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News How Xbox outgrew the console: inside Phil Spencer’s multi-billion dollar gamble

XXL

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Phil Spencer saved Xbox. Now he wants to reinvent gaming. Ahead of Xbox’s 20th anniversary, we sat down with him and Microsoft’s gaming A-Team to discuss their wildly ambitious future including Game Pass, Xbox Cloud Gaming, Halo Infinite, The Elder Scrolls VI exclusivity and more
 

Chukhopops

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He’s also overseen the creation of Game Pass – the first Netflix-esque subscription service for video games
Spencer’s ability to make fast, seismic calls without being paralysed is clear. He has a confidence and clarity of vision about what the future of Xbox – and the future of gaming – can and should be.
This crisis proved to be Spencer’s opportunity. He was, as Microsoft saw it, the perfect fit to spearhead Xbox through one generation and into the next; repackaging and reinvigorating an existing team with newfound confidence and purpose.
PlayStation is no longer the competition. After two decades of console wars, Xbox has sacked off the trenches and started the space race. Sony has its console and its dedicated games, playable only on that box, for £70 apiece.
For Howard, Game Pass is the biggest change yet to how his team thinks about designing. It's a “creator-driven” platform that gives developers the confidence that whatever game they make is “going to find an audience of some heft. Before [Game Pass] you might want to make this game, and then you’re gonna sit in a lot of forecasting sales meetings, and say, ‘well, I don’t know if we can make that game’,” he says. “Game Pass opens up the creative canvas to many more types of games that may not find an audience in other ways.”
Season 5 Nbc GIF by The Office
 

Kerotan

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Spencer had a dream that one day we would judge games by the content of their characters and not the color of their logo.
Oh so all those top class Nintendo, sony and pc games were only good because of their logos. The logo represents the people who make a game. The Microsoft Game Studio and xbox logo should be a badge of honor. I wonder why he feels different.
 

reksveks

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Of course gamepass removes the worry of it flopping. Microsoft succeeded in creating the biggest crowd funding project to date. Subscribers are helping cover the costs of development.
i was going to say the mtx/dlc buyers of f2p games are covering the cost of first party devs in most part, but need to double check the sony revenue split; think it is the case.
 

Edder1

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Stop feeding this guy's ego, he's already signing controllers like he's some sort of celebrity. Xbox is still in debt with GamePass and all the studios they bought, how about we return to this topic when they start making their money back and GamePass becomes profitable. Even Nintendo fans didn't have this kind of unhealthy relationship with Reggie.
 
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Leyasu

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i was going to say the mtx/dlc buyers of f2p games are covering the cost of first party devs in most part, but need to double check the sony revenue split; think it is the case.
Perhaps they are. But I get the feeling that that their acquisitions have been tied to GP revenue. That the studios running costs are covered by it
 
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Nikana

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Sounds like Phill is getting ready to move on soon. Guessing he will be laying the ground work for next gen and then will take his leave and hope he left it in the best place possible.
 

SlimySnake

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Sales-Age:
Does the game have microtransactions so they can make their money back?

I mean F2P games are a thing so its possible to give the game away for free and make the money back that way, but surely the revenue needs to be some consideration.

Unless of course he was just using it as a way to increase gamepass subs.
 

Sosokrates

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Great read, I like that Phil + xbox team are striving for innovation and evolving the industry.

At the end GQ mentioned that PS5 has sold more then series consoles, in isolation its a useless metric when judging a platforms success, "Xbox" is not just console now. Starfield is going to have more players and make more money then any PS5 exclusive that exists.
 

SlimySnake

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You're joking right? The game hits #1 on Steam multiple times a year when Rare puts it on sale.
Joking about what? The post you quoted said Phil was ok with not a single copy being sold. My question is does the game have microtransactions? The game selling on steam has nothing to do with the quote in your post. It literally disregards any potential sales the game might have had. Phil seems to be ok with not selling any copies on steam or xbox as long as it sells gamepass subs.
 

ClosBSAS

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I think Gamepass is a great service, but Microsoft needs devices, like Netflix. Also needs to sell those consoles.
MS has proven it DOESNT need to sell those consoles, they dont make profit. they have so much money, this shit is just free moolah for them. Things like office, windows and other services is what gives them money. they can afford to spend on xbox and tyr out new things. they dont need to sell consoles to make money, just their services.
 

Helghan

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MS has proven it DOESNT need to sell those consoles, they dont make profit. they have so much money, this shit is just free moolah for them. Things like office, windows and other services is what gives them money. they can afford to spend on xbox and tyr out new things. they dont need to sell consoles to make money, just their services.
Source?
 

Rivet

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90% of GAF will say this is the most important metric.
Edit: Thank you Rivet, my day is not complete without your triggered like.

Whatever the metric you choose, Gamepass isn't setting the world on fire right now.

They just missed their subscribers growth target :

https://www.axios.com/xbox-microsoft-subscription-gaming-d047cf43-e9b4-4a33-bd25-1ab2c0ad9346.html

It doesn't mean it will ultimately fail, but it seems a bit early to claim this guy reinvented gaming.
 

Bernd Lauert

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Rivet

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You mean they beat their 2 year target. Numbers are hard.
Yes, that's exactly what the link to Axios above says :

"Xbox Game Pass subscriptions miss Microsoft’s target

Subscriber growth for Microsoft’s signature gaming service, Xbox Game Pass, was slower than the company hoped for in the past year,
according to a new financial filing."

Reading is hard.
 
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reksveks

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Bernd Lauert

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Yes, that's exactly what the link to Axios above says :

"Subscriber growth for Microsoft’s signature gaming service, Xbox Game Pass, was slower than the company hoped for in the past year, according to a new financial filing."

Reading is hard.
Just look at the filing. The goals were for 2 years. They exceeded the goal.
 
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reksveks

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As Bernd said, they hit the two year target but missed the last year. The question is how aggressive were those targets?
Just look at the filing. The goals were for 2 years. They exceeded the goal.

Copy and pasting from my twitter

The maths is year 1: forecast growth: 71% year 1: actual growth: 85.75% year 2: forecast growth: 47.79% year 2: actual growth: 37.57% forecasted growth: 152.7% growth in two years actual growth: 155.53% growth in two years I don't know if they revised the targets after y1.
 

DaGwaphics

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Phil Spencer saved Xbox. Now he wants to reinvent gaming. Ahead of Xbox’s 20th anniversary, we sat down with him and Microsoft’s gaming A-Team to discuss their wildly ambitious future including Game Pass, Xbox Cloud Gaming, Halo Infinite, The Elder Scrolls VI exclusivity and more

Jesus, not Spencer hinting at retirement. When that day comes they had better find someone just as good, particularly at looking forward. It would be crushing to get another Mattrick type that can't see past the current calendar day, I don't know if the Xbot "green rat" army could survive it. :messenger_beaming:

Great read though. Can't wait to see some of the "Horizon 2 and 3" stuff that is in the pipeline. Sounds like exciting times ahead.

Spencer always the good guy though, trying to soften the blow of that eventual ES announcement for PS exclusive players.
 
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Is there any data to show that the Xbox GamePass subscriber growth isn't largely driven by Xbox console owners?

Have they released any data to show the numbers of GP users on PC or mobile via xCloud?

Assuming they haven't, it seems a little premature to conclude that console sales aren't important at all.
 
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reksveks

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Is there any data to show that the Xbox GamePass subscriber growth isn't largely driven by Xbox console owners?

Have they released any data to show the numbers of GP users on PC or mobile via xCloud?

Assuming they haven't, it seems a little premature to conclude that console sales aren't important at all.
They haven't yet not as far as I can tell. I suspect it's still largely console driven but i think the big factor/device is going to be TV streaming and if they are able to do the deals to get it bundle in with ISP/TV OEM's
 

Clear

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Still amazes me that Phil's held in such high regard despite the fact that Xbox is still in a worse position than they were a decade ago. He seems like a good guy, and he's done great things for the userbase. However those gains have been made at immense cost in terms of investment, and like all investments their value can only be determined by dividends yielded over time.

Also, any discussion about Cloud gaming that omits Playstation Now despite it approaching its 9th year in operation is clearly pushing a very pro-MS narrative. Has this service been a resounding success? No, but it has accompanied a console business that has consistently been one over the same timespan.

Same deal applies to the tub-thumping over having "the world's most powerful console". Ok, that's a win when taken at face value, but in the real world is it catapulting sales to new heights? Is it providing drastically better performance and user experience on the same titles when compared to Sony's less powerful, likely cheaper to manufacture offering?

Sorry, hang Phil the gongs for his good works when gains are more than hypothetical. When they can brag about P/L as well as cash-flow, when there's evidence of competitive advantage in the marketplace over the direct competition. Because at the end of the day its not all about what you are doing, but what your competitors are doing when you are both vying for the same audience and the same income.

This is a work-in-progress situation, the auguries seem promising but claiming victory is a long way off.
 

Sosokrates

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90% of GAF will say this is the most important metric.
Edit: Thank you Rivet, my day is not complete without your triggered like :messenger_beaming:

Its an important metric, but its not a determinating one.
Anyone who claims it is just sprouting wrong information.
 

reksveks

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what? my man, come on...this has been said already plenty of times....xbox doesnt makd a profit on consoles. google it up and you will see a bunch of articles on it.

Yeah, Xbox hardware doesn't make profits, its a loss leader. The profits (probably small) are all coming from the software and services associated to the console and now PC/Mobile.
 
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