msn Phil Spencer: Xbox Lost the Console War

[UltraMega]

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Microsoft's Xbox consoles have a loyal following, but when it comes to sales, its new generation Xbox Series X/S has been lagging well behind Sony's PS5 and Nintendo's juggernaut Switch. In a recent interview with Kinda Funny Games, Xbox Head Phil Spencer admitted that Microsoft had effectively lost the console wars to its rivals.

 

"We’re not in the business of out-consoling Sony or out-consoling Nintendo. There isn’t really a great solution or win for us," Spencer says. "I know that will upset a ton of people, but it's just the truth of the matter when you're third place in the console marketplace and the top two players are as strong as they are."'

 

Spencer says it's not as easy to shift consumer purchasing habits as it once was.

 

"It’s just not true that if we go off and build great games, all of a sudden you’re going to see console share shift in some dramatic way," he says. "We lost the worst generation to lose in the Xbox One generation, where everybody built their digital library of games." 

 

He went on to explain how generational continuity has changed the marketplace.

"I see a lot of pundits out there that want to go back to a time when we all had cartridges and discs, and every new generation was a clean slate, and you could switch the whole console share," he said. "That’s just not the world that we are in today. There is no world where Starfield is an 11 out of 10 and people are selling their PS5. That’s just not going to happen."

 

It's somewhat of a mystery exactly how many Xbox units Microsoft has sold this generation, since it stopped reporting exact sales figures to the public. Current estimates put it at around 21.3 million units versus 35.9 million for the PS5 and a gargantuan 122 million for Nintendo's less-powerful but more flexible Switch. Microsoft has instead focused on subscriber numbers for its XBox Game Pass platform, which allows users to play games across platforms like PC and mobile.

Microsoft Exec Says Xbox Lost Console War to Sony, Nintendo

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The Xbox Series X/S have around half the sales of Sony's PS5 and less than one-fifth of Nintendo's Switch.

 

 

Important to note, Microsoft is not trying to sell more consoles than Sony, and Sony has also realized selling hardware is not the best way to make money. It's all about selling games, or subscriptions. That's why Sony puts their games on PC now, they don't make money from selling PS5 consoles, they make money from selling games. It would be interesting to know which company is actually pulling in more revenue from their respective gaming divisions. 

As I see it, Sony is the brand most people would think of when they think of the highest quality modern games, especially single player games. Xbox is in a good position with game pass though. It's been a lot of messy launches and failures for Xbox game pass so far, with RedFall being the latest example, but I think eventually they will get things in order and have a lot more to offer in terms of quality when we start seeing some first party titles like HellBlade and maybe Starfield. If they ever do get COD on game pass, that will be pretty huge as well but even if they don't, there will still be a time where they will eventually have enough quality games on game pass for most people to justify the $10 or $15 a month subscription fee. 

Essentially, the way I see it can be summed up like this; Sony is operation on all cylinders and pumping out great games, but there isn't much they can do to build on that formula right now except keep delivering good content. Microsoft on the other hand is still struggling to get started, still yet to release a single "next gen" Xbox series X hardware level game. They have a great foundation in place but are still building out the content to back it up. If/when they do release some good content, I think they will get a ton of new subscriptions. 

Side rant:

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I think Microsoft should have bought Ubisoft instead of trying to buy Activision. Activision is a huge company with really established cross gen IP. I have no doubt Microsoft would keep releasing COD on PlayStation because they mostly just want to sell games, and when people buy Microsoft games for a Sony console, they still get paid, but no doubt it would also push a lot of game pass subs so it makes sense. However, Ubisoft has a lot of great IP that only doesn't shine because Ubisoft upper management messes them up by focusing on fluffy gameplay mechanics that slowly erode the value of their IP overall. Ubisoft would have been a lot cheaper for Microsoft, their market cap is less than 4 billion. It would have been really great to see Microsoft take over and try steer Ubisoft back on course rather than just using COD to push subs. Potentially, the Ghost Recon IP could have been something Microsoft used to build games that competes with COD. Microsoft would have acquired some really great game engines as well, which are mostly based on CryEngine but with years of enhancements, so they have a very strong foundation. With Activision there isn't anything Microsoft can add, they just take over and get more game pass subs. With Ubisoft, they could have bought a ton of IP for a really low price and built out a whole new catalog of improved Ubisoft games, something that would actually improve the gaming landscape rather than just move ownership around. 

 

There was that thing with the sex abuse stuff with the Activision CEO at the time so I guess Microsoft probably saw it as a good PR move to step in and basically be able to fix that part of the problem, but that's really not their job and no one would have blamed them for not trying to buy Activision. 

 

Edited May 8, 2023 by UltraMega

[Andrew]

They lost as soon as they announced the Xbox One with inability to buy and use used games as well as always online with a Kinect being required that they thankfully didn't go through with. Had that not done that, there's no reason why Xbox One and Series S/X wouldn't be as big as the 360 was.

[UltraMega]

25 minutes ago, Andrew said:

They lost as soon as they announced the Xbox One with inability to buy and use used games as well as always online with a Kinect being required that they thankfully didn't go through with. Had that not done that, there's no reason why Xbox One and Series S/X wouldn't be as big as the 360 was.

Thats true, but even after pulling back on that announcement the Xbox One was significantly bottlenecked by much lower memory bandwidth compared to the PS4 which is why pretty much every cross-platform game runs at a lower res on Xbox One. Sony also really delivered on first party games during that era, a trend they had gotten pretty good at with the PS3 era. Microsoft was never good at keeping up with first party titles, and they got to ride the Halo wave for way longer than they really should have been able to. Sony was smart to take game development so seriously for so long and build such a strong brand of quality around it. I think Microsoft only recently started to really understand that. Sony was playing Chess while Microsoft was playing Checkers. At any time, Microsoft could have focused more on quality software, but for whatever reason they just didn't take that seriously until now. Had the PS4 and Xbox one been identical in both specs and price, Sony still would have dominated because it would have been Halo and Gears of War vs a much larger library of high quality games from Sony.