworld, warhammer darktide, etc... ?
That's simple, It’s because exclusivities simply matter! This is true for third party games and it is true for first party games. Xbox has quite simply a hybrid strategy, they send some games to other platforms because they can, they have so many studios and licenses that they can afford to seek profitability on other platforms with a handful of games. They have only sent 4 games so far, 2 small games and 2 service games which are 5 and 8 years old. We can't say it's massive.
For Indiana Jones, At no time do you talk about Disney, which is behind the Indiana Jones license, have you ever thought that it was Disney who put pressure on Xbox? Of course Xbox takes responsibility, they are not going to say that Disney is behind this decision.
And even if that were the case, have you even counted the number of Xbox exclusive games compared to the few multi-platform games? When Xbox releases a game on another platform, 5 others are exclusive to the Xbox ecosystem.
The reality is that today Xbox has more first party games and more exclusive games than PlayStation! Just look at the current line-up of Xbox games compared to the poverty of the PlayStation line-up.
Xbox is the only manufacturer to have announced the next generation of consoles. They know very well that keeping a good balance of exclusive games is important, that's why many first and third party games are exclusive and some are multiplatform.
The world is made of nuances, of balance, it is not binary, it is not all or nothing. Phil Spencer always said that it was case by case, you don't talk about it in your article. He also said that he would learn from the 4 games sent to other platforms (pentiment, grounded, etc.), he saw that it was profitable, and so he sent another one, but at no time did he say that it would be systematic, he even said the opposite remember! He told at Xbox Business Update, i quote "don't think that the arrival of these 4 games is a sign that everything is going to happen, it's not the case."
This is not the case and it will not be the case for the reasons that I have mentioned and lots of other reasons that I will not explain in this already too long comment.
Case by case, balance, that's all there is to understand.
Unfortunately the media reality is binary, it is simpler, faster, more effective (more clicks).
But this world comes into contradiction with the real world just as with the business world which is made of balance and nuances, it's not all or nothing!
The basic problem is there, some are so formatted by the world of media that they cannot understand the obvious.
Case by case, balance, that's all there is to understand.