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E3 - Microsoft Xbox boss Phil Spencer on the future of gaming: ‘The business isn’t how many consoles you sell’

JustP_Gaming

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Where are the customers? You made this big assumption they increase users by four fold.

I'll tell you where they could have gotten a billion users.... Games for Windows Live and the Microsoft Store.... but they fail and fail again.

If they can't compete with digital stores on their own OS, they have a uphill battle everywhere else.... nobody needs them for streaming.
Again its not an assumption it was just an example, a hypothetical scenario. Come on I shouldnt have to explain this.
 

JustP_Gaming

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To add to the articles point. What if you have an influx on PC Game Pass subscribers. Suddenly that reliance on console inst 100%
 

DanielsM

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Again its not an assumption it was just an example, a hypothetical scenario. Come on I shouldnt have to explain this.
I'm kind of with Evil Lore, maybe they can make a service on PC as a rental model to compete with Steam, etc. but its going to take billions in investment, and probably huge amounts of money on annual basis, and possibly no way of making the money back - Netflix on a cash burning steroid trip.

I'm not sure why the big publishers would be on board unless Microsoft pays them lots of money not to be on their own service.
 
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tr1p1ex

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His answer is to the question, do you think you can release these too quickly?

And from that viewpoint thet don't care if you stick with the last version of the console or get the new one - they care about retaining you as a player.

They aren't worried about what version of console sells what. They want to give you a choice. And make it clear what your choices are and will be in the near future.
 
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Jigsaah

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No it didn't. I notice the PR speak when I see it. Why sell consoles if it doesn't matter how many you sell? Of course that matters. If it really didn't matter how many consoles they sold, you'd see MS releasing those numbers quarterly but not caring about the number so much. But they don't. They refuse to give us the console sold numbers.



Like someone said earlier, "Not everything in gaming is about active player base". It's ok to sell a game and then maybe that gamer doesn't come back to the game a year later. Some games are good for that. Does a game like Horizon Zero Dawn need an "active player base"?

Maybe Phil should have said console sold means less than it did 10 years ago. But to act like it doesn't matter at all is foolish talk.
That a good point about HZD.

Phil is quoted as saying "The business isn’t how many consoles you sell. The business is how many players are playing the games that they buy, how they play".

This leads me to believe that he is more focused on GASS which HZD certainly is not (thankfully). Bleeding Edge, the first game from one of their newly bought studios is eerily similar to Overwatch. I'm just saying the writing is on the wall.

As far as your comment about the console numbers. Yea...it's still convenient to leave that as a mystery and push this other narrative. It's a smart strategy that over time, people start to care less and less about as well because they just won't give us the info. I stopped giving a shit a long time ago, but it's Sony and it's fans who want that fight because it shines a brighter light on them. Naturally, you wanna look good, I get it.

Microsoft just wants to look good too. So again, I get it and it's why I don't care anymore. I'm a consumer, a streamer, maybe a youtuber one day. I only care about what games are coming, what features are coming, essentially what are you Sony and Microsoft going to do for me.
 

JustP_Gaming

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I'm kind of with Evil Lore, maybe they can make a service on PC as a rental model to compete with Steam, etc. but its going to take billions in investment, and probably huge amounts of money on annual basis, and possibly no way of making the money back - Netflix on a cash burning steroid trip.
Possibly, but no one has a crystal ball into the future, but I can say its very very exciting what they are trying to accomplish, key word trying.
 
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JustP_Gaming

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That a good point about HZD.

Phil is quoted as saying "The business isn’t how many consoles you sell. The business is how many players are playing the games that they buy, how they play".

This leads me to believe that he is more focused on GASS which HZD certainly is not (thankfully). Bleeding Edge, the first game from one of their newly bought studios is eerily similar to Overwatch. I'm just saying the writing is on the wall.

As far as your comment about the console numbers. Yea...it's still convenient to leave that as a mystery and push this other narrative. It's a smart strategy that over time, people start to care less and less about as well because they just won't give us the info. I stopped giving a shit a long time ago, but it's Sony and it's fans who want that fight because it shines a brighter light on them. Naturally, you wanna look good, I get it.

Microsoft just wants to look good too. So again, I get it and it's why I don't care anymore. I'm a consumer, a streamer, maybe a youtuber one day. I only care about what games are coming, what features are coming, essentially what are you Sony and Microsoft going to do for me.
In my opinion he is saying whats more important is how many pieces of software sell, next is its really important that to them they give the player and many choices as possible where to play that software.
 
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ethomaz

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For the time being they have more leverage as a platform holder. If they solidify their position on PC and continue to grow Game Pass and their internal studios, that might be the correct move a gen from now depending on how things play out.
Since when they announced Gamepass I though their ultimate goal is to be in all platforms (that includes PlayStation).... a real play anywhere service.
 
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mckmas8808

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As far as your comment about the console numbers. Yea...it's still convenient to leave that as a mystery and push this other narrative. It's a smart strategy that over time, people start to care less and less about as well because they just won't give us the info. I stopped giving a shit a long time ago, but it's Sony and it's fans who want that fight because it shines a brighter light on them. Naturally, you wanna look good, I get it.

Microsoft just wants to look good too. So again, I get it and it's why I don't care anymore. I'm a consumer, a streamer, maybe a youtuber one day. I only care about what games are coming, what features are coming, essentially what are you Sony and Microsoft going to do for me.
But you should care about game (hardware and software) sells because it dictates what they can do for you going forward. Look at how Sega left the console space after the horrible sells of the Dreamcast.
 

Three

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And with the upcoming XCloud service or as I like to call it "Xbox Game Cloud" They can potentially quadruple their MAU, users, Players engagements how ever you wanna spin it.
Doubt that because their current MAU number is already across all the devices and platforms anyway (console, Android, iOS, W10 etc) . They can get MAU numbers in ways that require a far smaller barrier to entry than a subscription service very few will subscribe to, like mobile games that require XBL sign in.

On the topic I already said as much in this thread


They don't care about selling you a console if it isn't sold at a nice profit by marketing it as 'premium'. Their fans will likely buy it regardless, they are selling controllers for $180 because they know people will pay that.
 

JustP_Gaming

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Doubt that because their current MAU number is already across all the devices and platforms anyway (console, Android, iOS, W10 etc) . They can get MAU numbers in ways that require a far smaller barrier to entry than a subscription service very few will subscribe to, like mobile games that require XBL sign in.

On the topic I already said as much in this thread


They don't care about selling you a console if it isn't sold at a nice profit by marketing it as 'premium'. Their fans will likely buy it regardless, they are selling controllers for $180 because they know people will pay that.
There are still TV's they can have gamepass intergrated into for those that do not want to or have the financials to buy a $400 console. That market it wide open. Simliar to what. Netflix, Android TV and Amazon (Firetv) are doing.
 
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Nikana

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No it didn't. I notice the PR speak when I see it. Why sell consoles if it doesn't matter how many you sell? Of course that matters. If it really didn't matter how many consoles they sold, you'd see MS releasing those numbers quarterly but not caring about the number so much. But they don't. They refuse to give us the console sold numbers.



Like someone said earlier, "Not everything in gaming is about active player base". It's ok to sell a game and then maybe that gamer doesn't come back to the game a year later. Some games are good for that. Does a game like Horizon Zero Dawn need an "active player base"?

Maybe Phil should have said console sold means less than it did 10 years ago. But to act like it doesn't matter at all is foolish talk.
You're extrapolating way too much from one interview. All he said was that the business is evolving.

Like I already said. Console sales aren't everything anymore but they still are important.
 
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Gamernyc78

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Doubt that because their current MAU number is already across all the devices and platforms anyway (console, Android, iOS, W10 etc) . They can get MAU numbers in ways that require a far smaller barrier to entry than a subscription service very few will subscribe to, like mobile games that require XBL sign in.

On the topic I already said as much in this thread


They don't care about selling you a console if it isn't sold at a nice profit by marketing it as 'premium'. Their fans will likely buy it regardless, they are selling controllers for $180 because they know people will pay that.
History has shown most companies sell the hardware at a loss and no profit day one because they know that a console sold is the doorway to ppl buying software to make profit, also doorway to more maus as well. So they do care. Is all the same thinking and at this point to minimize the importance of console sales is disgenous and asanine. When streaming takes off and subscription services of course that's different but even then these consoles are the means to streaming and the subscription services for many while pc sales are obviously the other.
 

cireza

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I don't know about the numbers and I don't care, but obviously he is right.

You gain money with subscriptions. That's a recurrent income.

If someone pays Gamepass 15$ per month, how many games do you need to sell to someone who does not pay for it, in order to generate the same income ? So in the end, the number of games and consoles sold does not mean much.
 
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DanielsM

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Possibly, but no one has a crystal ball into the future, but I can say its very very exciting what they are trying to accomplish, key word trying.
We do have history though... many of the so called "disruptive" companies is really another word for "cash burning fed funds 0% interest rate scams", it works until the money stops coming in. I actually agree with EL quite a bit on what he said, it might turn out alright.... it might not.... I would probably go with doubtful at this point, but like you said... we don't know.

Either way Microsoft is going to have to go to where the customers are, which is what Phil is saying but when I say it... .people throw sticks at me and that's okay. LOL

Me: Microsoft doesn't care if it sells you a console.
Xbox fan: Fuck you, they're releasing a new Xbox in 2020.
Me: Yeah, but they don't care if you buy it, they just want you to subscribe to some services, but if you have to have a console, they'll sell you one at a premium and charge you more for the services on console.
Xbox fan: Fuck you, you're annoying.. .they're not leaving the console space.
Me: I never said that.
Xbox fan: Did I tell you to fuck off yet.
Me: yeah, I think so, but wait till you see 2019 Xbox sales numbers you're going to want to tell me again to fuck off.


Phil: Selling consoles really isn't very important to us.
Xbox fans: Awesome, Phil is so clear and candid, and I love subscriptions.


Me: Sigh!!!!

Microsoft loves console players, those are the ones paying more for the same services available on PC.
 
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JustP_Gaming

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This might be a terrible example, but I dont think MS cares how many PC's sell in order to use Office and gather Office subscriptions. All they care about is that Office is available on most any device you use ie. Android, Mac, PC, iPhone, Laptop. At the end of the day did they increase the usage of their software?
 

Jigsaah

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But you should care about game (hardware and software) sells because it dictates what they can do for you going forward. Look at how Sega left the console space after the horrible sells of the Dreamcast.
Well according to Phil, it's not the only measure to know what they can do for me in the future. Which is essentially, and objectively true. You're right about the dreamcast, but you're also referencing the gaming climate 2 decades old. Shit is changing man.

I remember when Phil said something to the tune of Cloud gaming and looking to serve 2 billion gamers is the future, traditional consoles is the past and anybody who sticks to this tradition will be left behind. This is a very rough paraphrasing but it illlustrates a very crucial point that has since shown that Sony not only agrees with that, but has taken steps to avoid falling behind. Sony signing that agreement with Microsoft for Azure support is indicative of this. Nobody is looking to manufacture 2 billion consoles to serve these 2 billion gamers...but they still want the potential revenue. Enter streaming, enter the era of "platforms", end of the era of consoles. to clarify, the end of this era doesn't mean consoles no longer exist, it just means they aren't the only game in town anymore.
 
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Mass Shift

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I think I understand what he means. Once you've sold a console to a consumer, you can't sell it to them again. That person's money is already in the bank.

The key is the continued cash turn over. Subscriptions, software, other game related transactions etc. It's the "other cash cow". Sure he would love better console sales, if they were better he'd be talking it up right now. But hardware is mostly the launch pad . It's the other things that lock us into their daily financial wheel that really need.
 

phil_t98

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Curious, does anybody think the WII won last gen? I mean they shifted serious amount of consoles didnt they?
 

Mattyp

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Gamernyc78

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Curious, does anybody think the WII won last gen? I mean they shifted serious amount of consoles didnt they?
Depends on their yearly Financials in terms of profit and revenue. From what I understand wii was sold at profit and their heavy hitters sold a gazillion. I never read theur financial reports but I was always under the assumption they made tons of money off wii. Mind you their profit will grow alot since thy charge for online now.
 
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Lort

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You dont make money from console sales you make money from games and game subscriptions ... gamers dont enjoy the console they enjoy the games.

If his selling more games then his winning .. thats the real reason xbox 360 beat ps3 is the much higher attachment rate... more publishers made more money on 360 thats what they care about noone really cares about the sell through rate of consoles except fanboys. Retail makes nothing on consoles .. the vendor makes very little ... publishers make nothing... what everyone cares about is game sales.
 

Jigsaah

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You dont make money from console sales you make money from games and game subscriptions ... gamers dont enjoy the console they enjoy the games.

If his selling more games then his winning .. thats the real reason xbox 360 beat ps3 is the much higher attachment rate... more publishers made more money on 360 thats what they care about noone really cares about the sell through rate of consoles except fanboys. Retail makes nothing on consoles .. the vendor makes very little ... publishers make nothing... what everyone cares about is game sales.
Harsh, but also true. I'd bet PS4 and Xbox One have a similar attach rate now though. Gaming has booned significantly since the 360 ps3 gen. People are buying a lot more games.
 
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DanielsM

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Phil has talked numbers, not that I could give a shit but if you want to see.

WC is on my block list, how many subscriptions are at full price?

Sony has rental (250+ downloadable PS4 games) and 750+ streaming PS1/2/3/4 games for $99.99 a year which includes the ability to play online as far as I know, its actually right now going for $69.99 a year.... yet they only have around 700,000 paying subscribers last quarter.

Its a tough business I think. Gaming is cheap as well not sure how anyone ever makes any real money with these models imo, I applaud Microsoft if they can do it as its only real business model, if that is what they have in mind, but I have serious doubts.
 
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Gamernyc78

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Harsh, but also true. I'd bet PS4 and Xbox One have a similar attach rate now though. Gaming has booned significantly since the 360 ps3 gen. People are buying a lot more games.
Similar attach rate? You buggin lol if anything it definitely isn't especially since most multiplats sell better on PS4 when last Gen Xbox had that advantage. Also PS4 exclusives been dominating in sales compared to Xbox games.
 

Mattyp

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WC is on my block list, how many subscriptions are at full price?

Sony has rental (250+ downloadable PS4 games) and 750+ streaming PS1/2/3/4 games for $99.99 a year which includes the ability to play online as far as I know, its actually right now going for $69.99 a year r.... yet they only have around 700,000 paying subscribers last quarter.

Its a tough business I think. Gaming is cheap as well not sure how anyone ever makes any real money, imo.
I outlined for you, its just basic information thou https://outline.com/jC4aDt

He also discuses it at e3 or after their show on youtube about PC gamepass and having millions and millions of subscribers only in the last few days you might find some information on. How many people are full paying is anyone's guess, I was paying full freight happily, until I upgraded my gold sub to Ultimate pass. It's to good of value even at $10.

If they can get eventually get millions of people paying $10 a month or $15 but that's billions in revenue a year.


Gaming is the cheapest it's ever been but, you're right. $10 a month with hundreds of games and full new releases? I remember having to pay $7 for an OVERNIGHT rental. And you would get slugged another $7 if it was in the slightest bit late. Gaming for low income or poorer households that can't afford to give their kids everything rich Johnny has up the street has gamepass must be a blessing.
 
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Lort

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Similar attach rate? You buggin lol if anything it definitely isn't especially since most multiplats sell better on PS4 when last Gen Xbox had that advantage. Also PS4 exclusives been dominating in sales compared to Xbox games.
Attach rate is measured per console sold... so xbox would only need to sell half as many of every game to meet ps4 attach rate. Generally it sells more so its attachment rate is higher... what really matters though is total game / game subscription sales ... playstation would be ahead on game sales ( mainly due to total sales even if its lower on attachment rate) .. ms is ahead on subscriptions.

Overall playstation has been helping its third parties generally sell more games and in total income its ahead thats why its winning... but as Phil said console sales dont matter .. game sales and game subscriptions matter... so xbox doesn't care if next gen they dont sell more consoles .. if they and third parties are making more money they win.
 

DanielsM

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I outlined for you, its just basic information thou https://outline.com/jC4aDt

He also discuses it at e3 or after their show on youtube about PC gamepass and having millions and millions of subscribers only in the last few days you might find some information on. How many people are full paying is anyone's guess, I was paying full freight happily, until I upgraded my gold sub to Ultimate pass. It's to good of value even at $10.

If they can get eventually get millions of people paying $10 a month or $15 but that's billions in revenue a year.


Gaming is the cheapest it's ever been but, you're right. $10 a month with hundreds of games and full new releases? I remember having to pay $7 for an OVERNIGHT rental. And you would get slugged another $7 if it was in the slightest bit late. Gaming for low income or poorer households that can't afford to give their kids everything rich Johnny has up the street has gamepass must be a blessing.
Let's put it this way Microsoft canned Groove Music (formerly Xbox Music) after 10 years because they couldn't compete in simple streaming of music.... the complexity of this is much more so. With music streaming they're not even producing anything.

You are forgetting all the costs associated with all of the development, productions, marketing, etc of the games. Let's put this in further prospective a game like Red Dead Redemption 2 is going to generate an easy few billion in revenue, that's a ton of subscriptions you have to sell to just to fund one new game. A game like Spiderman is probably a billion as well over 2-3 years. We'll see if someone can further sell these models but I remain suspect, either way Microsoft is going to have to find a way to get to the customers. Its hard to envision a model that can be sustainable for game development to be solely or mostly funded by rental subscriptions right from day one. The complexity is much more than Netflix and they're just a cash burning operation really. I remain suspect, but we will see.... you could be very well right.

Unless Microsoft comes to the customer with good games, which again I am suspect on.... all of this will be moot as well just for that. If they can't make good games, nobody is going to care what the price is.
 
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Mattyp

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Let's put it this way Microsoft canned Groove Music (formerly Xbox Music) after 10 years because they couldn't compete in simple streaming of music.... the complexity of this is much more so. With music streaming they're not even producing anything.

You are forgetting all the costs associated with all of the development, productions, marketing, etc of the games. Let's put this in further prospective a game like Red Dead Redemption 2 is going to generate an easy few billion in revenue, that's a ton of subscriptions you have to sell to just to fund one new game. A game like Spiderman is probably a billion as well over 2-3 years. We'll see if someone can further sell these models but I remain suspect, either way Microsoft is going to have to find a way to get to the customers. Its hard to envision a model that can be sustainable for game development to be solely or mostly funded by rental subscriptions right from day one. The complexity is much more than Netflix and they're just a cash burning operation really. I remain suspect, but we will see.... you could be very well right.

Unless Microsoft comes to the customer with good games, which again I am suspect on.... all of this will be moot as well just for that. If they can't make good games, nobody is going to care what the price is.
I used to use Groove solely because of Spotify being pay walled out of xbox by Sony, complete bullshit move like Microsofts with Netflix last generation. But it couldn't compete with Spotify as an app, with the amount of music, as a price, for me personally. I can see why services die compared to the competition. I truly believe Gamepass is the best service out there right now for game rental compared to the competitors so it just needs to stay in that number one position with decisions.

All those costs are up there I agree and add to running costs, but you also have to factor in that their games won't just be played through subscription only. I will still buy hard copy of the majority of their first party games like Halo and Forza, I don't believe in digital ownership let alone rental. The moment I can no longer buy physical I stop buying new games.

Games but, we both agree on. That's all that matters in the end scope of where this is going personally I'm a very heavy Forza fan along with Halo, I've never cared for Gears. But these games keep me coming back, Microsoft need their developers to step up next gen and keep people coming back for this to work.

I'll admit their games aren't and haven't been for everyone and hopefully they know that to make xbox a bigger contender next gen. I assume that's what all the purchases have been about (variety) but we'll wait and see :messenger_grimmacing_
 
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0neAnd0nly

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It’s a debate I have with other friends who are in/ into the industry.

I think Xbox isn’t doing quite well overall. Their stint as unchallenged leader (during the first half of last generation) was short, they haven’t really had the Gen to Gen dominance Sony or Nintendo have had a history of doing. My theory here is that is why they are pushing for the hybrid PC crap. They don’t actually care about tech, or PC players - the realistic answer is - console hardware isn’t that big of a money maker, peripherals and software are. Their first party software (biggest money maker) has been a disaster this generation. Of the top 10 Xbox one lifetimes software sales, ZERO are exclusives. Of Plastation’s, 2 are. And of Nintendo all 10 are - according to NPD. This is why they have come out with amped up and pricey peripherals (Kinect, Elite controller) because it is helping them make money they are missing elsewhere. This is also why they are integrating into PC, as I think there is some major uncertainty for their future in console gaming.

Just a thought / fun debate. But I am beginning to really believe that is what is happening over the last 2 years.
 

Bogroll

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Its not that he is wrong or right.... its that you are making assumptions that people will subscribe at the numbers needed. Than that number has to be subtracted from the sales you will be losing if you put the product up for sale instead of a rental. Best case, this takes 5-10 years of growing their library, but the problem is.... the costs just keep coming see Netflix.

They are going to have to double or triple what they have now, and drastically increase their quality and output to even have a chance and even than they'll probably be running into the red worse than Netflix.
Gamepass is different from Netflix. Majority of 3rd party games these days sell for the first month or two if your lucky and then sales fall of a cliff. Who else is going to buy your 2 month old game ? Well with that much choice around these days and backlogs of games to play lots of people just wait for a big sale or buy 2nd hand dirt cheap in which case the dev don't get a bean. Along comes Xbox. "Do you fancy sticking your game on our Gamepass to rent out and we will pay you a cut of when its downloaded and for how long its played" Dev " May as well sales have dropped off now and we will make more of renting it out in the long term as there will be less physical copies out there(those who where going to pay full price would have bought it in the 1st month of release) as people will probably play on gamepass rather than buy a Physical copy for £10-20 that can be sold on numerous times, yes why not"
And Ms might not even pay a bean out to the Devs. Not saying that's how it works but something like that wouldn't surprise me.
 
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mckmas8808

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I don't know about the numbers and I don't care, but obviously he is right.

You gain money with subscriptions. That's a recurrent income.

If someone pays Gamepass 15$ per month, how many games do you need to sell to someone who does not pay for it, in order to generate the same income ? So in the end, the number of games and consoles sold does not mean much.
But you'll make MORE money from a gamer that buys a console "AND" pays for Gamepass (when compared to someone that uses Gamepass on their tablet only).
 

Robins

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The ultimate goal is to be the Netflix of gaming.

This means doing away with all those troublesome consoles and just selling you regular drops of gaming content - ideally in a monthly subscription that you pay for whether you use it or not on third party devices. Like netflix.

The only problem with this master plan is that the first party content available isn't strong enough for a significant number of people to want to play it outside of the original platform.

So while you're desperate to get out of the hardware business you can't because your offerings aren't strong enough. If they were your platform would be more popular.

I've got to admire the ambition of the plan but the execution is sadly lacking for now.
You have hit the nail on the head.

Plus the fact that Netflix doesn't really make money due to having to spend so much on new content to keep people subscribed. How many will move to Disney's service this year when that launches?

All Nintendo or Sony need to do in the future is decide all their first party catalogue will be available on a subscription service too and Microsoft will struggle to compete if they don't focus on quality.
 
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JustP_Gaming

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So the future of a console isn't directly related to the console sales?

Maybe McDonald's will also say it wouldn't matter if they stopped selling burgers.
Now that's a crazy comparison. It doesn't even relate, burgers to software?
 
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LittleBusters

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Revenues are what matter, and Microsoft is doing just fine. Sony made $20 billion last year, and Microsoft made $10 billion. There is a big enough pie for all to enjoy.
 
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