With Xbox Series X Launch, Microsoft Not Focused On Selling The Most Consoles This Year
Phil Spencer talks about launching a new console during a period of "massive economic uncertainty."
The United States is currently in the midst of its first economic recession since 2009, but despite that perceivable economic crisis, Microsoft (and Sony for that matter) remain on track to launch their next-generation consoles this year. Xbox boss Phil Spencer spoke about this in a recent interview with the BBC, saying Microsoft wants to make Xbox as affordable as possible this year. Additionally, Spencer said the company's overall goal is not to sell the most consoles this year but instead to get people to sign up for its services.
"It looks like we're moving into a period of of massive economic uncertainty," Spencer said. "The thing I'm probably focused on the most is the macro-economic environment. We see the impact of people getting furloughed and layoffs. It's tough."
Gaming is a "leisure activity," Spencer pointed out. People don't need to play games. But they need to eat food and pay rent, he pointed out. Spencer said Microsoft is keeping this in mind for its next-generation strategy.
"So we want to be really tuned in to that as we launch. How can we make it as affordable as possible? How can we give buyers choice?" he said.
Spencer pointed to Microsoft's ongoing Xbox All Access subscription program, which allows people to buy an Xbox and pay it off with monthly payments instead of all at once. Additionally, Spencer doesn't need anyone to actually go out and buy a new console right away.
Microsoft will continue to support the regular Xbox One, Spencer said. In fact, Microsoft will not release any exclusives for Xbox Series X for around the first two years, so titles like Halo Infinite and the rest of Microsoft's lineup will play on both the new console and the regular Xbox One. Additionally, Microsoft's Smart Delivery program helps people who may want to buy the Series X someday but not right away.
"And through technologies like Smart Delivery, you can buy your games and know that when you buy the next console, your games will move with you, to allow consumers to make the choice that's right for them," Spencer said.
Spencer also said that, now more than ever during this time of great crisis and lockdowns, many are turning to gaming for comfort. "You can buy a console, buy some games, and it can literally provide your family with hundreds of hours of entertainment," he said.
Spencer also pointed out that the video game business survived the US financial crisis of 2008-2009. "Gaming did OK. It was durable," he said.
But money is indeed tight these days for some households, and Spencer said he wants to make sure that Microsoft is "providing the right value" to its customers. Spencer said Microsoft is more focused on growing Xbox Game Pass than selling consoles in 2020.
"Price is going to be important," he said. "But our strategy is centred around the player, not the device. If this is not the year when a family wants to make a decision to buy a new Xbox, that's OK. Our strategy does not revolve around how many Xboxes I sell this year."
Microsoft is expected to lose money on every Xbox Series X it sells this year, as consoles are historically sold for a loss. Microsoft makes up the losses by selling games, accessories, and subscription services, all of which are higher-margin and better profit-drivers. Xbox Game Pass is a huge part of this. And when the streaming service xCloud is added to Game Pass later this year, Microsoft has the ability to extend the reach of Xbox far beyond the console world alone.
On the subject of affordability, Microsoft is rumored to be releasing another next-generation Xbox, codenamed Lockhart, but the company has yet to confirm these supposed plans.
In other Xbox news, Microsoft has confirmed that it did not delay an Xbox reveal event--the plan remains to show off Halo Infinite and other first-party games during a showcase in July.