Why Microsoft is switching up its Xbox strategy
Microsoft, the owners of Xbox, made a surprising announcement on Thursday: They’re bringing four previously Xbox-exclusive games over to rival consoles. And if they like the results, then they might offer more games that way.
Xbox, Playstation and Nintendo have all historically used exclusive games that can only be played on their gaming consoles to help drive sales of that console — people who want to play the latest Super Mario Bros. game have to have a Nintendo Switch, even if they already have a Playstation 5. So why is Microsoft seemingly giving players a reason not to buy an Xbox?
Tom Warren, senior editor at The Verge, joined Sabri Ben-Achour to explain the company’s shift in strategy and what it means for the overall gaming landscape.
Sabri Ben-Achour: So first, do we know which games Xbox is going to allow to appear on other rival consoles?
Tom Warren: So, officially, we don’t; all they’ve said is there’s gonna be four. They’ve left some sort of like clues to being sort of community-driven games and into being some smaller titles. Speaking to internal Microsoft employees on the condition of being anonymous sources, they say that it’s gonna be Hi-Fi Rush, Pentiment, Sea of Thieves and Grounded.
Ben-Achour: These are known games, but not the most, most popular games.
Warren: Right. Yeah, exactly. It seems like a bit of a test case of these four games. You’ve got Sea of Thieves, which, it’s been a relatively popular game. It’s essentially a pirate game where you’re on the high seas fighting people. That is a multiplayer game, an experience that would probably benefit from being on, like, the Playstation. It opens up to more players.
Ben-Achour: In the past, Microsoft’s strategy has been “All right, we’re gonna make these exclusive games that only work on our console, the Xbox, and that will make people buy Xboxes.” Now, they’re changing that strategy. They’re saying, “We’ll let these games go elsewhere too.” Why are they changing their strategy now?
Warren: Yeah. So I think a big part of why it’s happening now and they want to bring these games elsewhere is the revenue opportunity there. They have bet their kind of future of the Xbox platform on Game Pass, which is essentially the Netflix of game subscriptions, where you pay like 10 bucks a month. You get access to a big library of games that you can play as long as you keep hold of that subscription. That subscription model hasn’t grown quite as fast as Microsoft was hoping. It was 25 million a couple of years ago; it’s up to 34 million now. So by 2030, they were looking up to 100 million subscribers, and, around about this point roughly, they were probably looking at about 45 to 50 million. So you can see that there’s a gap there. So to fill that gap, they need to get that revenue from elsewhere.
Ben-Achour: Back in the day, Sega, the company behind Sonic the Hedgehog, used to make consoles. They were outcompeted by Nintendo and Playstation. Now, they publish games for other consoles. Is this the same thing as what’s happening in Microsoft here? Is Microsoft gonna just wind down the hardware side of Xbox?
Warren: I don’t think they’re out of the hardware game at all, and I think that underpins kind of the entire Xbox strategy. You still need that device to sell to people to then sell them Game Pass — until they can get Game Pass across all these different platforms, which they have no intention of doing now but only because Sony and Nintendo won’t let them. But until they can really offer that subscription everywhere, they still need that hardware.
Ben-Achour: Sony recently revised down the number of consoles it expects to sell this year. It will also bring more of its exclusive games to other platforms, like we’re hearing Microsoft is doing. Is there an industry wide shift going on here?
Warren: Yeah, that’s the big question that I’m sort of trying to grapple with myself actually, because obviously Sony’s mentioned that they wanna go multi-platform more aggressively. Microsoft’s making this big move to actually put their games on Sony’s platform. But I do feel like we probably are heading to an era where Sony starts publishing their games maybe on the same day and date — that they publish them on the Playstation 5, they publish them on PC. We’ve seen that with Helldivers 2 recently, one of the first ones to be on both on PC and Playstation at the same time, and it’s been hugely successful on PC. So I think there’s an opportunity for them to make money there as well.
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