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

HBK · Jun 13, 2019

While I have no doubt he'd be singing a different tune if he was leading the console race, what he's saying is still technically right.

It's all about having your business being profitable. And I have no doubt Xbox is now pretty profitable.

Of course he'd love to sell more Xboxes, but as long as there are a fair number of players on the Xbox ecosystem, he gets to keep his job and can still do cool things in the process (consoles, games, etc).

If it was all about being first or retiring, all we'd wave would be monopolies everywhere. And there's still a fair bit of competition in pretty much every market imaginable. Food, cars, clothes, military equipment ... Consoles make no exception.

Jraphics Horse · Jun 13, 2019

gofreak said:
Sounds like it's true, that from a Microsoft first party perspective at least, there may not be next-generation exclusives any time soon.

That's a bit of a shift in thinking vs previous gens, and possibly vs their competitors.

I think it also speaks to the likely continued existence of Lockhart. They sound more interested in viewing a variety of hardware as just different access points to the same games, rather than building software around one level of hardware - so adding another lower powered and cheaper console into the mix would make sense from that perspective.

They'll probably be wanting to cater to PCs that are lower spec in some aspects than their new high end console too.

TheThreadsThatBindUs · Jun 13, 2019

Console games are best played on console hardware and PC.

I would absolutely love to see some data indicating otherwise.

So if you don't control the hardware (i.e. having to rely on HW platforms you can't control) then how do you grow your service platforms?

Plenty platform agnostic service platforms fail.

The some of most successful service/software platforms, e.g. Apple, Nintendo, Playstation etc, very much rely on selling hardware to drive platform growth.

"Hardware doesn't matter" is pretty much exactly what the guy in third place in hardware sales will say.

dotyoureyes · Jun 13, 2019

Golvellius said:
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.

You are in the small minority....

Temp_User · Jun 13, 2019

Whenever i hear gaming services from MS my mind still goes back to disasters like GWFL, the MS/Windows store and the always-online bs of og Xbox1. Yes, yes, it was a different time and things are different now with Phil Spencer but the most trusted consumer aspect of Microsoft gaming is still that tangible box in the living room. The fact that its being apparently de-emphasized in favor of multitude online subscription services just makes it easier for me to maintain a wait and see mode before jumping into (again) MS gaming ecosystem.

Bastables · Jun 13, 2019

Dan said:
That's not really new.

Look at how the Xbox One was designed, and how many times the mention of "TV" in the original presentation.

It's also one of the reasons why PS4 did so well in comparison.

MS original goal was figuring out how to sell 200 million xboxone's over it's life time... TV was part of flooding 200 million xbox consoles into consumer's houses.

"The goal that the team had was to figure out how could we sell 200 million game consoles," he said. "We've never seen a console sell that many units. The biggest individual console, the PS2, did 120 million or something like that. The approach the team took was people are moving to OTT Video Services [over-the-top, like Netflix and Stan] and television's getting disrupted — and if we could build a console that could be at the center of this transition and really embrace not only people playing video games, but also people with the changing habits in television, you really take the console market and the gaming market and you expand it potentially." Stated by Phil himself.

https://www.windowscentral.com/micr...ead-wanted-sell-200-million-xbox-one-consoles

Phil might have redefined his "business" as now no longer selling consoles, but traditionally (XBOX) and xbox's direct competitors in the console space are still all about selling consoles.

DigSCCP · Jun 13, 2019

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

While this is true they need Windows Store to sucessed for this to happen.
The idea that "the businesss isnt how many consoles you sell" is not a wrong one.
But to sell services and to sell games you need userbase, no matter in wich plataform but you still need userbase.
MS lacks userbase in all fronts, when compared to their competitors.

Carthago Delenda Est · Jun 13, 2019

bane833 said:
Playstation is console gaming in Europe. People simply don't care about the Xbox brand here.

That's fine. Are you arguing that they couldn't or wouldn't care about the Xbox brand? That your consumers would buy a Playstation even if it offered an objectively worse experience? Because I don't believe that.

bane833 · Jun 13, 2019

Carthago Delenda Est said:
That's fine. Are you arguing that they couldn't or wouldn't care about the Xbox brand? That your consumers would buy a Playstation even if it offered an objectively worse experience? Because I don't believe that.

They bought an objectively worse 600€ PS3 over the 360. So yeah, that's what I'm arguing. Sony would need to fuck up on a unprecedented level for them to even have the slightest chance to catch up. As it stands now the Xbox brand is dead in continental Europe.

Eoin · Jun 13, 2019

Carthago Delenda Est said:
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?

Here's one reason: Europe as a whole was not really a console territory until the PlayStation.

Before that gaming was split between consoles, standard Windows PCs, and home computers with proprietary OSes like the Commodore, Spectrum and Amstrad machines. Consoles like the SNES and Mega Drive did fairly well in Europe (though this was still region-specific), but it wasn't until the PlayStation that Europe really bought into a console in huge numbers.

That means that when the PS3 launched in Europe, PlayStation wasn't just the current dominant brand, it also had the nostalgia cachet that something like the NES has in North America. It still has that, plus now another generation of dominance behind it.

Carthago Delenda Est said:
That's fine. Are you arguing that they couldn't or wouldn't care about the Xbox brand? That your consumers would buy a Playstation even if it offered an objectively worse experience? Because I don't believe that.

There's limits to brand loyalty. There's hypothetical scenarios where Sony screw up really badly and Microsoft don't and then Europeans swap to Xbox. Stranger things have happened.

However, as bane833 points out, with the PS3 Sony released a console that was over twice the price of the Xbox 360, they released it almost a year and a half later (after delaying the European release), it was originally a bit of a mess in terms of compatibility and output formats (people who were on forums with lots of European PS3 owners at the time might remember the ridiculous mess of 720p/1080i/1080p options and cable choices and 50Hz/60Hz silliness). The Xbox 360 was simpler, much cheaper, had way more games initially, had a visible performance advantage in multiplayer games, and Sony still won that contest in Europe.

So if all things are equal, Sony will outsell Microsoft in Europe.

If things favour Sony (like this generation), Sony will heavily outsell Microsoft in Europe.

If things favour Microsoft (like last generation), Sony will probably still outsell Microsoft in Europe but Microsoft might catch them in places like the UK.

If that's difficult to imagine then picture Europe as a market where perceptions are half way between North America and Japan. It should be easy enough to accept that unless the console market changes out of all recognition, Microsoft are never ever beating Sony in Japan, right?

DestroyerOfWorlds · Jun 13, 2019

DigSCCP said:
While this is true they need Windows Store to sucessed for this to happen.
The idea that "the businesss isnt how many consoles you sell" is not a wrong one.
But to sell services and to sell games you need userbase, no matter in wich plataform but you still need userbase.
MS lacks userbase in all fronts, when compared to their competitors.

Game Pass on PC is through the new Xbox app, which is already a much better experience than the normal Windows Store.

Sure, they need to get people to use that rather than Steam, but that's probably an easier sell in most cases than telling them they have to drop $300-$500 on a console they don't really want.

TheRulingRing · Jun 13, 2019

Number of consoles sold almost directly affects all those other things so there's no need to minimise the importance of that figure.

DestroyerOfWorlds · Jun 13, 2019

TheRulingRing said:
Number of consoles sold almost directly affects all those other things so there's no need to minimise the importance of that figure.

Yes, more consoles sold is a good thing, but Xbox has other platforms to make money on.

Deleted member 43 · Jun 13, 2019

bananas said:
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.

There seems to be a basic misunderstanding here.

If someone owns an Xbox console, they will be giving MS significantly more money than if they engage with MS's games in any other way. To say MS does not care about where and how you play their games is, quite simply, absolutely incorrect. MS is a company, they want to make the most $ possible, and getting people to buy Xbox's is the best way to do that.

MS games in the cloud, MS games on PC, that's about expanding their reach to hit more players that they otherwise would not touch. And that's absolutely what they should be doing. But the idea that console sales don't matter...I don't even understand how anyone can say that with a straight face.

DestroyerOfWorlds · Jun 13, 2019

Matt said:
There seems to be a basic misunderstanding here.

If someone owns an Xbox console, they will be giving MS significantly more money than if they engage with MS's games in any other way. To say MS does not care about where and how you play their games is, quite simply, absolutely incorrect. MS is a company, they want to make the most $ possible, and getting people to buy Xbox's is the best way to do that.

MS games in the cloud, MS games on PC, that's about expanding their reach to hit more players that they otherwise would not touch. And that's absolutely what they should be doing. But the idea that console sales don't matter...I don't even understand how anyone can say that with a straight face.

While that's true, their move to PC helps them overall. PC gamers typically only buy exclusives on console if they buy a console at all. So, they don't get those other earnings they get from existing big console gamers.

Since MS doesn't make any money on the console itself, it's all about the software. MS would rather have 100 people buying software on PC than 50 buying a console plus exclusives only on Xbox.

So, reducing that barrier to the ecosystem is a massive win for Xbox.

So, yes, more consoles sold is a good thing and they want to sell consoles, which is why they're still making and releasing them.

But getting PC gamers to start buying their games and services as well as increasing per customer sales on console are driving factors in terms of profitability.

Deleted member 43 · Jun 13, 2019

DestroyerOfWorlds said:
While that's true, their move to PC helps them overall. PC gamers typically only buy exclusives on console if they buy a console at all. So, they don't get those other earnings they get from existing big console gamers.

Since MS doesn't make any money on the console itself, it's all about the software. MS would rather have 100 people buying software on PC than 50 buying a console plus exclusives only on Xbox.

So, reducing that barrier to the ecosystem is a massive win for Xbox.

So, yes, more consoles sold is a good thing and they want to sell consoles, which is why they're still making and releasing them.

But getting PC gamers to start buying their games and services as well as increasing per customer sales on console are driving factors in terms of profitability.

That's just not true. It is almost impossible for an individual console sale to not be profitable, because once someone buys a system, they will spend money on it to justify that purchase, even subconsciously. And they barely need to buy anything before the console is solidly in the black.

The situation you described does not exist.

zedox · Jun 13, 2019

MS' business is subscriptions and selling products on their platform where ever it is. Be it PC, console, mobile, whatever. The fact that someone buys a console doesn't matter in the sense that they still have to buy products on it. Sure, it's more likely that a customer will buy more product because they have it, but it's not necessarily true. If they can have a happier customer on a different platform, that's better for them in the long term. Consoles are just a means to an end and that's subs/sales. They can and have been building that for some time and have been setting up themselves to be at any device with the same experience that is native to that device.

So no, they don't have to sell you a console, they just need you on their platform, which they are growing to be anywhere, not 100% there yet, but that's why Phil is saying what he is because that's what they are close to being. Console is just an endpoint and PART of the business, just not the center of it.

Deleted member 43 · Jun 13, 2019

zedox said:
MS' business is subscriptions and selling products on their platform where ever it is. Be it PC, console, mobile, whatever. The fact that someone buys a console doesn't matter in the sense that they still have to buy products on it. Sure, it's more likely that a customer will buy more product because they have it, but it's not necessarily true. If they can have a happier customer on a different platform, that's better for them in the long term. Consoles are just a means to an end and that's subs/sales. They can and have been building that for some time and have been setting up themselves to be at any device with the same experience that is native to that device.

So no, they don't have to sell you a console, they just need you on their platform, which they are growing to be anywhere. Console is just an endpoint.

Again, this is false.

Getting some money from more people is great. That's what xCloud and MS on PC is all about, and it absolutely makes sense for MS to pursue those users as well.

But as I said, MS will make a ton more money from a user that buys a Xbox over a user that engages with their gaming offerings in any other way. And that's an absolute fact.

Again, I am incredibly confused why so many seem to be saying otherwise.

OrdinaryPrime · Jun 13, 2019

Matt said:
Again, this is false.

Getting some money from more people is great. That's what xCloud and MS on PC is all about, and it absolutely makes sense for MS to pursue those users as well.

But as I said, MS will make a ton more money from a user that buys a Xbox over a user that engages with their gaming offerings in any other way. And that's an absolute fact.

Again, I am incredibly confused why so many seem to be saying otherwise.

Some people buy the PR spin unfortunately.

Jade1962 · Jun 13, 2019

There is no service more profitable than Live or PS+. It's free money to the platform holders. You can't put a paywall on PC or phones. Gamepass revenue has to be shared with 3rd parties. Plus MS gets up to a 30% cut when console owners buy games and nothing on PC when they purchase games on Steam.

Deleted member 16365 · Jun 13, 2019

Well now I'm really confused as to how they plan to make money. I figured the losses they're taking on Game Pass would be made up in console sales.

Hamster Plugin · Jun 13, 2019

bane833 said:
They bought an objectively worse 600€ PS3 over the 360. So yeah, that's what I'm arguing. Sony would need to fuck up on a unprecedented level for them to even have the slightest chance to catch up. As it stands now the Xbox brand is dead in continental Europe.

The Xbox 360 had a mandatory subscription fee attached to it, which made even the expensive PS3 cheaper in the long term. I bought a PS3 over 360 entirely because I did not need to buy Xbox Live Gold on it and could still play Call of Duty.

Papacheeks · Jun 13, 2019

rokkerkory said:
Major changes take time and new leadership with Nadella is newish CEO and made Spencer part of their ELT. Then the purse opened up with crap ton of acquisitions, synergy across other areas of MS including h/w and azure. Seems like more and more the stars are aligning.

I don't think without having to pursue xcloud, gaempass, and windows would xbox have gotten as much money from Nadella. He wants azure, xcloud, gamepass to all help expand enterprise and vice versa.

Instead of just putting up the money to support xbox and let it operate on its own separate from the big brother company. I don't think people understand how damaged the xbox brand has become this gen.

They desperately are trying to get tons of people on their service or playing minecraft, online solitaire or whatever regardless if they are not the same people who would buy a elite controller.
Which to me smells of corporate agenda in using the game division similar to previous gen leadership, just going about it in a more mutual way. If xbox had just honestly had correct leadership that understood PC games, and entertainment medium and seen the worth of keeping long term relationships. We would have way more studios without having to go on a shoppin spree which Microsoft has been doing.

All I see is the bigger company made a compromise and are giving funds that they needed a long time ago and the correct attention they needed a long time ago, but with strings attached in what that investment needs to do for the rest of the company.
I think thats my issue with xbox in a nutshell. Had they made better choices in what xbox was early on in it's lifecycle we would have had the american version of a Playstation type division rooted in PC heritage with their games/developers and ecosystem.

Now they are trying to all within one gen figure out what is xbox, revamp their studios to make games to suit a service, instead of just people that buy their boxes and into their brand PC or other wise.
All this should have happened a gen or so ago.

OG xbox was kind of that without the being connected to PC for Cross play. But it's backbone was rooted in PC developers. Hell it wasn't shy in what the innards of it were either being straight up PC parts.
Now it feels like they are trying to be a jacks of all trades master of none with what they think xbox is, and that is something that I don't know will

Jraphics Horse · Jun 13, 2019

Caspah said:
Well now I'm really confused as to how they plan to make money. I figured the losses they're taking on Game Pass would be made up in console sales.

ehh they just launched a PC version, it's all about building subscribers for now. I have no idea how they will ever make a big profit from it though, but they've talked about how it increases software sales of featured games from non-subscribers, so it might work out.

Doctor Avatar · Jun 13, 2019

Marcus Brutalius said:
Lol, and the biggest elefant in the room: without consoles there are no more console versions of games, right?
It's just one version of a game running on various devices. Sounds like "goodbye sweet royalty money" to me.
Why would Ubisoft pay one cent to MS if they can just turn to Amazon or Google and host their own streaming service there.

Yep, this is leading to the same million service apocalypse that streaming video is heading to.

EA subscription to stream EA games. Ubisoft subscription for their games. etc etc

It's going to ruin the streaming video business when there is too little content diluted between too many services in a few years (already half way there). Same will happen with video games.

If you're saying you don't need platforms then that's bad for platform holders. Any developer could go ahead and develop their own streaming solution with appropriate cloud servers bought from google/MS/amazon etc.

Deleted member 16365 · Jun 13, 2019

Jraphics Horse said:
ehh they just launched a PC version, it's all about building subscribers for now. I have no idea how they will ever make a big profit from it though, but they've talked about how it increases software sales of featured games from non-subscribers, so it might work out.

I figure they converted a lot of Silvers to Gold with Ultimate too, but it still is a crazy value.

DestroyerOfWorlds · Jun 13, 2019

Matt said:
That's just not true. It is almost impossible for an individual console sale to not be profitable, because once someone buys a system, they will spend money on it to justify that purchase, even subconsciously. And they barely need to buy anything before the console is solidly in the black.

The situation you described does not exist.

For example, I bought a PS4. I own 4 games for it. Exclusives only and that's all I will buy on there because I'd rather buy all multiplats elsewhere.

If Sony sold me those same 4 games on PC, they would have made just as much money from me.

It may not always be the case, but this scenario does exist as I'm proof of it. lol

Garrett 2U · Jun 13, 2019

Matt said:
Again, this is false.

Getting some money from more people is great. That's what xCloud and MS on PC is all about, and it absolutely makes sense for MS to pursue those users as well.

But as I said, MS will make a ton more money from a user that buys a Xbox over a user that engages with their gaming offerings in any other way. And that's an absolute fact.

Again, I am incredibly confused why so many seem to be saying otherwise.

I don't think we have any reason to believe that Microsoft will be losing any money on XCloud, even though it's on different devices. It is streaming your Xbox content through Xbox consoles in the Azure data center. There's no reason that game or DLC purchases will change at all. You can buy games on iOS and Android right now through the Xbox app. It boots up the Microsoft store website and uses the Microsoft payment processor.

I think XCloud will actually encourage Xbox console sales, as new gamers outside the market are introduced. And there's no doubt that GamePass will help draw users to Xbox consoles.

Jenea · Jun 13, 2019

The business isn't how many consoles you sell.

Microsoft doesn't care what xbox console was bought by a gamer, but it does care if the gamer bought a xbox console instead of competitor's one.

In the end, how many subscribers you have to something like Game Pass, how many games people are buying, those are much better metrics on the health of the business.

Funny thing, we don't have even these numbers. How many GP subscribers are now ? How many Gold subscriptions ? What's the software number / ratio ?

zedox · Jun 13, 2019

OrdinaryPrime said:
Some people buy the PR spin unfortunately.

First off, I've thought the same before Phil even made this statement...but you can continue with the stupid forum rhetoric type of shit that goes on here.

Matt said:
Again, this is false.

Getting some money from more people is great. That's what xCloud and MS on PC is all about, and it absolutely makes sense for MS to pursue those users as well.

But as I said, MS will make a ton more money from a user that buys a Xbox over a user that engages with their gaming offerings in any other way. And that's an absolute fact.

Again, I am incredibly confused why so many seem to be saying otherwise.

I think you need to understand what I'm saying.

I'm not saying that they won't potentially make more money on from a user that is on a console vs. what is on PC or xCloud. You have 3rd parties making games for your platform and there's no competition within the console. On PC, or streaming, there's competition or developers not on your platform at all. So if a user wants to buy said game, they could easily buy it from somewhere else, whereas if they had your console they would most likely use it. Lock-in, easy, basic logic. Obviously this doesn't apply to people who have multiple consoles or have a gaming PC.

I get your point. More money from a single user. Higher value user. You want as many of those as possible.

But my standpoint is that they can and are trying to build their platform for different (basically all) devices. No, it won't have the same type of lock-in potential that a console can and will always have with 3rd parties as such. Sure, they would LIKE to have everyone on a console, and be locked in...but the reality is that there will never be billions (their marketing) of users that will be able to buy one. That's the entire gaming market which they are saying that they want to reach with their platform.

Consoles are just part of the business, not the center of the business. This is no different than when they made office 365 and took it off of just Windows (and Mac...and Windows Phone) and put it on iOS/Android. Office 365 was the business and Windows is just an endpoint. Sure, if they have you on Windows they can upsell you on other Microsoft type stuff with lockin type of stuff. But you make more money by reaching more people, and I know you said you get that so I'm not arguing that you don't.

Consoles do not matter, users do. Find out ways to maximize as many profits from as much people where they are at. It's easier to get money from where they are at than trying to get them into something they may or may not be able to afford. That's why I said subscriptions and selling products are MS' main business. Consoles are apart of that. Consoles could go away one day and it's all streaming (not saying it is happening soon) and PCs...if that platform is there, that's what matters. Consoles are basically PCs with 1 appstore. If a business can get people to like its appstore anywhere...on any device type...that's all that the business would need to focus on.

Deleted member 43 · Jun 13, 2019

DestroyerOfWorlds said:
For example, I bought a PS4. I own 4 games for it. Exclusives only and that's all I will buy on there because I'd rather buy all multiplats elsewhere.

If Sony sold me those same 4 games on PC, they would have made just as much money from me.

It may not always be the case, but this scenario does exist as I'm proof of it. lol

That's only true if you bought the games from a store Sony owned on PC, and literally did not buy anything else for your PlayStation, period. And even then, you physically having a PlayStation has additional positive brand impact that only a software solution does not impart. People who come into your home see your PlayStation, and that has a positive effect.

And using the most extreme of edge cases to justify this line of reasoning is not a reasonable argument. This situation you describe is not one that influences business decisions, period.

DestroyerOfWorlds · Jun 13, 2019

Matt said:
That's only true if you bought the games from a store Sony owned on PC, and literally did not buy anything else for your PlayStation, period. And even then, you physically having a PlayStation has additional positive brand impact that only a software solution does not impart. People who come into your home see your PlayStation, and that has a positive effect.

And using the most extreme of edge cases to justify this line of reasoning is not a reasonable argument. This situation you describe is not one that influences business decisions, period.

Yes, and in this Scenario, talking about Xbox games, Xbox DOES have a dedicated store owned by them on PC. I play Sea of Thieves and Forza Horizon 4 with a bunch of friends who would have NEVER bought an Xbox One, but they happily bought those games on PC. That's a net gain for Xbox.

Again, selling consoles is good and important. I never said it wasn't.

I was just pointing out that reaching lots of new customers through PC will help, not hurt, Xbox. It's crazy that you seem to be suggesting that there's no benefit for Xbox here.

xabbott · Jun 13, 2019

Matt said:
Again, this is false.

Getting some money from more people is great. That's what xCloud and MS on PC is all about, and it absolutely makes sense for MS to pursue those users as well.

But as I said, MS will make a ton more money from a user that buys a Xbox over a user that engages with their gaming offerings in any other way. And that's an absolute fact.

Again, I am incredibly confused why so many seem to be saying otherwise.

We're heading into a time where publishers are making subscriptions, games are allowing mtx purchases to carry over into platforms where the purchases didn't originate from, competition is setting the stage to reduce the store's cut per sales, people are playing one game for years at time,etc.

I'm not saying the way a platform holder makes money is changing within a year or two but you have to make certain moves before the tides change.

Obviously when people say "Microsoft doesn't care" its hyperbole. But I think a lot of people can see the business isn't about the box itself.

This is even happening outside of gaming. Look no further than what Apple has started to do with its services and investment in content. Even Microsoft as a whole is focusing on services which has led to greater success.

Garrett 2U · Jun 13, 2019

Matt said:
That's only true if you bought the games from a store Sony owned on PC, and literally did not buy anything else for your PlayStation, period. And even then, you physically having a PlayStation has additional positive brand impact that only a software solution does not impart. People who come into your home see your PlayStation, and that has a positive effect.

And using the most extreme of edge cases to justify this line of reasoning is not a reasonable argument. This situation you describe is not one that influences business decisions, period.

If we are talking about the brand impact of someone owning a dusty PS4 on their shelf, can we acknowledge the brand impact of people playing Xbox games on their phones or Steam...?

Deleted member 43 · Jun 13, 2019

zedox said:
First off, I've thought the same before Phil even made this statement...but you can continue with the stupid forum rhetoric type of shit that goes on here.

I think you need to understand what I'm saying.

I'm not saying that they won't potentially make more money on from a user that is on a console vs. what is on PC or xCloud. You have 3rd parties making games for your platform and there's no competition within the console. On PC, or streaming, there's competition or developers not on your platform at all. So if a user wants to buy said game, they could easily buy it from somewhere else, whereas if they had your console they would most likely use it. Lock-in, easy, basic logic. Obviously this doesn't apply to people who have multiple consoles or have a gaming PC.

I get your point. More money from a single user. Higher value user. You want as many of those as possible.

But my standpoint is that they can and are trying to build their platform for different (basically all) devices. No, it won't have the same type of lock-in potential that a console can and will always have with 3rd parties as such. Sure, they would LIKE to have everyone on a console, and be locked in...but the reality is that there will never be billions (their marketing) of users that will be able to buy one. That's the entire gaming market which they are saying that they want to reach with their platform.

Consoles are just part of the business, not the center of the business. This is no different than when they made office 365 and took it off of just Windows (and Mac...and Windows Phone) and put it on iOS/Android. Office 365 was the business and Windows is just an endpoint. Sure, if they have you on Windows they can upsell you on other Microsoft type stuff with lockin type of stuff. But you make more money by reaching more people, and I know you said you get that so I'm not arguing that you don't.

Consoles do not matter, users do. Find out ways to maximize as many profits from as much people where they are at. It's easier to get money from where they are at than trying to get them into something they may or may not be able to afford. That's why I said subscriptions and selling products are MS' main business. Consoles are apart of that. Consoles could go away one day and it's all streaming (not saying it is happening soon) and PCs...if that platform is there, that's what matters. Consoles are basically PCs with 1 appstore. If a business can get people to like its appstore anywhere...on any device type...that's all that the business would need to focus on.

So your post was very reasonable until this point, where you went too far with your line of reasoning. That's where I think the breakdown is happening, taking this situation to an extreme that is not justified by basic facts.

Where and how a user interacts with MS's games, as you and I said, greatly impacts the value of that user to MS. Having a user on an Xbox console means that user will be way more valuable. Therefore, selling consoles is very important, as it creates way more value for MS. That means console sales matter a lot, and MS would prefer a user buys and games on an Xbox over using streaming or the PC, because all these users are not equal. That is just basic economic facts, and saying things like "console sales don't matter" or "a user is a user" is just not true.

Fastidioso · Jun 13, 2019

Golvellius said:
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.

I mean, even Ouya could be THE console gaming for you. Doesn't changes Europe is mostly sony country. Though could be interesting to discuss about your arguments against the sony console this generation vs the MS console. Because I can get it this position in the past generation, but actually it's hard to understand what exactly lean you to such preference.

dotyoureyes · Jun 13, 2019

OrdinaryPrime said:
Some people buy the PR spin unfortunately.

I am new here but I am shocked at the number of folks who take corporate PR and parrot it around for a company on these forums. Some of the replies are not even in reality. People parroting console sales don't matter cause Phil said so continues to be hilarious and sad at the same time. It clearly matters.

zedox · Jun 13, 2019

Matt said:
So your post was very reasonable until this point, where you went too far with your line of reasoning. That's where I think the breakdown is happening, taking this situation to an extreme that is not justified by basic facts.

Where and how a user interacts with MS's games, as you and I said, greatly impacts the value of that user to MS. Having a user on an Xbox console means that user will be way more valuable. Therefore, selling consoles is very important, as it creates way more value for MS. That means console sales matter a lot, and MS would prefer a user buys and games on an Xbox over using streaming or the PC, because all these users are not equal. That is just basic economic facts, and saying things like "console sales don't matter" or "a user is a user" is just not true.

I should reword that statement...Consoles don't matter more than users do. While console sales matter a lot now...long term wise, they will matter less as streaming becomes more normalized (we can argue about that but lets not here). There is still a lot of R&D that goes into making a console and selling a console and all that stuff that you know. What matters are high value customers...consoles lead to that but is not the only opportunity for that.

Fastidioso · Jun 13, 2019

dotyoureyes said:
I am new here but I am shocked at the number of folks who take corporate PR and parrot it around for a company on these forums. Some of the replies are not even in reality. People parroting console sales don't matter cause Phil said so continues to be hilarious and sad at the same time. It clearly matters.

I have to agree.

Mass Effect · Jun 13, 2019

zedox said:
So no, they don't have to sell you a console, they just need you on their platform, which they are growing to be anywhere, not 100% there yet, but that's why Phil is saying what he is because that's what they are close to being. Console is just an endpoint and PART of the business, just not the center of it.

Sure. Though we'll see how successful they are. On the streaming side, I think Google has the much bigger advantage — Youtube and Google search alone basically give them a massive head start. We already have seen their concept for tying in their services with Stadia on that YouTube video. And that's not even mentioning Android and what they can do with that.

On the PC front, they still have to compete with the juggernaut that is Steam. And now Epic Games Store is the new big kid on the block?

And of course there's the console space, where they have Sony (and Nintendo) dominating. At least with Nintendo they might be able to get their services and games on Switch, but PS4/5 is a no-go.

I think Microsoft is going to have a real tough time ahead of them regarding expanding their services. They can do it for sure, but the competition in all areas is fierce, moreso than it has been in the past.

Matt said:
Again, this is false.

Getting some money from more people is great. That's what xCloud and MS on PC is all about, and it absolutely makes sense for MS to pursue those users as well.

But as I said, MS will make a ton more money from a user that buys a Xbox over a user that engages with their gaming offerings in any other way. And that's an absolute fact.

Again, I am incredibly confused why so many seem to be saying otherwise.

Exactly. There's a huge difference between a PC gamer (who owns other consoles) buying a MS game on Steam once a year compared to someone who buys an Xbox and all their games on there.

When I was buying virtually everything on 360, they were getting thousands from me with the purchase of the console itself, all the games, paying for Gold, and buying DLC. Ever since I switched to PC/PS4 though, MS has gotten maybe a hundred or so this whole generation? That's a stark difference.

So yes, by expanding on PC they can capture some additional revenue from people who never planned an Xbox. But people acting like there's no difference in how much money Microsoft gets from the two types of consumers is simply wrong. Consumers they've lost to other systems means automatically much, much less revenue on average from said consumers.

Premium · Jun 13, 2019

Matt said:
Again, this is false.

Getting some money from more people is great. That's what xCloud and MS on PC is all about, and it absolutely makes sense for MS to pursue those users as well.

But as I said, MS will make a ton more money from a user that buys a Xbox over a user that engages with their gaming offerings in any other way. And that's an absolute fact.

Again, I am incredibly confused why so many seem to be saying otherwise.

A user who buys an Xbox and only plays via Gamepass is no more or less valuable than a person who subscribes to Gamepass via PC or a mobile user to xCloud.
Unless you're talking specifically about console users (who on average buy x # of games) as being the primary driver in this discussion? But then, that model is going to slowly dissolve over time with subscription-based services i.e. Gamepass or xCloud.

But it's all moot until these new offerings are mature enough to balance out the way users access their content. If attach rates and box owners were so critical to revenue growth, you wouldn't see the industry transitioning into a services-heavy focus, and yet here we are.

But someone as connected as you already knows this.

zedox · Jun 13, 2019

Premium said:
A user who buys an Xbox and only plays via Gamepass is no more or less valuable than a person who subscribes to Gamepass via PC or a mobile user to xCloud.
Unless you're talking specifically about console users (who on average buy x # of games) as being the primary driver in this discussion? But then, that model is going to slowly dissolve over time with subscription-based services i.e. Gamepass or xCloud.

But it's all moot until these new offerings are mature enough to balance out the way users access their content. If attach rates and box owners were so critical to revenue growth, you wouldn't see the industry transitioning into a services-heavy focus, and yet here we are.

But someone as connected as you already knows this.

Bingo.

We shall all see...in the future! LOL.

Mass Effect · Jun 13, 2019

Premium said:
A user who buys an Xbox and only plays via Gamepass is no more or less valuable than a person who subscribes to Gamepass via PC or a mobile user to xCloud.

Here's the difference:

Every single purchase that user on Xbox makes helps. It's all going to contribute some kind of revenue to Microsoft, whether it's Game Pass, DLC, or a movie rental.

On PC or mobile: that user has way more options and there's no guarantee that they will bother with Microsoft's offerings over the competition's. Microsoft can just as easily get no value from PC/mobile users.

For example, Game Pass on PC is cool, but it has to compete with Origin Acess, Discord's subscription, Twitch Prime, Humble Monthly Bundle, and now U-Play Plus. What are the odds that users will choose Game Pass over the other offerings? Much less regardless of how you slice it.

And if they choose one of those alternatives? 0 money for Microsoft. That's why pushing your own hardware is still extremely important.

dotyoureyes · Jun 13, 2019

zedox said:
Bingo.

We shall all see...in the future! LOL.

It's not "Bingo" As MATT said...MS gains more when someone buys an xbox and buys game on Xbox then on PC. The HARDWARE is by far the biggest driver of adoption right now and will be for awhile yet. Unless you think Matt does not know what he is talking about? If it did not matter MS would not be pushign Scarlett and spending millions maybe billion in R and D.

rokkerkory · Jun 13, 2019

Bastables said:
MS original goal was figuring out how to sell 200 million xboxone's over it's life time... TV was part of flooding 200 million xbox consoles into consumer's houses.

"The goal that the team had was to figure out how could we sell 200 million game consoles," he said. "We've never seen a console sell that many units. The biggest individual console, the PS2, did 120 million or something like that. The approach the team took was people are moving to OTT Video Services [over-the-top, like Netflix and Stan] and television's getting disrupted — and if we could build a console that could be at the center of this transition and really embrace not only people playing video games, but also people with the changing habits in television, you really take the console market and the gaming market and you expand it potentially." Stated by Phil himself.

https://www.windowscentral.com/micr...ead-wanted-sell-200-million-xbox-one-consoles

Phil might have redefined his "business" as now no longer selling consoles, but traditionally (XBOX) and xbox's direct competitors in the console space are still all about selling consoles.

Yeah but times change and business models evolve. GaaS / SaaS has turned traditional selling models on its head.

Garrett 2U · Jun 13, 2019

dotyoureyes said:
It's not "Bingo" As MATT said...MS gains more when someone buys an xbox and buys game on Xbox then on PC. The HARDWARE is by far the biggest driver of adoption right now and will be for awhile yet.

Microsoft gains the same amount from someone buying a game on the PC Xbox Store as they do on the Console Xbox Store. The difference is only if the purchase is made on Steam.

There is also no reason at all to suspect that Microsoft will lose any money on XCloud purchases, as it will more than likely use the Xbox marketplace for those transactions.

Crayon · Jun 13, 2019

One way or another, I doubt they're shooting for a hundred million consoles this time. Xbox just transitioning into more of an umbrella gaming brand and the consoles will be less and less essential part of it.

zedox · Jun 13, 2019

dotyoureyes said:
It's not "Bingo" As MATT said...MS gains more when someone buys an xbox and buys game on Xbox then on PC. The HARDWARE is by far the biggest driver of adoption right now and will be for awhile yet. Unless you think Matt does not know what he is talking about? If it did not matter MS would not be pushign Scarlett and spending millions maybe billion in R and D.

First off, my "Bingo" was that I agreed with his point as it aligned with mine. I can also disagree with Matt. His word is not golden, even if he wanted to change the colors in his reply. If you read what I clarified to Matt, it's about users more than consoles. Yes, consoles "matter"...but users matter more. Consoles can die but if you can still sell your content to them in other ways then that's a better business model. That's the business model that they have been transitioning to this coming generation (well, they tried to last generation but they failed...haha). That's the business model that this conversation is around. Yes, Xbox would love to have everyone be a high value customer and buy a console...that's not the reality and never will be the reality.

While hardware is the biggest driver now...Microsoft is clearly trying to change that as the "main" way to get to a user. As Crayon stated, Xbox is transitioning. It's not about the box...it's about the platform. Consoles aren't the heart of the business, what the business provides to a user on whatever device that they choose is the heart.

Luckydog · Jun 13, 2019

dotyoureyes said:
It will take a screw up ala PS3..Playstation is also very strong in NA, as per this gen and every other gen minus PS3. They won't dominate NA either. We will see. There is nothing "Easy" about it. Playstation is a formidable foe people still like to downplay.

Do we know just NA numbers XB1 vs PS4 (all versions)? My understanding was it was "relatively close" but the rest of the world is just a bloodbath in favor of Sony. Maybe thats not accurate.

azertydu91 · Jun 13, 2019

Luckydog said:
Do we know just NA numbers XB1 vs PS4 (all versions)? My understanding was it was "relatively close" but the rest of the world is just a bloodbath in favor of Sony. Maybe thats not accurate.

Considering there were just a few month where Xbox was ahead of Ps4 on the NPD I still think playstation is quite ahead.

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

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