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Why doesn't Microsoft leave the console market and focus on TRUE next-gen PC gaming?

Life

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So looking at recent 2020 stats, Sony has got the lead by 2:1 in console sales. Software sales would be even worse for Microsoft, of course. It makes me wonder, how much profit do they make for each Xbox console sold? Are the profit margins really that great to go through another decade with inferior sales?

I looked at the exclusives list for the Xbox One, and really, I was disappointed ( I own a PC). Similarly with the PS4, I don't own one because there simply aren't enough exclusives to really make me buy one, even though I know the PS4 has more.

Instead of dishing out another Xbox, which will more or less look and play like the PS5 but sell much less - and after 2/3 years, both consoles become technologically irrelevant...why doesn't Microsoft focus on building games for the PC market? Games that push the boundaries every 2 years - ultimately outshining any software that comes out for the PS5 long-term.

I'm not saying gamers will have to upgrade their specs every 2/3 years - because you have graphics settings to match your specs - and these days even setting games to LOW, you still get great quality. I'm just saying, push the boundaries, show gamers what is really next gen, physics and graphics wise. Do something truly innovative - instead of limiting yourself for the next 10 years.

I guess I'm writing this idealistic post because it's hard to be excited for the next 10 years simply because games will have no loading times and look slightly better.
 

Stuart360

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They have tens of millions of Xbox live accounts, that wont work on PC. Its all about the services and licenses now, its not a conspiracy theory when Microsoft say that, its true. Consoles are not systems anymore where the only sauce of income is sales (at best Microsoft and Sony will be breaking even on XSX and PS5) and game sales. Gaming has moved on, they have so manys ervices and licence fees etc.. They wouldnt keep releasing consoles if they werent making money, big companies dont work like that.
 

VN1X

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"Gamers love them, devs hate them! Find out why after the click!"
Your take doesn't take into consideration at least one aspect of the equation which is that a hardware refresh every 3 years would be a massive ballache for developers.

Also the rest makes no sense either. Not even something like Stadia will be upgrading every 3 years just because they can. There are many more factors at play here, not just yer entitled graphicswhore brain.
 
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pqueue

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So just because they are not the top dog, they should just leave the market? Ridiculous. By that logic there should only be one cell phone maker, one TV maker, etc.

If Microsoft is content to make the amount of money they do with the Xbox brand, then good for them.

Buy the system you want.
 

Moogle11

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They can do both.

Yep. And can also get Xcloud on mobile device, Roku/AppleTV/Firesticks etc. eventually.

There aim is to diversify and find as many ways as they can to get people spending money on their games and services. It's a smart idea IMO as they're unlikely to ever match Sony in console sales again as they've just failed to build a brand outside of North America, the UK and a few other places. But it's less of a barrier to entry for people to not have to buy their consoles to pay for their games and services.

I didn't have any interest in an Xbox one this generation, but bought Quantum Break and Gears 4 and Forza Horizon 3 on PC and have bought months of Gamepass (albeit on $1 deals) a couple of times to play things like Gears 5, Ori, and The Outer Worlds. That's money they made from me that they wouldn't have if they only had their console out. Though they still would have if they were PC only like the OP suggests. But they want to try and reach a bigger market than just PC gamers by also tapping into the console-only crowed and eventually more casual gamers with Xcloud on mobile etc.
 

Life

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They have tens of millions of Xbox live accounts, that wont work on PC. Its all about the services and licenses now, its not a conspiracy theory when Microsoft say that, its true. Consoles are not systems anymore where the only sauce of income is sales (at best Microsoft and Sony will be breaking even on XSX and PS5) and game sales. Gaming has moved on, they have so manys ervices and licence fees etc.. They wouldnt keep releasing consoles if they werent making money, big companies dont work like that.

Excellent assessment. Makes my post seem idealistic at best, for gamers - and not for business.
 

jakinov

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There’s a bunch of money in selling accessories(Even third party Via licensing), games and services in a walled garden. Microsoft doesn’t make any money from PC games sold on Windows unless they own the distribution, production, IP or have some random deal. Every game sold on the Walled garden console is money for them. ~$12 bucks for every game sold at retail and ~$18 bucks for every game sold digitally. And digital is going up meaning they get that $18 more frequently now. Add in XBL, accessories and advertisements. There’s a lot of money to be made. Go on PC only you are mainly just going to make money of first party.
 
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ZehDon

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Buying a Xbox console is like buying a prebuilt PC more or less. It's a baseline option for those that don't want all the PC bells & whistles.
Pretty much. Xbox is a contraction of "Direct X Box", with DirectX being their multi-platform API. It's literally intended to be a gaming PC for people who can't afford, or don't want to deal with, a gaming PC.
 
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VN1X

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Also everything we've seen from both camps is just a baseline. You'll be seeing even better looking games a few years down the line.

I swear every new console generation people seem to forget the concept of a console in the first place. The reason everyone and their mum are on board is because of the standard featureset that devs can focus on and create all kinds of astonishing content for. It's especially ironic considering the fact that the "2/3 year" incremental upgrade you're babbling on about is going to give you even less of a noticeable jump in visuals. GG WP
 
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Stuart360

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Excellent assessment. Makes my post seem idealistic at best, for gamers - and not for business.
its just the way many gamers look at it. They sold less than half of PS4 so why not give up, when in reality 50mil sales would be a milestone and a dream for most tech products. And like i said, its all about the services and licenses these days. They also need a console for the console only gamers. Thats why its so silly when people say they are stupid to release their games on PC, like PC users would rush out to buy a console to play them before. As a PC gamer, yeah it doesnt work like that for most PC gamers. And likewise, console only gamers are not going to suddenly go out and buy a gaming PC instead of Xbox. And thats why imo Sony will release more and more of their games on PC, over the coming years.
 

Moogle11

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Both means they have to prioritise the console and not go beyond its limits...I mean after 2/3 years. So they won't outshine Sony this way - that's my point.

I don't see that being an issue anymore now that consoles are pretty much PCs and most games use standard engines that are highly scaleable. Games like Gears 5 already look and perform better on high end PCs despite the game having to run on the base Xbox One. Besides that, the fact is there's just a huge market of console only gamers who'll never remotely consider a gaming PC so they won't care that their Xbox games never outshine Sony's games as they don't care that PC games have always outshined their consoles.

This strategy lets MS make money from those console only folks and the PC gamers. MS doesn't have any interest in being a third party publisher on PC and only putting games on Steam etc. and losing that cut and the Windows store has failed miserably at catching on. Thus they still want to sell as many consoles as possible to get their full cut on first party game sales and their cut from third party game sales, while also making money from the PC only crowd.

As I said, I think it's a smart move. They just want to make as much profit as possible for their shareholders and they've failed to compete with Sony in Hardware sales two out of the three generations they've been in the market and their PC store front bombed. It doesn't make sense to just go with one of those approaches given that, thus doing both (plus Xcloud) lets them make money from multiple market segments and maximize revenue streams.

It could fail of course, time will tell. But I think them staying console only or going PC only would lead to a quick death of the Xbox brand--or at least MS selling it off. They've got to find away to make enough profits to keep the shareholders and other divisions happy and this is there best chance at doing so IMO.
 
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Jesb

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At some point they can leave and just be in a bunch of markets. If gamepass. keeps going and their cloud they don’t need Xbox.
 

pasterpl

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they still sell hardware pc (surface) and some accessories even though they are not their main revenue stream, companies like this have to diversify, test New markets, and be persistent. And as someone mentioned 50 millions consoles sold is not too shabby Especially if you didn’t make a loss on units sold and now are making money on xblive, game pass and soon xCloud.

in addition, they already releasing their games on likes of steam, where they make outright revenue.

look at this from angles and you will see that this strategy makes sense and allows them to maximise revenues from their content and slowly grow their user base.
 

Moogle11

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At some point they can leave and just be in a bunch of markets. If gamepass. keeps going and their cloud they don’t need Xbox.

Yeah, that's the other point of this diversification across markets for the Xbox brand. It both lets them make more money from more people now, and it gives them more options going forward if any one part of the strategy fails. Especially with things like streaming/cloud gaming. If that catches on they're well positioned to capitalize with Xcloud. If it never takes off, they still have their console and pc gaming presence.

It's risky to have all your eggs in one basket. Even Sony who seems a lock to always sell 80-100 million+ consoles has PS Now on a variety of devices and is bringing some games to PC late to milk more cash out of them. Nintendo will be the hold out on that since they sell their hardware for a profit from day 1 and want to force people to buy it to play their games.
 

MoreJRPG

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Both means they have to prioritise the console and not go beyond its limits...I mean after 2/3 years. So they won't outshine Sony this way - that's my point.
The console's more powerful than PS5 so how would they not go beyond the console's limits and outshine Sony?
 
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Jesb

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Yeah, that's the other point of this diversification across markets for the Xbox brand. It both lets them make more money from more people now, and it gives them more options going forward if any one part of the strategy fails. Especially with things like streaming/cloud gaming. If that catches on they're well positioned to capitalize with Xcloud. If it never takes off, they still have their console and pc gaming presence.

It's risky to have all your eggs in one basket. Even Sony who seems a lock to always sell 80-100 million+ consoles has PS Now on a variety of devices and is bringing some games to PC late to milk more cash out of them. Nintendo will be the hold out on that since they sell their hardware for a profit from day 1 and want to force people to buy it to play their games.

What’s interesting about their strategy is they can make money off all or many of their competitors.
 

Krappadizzle

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Dude, they got Microsoft money. They can do both and both be successful. I love how people try to make videogames as a Zero-Sum game where there can be only 1 winner.

This shit ain't Highlander


There's room for everyone from every platform and all can make profit. Some more than others, but there's plenty of spice to go around.
 
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Vawn

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Because they don't own the PC platform. Xbox is a closed ecosystem. They'd only survive in PC only if they had a storefront that took over Steam, Epic and any other competitors.

Plus, you can't charge people to play online on PC.
 
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Gavon West

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They have tens of millions of Xbox live accounts, that wont work on PC. Its all about the services and licenses now, its not a conspiracy theory when Microsoft say that, its true. Consoles are not systems anymore where the only sauce of income is sales (at best Microsoft and Sony will be breaking even on XSX and PS5) and game sales. Gaming has moved on, they have so manys ervices and licence fees etc.. They wouldnt keep releasing consoles if they werent making money, big companies dont work like that.
This

Alot of gamers are still traditionalists when it comes to the success of consoles. Gaming is much more than just consoles now. Much bigger. Its why so many keep asking the same question as OP, even though that singular line of thinking about console sales doesnt apply, nor has it applies for a few years now. Its literally prehistoric at this point.
 

Moogle11

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Dude, they got Microsoft money. They can do both and both be successful. I love how people try to make videogames as a Zero-Sum game where there can be only 1 winner.

This shit ain't Highlander

There's room for everyone from every platform and all can make profit. Some more than others, but there's plenty of spice to go around.

100%.

Companies exist to make profits for their shareholders. While they'd all like to beat Sony and sell the most consoles by a wide margin most generations etc., they don't have to do so to make big enough profits to keep their shareholders happy.

Nintendo has found a way to make those profits by doing their own thing and not competing directly with Sony and MS and focusing more on families/kids/portable gamers and being a nice secondary console for core gamers since their games are so different than the others' exclusives. MS is trying to do similar after getting thumped by Sony in console sales two out of three generations.

There's room for all three approaches in the market---and even in my house. Sony will always be my main as their first party studios (along with a few third parties like CDPR) are the best fit for my tastes. But I'll always own a Nintendo console as I love their games too, and enough so to shell out for their hardware. I don't see myself buying another Xbox console, but I'll definitely keep buying months of Gamepass to play the few games of there's I like as long as I have a PC that can run them and will try out Xcloud for playing them once my PC is too dated (don't plan to upgrade it).
 

LazyParrot

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The days where you could make a game that pushes high end PC hardware to its limits and expect to make a profit ended a long time ago. There won't be another Crysis. AAA development costs are insane these days, and you won't make that money back by going after people with $3000 PCs.
 
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Men_in_Boxes

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Money.

MS knows there's a ton of money to be made in the console space as well as a ton of money to be made on PC.

Why drastically limit your income just to win over an incredibly small percentage of gamers who want "true next gen experiences"?
 
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I've been ready for a long time for a SEGA, Samsung, Apple, Amazon dip in. So that either MS gets their shit together, or gets pushed out.
 
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So you're suggesting they treat PC gaming like high-end arcade game systems of the bygone eras like SEGA's Model 2 and Model 3, but having a fraction of potential revenue/profit margins since the total number of PC gamers with the highest-end graphics cards is a minuscule 5% (if that), and would bring in lesser money than those arcade boards and games did for companies like SEGA back in the '90s?

Hmm...nah. Unless it'd mean MS making arcade systems with 3080 TIs and games natively targeting that, downporting to weaker PCs and consoles afterwards. Which there might actually be a market for, but I don't know if that's something MS would want to consider doing themselves.
 
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MilkyJoe

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So looking at recent 2020 stats, Sony has got the lead by 2:1 in console sales. Software sales would be even worse for Microsoft, of course. It makes me wonder, how much profit do they make for each Xbox console sold? Are the profit margins really that great to go through another decade with inferior sales?

I looked at the exclusives list for the Xbox One, and really, I was disappointed ( I own a PC). Similarly with the PS4, I don't own one because there simply aren't enough exclusives to really make me buy one, even though I know the PS4 has more.

Instead of dishing out another Xbox, which will more or less look and play like the PS5 but sell much less - and after 2/3 years, both consoles become technologically irrelevant...why doesn't Microsoft focus on building games for the PC market? Games that push the boundaries every 2 years - ultimately outshining any software that comes out for the PS5 long-term.

I'm not saying gamers will have to upgrade their specs every 2/3 years - because you have graphics settings to match your specs - and these days even setting games to LOW, you still get great quality. I'm just saying, push the boundaries, show gamers what is really next gen, physics and graphics wise. Do something truly innovative - instead of limiting yourself for the next 10 years.

I guess I'm writing this idealistic post because it's hard to be excited for the next 10 years simply because games will have no loading times and look slightly better.

This'll be a hard 7 years for you, son.
 

noise36

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Answer to all question is always money.

The mass market is where all the money is, people who don't spend much of their overall income on gaming like enthusiasts do, either because they are young, poor or because they are casual.

Look at mobile gaming revenue, last graph I saw had it much larger than console or PC gaming.
 
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ACESHIGH

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Microsoft had:

Higher Price
Less power
An accessory no one wanted
Poor momentum heading to the next gen
Terrible 2013 showing of the Xbox one (the media always helps though) In the end we all ended up being always online as MS stated in 2013.
Press against them (MS Evil monopolistic american company - vs good guy wise japanese Sony) I know, crazy but it does work outside North America.
Worse (if underrated by the media) first party offerings vs Sony
Lack of marketing efforts/prescence outside the Anglosphere and Mexico.

And still will end up the generation selling 50 to 60 M consoles with a strong as hell ecosystem in place. There's no way they abandon the console market. If anything I would like Valve to champion PC gaming, developing quality single player games. Half Life Alyx is a start but we need much more from them other their usual MP crap.

Oh and BTW, Fight Simulator is high end PC gaming. The most advanced and complex game of all time toe to toe with Star Citizen.
 
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Both means they have to prioritise the console and not go beyond its limits...I mean after 2/3 years. So they won't outshine Sony this way - that's my point.

You know this how? They've been getting a lot of Sony talent from SSM and Naughty Dog, and investing in tons of 1st party. And at least so far in terms of best graphical showcases of next-gen I'd say they're at least even with Sony, as for me those picks would be:

-Hellblade 2 trailer (XSX): In-engine, strong visuals and fantastic facial animations. Not impossible for final game to reach these visuals

-Project Mara (XSX): Still arguably the best demonstration of RT so far (alongside BMI). In-engine teaser, small scale as confirmed by NT so expecting final game to match visuals seen here if not even better.

-UE5 demo (PS5): In-engine demonstration, no real game based on it though. Fantastic texture quality and fast-scale streaming of assets, great use of software-based RT techniques. Keep in mind there was almost no actual "game" logic happening, though.

-Bright Memory Infinite (XSX): In-engine with some legit gameplay segments in there. Arguably best demonstration of RT along with Project Mara seen so far. Great atmospheric dust and smoke effects to sell rough weather.

-Ratchet & Clank (PS5): Lots of gameplay, tons of particle and object effects, seamless world hopping. One of the standouts of PS5 event.

-HZD2 (PS5): Some possible gameplay, at very least in-engine. High texture quality, nice use of color, great details. The other standout of the PS5 event.

Next gen is not going to play out nearly to the same degree this gen did when it comes to the rather lopsided nature of 1st-party initiatives between MS and Sony after the first couple of years IMHO, and that's a good thing for all gamers.
 
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the_master

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The day MS or Sony leave the console market leaving the other brand alone with the monopoly, you can forget about generations, forget about competition forcing companies finance first party studios and exclusives and forget about progress, price wars and quality. A monopoly has all the power it needs to slowly milk the consumers and it will always use minimal effort for maximum returns.

So I hope MS keeps making X boxes and Sony keeps making Playstations. A third company would be welcome.
 

ACESHIGH

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If Nintendo cared enough improving their relationships with third parties, their online infrastructure and ecosystem and released a powerful box they would obliterate the competition.
 
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Life

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Ms is making money on consoles. Its a straight extension of their software company background. Why would they want to give this up? Use some logic.

To show Sony that after 2/3 years, when the PS5 hardware is just good, and no longer amazing, MS can build games that can make Sony's look and play like last gens? Maybe longterm that could have better implications financially - but as people explained already, MS is already making money just by selling consoles through licensing,subscriptions etc.
Right now they're making money but they're not necessarily "winners". I guess they're happy making easy money from console consumers.