Phil Spencer: I Do Think at Some Point We'll Have to Raise Some Prices on Certain Things - News
by William D'Angelo , posted on 26 October 2022 / 4,638 Views
Microsoft Gaming CEO Phil Spencer during today's Wall Street Journal's Tech Live conference was asked about the potential for future price increases on Xbox Game Pass, consoles, and games.
"For us running the business we have to look at the return on our business, the cost of the business," said Spencer.
"We've held price on our console, we've held price on games for us and our subscription. I don't think we'll be able to do that forever. I do think at some point we'll have to raise some prices on certain things.
"But going into this holiday we thought it was important to maintain the prices that we have, because we think consumers right now are more uncertain than they have been in a long time and I want our medium of video games to be something they find attractive."
"We've held price on our console, we've held price on games... and our subscription. I don't think we'll be able to do that forever. I do think at some point we'll have to raise some prices on certain things..." pic.twitter.com/jRt5ifKpE5
— Tom Warren (@tomwarren) October 26, 2022
A life-long and avid gamer, William D'Angelo was first introduced to VGChartz in 2007. After years of supporting the site, he was brought on in 2010 as a junior analyst, working his way up to lead analyst in 2012 and taking over the hardware estimates in 2017. He has expanded his involvement in the gaming community by producing content on his own YouTube channel and Twitch channel. You can contact the author on Twitter @TrunksWD.
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You'd have to be a fool to not realize that GP will increase in price at some point. $15 is most likely my cut off. At that point I'd rather just go back to waiting for sales on steam and trying out games through other means that PC provides. A yearly deal that drops it back to 10 might bring me back. The main issue right now is Xbox needs to be more consistent with releasing their own content. Once that starts happening I can really look at Game pass and see if it's worth it.
Gamepass is already a bargain imo.
on gamepass I think a 1-2$ increase would be fine for the value it provide as long as they maintain or up the value with the increase. higher than that I think I would consider month on /month off subs like I do with netflix.
Consoles should never go up in price imo. They should go down as the generation goes along. Now, if you want to bump the price of your next console? Okay, that's fine. But suddenly raising the prices of years-old consoles with years-old tech... it just doesn't sit right with me.
I agree that raising a console price is not good. At least when not adding value. Switch OLED is more expensive but added value with the OLED screen.
I am guessing it is more likely in the future we will see Xbox Game Pass go up in price like with other streaming services (Netflix, Disney+, etc.) and the price of new releases going up to $70.
Game prices going up to $70 is the best strategic option, because they both get higher game sale prices, but also make Game Pass even more attractive vs. buying games. If and when they complete the Activision purchase, and with Activision games are already $70, it makes sense for Microsoft to make that a company-wide thing at that point IMO. And if you don't like it, get Game Pass instead.
I expect GP to go up in price and for first-party games to eventually jump to $70, but I doubt MS will up the price of their consoles.
Games will go up to $70 I'm sure next year starting with Redfall, Starfield, and Forza Motorsport since they are "next-gen only games". GP prices were always going to increase. It's a matter of when than if. It also will depend on what they decide to raise it to. I highly doubt console prices will go up.
I dont remember any of those games being anoinced as next gen only
They are. Xbox Series X|S and PC only for these titles.
How does this happen?
I'm not sure. I had to delete the repeat post 5 times lol
There are no free lunches in business.
I would be upset, if understanding, if Microsoft increased game prices to 70, but they should just go 65. Five bucks doesn't feel like much, but ten is getting into hesitation territory. I think I remember one of the Penny Arcade guys talk about this saying 5 dollars is the same as 0 dollars.
And here is another company that can afford to eat costs with all their billions of profits made just from there gaming devision.. but we have to let those multi millionaire shareholders happy.
Bad move.
The vast, vast majority of Microsoft shareholders are not multimillionaires. Most of them are just regular people holding MSFT in a retirement account. And then many of the large institutional shareholders are pension funds and the like, that are just benefiting regular people.
Anyway, management of public companies has an obligation to return as much value to shareholders as possible. They would be breaching their fiduciary duty if they decided to just not make as much money as they can simply because they're already making a lot.
I was being alittle exaggerated. Id agree with what you said, but they continue to make millions upon billions on customers. Maybe instead of raising prices, they can share some of those profits to the shareholders instead.
I wish they did. It is a reason I've put so much into ATT
Regarding "obligation to return as much value to shareholders as possible", I don't know how true that is, but there's no clear way of calculating that anyway, or no company would ever give out free DLC expansions if customers could pay for it. It can be argued that such acts will earn them more good faith, happy customers and more profit later.
The fact is tech have been seen as growth stocks and they have used the high share prices that come with that to benefit from not pay dividends or for those that do its smaller than average , but slowly and surely shareholders are starting to say that its time that the big companies start paying dividends .
XB - PS is bad for raising prices due to inflation and we would never do that because we care.
Also XB - We're raising our prices soon, but because we have to, not because we don't care.
The thing is you just made that up. Nobody at Xbox made those statements.
In answer to the question of the type "Do you have plans to raise the price of xbox series S|X like Playstation 5?" Their answer was no.
https://www.vgchartz.com/article/454684/microsoft-xbox-series-xs-price-will-not-be-increasing/
We don't know the exact question that was emailed to them, but that's the news we got. Anyway in general I am starting to dislike Phil's Bill Gates blabla clone ways of saying little with so many words and trying too hard to be on players' good side. I understand his strategy and I mostly agree with it, but he needs to do a better job woth the messages being out out and being clearer, and not appear as a brown nose.
The actual answer was that the price remain what they were. It was a clear non-answer by pointing to the reality of today without committing to anything other than short term.
As for Phil, even if he wanted to be more direct and clearer he has a parent company to answer to, so he could never commit to anything that MS don't commit themselves nor could he ever commit something to perpetuity.
But even then I like that Phil frequent statement even if somewhat
evasive. He make he's intent known and with every messaging , him keeping his jobs entails a tacit agreement from MS. The day he will stop doing that would be the day MS asked him to stop. that's when it will start worrying about the future of Xbox.
You should worry about the future of xbox when his messaging becomes so confusing people don't want to listen to him anymore. And that is starting to happening as MS becomes more important in the industry and takes more importance. They should be careful.
By saying one thing and appearing in one light, then saying something different shortly later, it's a bad approach and they should fix it, but as usual MS will learn their lessons the hard way, as they always have since the very first Xbox.
What partial motivation? Sounds like a self-fulfilling prophecy and wishful thinking, emotional thinking. Xbox is doing good, but if you know anything about the history of consoles, is that hubris comes in a matter of time.
Moreover if I wanted them to fail I would shut my mouth and let them continue instead of talking about it. The way your logic works...
Your argument boils down to "If you criticise MS then you are biased and hating on them." That is really sad. You are satisfied with them, all the power to you. It doesn't mean they won't ever be making bad moves, and we are on a video game SALES forum, to just paint in black an opinion that doesn't sit well with yours is lazy and counter-constructive to the purpose of the forum. Don't do it again.
I said shared "wildly" amongst not "only" among Jeez. Never claim you particularly wanted them to fail.
"Your argument boils down to "If you criticize MS then you are biased and hating on them." No, but your sure seems like if you think some of it is undeserved you're a fanboy or something that's emotionally thinking.
There's plenty to criticize MS for. But lately the criticism I've seen boils down to "I decide to make my own intepretation of MS statement to fit my narrative then shit on them when my interpretation don't hold to reality". No need for me to be emotionally attach to Xbox or MS to see that this is wrong.
Criticize MS for something that hold to reality and I'll join you. Like how bad their marketing strategy are lately with games, or how greedy theirs last attempt at raising Xbox live price were, or how shitty their "New partner program" is.
"and we are on a video game SALES forum, to just paint in black an opinion that doesn't sit well with yours is lazy and counter-constructive to the purpose of the forum. Don't do it again."
Says the one who's trying to paint the opposite opinion black.
When did I ever paint your opinion black? Only once you started treating (wrongly so) like a fanboy did I take the time to fix that. If it took painting your post black I did so unapologetically. You are free to disagree with me, I don't have a narrative or a history of being negative about xbox, and have no reason to censure myself if I see a bad PR narrative on their part and to suggest corrections. Agree to disagree and stay within the bounds of respect.
"When did I ever paint your opinion black? Only once you started treating (wrongly so) like a fanboy did I take the time to fix that." That's the thing, I didn't treat you like a fanboy nor did I meant no respect to you. Your response was the one who treat me like one though.
My point was that only the last opinion you shared being a variant of " Phil speaking both side of is mouth, always a liar or being 2 face" is also widely shared amongst those. And that my understanding of it is that this opinion don't hold to the reality once you look deeper into them.
So I agree with you to agree to disagree and suggest you take a little of your own advice and stay within the bounds of respect.
I don't need to follow my advice because I never treated you like a fanboy, the proof is I don't think that at all of you. Not until you start treating me of one that is, but still I'm not that quick to judge.
No I'm doing fine, you assumed I was being a hater and I'm not. Even if most haters do hate on Phil, I don't hate the guy, I like him. But I will say it when I think he's giving dizzying messages and I don't need to be disrespected for it.
I think we found sufficient common ground to shake hands and let be.
"Spencer said he doesn't think Microsoft will be able to keep the prices of games constant forever." https://www.cnbc.com/amp/2022/10/26/microsofts-phil-spencer-gaming-somewhat-resilient-to-weak-economy.html
Here in this new interview he mentions only games nothing about rising the price of the console. For me with common sense its clear he was always talking about game prices.
nobody from Microsoft said PS bad for raising prices. they just said they have no plans to do the same at the time. they still don't have plans to do the same, they just say prices could be raised in the future, which is a water is wet statement.
Pretty sure Xbox never said or insinuated anything like that about Playstation.
Xbox was asked if they were going to raise their prices, and they responded with something to the effect of, 'we currently have no plans to raise prices of our systems'.
Can you direct us to where you read that stement though? Because there's been quite a few of these types of false equivalences made in news articles lately that has derailed the conversation for no good reason.
When Sony raised prices, and some people said it had nothing to do with inflation, or even if it did, that it was corporate greed that was the main reason, and that Sony should just eat the cost, why weren't any of them forced to prove it?
Here we have MS backing up what others were using as an explanation as to why Sony did what they did. That business is business and product prices need to be covered and profits made.
So Sony comes out and says we're raising prices and for legitimate reasons, and MS immediately responds with, well we aren't, and we're all supposed to believe that's normal and to be expected?
Why would Sony raising prices automatically mean MS would be raising prices?
Aren't they both separate businesses who make their own plans and take their own paths?
As if MS didn't see the backlash and already knew there was a good guy vs bad guy opportunity available for them to benefit.
Then, not to long after this situation, after MS saying they have no plans to raise their prices at that time, now is warning consumers they'll have no choice but to raise prices soon.
What a coincidence.
It's almost like MS knew what Sony did made perfect business sense, yet took the opportunity to make them look bad, knowing full well they would be raising their own prices soon anyway.
Which would be why MS is getting ahead of that with these recent statements, so when people point out that MS did another 180, yet again, MS can simply say, nope, plans just changed due to business and we warned everyone. No foul play here.
So unless MS are just terrible at business, who couldn't see they would need to raise prices just a month or two ago, but now see clearly they will definitely have to, which is not a good look, the only other thing that makes any sense is they purposely wanted to make Sony look bad.
I also find it telling, that Sony is supposedly going to have 30 million PS5's available in the next year, which I actually recently suggested in another thread is going to lead to 25 to 30 million PS5 sales next year, which will also lead to a drop in XB Series sales.
So if you're MS right now, the last thing you want to do is raise prices, because that's just more reason for consumers to buy a more readily available PS5 now, especially during the holidays.
So MS wouldn't be eating costs this holiday because they care so much, it would be because they're scared of losing sales to PS5's wider availability.
So in summary, Hiku question was:
Can you direct us to where you read that stement though? Because there's been quite a few of these types of false equivalences made in news articles lately that has derailed the conversation for no good reason.
Your answer was : no, can't show my source, but here's more false equivalency to back my first one.
So you're saying everyone's opinion, no matter with little or a ton of backing, no matter how well it explains things, as long as it's not provable in court, is meaningless?
So pretty much everything anyone says on this site means nothing?
So from now on I should always respond with, prove it beyond a reasonable doubt and if they can't, their points made should be looked at as useless?
That's a pretty sad way to look at things. I tend to think all people's opinions are useful, positive or negative, and sometimes extremely insightful.
What's insightful here, is all you care about is that question as asked, since it's posed in a way to end the conversation immediately. That's because they can't deny my points being made because they explain the situation so well.
Which by chance makes XB look bad, just like how what MS said earlier about having no reason to raise prices made Sony look bad.
I guess everyone looks bad now and is even. Competition is great isn't it?
"no matter with little or a ton of backing" well that's exactly the point: It does matter. The more you back your point the better. You did not back anything in your previous post. Only provided more of your opinion, no source, no link, no quote using MS wording only your own interpretation. Wonder why you don't want to back your claim. maybe because the actual wording isn't as twisted as your own interpretation and would render most of your point moot?
So MS won't be raising prices then?
They didn't say somewhat recently they wouldn't be raising prices? Then more recently said they would be but not for the holidays?
Doesn't Phil like to point out when PS does good or great things? Why didn't Phil make it clear the PS5 price hike made perfect sense and that MS wasn't surprised due to inflation?
It's not always about what's said, but also what's purposely kept quiet.
"So MS won't be raising prices then?"
Where did I said this. Or is that supposed to be a thing I "purposely kept quiet".
"They didn't say somewhat recently they wouldn't be raising prices?"
Doing the job for you, here's the actual quote : “We are constantly evaluating our business to offer our fans great gaming options. Our Xbox Series S suggested retail price remains at $299 (£250, €300) the Xbox Series X is $499 (£450, €500).” source: https://www.windowscentral.com/gaming/xbox/xbox-responds-to-playstations-price-hike
So no, they did not say they wouldn't be raising prices. Only that their system remains at suggested retail price. You can reasonably assume this apply to short term. Other than that is up in the air as pointed to by this "We are constantly evaluating our business". Like I said to Padib It was a clear non-answer by pointing to the reality of today without committing to anything other than short term.
"Then more recently said they would be but not for the holidays?" This is the exact article your posting in and yet can't even quote them correctly? They never claim they will raise the price of any of both systems they are just not closing the door to that possibility the "certain things" part of the actual quote is not without meaning else they would said "on all those things". Of course the cost of Gamepass will rise eventually and games by all logic also will, but the system appears to be the least likely of all things. Not impossible just not likely.
"Why didn't Phil make it clear the PS5 price hike made perfect sense and that MS wasn't surprised due to inflation?" Why didn't Sony make clear Gamepass make perfect business sense? maybe because it isn't their position even though they sure try to close the gap offering wise in this business model. Get my point? It isn't Phil jobs to do pr for Sony nor take shots for them.
"it's not always about what's said, but also what's purposely kept quiet." It is convenient that you can't quote on things "kept quiet" isn't it. You may also claim remote and far-fetch on things "kept quiet" and whether it turns out to be with or without purpose is a matter of opinion and up for debate.
So to sum it all up:
What Phil says shouldn't be taken seriously because he's likely to do a 180 shortly after anyway.
Got it. Lots of words and little to no meaning. Fantastic!
And another one twisted interpretation. I ain't surprised at all.
I've responded to your question explaining to you how he didn't do a 180 but you weren't actually interested in my answer and then fallback to your made up conclusion and try to equate my post to it.
No wonder why you were ban for sealioning before.
So to sum it up:
You've only applied your opinion and nothing to back it up. Then ignore everything else Randy said with actual quotes. Fantastic!
When sony announced it papa phill was fast saying they would not and fanboys rejoiced and shit on sony for it.
Also when people say gamepass will get a raise downvotes go crazy here, anyone with a brain knows gamepass price point and the giving away subs for a dolar or in packages of pringles will end, they are a company and they evetualy want to get profit for this ?
Downvote did go crazy when claims were made that MS needed to raise the price like crazy for gamepass to be profitable. and today prove the downvote were legit on that.
To be completely fair the destiny of it is obvious. Once they gain control it will be hard to steer back and they will control the price. Slippery but attractive offer by them, whitty move, but at the end of the day there are risks for the players from a price point of view as Netflix has proven. Buyers beware.
Yes and no, the best example you could compare Gamepass to when it comes to how MS is handling their subscription pricing is Xbox live. And the rise in cost where few, far apart and did not even rise to the effect of compounded inflation.
As for the comparison with Netflix few things to keep in minds:
First Netflix did not get worth mentioning competition for years Unlike Gamepass which as strong competition is just around the corner with Sony.
Netflix Only started rising their price once they shifted their strategy from nearly all third party titles to more and more in house content. MS is making strong in house content from the get go as they are currently financing 20+ studios and their projects.
All Gamepass content is widely available outside of Gamepass, Netflix not so much.
Even if MS were to model themselves against Netflix, Netflix have been losing subscriber left and right in 2022 and it also got beaten sub wise by Disney. A lot of this can be attributed to their much inflated pricing strategy.
I fully expect a rise in price at some point but should not get Netflix like crazy IMO. Also Gamepass is profitable right now but their subs count is not that impressive. If MS have the option between rising the price 10% or rising the subs count 10% no doubt in my mind they will always choose the later.
We'll see, you could be right. I still believe handing the keys to the kingdom to these big guys is risky business, but it is an evolving market with an interesting new distribution approach so let's see. As for Gamepass right now, it is clear to me that they are selling it at a bargain right now to really kickstart it, which is fine, but people should be aware (esp. given what you are saying about the cost of making in house exclusive content) that the price may possibly double once they attracted enough people and built it the service robustness they're looking for.
I get what you say, double will be intense though, no need for MS to offer the opportunity for competition to stiffen like Netflix has done especially while being profitable.
If I had to make prediction I would bet on 1$ maybe 2$ in 2023, +1$ in 2024 or 2025.
I'm 50% confident the price 11.99-, 95% at 12.99- by the end of 2025 and like 99% confident it will be 14.99- by 2030.
His true color shows haha,
At least we know that Jim Ryan's Playstation division is greedy mder fckers right at the get go,
But saying shit about oh we won't increase prices and then months later changes his mind hahaha that's what's fcken annoying
Should we give them the benefit of the doubt and just say XB is terrible at business and has no idea what they're doing?
At least that way they don't look like hypocrites.
He never said that. Why do so many in this thread, like you, straight up lie.
So in other words lets raise the price for no reason during the middle of a potential recession as opposed to raising it now?
When should they do it then?
they probably are going to push people towards GamePass Ultimate. I think it's likely that individual gamepass subs will increase first and more and they may just tick up GPU slowly. At least that's how I'd play it, but I'm sure they got smarter people than us trying to figure out the best way to do this.
