Microsoft is taking big steps and Game Pass only part of the puzzle. The subscription service has kept the Xbox Series X/S relevant despite the lack of exclusive first-party features that have stolen the conversation recently, but the company seems to be setting its sights on the mobile space for its next big game push. While PS5 console warriors argumentative Call of Duty monopolyMicrosoft is positioning Apple and Google as its real rivals.
It may just be a convenient pivot amid unprecedented antitrust scrutiny as it tries to achieve $69 billion takeover of Activision Blizzard through regulatory agencies in the United States and abroad. But it’s a convincing thing when you consider that Apple’s total revenue from games surpassed both Microsoft and Nintendo last year despite the fact that the iPhone maker doesn’t actually make the game. Here are nine interesting lessons from recent earnings calls, regulatory filings, and interviews that are starting to fill in the picture of Xbox’s present and future.
Game Pass is growing a lot on PC
While Game Pass’s best library of games is on the console, it’s really the computer side of the service that’s making steam. Microsoft CEO Satya Nadella confirms the company most recent earnings call that PC Game Pass subscribers have grown 159 percent from a year ago. The PC version’s game library has certainly improved in recent months, but the larger install base could be an even bigger factor. “We’re seeing incredible growth on PC, which is really where we’re focused,” Spencer said at WSJ Tech Live.
Game Pass is reaching its limit on consoles
Despite reaching 25 million subscribers overall, Game Pass’s overall growth is still far below Microsoft’s initial expectations. As reported by Axiosthe company is targeting 73% growth for the year ending June 2022, and only 28% growth instead.
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Meanwhile, on Xbox Series X/S, Spencer seems pretty confident that Game Pass will never account for more than 15% of Microsoft’s total content and services revenue. “I don’t think it’s bigger than that,” Spencer said at WSJ Tech Live. “At some point, you just reached everyone on the dashboard who wanted to sign up.”
Microsoft knows it’s long overdue for a major first-party monopoly
Part of the reason behind Game Pass stalling on consoles could be lack of major monopolies. Spencer recently admitted that they’ve been missing overall from the company’s lineup lately. “One thing that we’ve heard clearly is that it’s been way too long since we’ve put out the kind of game that people would say is a big first-party game,” he said. Same podcast Brain. “We can make excuses about covid and other things but ultimately I know people invest in our platform and they want great games.”
At the same time, he thinks the era of lag related to vivid games is over, at least for Microsoft’s first-party studios. In other words, don’t expect the big holiday drought of 2022 to extend into next year. While Starfield and Redfall both will be out in the first half of next year, major releases like Fables, Forza Motorsport 8, Availableand others are still waiting in the wings.
Rumored Streaming Device for TV Has Been Unloaded (Literally)
Project Keystone is supposed to be a software protection device for TVs that allows you to stream Game Pass in your living room without an Xbox. It was rumored to be coming soon, but Spencer confirmed that it was actually canceled in favor of more limited solutions through Smart TV makers like Samsung. That Keystone Prototype he keeps on his shelf? Not going into production. “Will we make a streaming device at some point?” he said at WSJ Tech Live. “I doubt we’ll make it, but I think it’s many years away.”
The company’s seriousness about a mobile Xbox store
Microsoft hints at its ambition to start competing in the smartphone space this early year, but a recent regulatory filing in the UK lays out the plans more clearly. “[Buying Activision Blizzard] will improve Microsoft’s ability to create a next-generation game store that works across a wide range of devices, including mobile, due to the addition of Activision Blizzard content,” the company said. Written in October.
Spencer doubled down on that vision at WSJ Tech Live, criticizing Apple and Google’s 30% cut in in-app purchases on their platforms and arguing that the $69 billion acquisition was a game to make. mobile devices become more competitive instead of being held back in the console market. “We have to break the monopoly that only two storefronts are available on the main street [mobile] he said. It’s unclear how the company plans to do that, but multiple acquisitions, likely in the mobile sector, are unquestionable.
Xbox Series X and S game consoles sell at a huge loss
While it’s well known that console manufacturers often sell devices at a loss, especially in the early stages of a new release cycle, we’ve never known exactly how big that loss is. what level. In uncertain terms, Spencer recently talked about Xbox Series X and S losing Microsoft $100 to $200 on average.
It’s the company’s defense of charging the same 30% on Xbox that it complains about Apple and Google charging on mobile, where smartphones are sold at a profit. At the same time, it also fueled the resounding success of Xbox Series S. The company announced during its most recent earnings call that half of all $300 Xbox users are outright. new to the ecosystem.
Price will increase in the future
However, don’t expect that discount forever. While Spencer didn’t say specifically, he suggested in WSJ Tech Live that Upcoming price increase. “We kept the price on the console, we kept the price of the game for us and our subscription,” he said. “I don’t think we’re going to be able to do that forever, I think at some point we’re going to have to raise the price of some things.”
While he didn’t say what those would be, Game Pass and individual game prices seem like obvious bets. Extensive subscription services have been increased their renewal costs recentlyand Spencer pointed out that the $60 price tag, which Microsoft kept for Halo Infiniteis outdated and doesn’t reflect the increasing cost of development or the additional hours many players get away with in modern games.
Call of Duty is on PlayStation
Microsoft has clearer than ever in recent weeks that it has no plans to do Call of Duty Xbox exclusive. “It’s not a plan, okay, we’re going to bait and move someone where they have to play in the cloud or in two or three years we’ll pull [Call of Duty],” Spencer said at WSJ Tech Live. “As long as there’s a PlayStation out there to deliver, it’s our aim that we keep shipping Call of Duty on PlayStation,” he said on Same Brain. He likens it to Minecraft continues to be supported on PlayStation and says he even wants to watch Call of Duty turn on the Switch in some form.
Don’t expect a Microsoft VR supermarket soon
“To me, building a metaverse looks like a conference room — I just see it as not where I want to spend most of my time,” Spencer said at WSJ Tech Live, even though his boss announced the integration of Microsoft Meetings with Meta Horizons VR Astigmatism just a few weeks ago. The veteran game executive said he thinks companies should work on perfecting 2D megagames before moving them into virtual reality.
