The Xbox One X, Xbox One S, and Xbox One as well as its successors aren't going to be a focus for Microsoft. Instead, the gaming giant is betting big on its Xbox Game Pass subscription service in addition to its Project xCloud streaming service. While the company claims that forsaking hardware would allow it to reach an estimated two billion gamers, it also appears as a veiled admission that Microsoft doesn't have what it takes to keep up with Sony and Nintendo. In fact, Xbox boss Phil Spencer has gone as far to suggest that the console business hasn't been as profitable as it would have liked.
"That is not where you make money," Phil Spencer said in a recent interview of gaming consoles. "The business inside of games is really selling games, and selling access to games and content in means like that is the fundamental business. So if you open it up, the more often people can play, the more they're enjoying the art form. It increases the size of the business."
Furthermore, Spencer reiterated the company's cross-platform plans to bring Xbox Game Pass and Project xCloud to every device.
"We want to bring Game Pass to any device that somebody wants to play on," Spencer said. "Not just because it's our business, but really because the business model allows for people to consume and find games that they wouldn't have played in any other space."
In addition to this, Microsoft estimates that there are two billion gamers in the world and many of them live where console gaming isn't feasible.
“We know we aren't going to sell two billion consoles, and there are a lot of markets around the world where a console is not necessarily part of the lifestyle,” said Kareem Choudhry, Corporate Vice President of Gaming Cloud for Microsoft in the same interview.
It's interesting to see how Microsoft views developing markets, labelling them as unfit for consoles when in truth, the company's own decisions have resulted in failure such as launching the Xbox One late in most of the world or partnering with Amazon exclusively in markets like India which drastically reduced its reach. While it hasn't done too well, Sony on the other hand, has grown from strength to strength by simply making the PS4 available to as large an audience as possible.
Furthermore, there's a question of the feasibility of Game Pass and Project xCloud for game makers themselves. Particularly with big publishers like Ubisoft sounding off on the disadvantages of such services to them.
"I actually view subscription gaming as inhibiting our progress, and I'll give you two examples. One is with PS Now. I think that's a great technology for getting streaming content to people, but we don't make the money as a publisher — we don't make the same amount of money as we would even just putting stuff on sale. So why bother, from a publisher's standpoint?," asked Ubisoft's Chris Early in conversation with GamesBeat.
"The technology is great for a player. I can play anything anywhere instantly! It's awesome technology, which is inhibited by the business model. So charge a PlayStation Plus add-on to be able to stream any game you own to any device you own. That's a great service for the player. It's going to start people adopting that streaming concept in more places. You'll be able to get to a place where you have more people focused on streaming.
There's a similar challenge with your business model. We see it works. We're believers. You've capped it with a subscription plan, where publishers aren't able to make money. On the other hand, you could just sell the game and let people have the five-minute experience while it downloads, or pay you an add-on price to be able to continue to have fast access in many more places. With subscription it's just giving it away."
And it's not just big publishers either. Indies such as Mike Rose of No More Robots has voiced concerns on such an approach from the likes of Microsoft.
"So let's say in five years, if Netflix-style subscription models have become the norm, and no-one is paying for games anymore, a la what happened with both music and TV... how are indie devs even making money anymore? They're not, is the horrible answer," Rose tweeted.
"So yeah, I'm honestly super worried about this upcoming trend -- and this is coming from someone who owns a publisher, and can potentially maximize sales by selling multiple games at once. If this trend takes over, I don't know how dev studios are even going to survive," he said in a follow up tweet before stating that it's the implementation of subscription services that needs to be questioned.
"To clarify: From a consumer standpoint, I *love* sub models. I currently use Netflix, Now TV, Amazon Video, Spotify, Xbox Game Pass... It's not that I'm rallying against them -- I just think we could do with having a real conversation about how they should be implemented best," he said.
This is of course, to say nothing of how such a move would impact consumer ownership, access, and of course reliability of such services, which are yet to be tested across multiple devices as Microsoft envisions, making the next generation of gaming a curious one to examine.
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