9 Things We Just Learned About Xbox, Game Pass And Microsoft’s Gaming Future

Image: Microsoft / Kotaku

Microsoft is making massive strikes and Game Pass is only one piece of the puzzle. The subscription service has stored Xbox Series X/S related regardless of the shortage of latest conversation-stealing first-party exclusives, however the firm appears to be setting its sights on the cellular area for its subsequent massive gaming push. While PS5 console warriors argue over Call of Duty exclusivity, Microsoft is positioning Apple and Google as its actual rivals.

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That could be a handy pivot amid unprecedented antitrust scrutiny because it makes an attempt to get its $69 billion takeover of Activision Blizzard by means of regulators within the U.S. and overseas. But it’s a convincing one when you think about that Apple’s whole income from gaming surpassed each Microsoft and Nintendo final yr even supposing the iPhone producer doesn’t truly make video games. Here are 9 attention-grabbing takeaways from latest earnings calls, regulatory filings, and interviews that start to fill in an image of Xbox’s current and future.

Game Pass is rising a ton on PC

While Game Pass’ finest library of video games is on console, it’s truly the PC aspect of the service that’s build up steam. Microsoft CEO Satya Nadella confirmed on the corporate’s most up-to-date earnings name that PC Game Pass subscribers grew 159 % from a yr in the past. The PC model’s recreation library has definitely improved in latest months, however the bigger set up base is probably going an excellent larger issue. “We’re seeing incredible growth on PC which is really where we’re focused,” Spencer mentioned at WSJ Tech Live.

Game Pass is reaching its restrict on console

Despite reaching 25 million subscribers general, Game Pass’ general progress continues to be far beneath Microsoft’s preliminary expectations. As Axios reviews, the corporate was focusing on 73 % progress for the yr ending June 2022, and as a substitute solely reached 28 %.

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On Xbox Series X/S, in the meantime, Spencer appears pretty assured that Game Pass won’t ever be greater than 15 % of Microsoft’s whole content material and providers income. “I don’t think it gets bigger than that,” Spencer mentioned at WSJ Tech Live. “At some point you’ve just reached everyone on console who wants to subscribe.”

Microsoft is aware of it’s overdue for an enormous first-party unique

Part of the rationale behind Game Pass stalling on console may very well be the shortage of main exclusives. Spencer not too long ago admitted that they’ve been lacking general from the corporate’s lineup not too long ago. “One thing we’ve heard loud and clear is that it’s been too long since we’ve shipped kind of what people would say is a big first-party game,” he mentioned on the Same Brain podcast. “We can have our excuses on covid and other things but in the end I know people invest in our platform and they want to have great games.”

At the identical time, he recommended the period of covid-related recreation delays was over, no less than for Microsoft first-party studios. Don’t count on the good vacation drought of 2022 to persist into subsequent yr, in different phrases. While Starfield and Redfall are each due out within the first half of subsequent yr, main releases like Fable, Forza Motorsport 8, Avowed, and others are nonetheless ready within the wings.

The rumored streaming machine for TVs was shelved (actually)

Project Keystone was alleged to be a dongle for TVs that might allow you to stream Game Pass in the lounge while not having an Xbox. It was rumored to be coming proper across the nook, however Spencer confirmed it was truly canceled in favor of extra restricted options by means of Smart TV makers like Samsung. That Keystone prototype he retains on his shelf? Not going into manufacturing. “Will we do a streaming device at some point?” he mentioned at WSJ Tech Live. “I suspect we will, but I think it’s years away.”

The firm’s critical about an Xbox retailer on cellular

Microsoft hinted at its ambitions to start competing within the smartphone area earlier this yr, however a latest regulatory submitting within the UK lays out the plans extra clearly. “[Buying Activision Blizzard] will improve Microsoft’s ability to create a next generation game store which operates across a range of devices, including mobile as a result of the addition of Activision Blizzard’s content,” the corporate wrote in October.

Spencer doubled down on that imaginative and prescient at WSJ Tech Live, criticizing the 30 % minimize Apple and Google take of in-app purchases on their platforms, and arguing that the $69 billion acquisition is a play for making cellular extra aggressive slightly than getting a stranglehold on the console market. “We have to break that duopoly of only two storefronts available on the major [mobile] platforms,” he mentioned. It’s not clear how the corporate plans to try this, however extra acquisitions, doubtlessly within the cellular area, aren’t off the desk.

Xbox Series X and S consoles are bought at an enormous loss

While it’s been effectively understood that console makers usually promote the gadgets at a loss, particularly early in a brand new launch cycle, we’ve by no means identified precisely how massive these losses have been. In no unsure phrases, Spencer not too long ago copped to the Xbox Series X and S shedding Microsoft between $100 and $200 on common.

That’s the corporate’s protection for charging the identical 30 % charges on Xbox that it complains about Apple and Google charging on cellular, the place smartphones are bought at a revenue. At the identical time, it’s additionally made the Xbox Series S an enormous success. The firm introduced throughout its most up-to-date earnings name that half of all of the $300 Xbox’s customers are utterly new to the ecosystem.

Prices will go up sooner or later

Don’t count on that degree of low cost without end although. While Spencer didn’t get particular, he hinted throughout WSJ Tech Live that worth hikes are coming. “We’ve held price on console, we’ve held price on games for us, and our subscription,” he mentioned. “I don’t think we’ll be able to do that forever, I think at some point we’ll have to raise prices on some things.”

While he didn’t say which issues these could be, Game Pass and particular person recreation costs appear to be the plain bets. Subscription providers throughout the board have been growing their renewal prices not too long ago, and Spencer identified that the $60 worth level, which Microsoft held for Halo Infinite, is outdated and doesn’t replicate the rising prices of growth or the extra hours many gamers get out of recent video games.

Call of Duty is staying on PlayStation

Microsoft has been clearer than ever in latest weeks that it has no plans to make Call of Duty an Xbox unique. “It’s not a plan of, okay, we’re going to bait and switch somebody where they gotta play on the cloud or in two or three years we’re going to pull [Call of Duty],” Spencer mentioned at WSJ Tech Live. “As long as there’s a PlayStation out there to ship to, our intent is that we continue to ship Call of Duty on PlayStation,” he mentioned on Same Brain. He likened it to Minecraft which continues to be supported on PlayStation, and mentioned he’d even prefer to see Call of Duty on Switch in some kind.

Don’t count on a Microsoft VR metaverse anytime quickly

“For me building a metaverse that looks like a meeting room—I just find that’s not where I want to spend most of my time,” Spencer mentioned at WSJ Tech Live, regardless of his boss asserting Microsoft Meetings integration with Meta’s Horizons VR dystopia simply weeks prior. The veteran gaming government mentioned he thinks corporations ought to work on perfecting 2D gaming metaverses earlier than shifting them into digital actuality.