Xbox changes its tone in Game Pass

Xbox changes its tone in Game Pass

Xbox changes its tone in Game Pass

Microsoft’s latest financials, and Phil Spencer’s subsequent comments during a Wall Street Journal Live event, sounded like a shift in tone.

And the important thing for some is how Microsoft, for the second consecutive quarter, Failed to achieve its goals around Game Pass subscription growth.

I am hesitant to draw conclusions from the results published over the past six months. Not only has there been a huge lack of headlines, but it also covers the first summer after the full lockdown, when people In fact I went on vacation. It was the inevitable video game goals that would be missed, and Microsoft isn’t the only one that’s tested it out.

But what was most noticeable were the comments that came along with the news. Phil Spencer estimated that Game Pass will likely only represent about 15% of future Xbox content and services revenue and said, “We don’t have that future where I think 50% to 70% of our revenue comes from subscriptions.”

15% sounds low when you consider the billions of dollars Microsoft spent on games and studios to grow Game Pass

15% sounds low when you consider the billions of dollars Microsoft has spent on games and developers, all in the name of Game Pass. Surely this was not the dream?

Xbox has done a great job with Game Pass. Brand work and messaging around the service made it the industry-leading subscription platform. It may not have the largest number of users, but every other service – from PS Plus to Apple Arcade – is comparable to it.

And he became somewhat of a system vendor as well. For the first time since PS2 with its own DVD player, the game console has a killer app that isn’t a specific video game. Microsoft announced during its financial statements that half of those who bought the cheaper Xbox Series S are new to the Xbox ecosystem, and it’s easy to imagine that Game Pass played a role in unlocking some of those new players.

But despite these successes, Game Pass’s momentum has been faltered by a series of obstacles. First, there’s a choppy release schedule – in part due to COVID-19 and the subsequent transition to hybrid work. This should be a stopgap, but the perfect model for the regular rhythm of the big games in Game Pass is still a long way off. The situation is made more difficult by the fact that AAA publishers are not ready to put their big new titles into service.

After that, there is a free game. The real competitor to Game Pass isn’t the $70 games, but the bigger games on the market — like Fortnite, Call of Duty Warzone, and Roblox — all for free. Microsoft is trying to find ways to do free work within Game Pass, for example through Partnership with Riot Gamesbut it has not yet been discovered.

Then there’s the fact that, for many people who only play a few games a year, the subscription service doesn’t mean much.

These are all legitimate reasons why Microsoft is reducing the capabilities of Game Pass, especially on consoles, as Spencer says growth is starting to slow.

For a lot of people who play just a few games a year, a subscription service doesn’t mean much

This may sound negative, and a huge change of tone for the Xbox, but the truth is that it’s not drastically different from what we’ve heard before. in An interview we did with Sarah Bond last year, told us that Microsoft does not expect subscriptions to become the dominant business model. It’s something the company has reiterated, although 15% is still less than many expected.

And you have to think about the background in which these comments are made. Microsoft’s major acquisition of Activision Blizzard is currently under scrutiny and discussion by regulators around the world. There is no doubt that some of the data Microsoft chooses to share is related to this.

One of the biggest concerns From the UK regulator (CMA) about Game Pass and Microsoft’s potential dominance of the gaming subscription and streaming space. By revealing that Game Pass accounts for only 15% of its content and services business, Xbox indicates that even if Game Pass becomes the most popular subscription service in gaming, it’s ultimately just one business model, not even the biggest.

Xbox changes its tone in Game Pass
The availability of many popular free games on Microsoft devices is a bigger threat to Game Pass than $70 games

Another message to regulators came in Spencer’s comments about PC and mobile.

Microsoft revealed that Game Pass has grown by 159% on PC, which matches recent comments we’ve received from independent publishers about the service’s growing popularity. Speak anonymously to GamesIndustry.bizOne independent publisher predicted that Game Pass would soon emerge as a major competitor to Steam, not the Epic Games Store.

As for mobile, Spencer talked about wanting to end the control of Apple and Google, and even mentioned that Call of Duty mobile was more interesting to Microsoft than the high-end console versions.

Microsoft is looking to move the conversation away from consoles and Game Pass, offering a broader view of the gaming business

This is not much different from Our own analysis of the acquisition earlier this year. With the acquisition of Blizzard, Microsoft will have major PC brands such as Diablo and Warcraft, which – along with Call of Duty – will boost PC Game Pass and provide a strong competitor to Steam. And with titles like Candy Crush (and Call of Duty), Microsoft will have a large presence in mobile for business development there.

By talking about this, Microsoft is responding to concerns that this acquisition could hurt competition in the console space, by highlighting how it can boost competition on PC and mobile devices. In other words, it’s not just about competing more aggressively with Sony, but also with Apple, Google and Valve.

It’s a compelling argument, but there are still some doubts and concerns about this. When it comes to PC, Game Pass is not as competitive as Steam. Some of the independent publishers we spoke to are concerned about what a popular PC subscription service might mean for premium indie titles. One publisher noted Netflix’s impact on cinema, especially smaller theatrical releases.

These concerns are not currently borne out by the data, but it is something that the industry (including Microsoft) will take into account. Microsoft wants to make sure that competing with Steam creates more opportunities for developers, not less.

As for mobile, it is not clear how Microsoft plans to compete seriously with Apple and Google. Candy Crush and Call of Duty, along with Xbox Game Streaming, will give the company a strong presence on mobile it didn’t have before. But it doesn’t feel deep enough to offer much competition on Google Play or the App Store.

However, with its latest findings and Spencer’s comments, Microsoft is looking to move the conversation away from consoles and Game Pass, and offer a broader view of the gaming business. A view that hopes to show how its $69 billion acquisition of Activision Blizzard will make the market more competitive, not less.

#Xbox #tone #Game #Pass

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