It appears the cat is out of the bad. Multiple rumors have been circulating that point to a drastic shift in how Microsoft will handle their gaming business. After buying Activision Blizzard King for $69 billion thoughts of what will and won’t be exclusive began to circle. Add in how their digital service (Game Pass) alters the normal business model, and you already have big changes…and a big problem. That problem? Determining how important console sales are, and what to do when they start lagging.
Important note: These rumors and speculation have not been 100% confirmed by Microsoft. As such, we will discuss the scenario where it appears to be heading. Amid the fervor of conversation, Phil Spencer has tweeted the following:
The Ways Microsoft’s Decisions Have Pushed Them Away from Being a Traditional Console Manufacturer.
Game Pass: Subscription services have taken over nearly all forms of media. From music, to television and now gaming, subscription services are a huge disruptor. What used to be units sold has now shifted to monthly active users and time played. While not wrong, you really stretch potential value across a console’s life span. These challenges have been compounded by including all first-party titles in the subscription. The value is great for consumers, but it really doesn’t add up to how Microsoft is recouping money spent on acquisitions and game development. As one of the most valuable companies in the history of life, does it matter?
Day One on PC: Again, another great objective for consumers. With the random “Play Anywhere” titles to their first party games just releasing day and date on pc, it really pushes ip. However, it certainly does not push the need for sales of said game on their consoles. The option is certainly nice, but Sony’s gameplan to put most games on pc years after their console release reinforced their commitment and need for PS5.
Acquisitions and Murky Exclusivity: By not explicitly outlining what is and won’t be exclusive, they put fans in a weird spot. There is value when making the decision to purchase a PS5 or XS X|S. With rumors flying of Microsoft looking to publish their titles elsewhere, it feels like it does devalue your purchase. As a publisher within Microsoft, there must be frustration that some games will get the opportunity for more sales by being on more platforms, while some are anchored to Xbox/PC. I feel like it almost has to be an all-or-nothing approach. Gematsu and The Verge have stories of what games may potentially be the start.
An All-Digital Future: I had flashbacks of the atrocious Xbox One conference where they pushed the need and reasoning behind an all-digital future. I certainly think we are headed that way, but I don’t think Microsoft should be the first one to go that route. I also don’t believe Sony is dumb enough to remove all physical media as they make inroads in more and more countries. Brick and mortar buying isn’t even remotely what it used to be, it still plays a role in how people purchase games. Not to mention the ability to ask for a game as a gift for Xmas or any other holiday is pretty much non-existent as things sit today for digital platforms.
Does Microsoft need a Physical Xbox?
Typically, a console manufacturer would have a physical box, would sell physical games, and everything would be nice and tidy. However, as all entertainment services have changed, so has gaming. Monthly active users and microtransactions reign supreme with consumer spending continuing after the initial boxed purchase. I am wholly confident that Microsoft can’t wait to find a way to remove the cost of manufacturing physical media. I also have no idea how this will play with their games being on other platforms.
If a Physical Xbox Exists, How Does Microsoft Push Value?
This is the billion-dollar question. If they go with no exclusives, why invest in their ecosystem? There is no doubt that they have the opportunity to push their games into new markets and to a far bigger audience, but that might cut off the need for an Xbox. They could provide exclusives within the game, but I don’t think that would shift the landscape enough in favor of Microsoft. Xbox’s dream was always encouraging the ability to play anywhere, but I am not sold on the idea of them being able to push their own hardware with little to no defining reason to do so.
The big question? Will an Xbox console exist in the next generation of gaming? Does Microsoft see the value in continuing to commit to a console when they are getting thoroughly outsold in all markets? There are credible sources that point toward an all digital Xbox, but I am not confident anything physical remains in Xbox’s future. Instantly becoming the biggest 3rd party publisher isn’t a bad consolation prize.