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9 things we just learned about Game Pass and Xbox Series X/S

9 things we just learned about Game Pass and Xbox Series X/S
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An Xbox Series S and X sit in front of a neon green grille.

picture: Microsoft / Kotaku

Microsoft is making big strides and game pass is just one piece of the puzzle. The subscription service has kept the Xbox Series X/S relevant despite the lack of new conversation-stealing first-party exclusives, but the company seems to be targeting mobile for its next big gaming push. While PS5 console warriors to fight about call of Duty exclusivityMicrosoft positions Apple and Google as real rivals.

That might just be a handy turning point amid an unprecedented antitrust scrutiny as it tries to get it $69 billion acquisition by Activision Blizzard by US and foreign regulators. But it’s compelling given that Apple’s total revenue comes from gaming has surpassed both Microsoft and Nintendo over the past year although the iPhone maker doesn’t actually make games. Here are nine interesting takeaways from recent earnings calls, regulatory filings, and interviews that are beginning to paint a picture of Xbox’s present and future.


Game Pass grows by a ton on PC

While Game Pass’s best library of games resides on console, it’s actually the PC side of the service that’s building steam. Microsoft CEO Satya Nadella confirmed this to the company the last win call PC Game Pass subscribers grew 159 percent year over year. The PC version’s game library has certainly improved over the past few months, but the larger install base is probably an even bigger factor. “We’re seeing incredible growth on PC, which is what we’re really focused on,” Spencer said WSJ Tech Live.

Game Pass is reaching its limit on console

Despite reaching 25 million total subscribers, Game Pass’s overall growth is still well below Microsoft’s original expectations. As Axios reportsthe company aimed for 73 percent growth for the year to June 2022 and instead only achieved 28 percent.

On the Xbox Series X/S, meanwhile, Spencer seems fairly confident that Game Pass will never account for more than 15 percent of Microsoft’s total content and service revenue. “I don’t think it’s going to get any bigger,” Spencer said on WSJ Tech Live. “At some point you just reached everyone on the console who wanted to log in.”

Microsoft knows it’s overdue for a big first-party exclusive

One reason for Game Pass stalling on console could be that Lack of big exclusive. Spencer recently admitted they’ve been missing from the company’s lineup overall lately. “One thing we’ve heard loud and clear is that it’s been too long since we shipped what people would call a big first-party game,” he said on the Same Brain Podcast. “We can have our excuses about Covid and other things, but at the end of the day I know people want to invest in our platform and want great games.”

At the same time, he hinted that the era of Covid-related game delays is over, at least for Microsoft’s first-party studios. In other words, don’t expect the great holiday drought of 2022 to last into next year. While starfield and redfall will both be out in the first half of next year, larger releases like fables, Forza Motorsport 8, confessesand others are just waiting in the wings.

The rumored TV streaming device has been (literally) shelved

Project Keystone was supposed to be a dongle for TVs that would let you stream Game Pass in the living room without needing an Xbox. It was rumored to be just around the corner, but Spencer confirmed that it has indeed been canceled in favor of more limited solutions from smart TV makers like Samsung. This Keystone prototype he keeps on his shelf? Doesn’t go into production. “Are we going to make a streaming device someday?” he said at WSJ Tech Live. “I suspect we will, but I think it’s years away.”

The company is serious about having an Xbox store for mobile devices

Microsoft hinted at its ambitions to compete in the smartphone space earlier this yearbut a recent UK regulatory filing lays out the plans more clearly.”[Buying Activision Blizzard] will enhance Microsoft’s ability to create a next-generation game store that will work across a range of devices, including mobile, as a result of the addition of Activision Blizzard content,” the company said wrote in October.

Spencer doubled down on that vision at WSJ Tech Live, criticizing Apple and Google’s 30 percent cut in in-app purchases on their platforms and arguing that the $69 billion acquisition is an attempt to make mobile more competitive, instead of keeping a stranglehold on the console market. “We need to break up this duopoly of just two storefronts on the Major [mobile] platforms,” he said. It’s not clear how the company intends to go about this, but further acquisitions, possibly in the mobile space, are not off the table.

Xbox Series X and S consoles are sold at a huge loss

While it’s well known that console manufacturers often sell the devices at a loss, especially at the start of a new release cycle, we’ve never known exactly how big those losses were. Without a doubt, Spencer has recently accepted the loss of Microsoft to the Xbox Series X and S between $100 and $200 on average.

That’s the company’s defense for charging the same 30 percent fee on Xbox it complains about Apple and Google charging on mobile devices, where smartphones are sold at a profit. At the same time, it also made the Xbox Series S a huge hit. The company announced during its recent conference call that half of all $300 Xbox users are brand new to the ecosystem.

Prices will increase in the future

However, don’t expect this discount level to last forever. While Spencer didn’t get specific, he did hint at it during WSJ Tech Live price increases are coming. “We’ve kept the price of the console, we’ve kept the price of games for us and our subscription,” he said. “I don’t think we’ll be able to keep this up forever, I think at some point we’ll have to raise the prices on some things.”

Though he didn’t say what things those would be, Game Pass and individual game prizes seem like the obvious bets. Subscription services became widespread Increasing their renewal costs recentlyand Spencer pointed out that the $60 price point Microsoft thought it was Hello infinityis outdated and doesn’t reflect the growing development costs or the extra hours that many players gain from modern games.

call of Duty stays on PlayStation

Microsoft was clearer than ever in the last few weeks that it has no plans to make call of Duty exclusive to Xbox. “It’s not a plan of, okay, we’re going to bait someone and switch where they have to play on the cloud, or in two or three years we’re going to move [Call of Duty]said Spencer at WSJ Tech Live. “As long as there’s a PlayStation to ship to, we want to keep shipping call of Duty on PlayStation,” he said on Same Brain. He liked it Minecraft which will continue to be supported on PlayStation, and said he would even like to see it call of Duty turn on in any way.

Don’t expect a Microsoft VR Metaverse any time soon

“For me, I’m building a metaverse that looks like a meeting room — I just find that’s not where I want to spend most of my time,” Spencer said at WSJ Tech Live, though his boss co-announced Microsoft Meetings integration Metas Horizons VR dystopia only weeks before. The veteran gaming exec said he thinks companies should work on perfecting 2D gaming metaverses before bringing them to virtual reality.

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