What’s next for Xbox – ‘The bottom line is that we simply put out more top quality games in front of more people than other companies’

Nine of Microsoft’s senior execs lined up to spell out its vision for the future of gaming this week, via an embargoed video presentation. Clear cut new announcements mainly centred around Xbox Cloud Gaming, but some new insights were also provided.

One clear headline statement was that it’s in-house studios would release a new title every three months. Matt Booty, head of Xbox Game Studios commented: “In terms of the overall lineup, we want to get to a point of releasing a new game every quarter…we know that a thriving entertainment service needs a consistent and exciting flow of new content. So our portfolio will continue to grow as our service grows.”

With Phil Spencer adding: “The bottom line is that we simply put out more top quality games in front of more people than other companies.”

Largely Microsoft went through how its gaming strategy continues to evolve. And here the company is something of a victim of its own success. Its strategy has been so well thought out and so clearly communicated in the past, and it continues to logically follow the pillars it set out many years ago now.

Although that’s not to say it’s not bullish in that rhetoric, with Phil Spencer taking a well-measured swipe at the competition.

BREAKING BARRIERS

“Across the Xbox ecosystem, we’re now reaching hundreds of millions of people every month, and our total addressable market is going to grow while others are relatively static.

“As the Xbox ecosystem grows in both content and total size, it becomes more valuable to both players and our partners. So right now, we’re the only platform shipping games on console, PC, and cloud simultaneously.

“Others bring console games to PC years later, not only making people buy their hardware up front, but then charging them a second time to play on PC. And of course, all of our games are in our subscription service day one, full cross-platform included.”

Microsoft repeatedly talked up creating a more consistent, more engaging and simply larger addressable market than the console/PC gaming has ever seen before. And as part of that Spencer took some further swipes at the industry’s past and those who still operate in that model.

“Our power is to empower everyone to play the games you want, with the people you want, anywhere you want. That’s a big change to how this industry has traditionally worked, in the past a lot of games companies have been about locking players into certain hardware, and erecting barriers between players,” observed Phil Spencer.

“We want everyone on earth to be able to join in, no matter what device you have access to, or where you are, and without spending a lot of money on every bit of individual entertainment,” he noted in clear reference to Game Pass. “And for many players this is an investment that will limit their ability to play. That cost and that retail model, for some, have limited the audience for creators and the entire industry,” he argued.

“But we believe that only this company, only Microsoft, can bring to bear the global scale, the vast wellsprings of technical innovation, the financial resources, and the deep, decades-long legacy in video games required to truly bring the joy and community of gaming to everyone.”

ALL IN ON GAMING

And Spencer’s rhetoric was backed up by a lengthy appearance from Microsoft CEO Satya Nadella, making it clear that the broader company was fully behind Xbox.

“As a company, Microsoft is all-in on gaming. Gaming is the most dynamic category in the entertainment industry. Three billion consumers look to gaming for entertainment, community, creation, as well as a real sense of achievement, and our ambition is to empower each of them, wherever they play.

“We believe that Microsoft can play a leading role in democratizing gaming and defining the future of interactive entertainment. There are really three key areas where we believe we have an incredible competitive advantage: First, our leadership in cloud computing. Second, the resources we have to build our subscription service, Xbox Game Pass. And third, our overall focus on empowering creators.”

DISCOVERY PASS

To support its strategy, Microsoft did release some new figures about the success of Game Pass, and how it actually helps games overall, boosting retail sales for those included.

“Rather than crowding out retail sales, we’re seeing that when many games go into Game Pass, there’s actually an uplift for the game, not just on our service, but also in digital retail, both in our store and in others, like Steam or the Epic Games Store,” stated Spencer

And that’s because of the power of the community to drive sales. There’s a powerful effect in our industry when more people have access to entertainment that drives continued adoption in popularity. When people see their friends playing games, they want to join them. And whether a player chooses to join Game Pass or buy a game elsewhere, our publishing partners see the benefit of being on our service.

“That’s an incredibly powerful dynamic for the whole industry because Game Pass has become a true discovery engine and a platform,” said Spencer.

One example of that given was a rise in engagement with EA Play on Xbox, with hours up by over 200 per cent since the integration of the service into Game Pass, resulting in “EA’s incredible portfolio of games has reached and gained millions of new fans on the Xbox platform.”

Microsoft also notes that the Game Pass-hosted Outriders was “also the #1 selling digital game on Xbox during its launch week and a top10 selling digital game on Xbox in the month of April.” Adding that “Game Pass helped introduce millions of players to the game.”

FINANCIALS

And all this talk of long-term engagement is backed up by Xbox’s CFO Tim Stuart. Who again reiterated that he was pleased with the strategy Microsoft had undertaken compared to previous industry models.

“In terms of our overall financial profile and the growing importance of content and services revenue makes our business more constituent on an ongoing basis and less dependent on individual hits or hardware SKUs.

“Now don’t get me wrong, console sales and hit games are extremely important, but as we move toward delivering a device-agnostic global gaming experience we can start to look at long-term engagement as the real North Star for our business, rather than trying to drive a one-time event.”

WHERE NEXT

And as to where next for gaming and Microsoft, we’ll leave it with Satya Nadella’s discussion of the balance of consumption and creation of content by communities.

“When you step back and look at the next decade and the evolution of technology, I think one of the most defining trends will be how the balance between consumption and creation is achieved and the changes it brings about. Already, more and more people are creating something new and magical every day. You see that in all sorts of platforms, and there are growing communities who want to discover, explore,and build on other’s creations.

“I believe we will need that virtuous cycle between content consumption, commerce driven by communities for everything we build. And there’s no better example of this than gaming. That’s why I’m so excited that so many games are evolving into these metaverse economies and societies, just like Minecraft, right? It’s one of the leading platforms in the creator economy.

“Some of the coolest things I’ve seen over the past year is how people have used Minecraftto create new worlds in order to maintain even a sense of community and belonging that’s so important in times like these. They’re creating entire college campuses on Minecraft. They’re expanding that economic opportunity, too. In fact, creators have generated over $350 million from more than one billion downloads of the mods, add-ons and other experiences in the game. And that’s fantastic to see.”