Phil Spencer: "We have more Xbox console players than ever," as fans question Microsoft's multi-platform strategy

[Windows Central]

Xbox CEO Phil Spencer recently conducted an interview to discuss the Xbox platform and the future fans can expect from Microsoft, as the mood on social media continues to deteriorate.

Phil Spencer: "We have more Xbox console players than ever," as fans question Microsoft's multi-platform strategy : Read more

 

[GraniteStateColin]

And with the exception of King's mobile games (from the Activision-Blizzard-King acquisition), what was the point of acquiring the other studios if MS is going to release these non-exclusive exclusives on PS? I suppose it prevents them from becoming PS exclusive. I would say that it gives MS negotiating leverage with Sony, but no evidence that Sony is releasing any games on Xbox, so that's not relevant (unless they used this to get Sony to put the games on Windows, but I suspect Sony reached that decision all on their own).

It's all strange and seems like poor marketing, as Jez wrote.

The only logic I could see before had been if the idea were to bring old versions of franchise games to PS, then at those PS gamers' next console upgrade, if the PS gamer thinks, "I love Elder Scrolls or Halo and want to be sure to be able to get the new version at launch, so I'll switch to Xbox," that might be a strategic objective. But with Indiana Jones going to PS5 (even if a brief period of exclusivity on Xbox, it's apparently not waiting until a sequel comes out to jump to PS5), even that strategy no longer flies.

MAYBE they view Xbox and the acquired studio's games primarily as varied ways to sell Gamepass subscriptions, with no concern for console dominance, and figure more exposure to all games just increases the value of a Gamepass subscription: if I play on PS5 and have come to love Forza and Fallout and Elder Scrolls and Halo on my PS5, then when I go to upgrade, if I know I can get all of those at no add'l charge with a Gamepass subscription, I won't bother with a PS6. In that case, my only logical choices would be Xbox or PC, with my choice probably being more a function of where I like to play than anything else (if on couch, then Xbox, if at a desk, then PC). I suppose that logic still tracks, but not sure it's going to work out for the win MS hopes.

Microsoft repeatedly demonstrates that it places zero value on customer loyalty. I know Dan often says, "Companies don't care about loyalty, they just want to make a profit." Of course he's correct with that point, but it's also missing half the story. That line of thinking makes the same marketing mistake that it would seem MS keeps making: a loyal customer is also the most profitable customer. There is economic value in courting your loyal, big-spending customers. They are also influencers, providing free word-of-mouth promotion. And finally, it's ALWAYS more expensive to win a new customer than to retain or upsell an existing customer (much higher CCA -- cost of customer acquisition -- for a new customer), and even higher still to win back a customer you previously had and lost.

Best to care for and nurture your loyal customers. That way, instead of risking losing them to competitors, they become your biggest evangelists, spending their own money on you in the process. To paraphrase Rocky, that's how profiting is done.

 

[Ron-F]

MAYBE they view Xbox and the acquired studio's games primarily as varied ways to sell Gamepass subscriptions, with no concern for console dominance, and figure more exposure to all games just increases the value of a Gamepass subscription: if I play on PS5 and have come to love Forza and Fallout and Elder Scrolls and Halo on my PS5, then when I go to upgrade, if I know I can get all of those at no add'l charge with a Gamepass subscription, I won't bother with a PS6. In that case, my only logical choices would be Xbox or PC, with my choice probably being more a function of where I like to play than anything else (if on couch, then Xbox, if at a desk, then PC). I suppose that logic still tracks, but not sure it's going to work out for the win MS hopes.

I don't think Microsoft is even trying to hide that the platform they are selling is GamePass, not Xbox. Moreover, many recent Windows's apps are now WebApps, such as the terrible new mail client, or even complete online services, such as the movie editor. Microsoft is moving from the customer's hardware to its cloud machines. Ideally, they want you to run all your software remotely.

 

[Ron-F]

I can foresee the Nintendo Switch 2 reveal direct. It will show all the third-party support and Microsoft will be proudly there with "one more thing".

 

[dennarai]

I don’t have any problem with them going multiplatform. The problem is that EVERY PART OF THE XBOX ECOSYSTEM SUCKS.

Xbox apps on PC is still terrible. The app is bad. They constantly pay for Game Pass deals where the console and PC games are separate. Games often just do not work or do not show up in the Xbox app.

The console experience is becoming an ad-fest and developers are abandoning even making Xbox console ports like crazy.

Cloud gaming is still in beta and it doesn’t feel close to good enough for prime time.

There is not a single part of the Xbox ecosystem that feels polished or worth investing in. They don’t care about any of this stuff and it shows.

It does not matter what these people say. It is literally just PR talk. They are just trying to milk money out of people who are already invested. They can’t come out with a road map saying “yeah we are killing all this” because then no one will spend anymore money.

 

[GraniteStateColin]

I don't think Microsoft is even trying to hide that the platform they are selling is GamePass, not Xbox. Moreover, many recent Windows's apps are now WebApps, such as the terrible new mail client, or even complete online services, such as the movie editor. Microsoft is moving from the customer's hardware to its cloud machines. Ideally, they want you to run all your software remotely.

Agreed. Hard to know if that's a winning or losing proposition in the long-run. I think it's smart to bolster their cloud offerings, but a significant mistake to ignore related core strengths they have with physical systems in front of users. For the New Outlook you reference as a web app, that strength is being the dominant home and office OS -- running natively can (if properly coded) ALWAYS produces a better UX than a web version of an app, simply because it removes layers that slow performance (this is why Apple's hardware+software UX is so good, for those who like Apple's UI, which does not include me). By leaving this behind and moving to web apps, they are slaughtering their own competitive advantage over cloud-only Google, and effectively helping Google take away their customers.

And in the gaming world, they are doing the same for Sony by making their exclusives available on PS. They have consoles hooked up to millions of TVs in the spot where people are most comfortable and where many prefer to play their games. That's incredibly valuable real estate even for Gamepass (and other things), which they sacrifice if they lose the console market to Sony. That is, if PS gains further dominance over Xbox as the family room gaming station, that REDUCES THE AVAILABLE GAMEPASS MARKET. Further, Xbox customers are far more loyal "fans" than Windows users. Where many Windows users are indifferent or even somewhat anti-MS, that's rarely the case with Xbox users. MS does not seem to understand the Goodwill value (an actual line on the balance sheet -- some companies are acquired purely for their Goodwill, which is a market value ascribed to their customers' loyalty as it is projected to translate into sales).

Even if the goal is purely for bolstering Gamepass, a long-run way to win there is to make fantastic games that are only available on Gamepass. They're not doing that either.

I don't see any other way to describe this but poor strategy. That's not to say it can't work. Bad strategies sometimes still succeed in spite of themselves, usually due to worse strategy by competitors, excellence in execution (this correlates better with success than excellence in strategy), or luck with external events outside their control, but the odds of a good strategy leading to market dominance is obviously higher than the odds of a bad strategy getting there.

Frustrating for me to watch as a strategist. These are such obvious and junior level mistakes. For a time, I thought perhaps MS has a bigger strategy that I'm missing. They have obviously done very well overall as evidenced by their sales growth and market cap, but with roughly a decade under Nadella, I can see that there is no larger strategy. There's just a focus on cloud (Nadella's background in MS before he was CEO, and props to his excellence there -- probably better than I could have done) but with no strategy to leverage other strengths. And whenever a company fails to leverage its core strengths, that's BAD strategy. MS is winning in the areas where it focuses (good) but could be winning bigger if they also properly leveraged their strengths. Worse, they are degrading their goodwill year after year, which makes each future success harder and harder for them. Nurtured fans make future successes with new launches almost a sure thing (see Apple, who does this right).

 

[fatpunkslim]

@Jez Corden The problem with many influencers and some commentators is that they think too binary, it's all or nothing!

Please someone Explain one thing to me, why does Xbox sign exclusivity contracts with third partiy studios like stalker 2, ark 2, dungeons of hinterberg, palworld, warhammer darktide, etc... ?

That's simple, It’s because exclusivities simply matter! This is true for third party games and it is true for first party games. Xbox has quite simply a hybrid strategy, they send some games to other platforms because they can, they have so many studios and licenses that they can afford to seek profitability on other platforms with a handful of games. They have only sent 4 games so far, 2 small games and 2 service games which are 5 and 8 years old. We can't say it's massive.

For Indiana Jones, At no time do you talk about Disney, which is behind the Indiana Jones license, have you ever thought that it was Disney who put pressure on Xbox? Of course Xbox takes responsibility, they are not going to say that Disney is behind this decision.

And even if that were the case, have you even counted the number of Xbox exclusive games compared to the few multi-platform games? When Xbox releases a game on another platform, 5 others are exclusive to the Xbox ecosystem.

The reality is that today Xbox has more first party games and more exclusive games than PlayStation! Just look at the current line-up of Xbox games compared to the poverty of the PlayStation line-up.

Xbox is the only manufacturer to have announced the next generation of consoles. They know very well that keeping a good balance of exclusive games is important, that's why many first and third party games are exclusive and some are multiplatform.

The world is made of nuances, of balance, it is not binary, it is not all or nothing. Phil Spencer always said that it was case by case, you don't talk about it in your article. He also said that he would learn from the 4 games sent to other platforms (pentiment, grounded, etc.), he saw that it was profitable, and so he sent another one, but at no time did he say that it would be systematic, he even said the opposite remember! He told at Xbox Business Update, i quote "don't think that the arrival of these 4 games is a sign that everything is going to happen, it's not the case."

This is not the case and it will not be the case for the reasons that I have mentioned and lots of other reasons that I will not explain in this already too long comment.

Case by case, balance, that's all there is to understand.

Unfortunately the media reality is binary, it is simpler, faster, more effective (more clicks).

But this world comes into contradiction with the real world just as with the business world which is made of balance and nuances, it's not all or nothing!

The basic problem is there, some are so formatted by the world of media that they cannot understand the obvious.

Case by case, balance, that's all there is to understand.