The Verge interviews Phil Spencer - ‘The business isn’t how many consoles you sell’

[Doskoi Panda]

You don't even have to go back that far.

https://www.gamespot.com/articles/new-xbox-one-ad-calls-it-the-best-selling-console-/1100-6444613/



The video has since been deleted when PS4 became best selling in October or November again.

But here is a mirror video.

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a consumer-facing advertisement which placed emphasis on a metric more familiar and more relatable to consumers than MAU and customer engagement/retention/recurring purchase potential. a metric that, at the time, was constantly utilized by Sony toward the same end - to impress gamers who had traditionally measured success by the # of consoles sold.

I don't think this advertisement contradicts Phil's statements in this interview

 

[Manyo]

The constant talk about 2 billion gamers even before this generation makes me wonder what Microsofts plans have been when they entered the market. 150 million seems to be the max for consoles, maybe even that wouldn't have been enough for them. I do wonder what their growth expectations are now with streaming around the corner and how much time they will give the current Xbox team to reach their goals before changing their strategy again.

 

[Replicant]

Not in the end. The 360 had a year long headstart and if you align the sales data sony ps3 outsells the 360 from day 1.

And the 360 was used as lead platform because ms did a better job with the hardware. it was easierfor the devs to port fromt he 360 and not the other way around.

As i said. Sony fucked up big time and ms used it (as they should) to get the upper hand for a few years.

And in no dimension was the 360 destroying the ps3 in the west. In the us and the uk they did better than sony but that's it. In every other country the ps3 outsold the 360 after the year long headstart.

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The ps3 outsold the 360 in NPD data only a handful of times in 7 years. If you take Japan out of the equation, the 360 outsells ps3 by roughly 10 million. Japan is definitely not Microsoft's market and it's a bit unfair for worldwide sales because of that.

 

[Lukas Taves]

a consumer-facing advertisement which placed emphasis on a metric more familiar and more relatable to consumers than MAU and customer engagement/retention/recurring purchase potential. a metric that, at the time, was constantly utilized by Sony toward the same end - to impress gamers who had traditionally measured success by the # of consoles sold.

I don't think this advertisement contradicts Phil's statements in this interview

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Specially so because this is what he said:

I don't need to sell any specific version of the console in order for us to reach our business goals. The business isn't how many consoles you sell.

He isn't arguing that they don't want to sell consoles. He is arguing that once he sells you a console he doesn't need to sell you a more powerful one, because even at the lower console you are still in their ecosystem consuming their games and services.

 

[Sydle]

He's right, you know. It's called the gaming industry. Consoles are just a part of it.

 

[CostcoCousteau]

Servicing
Consoling

Different but similar

 

[Hycran]

The ps3 outsold the 360 in NPD data only a handful of times in 7 years. If you take Japan out of the equation, the 360 outsells ps3 by roughly 10 million. Japan is definitely not Microsoft's market and it's a bit unfair for worldwide sales because of that.

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So it's unfair that the ps3 sold more consoles than the 360 because *checks notes* more people purchased ps3's?

This makes very little (if any) sense.

He's right, you know. It's called the gaming industry. Consoles are just a part of it.

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Microsoft now has a very robust digital offering ecosystem, but it's a bit convenient to hold this position when you've literally never sold the most consoles in any particular console generation.

 

[dotyoureyes]

The ps3 outsold the 360 in NPD data only a handful of times in 7 years. If you take Japan out of the equation, the 360 outsells ps3 by roughly 10 million. Japan is definitely not Microsoft's market and it's a bit unfair for worldwide sales because of that.

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LOL why would you remove an entire region? It doesn't work that way. A sale is a sale. PS3 also outsold 360 greatly in Europe, it was not just Japan. It's why PS3 closed the year gap. How is that "Unfair"? A part of ps3's appeal is the japanese support.

 

[BabyDontHurtMe]

The gaming industry is multi-faceted, and even Sony's Kenichiro Yoshida made a decent point suggesting the console market is niche. There's mobile, PC, and streaming and all of them are going to be huge. These companies aren't going to ignore a more expansive market. Also, why would Microsoft even focus on solely getting the majority market share in consoles alone when Sony usually has the upper hand, especially coming off the heels of the PS4? Microsoft is still going to make consoles and they are gonna make a profit from them. However, there's so much more than the customized PC boxes that are dedicated gaming machines. I still love consoles and I'll always be a console gamer. There's something rewarding about turning on a system and playing a game specifically designed and catered for it. However, I'm not all 2 billion gamers in the world. The vast majority of gamers do not play exclusively on consoles like I do. Both Spencer's and Yoshida's philosophy make sense and both companies are going to find success outside the console space. However, I believe Sony thinks PlayStation works best as a console brand, so they'll merely dabble with streaming and PC next-gen.

 

[Sydle]

So it's unfair that the ps3 sold more consoles than the 360 because *checks notes* more people purchased ps3's?

This makes very little (if any) sense.



Microsoft now has a very robust digital offering ecosystem, but it's a bit convenient to hold this position when you've literally never sold the most consoles in any particular console generation.

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Sounds a bit console warriorish to see things that way.

 

[Meliodas]

That's what you say when your goal at the start of the generation was to sell 200 million units of your new console but it haven't even reached 50 million at the end.

 

[Ascenion]

That's what you say when your goal at the start of the generation was to sell 200 million units of your new console but it haven't even reached 50 million at the end.

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Or that's what you say with a literal top down leadership change? Jesus Christ people. Satya is not Ballmer and Phil is not Mattrick. This is literally a different Microsoft. Since 2014.

 

[Weltall Zero]

The ps3 outsold the 360 in NPD data only a handful of times in 7 years. If you take Japan out of the equation, the 360 outsells ps3 by roughly 10 million. Japan is definitely not Microsoft's market and it's a bit unfair for worldwide sales because of that.

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The fuck?

Since Sony is a Japanese company rather than American, should we compare their global sales by taking out the US because it's "unfair" too?

 

[@dedmunk]

Does Microsoft need to sell the box in order to sell the subscriptions? If so then selling consoles is still the number one factor.

If they are going all-in on streaming then that's going to be interesting.

 

[randompasserby]

Jumping in at page 12 just want to make a quick note and question.
Sony's incredible success with selling their consoles directly correlates with how much profit SIE brings to the company right? More console sales means more PS+ subs, more exclusive games sold and so on.

What makes it different for MS?

 

[DestroyerOfWorlds]

Does Microsoft need to sell the box in order to sell the subscriptions? If so then selling consoles is still the number one factor.

If they are going all-in on streaming then that's going to be interesting.

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Don't need to sell someone a console in order to sell them game pass.

 

[Carthago Delenda Est]

All evidence from where? North America? Because from the sales data from pretty much everywhere outside of NA, the UK and maybe a few other countries, none of those playerbases ever jumped ship and pretty much always stuck to PlayStation.

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So Xbox 360 sold more than the Xbox how? And how did the original Xbox sell any at all? How did the PS2 outsell the PS1?

 

[Carthago Delenda Est]

What?

Sony won 3 out of 4 times so far. And the one time they didn't they undermined their own success, made almost every error possible and still won against the 360 (ms biggest success so far). The winner of that gen (wii) was only 10 million units ahead in the end.

Next gen will be the same again. People don't want to or simply can't accept that playstation is on another level worldwide.

If anybody jumped ship in the beginning of the 360 era they jumped right back in the end to the ps3 and stayed there for the ps4.

MS couldn't win against playstation and so they found a new way to generate profits. I love seeing them doing better but there's a reason they don't want to fight against sony in the classic hardware game.

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So you've just admitted that people are willing to jump ship. Sometimes even twice a generation.

 

[@dedmunk]

Don't need to sell someone a console in order to sell them game pass.

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No you don't. But what are they going to play the games on? PC? Are you saying Microsoft are going to go all in on PC?

 

[RelaxItsJustMe]

So Xbox 360 sold more than the Xbox how? And how did the original Xbox sell any at all? How did the PS2 outsell the PS1?

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Your own words were "I'm saying console allegiance doesn't exist at any relevant level" which is straight up wrong seeing that Europe completely backed PlayStation no matter what. How many or how few jumped ship is completely irrelevant to the point I'm refuting. Because we know the number of people that didn't jump ship were relevant enough to make or break Sony.

 

[Skatterd]

Phil is so damn likeable

 

[clickKunst]

Tell that to the shareholders, Phil. It's all about money - if they don't care about console sales, they're milking that revenue from somewhere else.

 

[Inuhanyou]

WHile service based ecosystems was always going to be a thing(you could say MS was the arbiter of that with Xbox live), its clear that their pace was hasted because of how they have been on the backfoot in sales. They have had to justify being in the gaming ecosystem by changing their strategy entirely. That's an admission of loss in that marketplace if anything

 

[SharpX68K]

To be clear, for now there isn't any crystal clear evidence around that Lockhart was cancelled. Nor is there any evidence MS is still planning to launch that SKU.

We've all read certain opinion pieces as well as journalists and other industry-related players which statet they've heard "rumors", and that's pretty much it. The latest ones I've read here strongly suggested Lockhart is cancelled, but that might as well be the result of my selective perception...

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What I observed is that MS clearly changed their PR standpoint, as you called it, since April. Neither right before nor during E3 did MS refer to Anaconda as being determined to become the - by far - most powerful next console out there. Instead the Head of Microsoft Game Studios literally said "we're also in a world where speed is starting not to matter". Which for all I know indicated there was indeed a change of plan regarding the market proposition of the Anaconda SKU.

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What's more, everyone's talking about Anaconda and PS5 devkits and how they compare to each other. Yet there isn't a single one out there talking about Lockhart devkits. Which is kinda odd since Lockhart is supposed to be the baseline for next gen gaming - and how can anyone develop a next gen exclusive game without knowning that baseline hardware (might be possible for all I know, still though!).

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I do hope Larkheart is dead and never becomes the baseline for next for next gen gaming.

We'll see more impressive games on Scarlett/Anaconda if that's the only traditional console SKU.

Lockhart would only restrain what developers can do for next gen, and could even hold back 3rd party PS5 games, as well as Anaconda and PC.

Lockhart was a bad idea from the start and I truly hope it never shows up.

That should not however, rule out a very cheap streaming console/device that relies on xCloud. It was rumored that this device helps to reduce latency by having some local compute power.

Since last year, Project Scarlett was rumored to encompass 3 hardware devices with 2 of them being traditional consoles.

Anaconda high-end console
Lockhart low-midrange console
A cheap streaming console/device of some sort that has to be connected to xCloud.

If Microsoft only launches Anaconda as the next Xbox, that's fine.
If Microsoft launches Anaconda and a cheap streaming device that plays the exact same games as Anaconda, that's fine too.

 

[Hycran]

Sounds a bit console warriorish to see things that way.

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I'm not sure how stating a fact is console war-ish. If you could point me to a time when the xbox console sold the most units in any particular generation of consoles, that would be super.

If Sony or Nintendo, two companies with histories of selling the most consoles in a generation said "the amount of consoles don't matter", that would be a lot less suspicious. Similarly, if Nintendo said "online offerings don't matter", that would also be a convenient position given they are obviously miles behind xbox and sony in their online offerings.

To Microsoft's credit, they have parlayed a weakness (lack of console sales) into a strength (having the most robust online eco-system to keep more people on xbox consoles). That being said, Microsoft is also adopting a strategy (putting all your games on PC) that is seemingly at odds with the traditional console game plan, so it's hard to put them in the same basket as "traditional" console makers.

 

[Carthago Delenda Est]

Your own words were "I'm saying console allegiance doesn't exist at any relevant level" which is straight up wrong seeing that Europe completely backed PlayStation no matter what. How many or how few jumped ship is completely irrelevant to the point I'm refuting. Because we know the number of people that didn't jump ship were relevant enough to make or break Sony.

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There are a ton of factors that go into why Europe didn't have a comparable split with the US. There's literally no reason to believe brand loyalty was that reason. It doesn't make sense. Why would Europeans be more brand loyal than the US in general?

 

[bane833]

There are a ton of factors that go into why Europe didn't have a comparable split with the US. There's literally no reason to believe brand loyalty was that reason. It doesn't make sense. Why would Europeans be more brand loyal than the US in general?

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Playstation is console gaming in Europe. People simply don't care about the Xbox brand here.

 

[Hamster Plugin]

Don't need to sell someone a console in order to sell them game pass.

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You actually do.

On an open platform like PC, what is there to stop other companies from offering their own game pass? How many big AAA publisher games are you going to get on a Game Pass when the big AAA publisher can offer its own subscription service instead? See Uplay+ and Origin Access.

You also need to sell a console in order to implement a paywall on online access for its software. This is one of the most profitable things console makers have ever come up with - they don't even need to give you a service, you need to pay for it to play online. This is why Sony can just remove monthly games and Nintendo can give practically nothing and both still get about 50% of users to sign up for it.

 

[Deleted member 20297]

Playstation is console gaming in Europe. People simply don't care about the Xbox brand here.

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This as a general statement is just not true and 360 proved that. You can be number 2 or 3 and still have people caring about the brand.

 

[Deleted member 20297]

Not in the end. The 360 had a year long headstart and if you align the sales data sony ps3 outsells the 360 from day 1.

And the 360 was used as lead platform because ms did a better job with the hardware. it was easierfor the devs to port fromt he 360 and not the other way around.

As i said. Sony fucked up big time and ms used it (as they should) to get the upper hand for a few years.

And in no dimension was the 360 destroying the ps3 in the west. In the us and the uk they did better than sony but that's it. In every other country the ps3 outsold the 360 after the year long headstart.

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Every few months the same argument. You people make it sound like MS had a "best case" gen with 360 while the launch period was plagued with RROD - not that it only happened, it was spread across a wide range of media which hurt the image of the console. Also I think that yearly sales, PS3 did not win every year because MS had a very strong year when Kinect released which meant quite a big leap in sales, unexpected for its years on the market.

 

[Hana-Bi]

The constant talk about 2 billion gamers even before this generation makes me wonder what Microsofts plans have been when they entered the market. 150 million seems to be the max for consoles, maybe even that wouldn't have been enough for them. I do wonder what their growth expectations are now with streaming around the corner and how much time they will give the current Xbox team to reach their goals before changing their strategy again.

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Well, as they started there weren't two billions gamers. There was no mobile / smart phone gaming.

The goal that Bill Gates set was to get Xbox / Microsoft in the living room. Now MS goal is to sell all kind of services on many devices as possible. But that isn't a Xbox strategy change that is MS goal under Nadella.

xCloud with GamePass on mobile can be huge.

 

[FIREKNIGHT2029]

Jumping in at page 12 just want to make a quick note and question.
Sony's incredible success with selling their consoles directly correlates with how much profit SIE brings to the company right? More console sales means more PS+ subs, more exclusive games sold and so on.

What makes it different for MS?

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That's what I'd like to know as well.

Common sense implies that if they sell more consoles they'll make more money in addition to what they are making now. I don't understand this idea that console sales shouldn't be part of the focus for them.

 

[MXT]

The number of consoles sold doesn't matter when the console is an app on your TV, not a box that you own. Which one you spend the most money with, spend the most time with, get the most value out of is what will matter going forward.

 

[mingo]

Yes, but the more hardware they sell, the more opportunity to sell more services....

 

[MXT]

Yes, but the more hardware they sell, the more opportunity to sell more services....

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The same opportunity exists when someone powers up their new Smart TV and are greeted with a row of apps, of which Xbox is one. Pair a bundled controller and you're off.

That's the future. That's 2021.

 

[DoradoWinston]

Yes, but the more hardware they sell, the more opportunity to sell more services....

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to an extent yes but not everyone is opening to owning an xbox for a variety of reasons which is why selling that software and services on PC and Switch makes complete sense.
players that are interested or invested in the xbox console space will continue to support, the nintendo crowd gets covered and the massive PC space gets more and more services (gamepass) and software going to both the xbox store and Steam.

 

[Alex840]

Yes, but the more hardware they sell, the more opportunity to sell more services....

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Exactly. It's part of the equation.

Hardware sold x attach rate = copies sold.

They're not deep enough into the Game Pass/Xcloud model that they can claim they have other devices people are playing on.

 

[MXT]

Exactly. It's part of the equation.

Hardware sold x attach rate = copies sold.

They're not deep enough into the Game Pass/Xcloud model that they can claim they have other devices people are playing on.

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The actual interview is speaking about the not-too-distant future. Phil is not claiming that consumers are playing on cloud hosted Xboxes right now, he is saying that they will be.

Hardware sold will continue to be part of the equation, but an increasingly small portion of it. It simply doesn't matter in a world where a substantial portion of your user base owns no hardware other than a controller.

 

[Alex840]

The actual interview is speaking about the not-too-distant future. Phil is not claiming that consumers are playing on cloud hosted Xboxes right now, he is saying that they will be.

Hardware sold will continue to be part of the equation, but an increasingly small portion of it. It simply doesn't matter in a world where a substantial portion of your user base owns no hardware other than a controller.

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Maybe. But maybe not. I'm already seeing articles such as one in the BBC stating the next generation of consoles is dead because of streaming. We had exactly the same discussion last gen with mobile.

I think streaming is probably the future eventually, but I don't see it taking off for a while, it'll be a slow process with plenty of problems that take a while to figure out. Not unlike VR.

 

[noyram23]

'The business isn't how many consoles you sell, it's the friends you made along the way'
- Phil 'I believe' Spencer

 

[MXT]

Maybe. But maybe not. I'm already seeing articles such as one in the BBC stating the next generation of consoles is dead because of streaming. We had exactly the same discussion last gen with mobile.

I think streaming is probably the future eventually, but I don't see it taking off for a while, it'll be a slow process with plenty of problems that take a while to figure out. Not unlike VR.

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There will continue to be dedicated hardware. There will also be streaming. A sizable audience will be streaming without owning a console. This is nothing like silly mobile stuff from last gen - this is a thing that is occurring, you can watch it happening.

The problems have been figured out. The tech works. It will be pushed out to the people. Since the tech works and because most people prefer not to spend $300-400 on a console and get a worse experience* for doing so, Microsoft's next generation product (Google I am less sure of - they don't have the publisher partnerships they need in order to succeed) will be quite successful.

*Not having to wait for games to install and (constantly) patch is a big benefit.

 

[Deleted member 5535]

Funny how that argument was never made for Nintendo with Wii U and Gamecube lol

 

[MXT]

Funny how that argument was never made for Nintendo with Wii U and Gamecube lol

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Was the Wii U part of a transition to a cloud streaming product?

 

[Golvellius]

Playstation is console gaming in Europe. People simply don't care about the Xbox brand here.

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Strange. I am European and console gaming means Xbox for me. I've never owned a Playstation console because Sony has failed to offer anything of interest so far.

 

[bananas]

No you don't. But what are they going to play the games on? PC? Are you saying Microsoft are going to go all in on PC?

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Microsoft is releasing every first party game on PC and just did a significant update to their gaming storefront on PC.

I don't really think Microsoft cares if you choose to use your PC over an Xbox One.

 

[Arebours]

Phil is so damn likeable

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that's basically his job though and the problem with charismatic people in a position of power. I don't think ms is worse or better than Sony or any other of the giants in this space, but these companies will do as much as they can get away with in terms of anti-consumer practices and having a likable person as a spokesperson is a part of that.

 

[Pancakes R Us]

Thanks OP. Glad that I finally know what Xcloud is. That was a good description.

 

[@dedmunk]

Microsoft is releasing every first party game on PC and just did a significant update to their gaming storefront on PC.

I don't really think Microsoft cares if you choose to use your PC over an Xbox One.

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They are still selling boxes, failing but trying.

 

[nanskee]

Smart but I already knew gamepass could be huge. Just too much value, we need a netflix for games

I don't even feel like paying for more Nintendo games. Shits expensive

 

[bananas]

They are still selling boxes, failing but trying.

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40 million is failing, apparently.