Microsoft appears to be shifting its Xbox focus to software and services, much like the company’s overall efforts. In an interview with Bloomberg, Microsoft’s head of gaming Phil Spencer explains why the company is focusing more closely on game sales, subscriptions, and other gaming services over pure hardware sales.
“Now, players are playing the games across every device and we’re connecting those players across all of those devices,” explains Spencer, who was recently promoted to report directly to Microsoft CEO Satya Nadella. “Obviously for us, the console is an important part there… but connecting to gamers wherever they are is the vision of Microsoft around what we’re doing in gaming.”
If that focus on the consumer rather than the hardware sounds familiar, it’s because it’s central to Satya Nadella’s vision for Microsoft. The software giant has been refocusing its efforts in mobile on the reality of how people are using Android and iOS phones instead of Windows-based handsets. Nadella wants Microsoft focused on software and services that are powered by the cloud and follow people no matter what device they’re using. The cloud is now a big part of Microsoft’s overall revenue.
This doesn’t mean Microsoft is giving up on making Xbox hardware, but it’s clear the company will be more focused on the software and services for that hardware and perhaps even rival consoles and mobile devices. Microsoft has been trailing Sony’s PlayStation 4 sales, and the company has started to look at boosting its Xbox revenue from subscription services like the Xbox Game Pass.
One key way Microsoft could bring its own Xbox games to other devices is through game streaming. While the company first demonstrated Halo 4 streaming from the cloud to a range of mobile Windows devices back in 2013, it was simply a concept of the technology involved at the time. Bloomberg reports that Spencer has teased that Microsoft “will probably debut a streaming service that doesn’t require a console for some types of content in the next three years.”
Spencer also admits Microsoft needs to have solid first-party games for the Xbox. “Our ability to go create content has to be one of our strengths,” says Spencer. “We haven’t always invested at the same level. We’ve gone through ups and downs in the investment.” Microsoft shuttered studios last year and canceled some Xbox exclusive games, and gamers are now waiting to see what the company has planned for exclusive titles to take advantage of the powerful Xbox One X console.