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LONG BLOG

This Is What Xbox' Bright, Profitable Future Looks Like

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Phil Spencer

At this year’s E3, Sony talked about the present. The company showed off games that would be coming to its console over the next few years and it profoundly featured the Playstation VR, its Virtual Reality platform set to launch in the fall of this year.

The Microsoft press conference placed an emphasis on its 2016 and 2017 games, but more than anything the company shared its vision for the future. The “Play Anywhere” initiative, which allows gamers to buy a single Xbox game and play it on any Xbox supported platform – console or PC – is just one of the examples of where the company is taking the industry. For Microsoft, consoles are no longer a primary factor for success.

play anywhere

Jeff Rivait, the Xbox Platform Marketing Manager for Xbox Canada, said that the number of consoles sold no longer determines whether a company is successful or not. There are other more important factors, such as the overall number of users on the platform.

“Units are important to a business, but we’ve changed the way we think about the business,” said Rivait. “In order for us to accurately measure the health of our business is to look at it more like a service, and the way you measure service is through the users. That’s why it makes more sense to us to report the number of active users every month, because those are the people that are feeling your platform, your community, consuming your content, and buying the consoles in the first place.”

xbox-live

In a way, Microsoft is looking at the long game. With a large PC presence and its Windows Store, Microsoft has a lot more money to gain by selling software as opposed to hardware. Just think about it. Why would Microsoft sell its games exclusively on its own proprietary platform – one which only houses an install base of 20 million – when it could open up its first-party titles to a massive PC market of hundreds of millions of users? The strategy just makes sense.

The strategy also encourages a move to digital gaming, which is a plus for any game publisher. A regular retail game eats up a publisher’s profit. With so much of the game’s cost going to retail partners, physically producing the title, paying for returns, and other licensing fees, almost half of a game’s cost can get eaten up before even making it to the publisher. Digital games are not only more convenient, but more profitable for the publisher. In Microsoft’s case, it makes sense to break down the console barrier.

“It increases the value in gamers’ lives, and that’s the goal for Xbox’ vision,” said Rivait. “It’s no longer just a console ecosystem. We want to make sure that Xbox can bring the best games to people no matter the device they play on. Windows 10, being the best Windows built for gaming, gives players who may have been primarily console gamers at first – it might knock down some barriers for them to try out PC gaming, and vice versa.”

rocket-league-xbox-one-1-million

Microsoft is not just limiting Play Anywhere to its first-party titles, as the company hopes to expand to including third-parties as well. Imagine picking up a third party game like Titanfall 2 – with the game playable across both your PC and Xbox console. Microsoft is not just offering convenience in this case, but Microsoft’s platform is all of a sudden very competitive against a service like Steam.

Think about it. For a while PC gaming from Microsoft was all but dead. Games for Windows, the laughable Microsoft digital gaming service, was discontinued back in 2014. Virtually all PC gaming was dominated by Steam, with small slivers eaten away by other platforms like UPlay and Origin. Nevertheless, it did not seem like Microsoft had a way to get back into PC gaming. Now, the company has a highly competitive proposition for PC gamers who want to join the Xbox ecosystem on PC. Steam may not be the best service for every PC gamer anymore.

Looking even deeper into Microsoft’s strategy, we can see subtle emulation of Steam as well. Project Scorpio, reportedly the most powerful console ever in development, is more or less a console with the innards of a PC – almost like a Steam Machine.

steam machine

“Our vision is ultimately to knock down the barriers between generations,” responded Rivait when asked about the Scorpio’s similarity to Steam Machines. “So, with that we have our biggest games, Xbox Live innovation, and introducing a couple new consoles that bring hardware innovation without sacrificing compatibility. And that’s the key thing – traditionally a console life cycle, when you get a new one starting, none of your old stuff would work, you have to go buy everything. Now, we can deliver hardware innovation, while keeping Xbox One games and accessories still working, no matter what Xbox device you’re playing. They’re living in the same ecosystem, one does not replace another.”

“Steam’s approach is more an open ecosystem, where the specs are open with manufacturers,” said Rivait to contrast the Steam Machine to the Scorpio. “Whereas Project Scorpio really is the most powerful console ever build. So, you’re getting the simplicity of a console, that publishers and gamers really like, but also 6 teraflops of processing power.”

Rivait said that although Microsoft usually does not talk a lot about power, 6 teraflops is a very important benchmark for a publisher.

Scorpio Press Conference

“That’s an important processing benchmark, because it provides the capability to do things like true 4k gaming like what you see on PC today at the highest quality… but it also allows you to bring true, high-powered VR with as little latency as possible. This is the future of gaming.”

However, through our interview, the Marketing Manager made it clear that traditional console generations are flying out the window for Microsoft, almost like a new platform would be coming on a near annual basis. After all, at one point the Xbox One was one of the most powerful consoles to be released. Could the Scorpio become outdated as well in just a year or two?

“It could be,” answered Rivait with a slight chuckle. “When I saw we are knocking down the barriers between generations, I mean exactly that. Technology is progressing so rapidly, we don’t want gamers to wait five to eight years for hardware innovation. This is our vision for gaming.”

Xbox One Slim

“Phil said this. When gamers get to carry forward their games, and they’re not losing the value invested in the ecosystem, in addition to getting more frequent and more powerful hardware, is looking at things like the mobile industry and how they’ve innovated. Yes, if you want to stay on top of things you may be buying consoles more frequently, but you’re also getting better looking and more powerful gaming experiences sooner than you would be getting in previous [generations].”

On mobile, however, things do not always carry over. New games often require more recent technology, and even new updates can render apps useless on older mobile devices. Mobile is not fully backwards compatible because devices do get outdated. If Xbox is getting a new platform upgrade every year or two, in the style of mobile, could a similar situation occur where gamers with older hardware are left out?

“I can’t say that. We will stay true to our vision, with the Xbox One S launching this year and Project Scorpio in 2017. We’re making sure that we maintain compatibility in accessories and Xbox One games. As we get closer to that vision… we don’t have a crystal ball and that’s our vision, so we will have to see.”

Note: I originally published this article on Xbox Enthusiast.

- Keep gaming real.


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About Elia Palesone of us since 9:45 AM on 10.04.2014

Eli Pales owns pretty much every single product Nintendo puts out, and due to his impulsive tendencies, he also tends to purchase every gaming product put out in general. When not gaming, he’s probably running cross country or writing. He makes sure to take regular gaming breaks, though.
You can follow Elia on Twitter: @Paleselan