Microsoft Gaming head Phil Spencer has chimed in once again on Xbox’s status as a video game platform.
Since Game Pass was introduced in 2017, it has upended how Xbox gamers, and the industry in general, have thought about console gaming. Unlike PlayStation Plus and Nintendo Switch Online, Microsoft’s subscription service enables their users to play their Xbox games on a wide array of platforms.
It’s worth remembering that this all began from Spencer himself, shortly after he took over Don Mattrick to be the head of the Xbox division. The disastrous announcement of the Xbox One in 2013 led to severe reputational damage they are still dealing with today.
Spencer’s out of the box thinking to deal with this issue at the onset, was initially only going to be a game rental service. However, seeing the success of Netflix and Spotify, and Microsoft’s own success in their cloud business, moved him to sell Microsoft CEO Satya Nadella on the idea of creating a subscription service, that could be accessed on the cloud.
And there are definite parallels to how Spencer sidestepped the problem of having an unpopular console in the Xbox One, with how Nadella rebuilt Microsoft’s business with the faltering reputation of Windows, especially after the failure of Windows Phone.
In both cases, Microsoft built their new subscription services slowly but effectively. They may not have convinced older Windows or Xbox fans to switch over, but they actually unlocked a new market for cloud services, with new customers who have needs and wants of their own.
So, when Microsoft unveiled yesterday’s “This Is An Xbox” ad campaign, it was faced with a lot of scrutiny and criticism from gamers of all consoles. But the way that story was told, coming from many console gamers themselves, was misleading. This messaging was clearly for the gaming subscription crowd, that’s already been making Xbox a lot of money for years now. If anything, Microsoft is simply living out that adage of truth in advertising.
But Spencer knows that there would be a reaction like this, and that’s why he’s doing another interview tour today. When asked by Rolling Stone point blank about the future of Xbox as a console, he said this:
“We’ll definitely do more consoles in the future, and other devices.”
We know for most gamers, the story stops here, but the real story came earlier in the article. As Xbox consoles continue to deal with a lower reputation compared to their peers, Spencer was candid about how their business was growing more outside their consoles. He said:
“Our biggest growth in Xbox players is on PC and cloud. The console space all up isn’t growing, across all of them.
We love those customers, but in terms of continuing to expand and grow Xbox, it’s about PC, it’s about cloud, and it’s about making our games more available in more places.”
In the same way that Microsoft untethered their Office suite from Windows, and gave users a way to use Microsoft Word, Excel, and Powerpoint on Apple and Android devices, their gaming division is now seeking ways to grow their business outside the console. And yet, their Microsoft Office apps on Apple and Android use their cloud services, in the same way that Microsoft’s cloud is foundational to Game Pass.
Is there a reason to keep buying Xbox consoles then? That’s like asking why Windows is still the top OS for gaming PCs. It may seem counterintuitive, but Spencer’s business strategy may have guaranteed that Xbox will stay forever, whether future generations of their consoles flop or finally flip the narrative for them.
