Xbox a 'multi-billion dollar' profitable business, more first-party investment on the way

We've heard rumors for years about Microsoft "selling off" the Xbox business, usually started by investors or firms with an agenda, who'd rather Microsoft focus on less volatile, less risky sectors instead. Thankfully, those investors ignorant of Xbox's importance won't be getting their way.

In a financial presentation, Microsoft CEO Satya Nadella and Xbox head Phil Spencer explained how their gaming business is critical to the company's future.

Nadella defended Xbox to Microsoft's Wall Street investment block (via Dualshockers), who seemingly lack an understanding about how Xbox, Windows 10, and the Universal Windows Platform are converging as a centralized entertainment offering.

"Most of you view gaming as 'Microsoft has Xbox business.' I think you understand the console economics. But it's a much broader thing for us."

Microsoft's Chief Financial Officer Amy Hood described how Xbox is a multi-billion dollar profitable business, and is positioned well to grow further (also via Dualshockers.)

Phil Spencer went on to discuss how being at the forefront of gaming helped the company's understanding of the next wave of computing solutions, namely mixed reality and holograms, which make extensive use of 3D assets.

Microsoft detailed how Xbox Live is also the most prolific gaming social network on the web. Critically, Xbox Live is also the most profitable gaming social network on the web, where gamers remain subscribed to Xbox Live, will make use of upcoming subscription features like the Xbox Game Pass, and purchase goods from Microsoft's various service-driven games, like Gears of War 4 and Halo 5.

Phil Spencer stated an intent to invest in first-party exclusive games to accelerate Xbox adoption, including the announcement of the "next big hits" at E3 in June.

Spencer also discussed a world where Xbox Live could be a virtual space, where gamers meet and even couch co-op on a shared virtual screen. The company demonstrated this using a slide we saw at Build this week, during the mixed reality presentations.

It's encouraging to hear how intrinsic Xbox has become to Microsoft's strategy for platform engagement, as a deeply integrated aspect of Windows, rather than a separate side-project.

Sony might be leading the race in terms of console units sold, but there are tens of millions more Xbox Live subscribers out there, in a world where platform engagement is becoming increasingly important. Things like PlayStation Now and Xbox's Game Pass are likely to disrupt the industry further in the future, and Xbox is well-placed to weather the storm. E3 2017 is going to be a special one.

Jez Corden
Co-Managing Editor

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 @JezCorden and listen to his XB2 Podcast, all about, you guessed it, Xbox!