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

[DixieDean82]

He would say that, wouldn't he?

All joking aside, he is right. And in the very long term, he'll be even more right, when the day comes that consoles are not as prominent due to streaming.

Then, it all comes down to subscriptions. And the big question is, can they be more successful in that area than they were selling consoles.

 

[@dedmunk]

He would say that, wouldn't he?

All joking aside, he is right. And in the very long term, he'll be even more right, when the day comes that consoles are not as prominent due to streaming.

Then, it all comes down to subscriptions. And the big question is, can they be more successful in that area than they were selling consoles.

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I'd imagine in this future all that's going to separate one service from another is the exclusive games available.

 

[Bitch Pudding]

It is friggin bizarre, are people being wilfully obtuse here or what.

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I'd like to say "of course not" but then stuff like harSon's post pops up out of nowhere...

 

[iareharSon]

Why do you keep talking about individuals when I am talking about aggregate populations? A person might buy an Xbox and never touch it, but the average Xbox user does not. It doesn't matter that you can think of situations where a single given Xbox owner operates outside the bounds of typical practice, because that's what that is: an edge case, and not at all indicative of the overall behavior of the user base.

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You're the one whose reducing it to an individual for some reason. I'm providing examples of a type of console consumer, which in itself suggests that there's more than one.

I mean whose being more ridiculous here? The person who suggests that consumers aren't a monolith but a spectrum of behaviors, or the person who claims without question that they know the aggregate trends of consumers for a situation that has not been put to test yet?

 

[Deleted member 43]

You're the one whose reducing it to an individual for some reason. I'm providing examples of a type of console consumer, which in itself suggests that there's more than one.

I mean whose being more ridiculous here? The person who suggests that consumers aren't a monolith but a spectrum of behaviors, or the person who claims without question that they know the aggregate trends of consumers for a situation that has not been put to test yet?

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But those types of users are such a minority as to not be relevant to this discussion on macro factors.

You are essentially arguing against the value of averages.

 

[JoyFreak]

I totally agree with them. Xbox has since changed their strategy Gaming Forums

 

[iareharSon]

But those types of users are such a minority as to not be relevant to this discussion on macro factors.

You are essentially arguing against the value of averages.

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So there's no such thing as a hardcore gamer and casual gamer, especially when it comes to behaviors with respect to expenditures? The latter is simply a meaningless outlier? An insignificant coincidence?

You're saying this stuff with such definitive authority.

 

[Deleted member 43]

So there's no such thing as a hardcore gamer and casual gamer, especially when it comes to behaviors with respect to expenditures? The latter is simply a meaningless outlier? An insignificant coincidence?

You're saying this stuff with such definitive authority.

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By owning an Xbox, a user is already placing themselves in the "hardcore" video game playing demographic.

And I am being definitive because, well first of all everything I'm saying is kinda basic stuff, and second, addressing data like this is part of my career.

 

[tutomos]

Console ownership in itself does not equal continued engagement.

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I agree in a way that we are not sure what the engagement metrics will look like for Game Pass owners on PC. Matt, maybe early Game Pass owners on PC will be highly engaged. "Early adopters" may be a better term than "console" to describe high engagement .

We do know early console adopters spend way more than late adopters in lifetime device spend. Early console adopters are the main source of revenue for all three platform holders.

 

[iareharSon]

By owning an Xbox, a user is already placing themselves in the "hardcore" video game playing demographic.

And I am being definitive because, well first of all everything I'm saying is kinda basic stuff, and second, addressing data like this is part of my career.

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Console ownership is synonymous with being a hardcore gamer now? If that's the threshold then it's been reduced to a useless metric.

So if a console owner is intrinsically more valuable than a non console owner, and a console only approach is diametrically opposed to a platform agnostic approach, then why would a platform holder choose the latter over exclusively devising a way to drive consumers to purchasing its consoles?

 

[Deleted member 43]

Console ownership is synonymous with being a hardcore gamer now? If that's the threshold then it's been reduced to a useless metric.

So if a console owner is intrinsically more valuable than a non console owner, and a console only approach is diametrically opposed to a platform agnostic approach, then why would a platform holder choose the latter over exclusively devising a way to drive consumers to purchasing its consoles?

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Billion of people play video games all over the world. Of course console owners are the minority.

MS is not doing a one or another approach, and that's a good thing. PC, xCloud, etc. are ways of reaching people they can't reach via consoles. That's a good thing. But the average user value of those owning dedicated hardware will be higher for many years still, because everything done on a console generates revenue for the platform holder, unlike the situation on open platforms.

The point of doing both approaches is to reach both high and low value users, because overall that will mean more total $ for MS. But that does not mean consoles are unimportant, or that all users have equal value.

None of these points are really in dispute except, well, here.

 

[Trup1aya]

MS strategy isn't just about reaching gamers outside of their console market, it's about extracting higher margins out of all customers.

The average Xbox owner buys what? Two games a year?Half of all owners subscribe to Xbox Live. half of all owners buy their games digitally. Many by used. There are a lot of low value customers who own the console.

A year long Gamepass PC subscriber nets them the same $120 annual they'd get from console games unit sales. 100% of Any additional purchases he makes will be digital, so MS gets higher margins on software sales. And they aren't dealing with the costs of physical distribution, retail presence or trying to convince users to buy a plastic box with limited functionality.

I disagree that MS sees non-console customers as low value - they plan to extract equal or greater value out of people who don't own the hardware or aren't so tightly bound to the hardware. These people might spend less on Xbox, but more of what they spend goes to MS profits.

(This all assumes MS actually carves out a notable presence outside of their console business.)

 

[RelaxItsJustMe]

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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Because Xbox is barely a thing in Europe. They buy PlayStations because in a vast majority of Europe gaming is synonymous with PlayStation. Just like how in America a lot of parents used to say "turn off your Nintendo" it's the same thing here but with PlayStation. It's the default here because Sony put so much effort here while Microsoft treated it like it barely even existed. If the only thing here is PlayStation, of course brand loyalty will become a part of why you don't switch.

In my school if you had a gaming console and it wasn't a PlayStation you got made fun of. Kids asked their parents for PlayStations regardless of whether Xbox was stronger or had better games because everyone else, all their friends got PlayStations. If you get a PlayStation regardless of anything else, price, value, quality of games, that's pretty much brand loyalty taken to the max.

 

[Bitch Pudding]

MS strategy isn't just about reaching gamers outside of their console market, it's about extracting higher margins out of all customers.

The average Xbox owner buys what? Two games a year?Half of all owners subscribe to Xbox Live. half of all owners buy their games digitally. Many by used. There are a lot of low value customers who own the console.

A year long Gamepass PC subscriber nets them the same $120 annual they'd get from console games unit sales. 100% of Any additional purchases he makes will be digital, so MS gets higher margins on software sales. And they aren't dealing with the costs of physical distribution, retail presence or trying to convince users to buy a plastic box with limited functionality.

I disagree that MS sees non-console customers as low value - they plan to extract equal or greater value out of people who don't own the hardware or aren't so tightly bound to the hardware. These people might spend less on Xbox, but more of what they spend goes to MS profits.

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Sorry, but you're comparing apples with oranges. For starters, "revenue" isn't the most important financial KPI out there (not even close). Especially if you want to assess the "value" of a customer.

$120 revenue from a 12 months GamePass subscription and $120 revenue from hardware & software unit sales shouldn't be compared (or equalled), since the margins behind all three (I asume) should be very different.

Second of all, you make the same mistake like harSon: You chose an example which suits your hyptheses which has NOTHTING to do with actual spendings of average XBOX owners vs. XBOX non-owners out there.

Matt isn't some drive-by shitposter, and he hasn't become a mod here because his uncle works for Sony. If Matt says he has access to data which supports his statements, then I believe him 100%. Yet there's always one guy here who tries to contradict him with those "yes, but if someone buys X on Y instead of V from Z THEN he has a higher value for MS!" statements. Which is NOT how falsification works.

 

[Hucast]

This statement makes a lot of sense when you consider how they're attracting subscriptions through PC now as well

15 dollar for gamepass on pc xbox and xbla is a steal

 

[iamandy]

Business are about money. Doesn't matter what, how or how many you sell. I agree with him.

For the shareholders at Microsoft makes no difference where the money come from. They care if the company can make more and faster.

 

[Cipherr]

Yeah right, it's about how much money make on those sold consoles.

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Its actually just about how much money you make in general. And the margins on consoles have been shrinking and shrinking as they aim higher and higher for power. I figured at some point there was going to be a breaking point. After a while you are just buying damn near PC parts but at bulk prices and shipping consoles out the door either at a loss or at razor thin margins and trying to make it up on software.

I remember when you used to be able to look at gaming division numbers for these companies to see if they were under water over all or actually profiting. Now they conceal this stuff by merging gaming earnings/losses with so much other shit that you can't tell anymore.

Im sure thats intentional. I think they want to get away from the expensive console boxes and move to subs where the margins are so much higher. Only Nintendo has abandoned the arms race as is probably still making a killing on their console hardware these days.

 

[Trup1aya]

Sorry, but you're comparing apples with oranges. For starters, "revenue" isn't the most important financial KPI out there (not even close). Especially if you want to assess the "value" of a customer.

$120 revenue from a 12 months GamePass subscription and $120 revenue from hardware & software unit sales shouldn't be compared (or equalled), since the margins behind all three (I asume) should be very different.

Second of all, you make the same mistake like harSon: You chose an example which suits your hyptheses which has NOTHTING to do with actual spendings of average XBOX owners vs. XBOX non-owners out there.

Matt isn't some drive-by shitposter, and he hasn't become a mod here because his uncle works for Sony. If Matt says he has access to data which supports his statements, then I believe him 100%. Yet there's always one guy here who tries to contradict him with those "yes, but if someone buys X on Y instead of V from Z THEN he has a higher value for MS!" statements. Which is NOT how falsification works.

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I'm not comparing apples and oranges at all.

My whole point is that margins are different, which is why MS isn't undervaluing customers who don't have xboxes. Converting these people into subscription holders, who end up buying games and dlc from MS stands to offer larger margins than than a sizeable portion of the console customers- the HALF that don't have xbl, don't buy digital, and don't buy new.

I'm not making his mistake at all. At the present, there's no question that the average Xbox console user makes them much more than any other gaming customer. My point is, MS aim's to alter this dynamic and if they can, the margins will be very high BECAUSE they aren't having to push hardware.

I also don't disagree with Matt's analysis of the current situation. I just don't think MS' ambitions end with non-console users being low value, lightly engaged customers for them. They see shakeup opportunity here.

 

[Deleted member 4247]

But they HAVE TO leave the XBO baseline behind, otherwise the entire next generation will be held back by the Jaguar. One to X was mainly a GPU bump, and that basically just means higher visual settings. But a huge CPU power increase is something different, you will be able to do things on that console that just aren't possible on the current ones.

(This regarding what he said about not caring WHICH console they sell, that you can buy an X today and be happy for years to come, etc.)

 

[McScroggz]

Just out of curiosity has there every been a good breakdown of GamePass and how much it might potentially cost Microsoft versus revenue, as well as how third party publishers/developers are compensated?

It's a major piece of the puzzle and I couldn't tell you if Microsoft is making huge profits or if it's losing money with the assumption it will eventually reach enough people to start raking in cash.

 

[TheGhost]

Common sense is realizing when you can sell games / services on more than just a box under your tv, the sales of said box become less important.

 

[VallenValiant]

Common sense is realizing when you can sell games / services on more than just a box under your tv, the sales of said box become less important.

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That only makes sense if you choose to not focus on selling boxes. But Ms wasn't doing this by choice. They simply realized that they couldn't increase their market share without Sony making another PS3 level blunder, and decided to make do with their weaker market penetration.

Being a service provider makes you third party. And the costs of actually making and selling consoles is so high that if you don't take it seriously, you could seriously lose the customers you currently have.

 

[TheGhost]

That only makes sense if you choose to not focus on selling boxes. But Ms wasn't doing this by choice. They simply realized that they couldn't increase their market share without Sony making another PS3 level blunder, and decided to make do with their weaker market penetration.

Being a service provider makes you third party. And the costs of actually making and selling consoles is so high that if you don't take it seriously, you could seriously lose the customers you currently have.

Click to shrink...

My head hurts from revisionist history. Xbox increases their market by originally launching first. That's it. It helped sure that PS3 has no interesting games at launch, was priced way too high and then had the PSN outtage. (Thank the gods for Treyarch had finally implemented bots in COD) Are we also forgetting Sony will be paying Microsofr for Azure?

Like I said it's all about services, Xbox fans are pretty dedicated group, JRPG's and the umpteenth single player cinematic experience isn't going to make a Xbox player abandon Xbox, they will just pick up a ps5 as well. On a enthusiast forum everyone should be ok with owning all consoles anyway. Instead we have this damn black and white attitude of "it's either one or the other"

 

[VallenValiant]

My head hurts from revisionist history. Xbox increases their market by originally launching first. That's it. It helped sure that PS3 has no interesting games at launch, was priced way too high and then had the PSN outtage. (Thank the gods for Treyarch had finally implemented bots in COD) Are we also forgetting Sony will be paying Microsofr for Azure?

Like I said it's all about services, Xbox fans are pretty dedicated group, JRPG's and the umpteenth single player cinematic experience isn't going to make a Xbox player abandon Xbox, they will just pick up a ps5 as well. On a enthusiast forum everyone should be ok with owning all consoles anyway. Instead we have this damn black and white attitude of "it's either one or the other"

Click to shrink...

MS is trying to find value and extract more revenue from the Xbox division, knowing that they can't expand the console install base much next gen. But it is a strech to then claim that consoles don't matter. Because if THAT is true, then MS has no reason releasing the next gen machine at all. We have SEGA as the real life example of the shrinking one suffers when losing a console platform.

Designing and releasing the next Xbox is really, really expensive. If what you said is true, then making Scarlet is a fool's errand if they care so little about it.

 

[Trup1aya]

Just out of curiosity has there every been a good breakdown of GamePass and how much it might potentially cost Microsoft versus revenue, as well as how third party publishers/developers are compensated?

It's a major piece of the puzzle and I couldn't tell you if Microsoft is making huge profits or if it's losing money with the assumption it will eventually reach enough people to start raking in cash.

Click to shrink...

There's no real detailed breakdown.

For each title, MS negotiates a price with the publishers and makes a payment to get the game on Gamepass for X amount of time. It's basically the same model as Netflix

You can imagine that smaller/older games would cost MS less, while newer/larger games would be more expensive.

its impossible to tell how profitable it is

MS is trying to find value and extract more revenue from the Xbox division, knowing that they can't expand the console install base much next gen. But it is a strech to then claim that consoles don't matter. Because if THAT is true, then MS has no reason releasing the next gen machine at all. We have SEGA as the real life example of the shrinking one suffers when losing a console platform.

Designing and releasing the next Xbox is really, really expensive. If what you said is true, then making Scarlet is a fool's errand if they care so little about it.

Click to shrink...

I don't think MS "knows they can't expand the console install base much next gen". I'm sure they very much want to and intend to. All 3 major console makers have demonstrated, over the last 3 generations the execution is more important than brand when it comes to overall market penetration.

"The consoles don't matter" debate is pretty nonsensical. On one side you have people arguing that software and services are what provide value in this market. On the otherside, you have people arguing that consoles are a key means to securing software and service sales. Both are correct.

I don't think anyone truly believes consoles don't matter at all. It's just that there's a whole other Avenue for selling software and services that has a lot of potential for MS. They want to do well in both.

 

[VallenValiant]

I don't think MS "knows they can't expand the console install base much next gen". I'm sure they very much want to and intend to. All 3 major console makers have demonstrated, over the last 3 generations the execution is more important than brand when it comes to overall market penetration.

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And yet threads like this one keep getting made, trying to downplay the importance of console install base.

IMO I agree that MS still want Xbox to become number 1. But they are pretending they don't care about it right now, just as Sony used to pretend they don't care about backwards compatibility. That's fine, MS needed to do what they had to do to protect their shareholders.
But that doesn't mean the consumers have to swallow the marketing speak, and start new threads trying to argue why MS is somehow doing great because consoles no longer matter.

 

[nib95]

I'd argue that he's both right and wrong, but that he'd obviously champion as much given the state of Xbox's console success. Obviously the number of consoles you sell isn't in and of itself the primary or sole business goal, but the fact is the higher your install base of consoles sold, the bigger the pot of (relatively high spending) consumers locked into your ecosystem through which to sell software, subscriptions etc, Sony's success this gen abundantly highlights this, where in terms of revenue and profit they are far and away exceeding the competition.

Obviously the response to this will be that PC gamers and the general public via streaming, encompass a potentially much larger potential install base and demographic of consumers to sell subscriptions, games etc to, but the problem is that this particular wider demographic may not be as interested in, or as likely to spend money on services, expensive games or subscriptions, hence we're in the situation we're presently in.

Granted that could change going forward as game streaming picks up steam, but I just can't see the revenue and profit dynamic drastically changing any time soon, and fully expect consoles and the number of systems sold (eg a consoles install base) to be the primary correlating factor to coinciding software sales, subscription numbers, revenue and profit.

 

[Butt-shot Katana]

I came back to Xbox really late with an X, but it's finally just a place where I feel comfortable. If the Switch had something like GamePass ...

The only console I don't play anymore is the PS4. Nintendo is getting money from me with online and games, and Microsoft is getting money from me with online and GamePass (and a few instances where I'm playing exclusives from earlier in the gen...)

So I can kind of get that services are keeping MS afloat this gen.

 

[unapersson]

MS is trying to find value and extract more revenue from the Xbox division, knowing that they can't expand the console install base much next gen. But it is a strech to then claim that consoles don't matter. Because if THAT is true, then MS has no reason releasing the next gen machine at all. We have SEGA as the real life example of the shrinking one suffers when losing a console platform.

Designing and releasing the next Xbox is really, really expensive. If what you said is true, then making Scarlet is a fool's errand if they care so little about it.

Click to shrink...

It's weird, it's like people are arguing Microsoft out of the console business and into the services one. It wasn't long ago the suggestions of them dropping out of hardware would be ridiculed, but that's the end destination of this kind of argument. Whereas hardware will always be the lynchpin from which these other services can then flourish. Remove that and you have a very different proposition. The competitive landscape is different. The content picture is different. The story around 3rd party is different.

 

[Anthony Hopkins]

It's weird, it's like people are arguing Microsoft out of the console business and into the services one. It wasn't long ago the suggestions of them dropping out of hardware would be ridiculed, but that's the end destination of this kind of argument. Whereas hardware will always be the lynchpin from which these other services can then flourish. Remove that and you have a very different proposition. The competitive landscape is different. The content picture is different. The story around 3rd party is different.

Click to shrink...

On a long enough timeline all Sony and Nintendo will be out of the hardware business.

 

[unapersson]

On a long enough timeline all Sony and Nintendo will be out if the hardware business.

Click to shrink...

Yeah, but that would simply be a very different business with different participants. The current crop may just not exist in that world at all. We'll all be streaming quantum entangled versions of each others virtual worlds. Fortunately we get to enjoy the last gasp of the console business in the meantime.

 

[spwolf]

I'd argue that he's both right and wrong, but that he'd obviously champion as much given the state of Xbox's console success. Obviously the number of consoles you sell isn't in and of itself the primary or sole business goal, but the fact is the higher your install base of consoles sold, the bigger the pot of (relatively high spending) consumers locked into your ecosystem through which to sell software, subscriptions etc, Sony's success this gen abundantly highlights this, where in terms of revenue and profit they are far and away exceeding the competition.

Obviously the response to this will be that PC gamers and the general public via streaming, encompass a potentially much larger potential install base and demographic of consumers to sell subscriptions, games etc to, but the problem is that this particular wider demographic may not be as interested in, or as likely to spend money on services, expensive games or subscriptions, hence we're in the situation we're presently in.

Granted that could change going forward as game streaming picks up steam, but I just can't see the revenue and profit dynamic drastically changing any time soon, and fully expect consoles and the number of systems sold (eg a consoles install base) to be the primary correlating factor to coinciding software sales, subscription numbers, revenue and profit.

Click to shrink...

also... doesnt Sony have the largest gaming subscription service out of all consoles - in both Plus and Now?

 

[Anthony Hopkins]

Yeah, but that would simply be a very different business with different participants. The current crop may just not exist in that world at all. We'll all be streaming quantum entangled versions of each others virtual worlds. Fortunately we get to enjoy the last gasp of the console business in the meantime.

Click to shrink...

I think they will still be here.
They have the talent, mascots and I. P.
I just think its amusing when ppl try and single out ms coming out the hardware business, especially considering Sony we're the first ones out of the big 3 with a working game streaming service.

 

[unapersson]

I think they will still be here.
They have the talent, mascots and I. P.
I just think its amusing when ppl try and single out ms coming out the hardware business, especially considering Sony we're the first ones out of the big 3 with a working game streaming service.

Click to shrink...

That wasn't what I expected people to take out of it. And yes, they're unlikely to get out of the business, that was pretty much my point. Hardware, at least for now, is a fundamental driver. It won't disappear by itself, it would require a mass abandonment by actual physical customers. L

 

[Anthony Hopkins]

That wasn't what I expected people to take out of it. And yes, they're unlikely to get out of the business, that was pretty much my point. Hardware, at least for now, is a fundamental driver. It won't disappear by itself, it would require a mass abandonment by actual physical customers. L

Click to shrink...

Yes, I think it will be 25yrs when more people are streaming games then playing locally.
Bare in mind smart people are predicting general A.I will here in 25 - 50yrs, so things could advance at a much faster rate if that happens.

 

[inpHilltr8r]

in the long term we're all dead

 

[DocH1X1]

https://www.google.com/podcasts?fee...iZjI4MzItZTAwYy0wMTlmLTQwMGMtOTMzMTMxNzFhNTli

also... doesnt Sony have the largest gaming subscription service out of all consoles - in both Plus and Now?

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In the podcast "Tripleclix Video Game Marketing Podcast" at the 28 minute mark Aaron Greensburg notes that Game Pass is now the leading games subscription service in video games. I would assume he is comparing PSnow not PSnow and PSplus. Now how does gold plus gamepass combined compare to PSplus and PSnow combined I have no idea.

 

[Trup1aya]

And yet threads like this one keep getting made, trying to downplay the importance of console install base.

IMO I agree that MS still want Xbox to become number 1. But they are pretending they don't care about it right now, just as Sony used to pretend they don't care about backwards compatibility. That's fine, MS needed to do what they had to do to protect their shareholders.
But that doesn't mean the consumers have to swallow the marketing speak, and start new threads trying to argue why MS is somehow doing great because consoles no longer matter.

Click to shrink...

It isn't a downplay of the importance of consoles, its a statement of fact. Selling consoles is a means to an end- that end being selling software and services. MS is infact getting their ass kicked in terms of software and service sales as well as console sales - so I don't see how stating that the end goal is software/services is a downplay.

Spencer explainibg that the end goal is service/software sales doesn't mean he he's trying to convince people that consoles aren't important. for MS, consoles are currently the most the most effective way of securing software and service sales. I think this is obvious to everyone.

Microsoft didn't need to do this to protect shareholders. The Xbox business is a drop in the bucket compared to MS' other sectors. Shareholders don't really care about xbox- they are to busy being thrilled by Azure.

Furthermore, whether or not Xbox was getting their assed kicked by Sony and Nintendo, finding new ways to expand their gaming software/service reach would be a desirable goal. Being number 1 didn't stop Sony from investing in PSnow with the aim of putting console content on a wide variety of devices, for example.

I wonder if people are truly concerned about others "swallowing market speak" or are they just frustrated that MS won't blatantly admit Sony crushed them on consoles. I don't understand why this matters to consumers.

 

[ItsBobbyDarin]

in the long term we're all dead

Click to shrink...

"Term" should be "run". 5/10 for effort.

 

[bane833]

On a long enough timeline all Sony and Nintendo will be out of the hardware business.

Click to shrink...

As long as games don't run on hot air we'll need hardware. And as long as we need hardware someone is going to make money with it. I don't see a reason why this couldn't be Nintendo and Sony, I mean they're doing it now.

 

[khamakazee]

Once they get things like xCloud on mobile and Game Pass I would think the numbers will drastically increase in gamer engagement and that is what they want. Right now it looks like cosnole sales have kind of stagnated, around 150-200 million. I think there is far greater potential out there when you mix in streaming and mobile.

 

[Anthony Hopkins]

As long as games don't run on hot air we'll need hardware. And as long as we need hardware someone is going to make money with it. I don't see a reason why this couldn't be Nintendo and Sony, I mean they're doing it now.

Click to shrink...

I'm talking in 20-30yrs when streaming is more advanced and everywhere.
The hardware will be in the data centres.

 

[Alexandros]

The point of doing both approaches is to reach both high and low value users, because overall that will mean more total $ for MS. But that does not mean consoles are unimportant, or that all users have equal value.

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I am one such low-value customer for console companies. I only game on PC and I don't own any consoles. I haven't given Microsoft (or Sony, or Nintendo) any money in the last twenty years. Because of Microsoft games releasing on Steam and PC Gamepass, Microsoft will get a substantial amount of money from me. I'm not as valuable to the company as a user that is fully locked in to the Xbox ecosystem but I am still a new customer that they didn't have access to before.

 

[Deleted member 43]

I am one such low-value customer for console companies. I only game on PC and I don't own any consoles. I haven't given Microsoft (or Sony, or Nintendo) any money in the last twenty years. Because of Microsoft games releasing on Steam and PC Gamepass, Microsoft will get a substantial amount of money from me. I'm not as valuable to the company as a user that is fully locked in to the Xbox ecosystem but I am still a new customer that they didn't have access to before.

Click to shrink...

That's exactly right, and why the mixed strategy is a good one.

 

[unapersson]

I am one such low-value customer for console companies. I only game on PC and I don't own any consoles. I haven't given Microsoft (or Sony, or Nintendo) any money in the last twenty years. Because of Microsoft games releasing on Steam and PC Gamepass, Microsoft will get a substantial amount of money from me. I'm not as valuable to the company as a user that is fully locked in to the Xbox ecosystem but I am still a new customer that they didn't have access to before.

Click to shrink...

Yes, as a Linux/Playstation user I've never owned a single Microsoft game, however if the right games turns up on Steam and run with the Windows Emulation layer then I would definitely be tempted (by future Ninja Theory games etc.)

 

[12Danny123]

This is exactly what will happen. It is already happening in TV/Movie streaming, your not just paying for gamepass your also paying for EA/Ubisoft/Activision streaming passes. When that happens the traditional game model is the only thing to fallback to from paying for multiple subs.

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Hence why we are likely going to see acquisitions of Publishers and Studios.

Yes, as a Linux/Playstation user I've never owned a single Microsoft game, however if the right games turns up on Steam and run with the Windows Emulation layer then I would definitely be tempted (by future Ninja Theory games etc.)

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Depending if you need access to Xbox APIs that are exclusive to Windows 10.

 

[Trup1aya]

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.

Click to shrink...

For one, because MS might offer the better rates to stream via their service. And even if they don't go with MS, they are simply trading one middle man for another. Instead of paying the console maker, they are paying the cloud service.

The other issue is that Ubisoft still needs to maximize their profits. If the need to subscribe and have consistent internet access becomes the only way to access Ubisoft content, then Ubisoft could be making their content less accessible and less desirable to a significant number of gamers.

It'll always be a balancing act.

 

[Marcus Brutalius]

For one, because MS might offer the better rates to stream via their service. And even if they don't go with MS, they are simply trading one middle man for another. Instead of paying the console maker, they are paying the cloud service.

The other issue is that Ubisoft still needs to maximize their profits. If the need to subscribe and have consistent internet access becomes the only way to access Ubisoft content, then Ubisoft could be making their content less accessible and less desirable to a significant number of gamers.

It'll always be a balancing act.

Click to shrink...

I was not talking about streaming alone. The situation will drastically change in the next years. Just think about it - a few years ago there were only the big three
console manufacturers and Steam on PC. Within a year 2 big players have entered the game with Epic and Google. If the retail-middleman and walled-off garden goes away, publishers will directly compete with each other. Why would Ubisoft put their games on Xbox game pass PC now that they have their own subscription service on PC? They will at least ask a very good price for that. Everyone is going to renegotiate the current status quo, no doubts about it.

 

[Bioshocker]

According to Spencer (in the Gerstmann interview) they haven't decided on either the name nor the pricepoint yet. They should however have decided on whether to launch two consoles simultaneously so we'll see. They did it with Xbox 360 (sort of), so I still expect them to launch two versions, one of which will be an all-digital Xbox Scarlett. But maybe they'll wait a little.