Interview in the Financial Times
Microsoft looks beyond Xbox hardware for gaming growth
Microsoft looks beyond Xbox hardware for gaming growth
Microsoft is accelerating a push away from its own Xbox hardware, hoping to boost growth by selling more games on rival consoles as the industry reckons with a protracted slowdown. The technology group plans to make a handful of games that were previously offered only on its Xbox available on Sony's PlayStation and Nintendo's Switch, in a departure from its previous strategy of keeping games developed in-house as exclusives for its own platforms.
Phil Spencer, chief executive of Microsoft Gaming, insisted the moves were "not a change to our fundamental exclusives strategy" but reflected a desire to expand the audience for certain games that have hit a ceiling on its own platforms. In an interview with the Financial Times, Spencer said there was "some diminishing return" from focusing only on selling more games to its existing audience of Xbox owners. "When I look forward, for our business, finding more players in more places, many of them on the devices that they already own, is a good thing for our own growth as well," he said.
Content delivers higher margins than hardware for Microsoft, Spencer said, adding: "Extending the software and services and games to more endpoints improves the overall profitability of the [Xbox] division."
"We have more Xbox players off of Xbox consoles than on Xbox consoles today," Spencer said, referring to those who play its games on PCs or other devices via cloud streaming. "Those lines will continue to diverge. That's a good thing for the health of the business because the hardware we sell is not a profit driver for us in our organisation."
Enders Analysis estimates global gaming revenue rose by less than 1 per cent last year to $184bn, a slower rate than inflation. Enders' researchers said in a recent report that 2024 was set to be a "bumpy and uncomfortable year across the industry" as "revenue growth is likely to be flat for the next 12-24 months".
"We are seeing good subscription momentum on PC and cloud," Spencer said.
Making more Xbox originals available to buy on PlayStation and Switch was driven by the need for multiplayer games to draw in more players, Spencer said, but some of its in-house titles would remain exclusive to its own platforms.
