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

Dunlop

Member
Oct 25, 2017
1,107
If this is true it seems like Stadia could have a major leg up on xCloud. It's not tied to a specific hardware specification so they can consistently upgrade it and keep it bleeding edge.
I agree, if Google does any first party games to highlight this. Otherwise it will probably be a comparable existence.

Can't wait to see the results of the first 4k 60fps demo
 

jroc74

Member
Oct 27, 2017
5,254
About Lockhart...did they ever officially say they were doing 2 consoles?

If not, they just aren't officially ready to say right now.
 

Papacheeks

Member
Oct 27, 2017
3,132
Watertown, NY
I don't know why people subscribe but apparently you do. Also Minecraft is still growing and that could very well be because they are now owned by MS. We don't know where it would be without Microsoft. You can also argue why people subscribe to PS+ but my guess is that this is hardly because of the first party output from Sony but because of games that people play online mostly. Where would the PS+ subscription be at without COD, Fortnite or FIFA?
Oh, I don't disagree at all. Most of PS+ subs are because of COD, GTA V etc. But the division itself didn't have to buy a giant entity or game like lets say fortnite to make the division profitable, nor did they have to create a game service to make their games look more attractive.
 

bane833

Member
Nov 3, 2017
3,022
Seriously this is what people aren't understanding. Sony and Nintendo are like toy companies compared to MS. Xbox is not just the game division it's the cloud among other things.
We heard the same stuff back in 2001 when Microsoft entered the console business. And here we are almost 20 years later and Microsoft is a distant third in the console business , humiliated by these toy companies time and time again.
 

dotyoureyes

Member
Jun 11, 2019
302
We heard the same stuff back in 2001 when Microsoft entered the console business. And here we are almost 20 years later and Microsoft is a distant third in the console business , humiliated by these toy companies time and time again.
Yep..the Sony can't compete with MS rhetoric is such a load of BS we have been hearing forever..every gen it's the same. Yet here we are.
 

metalgear89

Member
Oct 27, 2017
621
It matters, but it doesn't make as much money for Microsoft as it does for Sony.

Hardware sales have been crucial for Sony's success.

Software, services and cross-platforming with PC (and soon smartphones and other mobile and/or living room devices) have been crucial for Microsoft's success.

I would argue that Sony NEEDS to make a superior high-end console for their PS5 in order to stay successful. Microsoft simply needs to expand to more platforms and keep up with support and compatibility across the board with the latest titles.
Psnow is already on pc it was on smart TVs a while back. Sony are already on more platforms, nothing stopping them from expanding.
 

OG_Thrills

Member
Oct 27, 2017
2,393
What a difference a few years make...

"At some level, it is a competition, and I've said before I want to win," Spencer tells us. "At the same time, I want to build a great platform for gamers. If somebody else does that to, and they do really well? Hats off to them, but I can have success in our own space if we're selling a lot of consoles and people are buying games."

I wonder what he would say if Xbox sold 100m+ units.
Please see the above.
 

Prine

Member
Oct 25, 2017
5,067
What a difference a few years make...

"At some level, it is a competition, and I've said before I want to win," Spencer tells us. "At the same time, I want to build a great platform for gamers. If somebody else does that to, and they do really well? Hats off to them, but I can have success in our own space if we're selling a lot of consoles and people are buying games."
5 years ago. Now he's a director in MS, they're releasing games on Steam, PC and giving away all 1st party content for $7.99. Your being disingenuous if you think Phil is in the same place as 5 years ago.
 

phonicjoy

Member
Jun 19, 2018
1,768
MS is definitely ahead of the curve as we proceed along the slow march to the end of dedicated hardware and physical media as the main gaming method. Those will be around a long while, but in a decade or so won’t be the dominant way people play games, just like what’s happened with music and movies.
I still need to see the receipts for that idea. The difference is that video and music are just files. Games require hardware. And judging from his comments, thats still 1:1. I cant really see it being profitable enough untill you can run them virtualized on hardware with overcapacity. Games are usually at the forefront ot tech, so I can't see that coming any time soon. But I might be totally wrong.
 
Oct 27, 2017
3,350
What a difference a few years make...

"At some level, it is a competition, and I've said before I want to win," Spencer tells us. "At the same time, I want to build a great platform for gamers. If somebody else does that to, and they do really well? Hats off to them, but I can have success in our own space if we're selling a lot of consoles and people are buying games."
As Konrad Adenauer (1st German chancellor post WWII) once said: "What do I care about my chitchat from yesterday?"
PR and politics are basically the same in that regard.
 

KBadOne

Member
Oct 28, 2017
120
Both. One way is to use your own Xbox for free for remote play, I guess like PS4 remote play. The other way is to use XCloud and the data centres, I think it's safe to assume there will be a price attached to this version.
Oh I see, thanks for the info! If data centers is used I would expect a subscription involved in it
 

BeeDog

Member
Oct 26, 2017
716
The big challenge, or perhaps fear, I see with subscription models for gaming is similar to what can be seen for music streaming. When more actors (game devs, publishers, indies) pile up to share the same pool of subscription money, who will earn enough to actually survive and even invest it back into the increasingly expensive area of game development? There seems to be a high chance of diluting the value proposition of a game which goes counter to the general gamer expectation of higher budgets and better production values.

Additionally, I keep feeling these gaming companies overestimate just how many actually have good connections/ISPs. Video and music streaming is much more straightforward and linear; gaming streaming is much more unpredictable. Even if they might nail the responsiveness, the amount of bandwidth will likely exclude a big chunk of the potential user base.

I guess we'll see.
 
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cgcg

Member
Oct 27, 2017
176
all cool, perfectly ok if the next xbox sold 1000 units. devs will continue to make games for it. and no way are subscribers tied to number of systems sold, all cool
 

Netherscourge

Member
Oct 25, 2017
7,912
Net Annual Income 2018:

Microsoft 16.6 Billion USD (...and this was actually down from the previous year)
Sony 4.4 Billion USD (...which was a 550% INCREASE from the previous year)
Nintendo 1.3 Billion USD

-Microsoft doesn't need to sell as much hardware as Sony or Nintendo to make a bigger profit overall.
 

dotyoureyes

Member
Jun 11, 2019
302
Net Annual Income 2018:

Microsoft 16.6 Billion USD (...and this was actually down from the previous year)
Sony 4.4 Billion USD
Nintendo 1.3 Billion USD

-Microsoft doesn't need to sell as much hardware as Sony or Nintendo to make a bigger profit overall.
LOL at comparing MS as a whole to Sony and nintendo...Playstation made as much as Nintendo and xbox combined...because they sold more hardware. What the rest of MS does is irrelevant to this discussion as their profit comes from Windows, Azure, Office.....
 

metalgear89

Member
Oct 27, 2017
621
Net Annual Income 2018:

Microsoft 16.6 Billion USD (...and this was actually down from the previous year)
Sony 4.4 Billion USD (...which was a 550% INCREASE from the previous year)
Nintendo 1.3 Billion USD

-Microsoft doesn't need to sell as much hardware as Sony or Nintendo to make a bigger profit overall.
Who is even arguing that? People are talking about the game division.
 

Papacheeks

Member
Oct 27, 2017
3,132
Watertown, NY
Also, ya know, Microsoft's entire strategy and outlook regarding the games industry... but console warzzzz am I right?
No.

If the industry was going towards this radical shift you would see hard sales data showing it. As it is streaming is unproven. EA ORIGIN is a proven model that makes sense for games that come out yearly. Just like a sports season.

EA is the only place in town for sports games mostly outside of PES.

Gamepass is growing but the actual hard money numbers that it's generating is still not clear because of tons of middling factors that its hard to get just straight money generating numbers.

It's hard when they were giving away free subs, trials and months away or charging $1. Like right now they have a beta price of $4.99 for PC.

If it was such a big deal you would have seen more people get on the train much earlier. Games that sell in the millions being put on a service makes sense if every game you put out sells those numbers consistently. EA makes sense because of madden, Fifa alone. Having battlefield and POP games on there is a bonus.

That Ubisoft+ is not going to get tons of people 14.99 a month. It's entry price is too high for a couple of titles that move large numbers.

If Sony or Nintendo were not selling consitantly on their big releases then a sub strat would make sense and they would entice people with their big IP's that have brand recognition like mario, uncharted, GOW, TURISMO ETC.
 

Deleted member 47843

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Sep 16, 2018
2,501
I still need to see the receipts for that idea. The difference is that video and music are just files. Games require hardware. And judging from his comments, thats still 1:1. I cant really see it being profitable enough untill you can run them virtualized on hardware with overcapacity. Games are usually at the forefront ot tech, so I can't see that coming any time soon. But I might be totally wrong.
It’s definitely up in the air. But if the latency in Stadia and Xcloud are really as low as they say, it shouldn’t be an issue in 10-15+ years as tech and internet capacity improve.

Availability of of good Internet is a limiter, but honestly the big publishers focused on constant revenue streams from always online games already don’t care about the rural and third world/developing nation market. That MS guy was too blunt in his comments about rural markets years back, but his sentiment is the dominant one in the AAA space. The bulk of money is in wealthy urban and suburban markets with good internet and high concentrations of high paying jobs where the key 18-35 gamer market increasingly congregates.
 
Oct 28, 2017
38
Also, ya know, Microsoft's entire strategy and outlook regarding the games industry... but console warzzzz am I right?
You're delusional if you dont think them getting hammered this gen has to do with their about face. Companies try to predict and also react to market conditions. I dont see it getting better for them next gen if they continued the same strategy, but personally i hope to see xcloud fail, all the streaming services for that matter.
 

Wonkertonk

Member
Jan 15, 2019
55
Warwick, England
Net Annual Income 2018:

Microsoft 16.6 Billion USD (...and this was actually down from the previous year)
Sony 4.4 Billion USD (...which was a 550% INCREASE from the previous year)
Nintendo 1.3 Billion USD

-Microsoft doesn't need to sell as much hardware as Sony or Nintendo to make a bigger profit overall.
Nah mate, Xbox is a division of Microsoft in which Phil Spencer is in charge.
 

dotyoureyes

Member
Jun 11, 2019
302
The point is Microsoft doesn't have to sell as many consoles to make a bigger profit, which proves Phil's point, hence the purpose of this thread.
lol...ms profits you posted are from AZURE, Office, Windows..the xbox divions made way less..why ae you using Ms total profits which has nothing to do with xboxs sold?

Sony made near more then nintendo and xbox division combined because they sold more hardware...that's a simple fact.
 

Cpt-GargameL

Member
Oct 27, 2017
3,370
So they're bringing remote play to Xbox and calling it streaming while Xcloud is also streaming but calling it Xcloud. I can see why people are confused.
 

ArmGunar

Member
Oct 30, 2017
2,269
Net Annual Income 2018:

Microsoft 16.6 Billion USD (...and this was actually down from the previous year)
Sony 4.4 Billion USD (...which was a 550% INCREASE from the previous year)
Nintendo 1.3 Billion USD

-Microsoft doesn't need to sell as much hardware as Sony or Nintendo to make a bigger profit overall.
In 2018, it's $8.26B net profit for Sony and $1.75B for Nintendo
 

Alexandros

Member
Oct 26, 2017
6,113
Vendor locking customers through hardware is still an effective tactic because most people only buy one console and they have to buy all third-party games on that. Microsoft is wisely trying to widen its audience beyond console but they will still need solid console sales in order to get people to buy games on the Xbox ecosystem.

I think Microsoft's strategy is to get to first place in console sales through the network effect of a big number of people engaging with the Xbox ecosystem. If many of your friends are playing games on Xbox, either through the console or PC or in the future Xcloud, you are more likely to want to participate in that ecosystem too.
 

Betty

The Fallen
Oct 25, 2017
7,100
Yeah but more consoles sold = more games bought.

Microsoft as a whole don't rely on gaming as much as Nintendo or Sony though so I doubt they're worried if they end up trailing next gen too.
 

xabbott

Member
Oct 28, 2017
617
Florida
And whats changed since then? People not buying xbox as much as the competition.
Five years in tech is huge. We have games like Fortnite and PUBG on phones and in many different countries bringing in more money than the vast majority of $60 games. Google, Ubisoft, EA, and more trying subscriptions and streaming. Microsoft has more than tripled in value and has a market cap now of over 1 trillion. You can't just stick to your current path forever. Sony knows this all too well which is why they've changed stances on stuff like EA access, crossplay, etc. You have to adapt to grow. If Microsoft just focused on "beating" Sony in console sales they would eventually be losing to Google if streaming becomes the thing 5 years from now.
 

rokkerkory

Member
Jun 14, 2018
3,280
MS isn't battling Nintendo or Sony anymore, they are battling Google's Stadia. That's where the future of gaming is to be 'untied' to a console as much as possible. That's where all the money and opportunity is. Even Sony gets this and is using Azure for their services plan.
 

dotyoureyes

Member
Jun 11, 2019
302
Five years in tech is huge. We have games like Fortnite and PUBG on phones and in many different countries bringing in more money than the vast majority of $60 games. Google, Ubisoft, EA, and more trying subscriptions and streaming. Microsoft has more than tripled in value and has a market cap now of over 1 trillion. You can't just stick to your current path forever. Sony knows this all too well which is why they've changed stances on stuff like EA access, crossplay, etc. You have to adapt to grow. If Microsoft just focused on "beating" Sony in console sales they would eventually be losing to Google if streaming becomes the thing 5 years from now.
Companies can and will focus on more then 1 thing at once, like they are already doing....
 

Darkstorne

Member
Oct 26, 2017
1,611
England
5 years ago. Now he's a director in MS, they're releasing games on Steam, PC and giving away all 1st party content for $7.99. Your being disingenuous if you think Phil is in the same place as 5 years ago.
Only out of necessity though. Not out of choice.

Selling more hardware means you sell more software and subscription plans. That's why Sony is making a killing on software and subscription plans. Microsoft isn't selling anywhere near as much hardware, hence this shift to selling subscription plans on PC, the rumours of selling Game Pass on Switch, and the new rule for all first party games to support Xbox One as well as Scarlett. The messaging on the latter is all over the place, especially noticeable in this Eurogamer interview.

On the topic of what Scarlett opens up for new ground in game development that couldn't be done before:
"What I'd like to share a little more relevant to my world on the game studios side, is what [Scarlett] will open up in terms of game design. Going all the way back to the early 2000s with streaming, what you do when things are streaming, even some ways Unreal Engine is architected to allow for certain things - going into a room through a little hallway - people have been designing games around load times for so long.

To be able to have the power, the SSD to unlock a new approach to game design... We're probably sitting on a pivot point in game design, when you add up the new console's speed and performance, what cloud streaming will offer up when all the instances of a multiplayer game are running in one location, what it means to be running a game in a data centre... all that in combination with some of the hardware stuff could be as big a transition as when we went from 2D to 3D."

And:

"I don't want to steal any of Bonnie [Ross]'s thunder on Halo Infinite but I think you saw a little bit of it during the video we showed today. But start to think about things like bringing a bigger density of life to a world. We know the kind of game Halo is, the kind of detail in there. Think about bringing more density and variety to the light inside its world. Think about not having to create artificial design things to mask some of the limitations of the hardware and just bring things off of the SSD as fast as they're needed on screen."
Immediately followed by talking about all Scarlett games also being playable on Xbox One, so no one is left behind:
"We're not talking today about features in Halo Infinite but what I can share is our first-party studios have direct access to the team working on Project Scarlett, and the Halo team gets first access to what's running on the hardware. So they are in prime position to take advantage of the things Scarlett will offer, but as you pointed out we also want to make sure people who own an Xbox One get a game which runs well up and down the Xbox family. But it plays best on Scarlett."

"The game needs to be smart enough to take advantage of what's there in the best possible way, but also set itself up to run on the hardware which doesn't have those capabilities. The fact we have direct access literally across the soccer field to the Windows team working on DirectX and all the gaming features on Windows means we have experience navigating up and down the hardware continuum. And a little bit of that is going to be coming to our world on console, but again our lens on this is always from the player's point of view. How do we make sure our game is opened up to as many people as possible, and invested into our console family?"

"Our first-party teams are highly-empowered to make the games they want, but also to target the right platforms. [...] Those studios who have games like Halo, Gears of War, the next Forza, they have great access to the people working on Scarlett. And like you said, it'll be available to everyone but plays best on Scarlett."
These are two very different directions. They are not truly compatible. You can't hype up the benefits of faster RAM and SSDs to finally allow devs to design worlds without loading doors/corridors, but then also say that all of their next gen games are being designed to run on current gen hardware but "play best on Scarlett".

Sadly, that seems to be specifically because they know they can't match Sony in terms of hardware units being sold, and so they're reluctant to risk losing their current Xbox One install base to the PS5 if they pursue a true console generation transition (just like so many 360 players switched to PS4 this gen). Hence, sacrificing game dev advancement by ensuring all first party games are designed with current gen hardware in mind, but "playing best" on Scarlett, just to ensure as large as an install base as possible for the sale of software and subscription plans.

It's a pretty depressing new direction for Spencer to pursue, if you value the benefits a new console generation typically affords first party games to pursue. I'm sure it's great news if you can't afford to buy into a new console gen just yet though and you're an existing Xbox One owner.
 

Nostradamus

Member
Oct 28, 2017
805
Net Annual Income 2018:

Microsoft 16.6 Billion USD (...and this was actually down from the previous year)
Sony 4.4 Billion USD (...which was a 550% INCREASE from the previous year)
Nintendo 1.3 Billion USD

-Microsoft doesn't need to sell as much hardware as Sony or Nintendo to make a bigger profit overall.
Lol. What do these numbers have to do with the Xbox division? Also do you think that since MS is making enough money they are ok with the Xbox division underperforming? If yes, then it's the first mega company that doesn't like capitalism and it's ok if it doesn't grow even bigger.