Summary
Phil Spencer’s recent comments drew the ire of dedicated Xbox console fans, as the company appears to continue to pour investment into their subscription program,Xbox Game Pass. Comments at a panel atGamescom 2024that Machine Games’Indiana Jones and the Great Circlewould also be releasing on the PS5just a few months after its Xbox and PC debut is leaving a lot of people who own an Xbox upset and proclaiming that Xbox has officially lost the console wars. However,I’d argue that Microsoft is actually taking the winning routeand is looking forward to a strategy that will work rather than living in the past.
I will caveat that I don’t think the moves by Xbox or the global domination of any one massive corporation is a “good” thing. On the contrary,I believe that corporations have a moral and social obligation for the betterment of societyas a whole and fully acknowledge and even rally against anything that would quash competition or hurt the consumer. That said, my RTS brain also enables me to look at the world in a pretty pragmatic way, and the way that Microsoft is handling the console wars will have them reign supreme in the end.
10 Best Games On Xbox Game Pass
Explore top 10 games on Xbox Game Pass, offering diverse genres and styles for every player’s taste in thrilling action, RPGs, and immersive puzzles.
A Completely Capitalist View
A Subscription Service Is Best For Business
Even though it may seem obvious why a subscription is better for the bottom line, there are multiple benefits to why this model is better for a company that some may not have considered. While most probably think it has to do with people forgetting to cancel their subscriptions (and to some extent, that is true), there are more compelling reasons. Without getting bogged down too much in business theory, I’ll just skim through the basics, which may seem obvious to some but not so obvious to others.
Sustainable & somewhat reliable income is a concept many people can understand in their personal and professional lives, but the same can be said for gaming studios or any business for that matter. Not only does asubscription service enable you to have a steady stream of revenueoutside of the large product or game launches, but it also allows you toproject your yearly losses and profitsto investors within a window of margin that isn’t highly speculative.
Xbox Doesn’t Need To Win The Console Wars, It’s Already Dominating PS5
The current state of the PlayStation store suggests that Xbox doesn’t need to worry about winning the console wars.
Stability in an industry where one bloated budget for aAAA game can bankrupt an entire development companyis key to those who hold the keys to the vaults of investment cash. For the company, this enables investment into future projectssince that revenue is relatively reliable and can be projected a few months or even years into the future. Having a much higher level of liquidity (cash that can be used) helps businesses launch more products faster. This might seem obvious to any with a subscription service, but when one thinks of the business benefits, it’s hard to deny it makes business sense.
My personal knowledge of this comes from my experience in the non-profit sector; as most union members and other people involved with organizing will tell you, sustainable long-term income is the lifeblood of a non-profit. Massive one-time donations are always welcome (and mainly earned via grants), but it’s really those smaller sustainable monthly donations that really keep many NPOs in the United States afloat. It’s the same reason when a non-profit gives you a call that they push a sustaining monthly donation rather than a one-time payment.
Microsoft Is Thinking With A Global Mindset
Not Everyone Can Afford An Xbox Series X/S Or PS5
It’s no secret what Microsoft’s ultimate goal in pushing Xbox Live is. Phil Spencer said it best himself, back in 2019, when he toldThe Vergethat the then-named xCloud “allows you to take the gaming experience wherever you are.” Thegoal for Xbox and Microsoft isn’t to win the console wars; it’s to dominate the gaming industrywholesale. Xbox has made it fairly clear, especially within the past few updates, that the health of the Xbox as a console is irrelevant because the future won’t be in physical console hardware.
Video game console profit margins are notoriously slim to outright unprofitable, with Chief Financial Officer of Sony, Hiroki Totoki, saying that the $499 PS5 was “no longer selling at a loss” in 2021 (viaBloomberg).
Microsoft managed to rake in $211 billion in revenue in 2023, according to its annualreport, with a market cap of over $3 trillion, according toMacrotrends. To think that the company could be so misguided in a core business feels almost ignorant to some degree — but many would purport the company is somehow “losing” the console wars. More realistically, it looks like a wager by Microsoft that the future will be in some sort of cloud gaming rather than physical hardware — something previously unattainable due to the limitations in internet upload and download speeds.
In a sense,Microsoft is playing to its strengths, as the company is renowned for its flagship software, which runs the vast majority of PCs today — Windows. Unlike Sony and Nintendo, who have a long and entrenched legacy of creating quality hardware and consoles, this was somewhat new to the behemoth corporation when it launched its Xbox gaming line back in 2001. It seems now that things are coming full circle, as it fully invests in Game Pass.
The Argument For Xbox Game Pass
& Cloud Gaming Options Generally
With all this being said, it’s not all doom and gloom for Xbox owners at large. There are actually positive things about the Xbox Game Pass service, particularly in the potential for cloud gaming to open up AAA gaming in regions of the world where it would otherwise be inaccessible. Gaming hardware, in its very essence, is pay-gated. While many Americans can afford a $500 PS5, there are plenty of other people across the globe who can’t.
Regional pricing for hardware, which requires raw materials, parts, labor, and distribution, makes a lot less sense for a company than offering a cloud alternative at a price that’s reasonable for the region of the world.
While it’s true that a lot of the world still lacks access to high-speed internet, advances in technology and updates to infrastructure have grown the number of internet users globally from around 1 billion in 2005 to 5.4 billion in 2024, according toStatista. Things like satellite internet could unlock high-speed connections to more people around the globe, and Microsoft and Xbox are eyeing a future where most people have access to a good connection.
I’ll end by saying this. At my core, I’m a PC gamer. I’m sitting in front of two 140hz monitors with a 3070Ti GPU and 1 TB internet. I’m not anti-hardware in any sense, but I’ve also been in a scenario where I’ve wanted to play the latest AAA game but my rig just couldn’t run it. For people like my past self, having a reliable cloud option to play on whatever display is available would have been awesome.Xbox Game Passand cloud gaming may not be for everyone, and some might always opt for a console, but I think having a good cloud option is something that can benefit many.
Xbox Series X/S
Xbox Series X and Xbox Series S are two consoles Microsoft released in November 2020. Like most Xbox models, the Xbox Series X/S was the main competitor to the PlayStation 5. The consoles were the successors to Microsoft’s Xbox One line. While the PS5 and Xbox Series X are comparable interns of graphics, the Xbox Series S provides less powerful graphics around 1080p-1440p and does not contain a disc drive.
