Microsoft's Xbox business needs to grow. Sales of the company's Xbox Series S and He admitted that 2022 will be a dry year for Xbox games after Microsoft's big Bethesda exclusive game Star Field has been delayed.
A slowdown in Xbox Game Pass could be why I'm hearing about a number of Xbox exclusives coming to consoles that Microsoft usually competes with. Sources close to Microsoft's plans say so The edge as the company prepares to launch a number of Xbox games on PS5 and Nintendo Switch. Weeks of rumors suggest that Rush to Hi-Fi, Sea of Thievesand even Bethesda titles like Star Field And Indiana Jones might appear on non-Xbox platforms.
The first two games expected to appear on rival consoles are Rush to Hi-Fi And Penment, according to sources. Microsoft is also currently planning to launch Sea of Thieves on non-Xbox platforms later this year, with other first-party titles also under consideration.
Launching Xbox games on PlayStation or Nintendo Switch is a seismic shift in strategy, and it's not one that Microsoft will have taken lightly. This will give Microsoft greater reach for its first-party games and an opportunity to generate more gaming revenue, but it also comes with plenty of risks.
Microsoft's overall gaming business just surpassed Windows in revenue, thanks to the acquisition of Activision Blizzard. This giant $68.7 billion acquisition will weigh on Microsoft's mind, especially considering that Call of Duty is a large cross-platform game that generates key revenues on these platforms and on mobile. This Game Pass slowdown will also partly explain why Microsoft is even considering more cross-platform gaming.
In May 2022, Microsoft had an ambitious goal of 100 million Xbox Game Pass subscribers by 2030. At the time, the service, which allows Xbox owners to subscribe to a library of games, had 25 million of subscribers, up from 18 million in 2021. It looked poised to continue growing rapidly amid Microsoft's focus on consoles, PCs and cloud gaming.
Then Xbox Game Pass started to stall. Star Field And Red fallwhich were to be major Xbox exclusives, were delayed from a 2022 release to 2023, with Star Field a key holiday window is missing.
“It looks like we're likely going to go through a gap of almost 16 months between big exclusive launches on our platform,” Phil Spencer, CEO of Microsoft Gaming, said in an internal email to Xbox executives in May 2022 , revealed in the FTC vs. Microsoft case. “This is truly a dire situation for us given how much we have invested in content in our site's studios. [Game Pass] content funds.
In the months since, Microsoft has not provided any updates on subscriber numbers to investors. It's been more than two years since the 25 million figure was announced alongside the Activision Blizzard acquisition, and some analyst estimates Microsoft only has around 33 million subscribers.
If accurate, that represents growth of about 33% in two years. Microsoft targeted a growth rate of 73 percent for Game Pass subscriptions for a single fiscal year that ended in June 2022, but only managed 28 percent of it. The company then drop in Xbox Game Pass growth as a target for Satya Nadella's executive compensation last year, after first exceeding its ambitious internal Game Pass targets in 2020 and then failing to meet compensation targets for two years in a row.
Microsoft instead focused more on PC Game Pass growth last year and scaled back some of its Xbox Cloud Gaming plans. The combination of the Xbox Series S, the $299 Game Pass console, and cloud gaming was supposed to account for a large portion of the 100 million Game Pass member figure that was disclosed in FTC vs. Microsoft materials, but sales of Microsoft's latest consoles will not allow the company to achieve this alone.
Microsoft has been exploring other avenues for Xbox Game Pass or gaming revenue growth, particularly on mobile – a key reason for its acquisition of Activision Blizzard. The publisher's lineup includes mobile games like Mobile Call of Duty, candy CrushAnd Diablo Immortal. A new Xbox mobile games store could launch this year, with Microsoft relying on the EU's Digital Markets Act, forcing Apple and Google to change the way they distribute apps to mobile devices and eventually open their platforms and stores to the competition.
But Apple's surprise new plan to comply with the European Union's latest technology regulations has frustrated Microsoft and others. “Apple's new policy is a step in the wrong direction,” Bond said in reaction to Apple's proposals last month. Spencer previously described the Xbox Mobile Store and the EU's Digital Markets Act as a “huge opportunity” for Microsoft.
All of this means that adding a bunch of games to the Switch and PS5 won't necessarily help Microsoft's growing ambitions for the Xbox. This is why I think Microsoft might need to reveal more about its future hardware vision.
Microsoft held an internal town hall for Xbox employees last week, where Microsoft Gaming CEO Phil Spencer, Xbox Game Studios head Matt Booty, and Xbox president Sarah Bond all spoke. to employees. Shannon Liao first reported the details from City Hall.
While Xbox executives reassured employees that Xbox hardware would continue, they didn't directly address the elephant in the room: those persistent rumors about Xbox exclusives coming to the Nintendo Switch and PS5.
Even the rumors surrounding this move have shaken Xbox fans, fearing that Microsoft will eventually abandon the Xbox console hardware, render the Xbox digital libraries useless, and simply release games on rival platforms. But after more than 20 years of Xbox hardware, it seems inconceivable that Microsoft would suddenly move away from the device ecosystem that powers its Xbox platform and its revenue. Instead, I suspect Microsoft will have a vision that shifts focus away from select Xbox games to rival platforms.
There are rumors of an Xbox handheld, with Windows CentralIt is Jez Corden claims earlier this month, “Xbox has literally given the green light to several new hardware projects over the past two weeks.” A few days later, Corden speculated on a potential Xbox handheld, and Spencer liked an article on X describing the handheld as “inevitable.” Microsoft has a habit of teasing future hardware: at E3 2016, it announced the Scorpio projectdescribing it as “the most powerful console ever made” before being released 18 months later as the Xbox One
A disc-less Xbox Series fairly quickly ruled out the leak like the old plans, so maybe this material was canceled.
Either way, without a public commitment regarding future hardware, Microsoft could have a problem. By gradually opening up Xbox games to the Nintendo Switch and PS5, it also raises questions about how many games will be cross-platform in the future. If you can play Xbox games anywhere – including PC, cloud, Nintendo Switch and PS5 – then why would you want an Xbox? This is the big question that Microsoft must answer on Thursday.