Phil Spencer: The Console Market Has Stagnated, Might Open Xbox Consoles Up to Other Stores - News
by William D'Angelo , posted on 01 April 2024 / 6,546 Views
Microsoft Gaming CEO Phil Spencer in an interview with Polygon at GDC discussed the lack of growth in the console market and how the slow down in Moore's Law means subsidizing hardware has become more challenging.
"Moore’s Law has slowed down," said Spencer. "The price of the components of a console aren’t coming down as fast as they have in previous generations.
He added, "[Subsidizing hardware] becomes more challenging in today’s world. And I will say, and this may seem too altruistic, I don’t know that it’s growing the industry. So I think, what are the barriers? What are the things that create friction in today’s world for creators and players? And how can we be part of opening up that model?"
Spencer has expressed frustration in how closed the ecosystems are on consoles and was asked if other stores like Itch.io and Epic Games Store could exist on Xbox in the future.
"Yes," responded Spencer. "[Consider] our history as the Windows company. Nobody would blink twice if I said, 'Hey, when you're using a PC, you get to decide the type of experience you have [by picking where to buy games].' There’s real value in that."
He added, "If I want to play on a gaming PC, then I feel like I’m more a continuous part of a gaming ecosystem as a whole. As opposed to [on console], my gaming is kind of sharded — to use a gaming term — based on these different closed ecosystems that I have to play across."
Microsoft in recent years has released all Xbox games day and date on not just Xbox consoles, but also on PC. The company has even released four older Xbox console exclusives on rival platforms like the PlayStation and Nintendo Switch.
The combined consoles sales of PlayStation and Xbox have remained relatively stagnant for well over 20 years as each generation for the two have sold between 170 million and 185 million units lifetime.
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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Phil does the talking for xbox while games do the talking for the other two.
Didnt MS release more games than Sony last year?
They were terrible games though. What good is a released game if it's bad and doesn't help sell the brand to the public?
Which ones did you play to make those claims?
As usual MS and Phil trying to grab onto Sony and Nintendo and pull them down the toilet with them!!! Just because MS/Xbox/Phil is not doing well doesn’t mean the console industry is in trouble!!!!
Tell that to shareholders who want more customers, not just the same customers buying every gen.
Phil-we failed miserably so we have no choice!!!
Maybe part of the reason it has "stagnated" is because every generation is a refinement of the previous generation rather than a shake up?
Many people who are financially limited may not see a reason to upgrade from an 8th gen console to a 9th gen because they still get all the games.
Only Nintendo has really tried to think outside of the box over each successive generation.
The Kinect did boost Xbox 360 sales for a couple of holidays and that was different from the core gaming market. The Switch combining the console and handheld market for Nintendo into 1 platform is different. When Nintendo tried to compete more with PlayStation and Xbox with the GameCube they struggled and went a completely different way with the Wii.
I would like to see an Xbox handheld that is similar to a Steam Deck that runs a stripped down version of Windows and has access to the Xbox app on PC, Steam, Epic Games Store, etc and has a list of verified games that can run on it. Though that would mean not selling it at a loss. Or at least at a much smaller loss than with traditional consoles.
While I think what you say would be a great product I think a little understanding of why the steam deck exist is needed.
Everything Valve does has the purpose of people using steam. Getting DOTA 2 was a fantastic way of making people in Asia use steam, CS to get people from Russia and so on their other games. When Steam was big enough they stopped making new games because it was unnecessary until ... they had their own VR hardware, then a new Half Life was necessary to make people not only buy the hardware but also use steam for vr games. And finally after the Swith success it is obvious people love handhelds so Valve released the Steam Deck to offer once again a new way for people to use Steam. You can see a similar strategy from Epic with Fortnite, the racer game, the lego game, the music game all are designed for people to keep playing fortnite because fortnite is now a platform.
MS releasing what you say would be a great deal but they wouldn't make from it the same money Valve or Nintendo are doing from their hardware because MS wouldn't get any money from Valve, Epic, etc.
Whats the point of this? Why you need pc games on Xbox? Its console not pc. Also xbox app is windows store.
I think that's partially true, but I would go a bit further. Yes, each gen is a refinement, but those refinements have gotten smaller and smaller. Now, it's to the point where picking up a game like say, GTA 5, which is almost eleven years old, feels no different than picking up game that just came out. Tech has stalled, graphics have stalled, all of it has stalled. So the motivation for the average consumer to upgrade, or keep spending, just isn't there anymore. Back in the PS1 days, you literally could not sleep as that PS2 launch drew near. It was all you could think about, because you knew you were about to leap into an exciting new world of dreams never before achievable. That's no so anymore. You can keep playing your old games for over a decade and not feel like you're missing out, and that's the biggest issue facing the console world, imo.
I agree there is diminishing returns at this point with the amount of improvements. The biggest difference this gen is the loading times due to using SSDs. Plus, the consoles are more expensive than last gen. The PS5 and Series X are $500 still, while at this point last gen was down to $300 or less.
This would make sense if you wanted to live off of hardware... and grow your hardware sales from better supported hardware, from haveing more store fronts on it. However, as a HUGE publisher, with as many big studios as MS has..... why go this route? isn't that just going to cut into profits from said studios?
This would only apply to Epic, GOG and Steam right? I can't see either Nintendo or Sony releasing their games on an Xbox platform( for now).
How to kill xbox in 15secs - by Phil Spencer.
Reasons
- For anyone on the fence trying to decide on what to buy, there is very little incentive now to buy an xbox. Knowing Microsoft is turning their dedicated games console into a xbox pc defeats the purpose of a games console. It will be an under powered pc and an unoptimised games machine.
- Opening up the console to other providers who already have purchasing on their own platforms will crush any income from game purchases for xbox. People will simply buy them on steam/epic knowing they can play them on the xbox pc and buy them for less.
- Game developers will design and optimise games for PS and PC - xbox won't be mentioned.
- Doubts about the direction of the Xbox division will have a massive effect come the end of this generation.
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Gamespass numbers will decline as its growth has stagnated (Phil's words that the market isn't growing) and people move off the Xbox platform and this will impact on the profitability and sustainability of GP.
Playstation needs Xbox, having no competition suits no one. Microsoft need stop thinking they can move the games market and mould it to their liking. They need to invest and produce more games.....and have a leader with ambition/drive.
When your 2 competitors are having record console sales for each generation. And your console is selling less and less each generation.
It is the market going stagnant. Right.
Record Sales? What PS outsold the PS2?
How stiff can you be?
"PS5 Sales Touch 55 Million As Sony Breaks Revenue Records" 14/feb/2024
When you are talking about console sales, you are talking about money. Console makers make a ton lot more money compared to the PS2 days. Microtransactions, mothly subcription fees, digital stores that put Gamestop out of business. I sure don't remember owning a $200 Edge controller back in the PS2 days. Playstation is now the single most money making product for Sony, nothing like that back in the PS2 days.
The number of console buyers may be the same, or not growing explosively (to be determined, I am too lazy to check each generation since the Switch muddles the numbers by releasing mid-gen in 2017). But the amount of money gamers spend into the console gaming market sure as hell has grown much bigger vs 10 or 20 years ago.
An even more defeating point? Nintendo only makes consoles, but its stock price is 8X when compared to let's say 2012. It means Nintendo as a company has grown in value 8 TIMES. Console market is stagnant? RIGHT.
At the end of this Gen, the PS5 will sell similar to the PS4.
Revenue is higher because PS2 era had no digital marketplace and Subscriptions and MTs.
Isn't the switch in its way to be the second most sold console of all time? The ps4 a 10 year console that still is getting games is top 5. The ps5 according to internet users doesn't have games so it sells just for existing at a faster phase than the ps4. I don't know about that one Phil ... the world favorite liar strikes again lol.
I don't think you fully understood what he means by that. Individual consoles may do very well, such as the Switch and PS5, but they're competing between the same users every generation. From the 6th generation onwards, the overall console userbase has barely grown when compared to the previous generation.
Which is why ballooning budgets has become increasingly a problem when you're selling games to the exact same crowd that was there 20 years ago, but this time, the cost to make the game has increased by tens to hundreds of millions while the cost of buying the game has barely gone up. Even Sony has said that the PS5 peaked in sales this past holiday and they don't anticipate it going higher. I mean, we're talking about the Switch hopefully outselling a console that is nearly 25 years old in the PS2. That's really not where we would've hoped console gaming would be by now. We should've had a console that has sold 200 million units by now. So the overall console space has stagnated and won't be going much higher than what it already is. Having console prices go up rather than down worldwide certainly isn't helping either.
And how does anything you said, go back to what phil just said, about allowing other store fronts on their console, and makeing a pc xbox instead? Is it supposed to be understood, that its impossible to grow console owners gen on gen, past a certain amount (say 200m total), and thus, its better to just not try with consoles? and instead make pcs?
It doesn't. I was just replying to Amarillo.
But yes, it has been understood that it's historically been near impossible to grow console owners gen on gen. It literally happened to Nintendo every generation from the NES to the GameCube before the Wii came along, but then they had the Wii U. Who knows what kinds of sales we'll see with the Switch successor. Worldwide the PS5 is tracking behind the PS4 now and the PS5 peaked in sales this past holiday season according to Sony. This is why budgeting is also such a major issue. Nintendo handles it best where it doesn't cost hundreds of millions to make every single one of their games. But, also being 100% dependent on console sales leads to times like the Wii U. Not even Nintendo's first party releases could save the console and many believed Nintendo would go third-party.
Now we're at the point where even PS5 still doing beyond great in unit sales and Sony seeing record revenue, but they spend so much that their profit margins are slimming and Sony is adjusting to releasing games on PC, GAAS, etc to bring those margins back up.
It would be great if we got to the point where every console was selling at least 100 million consoles each as that would definitely show overall console growth, but it's just not the case.
But i's not so much not trying with consoles but expanding beyond just consoles as your primary source. And each company has shown they have their own ways in doing that. If Xbox feels including the PC community into that ecosystem (remains to be seen how exactly that's implemented) that potentially can be huge. They already release all their games on PC at launch and they have the Xbox App in every copy of Windows 10/11, so it can be interesting to see what happens when they unify them along with EGS and Steam.
He doesn't seem to understand that his job is to sell Xbox consoles...why would other storefronts want to be on a platform that isn't selling hardware. Sure, get on Switch and PlayStation, because there are large player bases on those platforms...Xbox doesn't have that. So why support a platform where you're gonna give up another 30% of revenue to Microsoft?
It only seems to have stagnated because Nintendo and PlayStation are kings while Xbox can't catch up and there's virtually no other competitors that even are a blip on the radar.
I don't see what adding more storefronts would solve. The game would still need to be ported to Xbox so what difference would downloading from somewhere else make?
I think the idea is that software is going to be increasingly portable and delivered by competing apps/store fronts and streaming services.
So if you are Epic or Steam or Humble Bundle you are going to want to be on Xbox because you are opening up a new revenue source. And for publishers & developers they may find as these other storefronts compete, they can get deals more alluring to them, with some stores potentially leveraging the number of devices they are on. Very likely - at least compared to Nintendo & Playstation - finding the store fronts' cut is lower due to the competition.
And for the consumer.. say you game on PC and have mostly invested in games on the Epic store, and now you're thinking of getting a new device for your young son.. perhaps you go Xbox because the Epic store front is there, and they have decided to allow games purchased on PC, to be freely playable on Xbox as well. So you buy an Xbox, put it in your son's room, subscribe to Gamepass, but have added incentive to stick with the Epic cross-platform storefront for future releases.
You go on vacation and you just take your Xbox controller with you. At your destination you load the Epic storefront on your hotel's LG TV, login, and you can game with your existing library. And of course switching apps to Xbox, you can game on Gamepass and from your Xbox library too.
Now suddenly things have switched around.. buy a Nintendo and you can play on that device only, similar with Playstation, but on your tv, and on your xbox, and on your PC you can play literally everything else. Which then begs the question of Nintendo and Playstation - do they really want to avoid putting their games everywhere in the same manner?
..and as soon as Microsoft has broken them away from their own hardware and walled gardens, suddenly it holds the strongest hand of all. Not that such a thing means Nintendo & Sony wouldn't succeed in the new environment.. but it could easily mean that Microsoft no longer loses.
In a Sony hardware dominated environment, without successful competitors, they are stuck paying 30% of every sale and subscriber to Sony, in an environment where people game any where and on any thing that evaporates. Because Sony has either opened up to the other storefronts or the consumer has gone elsewhere.
the walled garden helps MS sell more games, first party ones, and gives them a cut of 3rd party ones. If they open up to other store fronts, that goes away or down. Why is that a good thing for them? maybe it benefits consumers, that dont have trust in Xbox staying around, they can use the xbox, but buy their games on other stores instead. This is not a good thing though, MS just bought a ton of studios and became a major publisher..... this is shooting that in the foot (ei. not in their own self intrests, when it comes to game sales).
Speak about your own console and dont speak about other brands. Or bettter shut the fuck already
Nintendo laughs
All this talk and zero admitting that Xbox has been a massive failure under Phil Spencer. It's embarrassing.
With Sony and Nintendo still having plenty of exclusives.....and Xbox putting their games everywhere else, what on earth is there any reason for anyone needing any Xbox hardware.
Xbox telling the whole world that don't not by any hardware from us, because you'll get all/most of Nintendo games and our games on Nintendo's console, and you'll get all/most of our game on the PS console too.
Phil Spencer massive failure and he got a promotion. This company is destined to fail if they keep rewarding people like Spencer and Booty.
Yes, the richest company in the world is destined to fail with a 3.1 trillion market cap, worth 500 billion more than the closest competitor and worth 30 times the value of Sony.
Microsoft as a whole is successful. Xbox is not a success. Just like Zune and Windows Phone.
This is hyperbole. Xbox isn't in the same situation of other failed products. Xbox is one of their highest revenue maker.
He just answered your question. If they open up the Xbox to other game stores, then at $500 you have a decent PC-type hardware with controller to play all your Steam, Xbox, Epic, etc. game in one reasonably-priced place. It is an excellent proposition, and much better than Nintendo or Sony, and I'm a Nintendo fan saying this.
Honestly I always wondered why xbox consoles didnt dual boot, and had windows too, granted a "closed" windows, where only say windows store front was allowed to install apps ect. It could come with certain things like office/word ect and thus target differnt demographics potentially. As a add value. However.... end of the day, thats basically just a pc then. Maybe just make a really good xbox app, thats like the console UI ect, when you run it on a pc, and then drop hardware? let others sell PCs, and you focus on selling your games, from your app. (ei. try to take on steam)
The issue with this now is .... Xbox is a big publisher.... if they limit themselves to their own storefront, they wont make much from being a big publisher. If they dont, what is the point of haveing said app/own storefront? esp considering how much bigger steam/epic ect are.
Basically xbox has to decide if it wants to be a big publisher, or a console maker.
JRPGfan, I can answer that easily. The experiences you get on console, you would most likely pay 1500-2000$ to run on a PC. Imagine your budget is 1000$. Already, a gaming PC is out of your range. But with a 500$ console, you could get a decent laptop to do some office work at 500$ and you're golden, or your already have an office computer and just want to pay a limited premium to play modern games. Then for 500-1000$, you have two devices: one for office work and one to play games, plugged to the TV.
The one plugged to the TV could play all the great games, esp. if Xbox is open to the other stores.
Xbox as a console operating in the same vain as Windows is an interesting proposition.
I don't really see anything interesting about it. Now you're just a PC and that comes with PC issues. Something tells me gamers who buy consoles for ease of use wont be happy with that. Then you have PC gamers who wont waste their time. So they are appealing to even less people.
Not really since developers will still have to follow the traditional console hardware specs when making a game. There are plenty of gamers who would love having this option, including myself.
How will this be possible? So you're saying they are going to allow the steam store and then retroactively force all games on the steam store to adhere to their traditional console hardware specs? If they allow the steam store they will have to basically become a PC at that point. How else would all the games on the Steam store work otherwise?
Then what is the point of having the Steam store? Why not just continue to make games for the Xbox at that point? I thought the whole point was to bring over the whole steam store and bring your library with you. As well has having Sony's game on the system. Seems like now you're just opening up your console to other stores for no reason other than to allow them to collect the 30% on sales that MS should be taking.
Let's be real. Almost all of the negative comments about this are due to being mad that Xbox doesn't just lie down and die like they want. Instead, Xbox is making a pivot with making Xbox more of a PC with numerous options and it's upsetting for them. You don't see anyone upset about Steamdeck or Asus Rog Ally offering this, but as soon MS wants to do something similar with Xbox, we get outrage. Mind boggling.
I wrote an thread about this. Console market is stagnated and to only way to succeed is to cannibalise off eachother. Making Xbox hardware an open platform is not a bad idea. The hardware is amazing, good way to utilise it.
Maybe if Microsoft use his financial power to promote his products.
Not getting 3rd party exclusive, juste promote Xbox, it would be a beginning (the same could be said for Surface and Windows Phone (RIP)).
It's sometimes exhausting to be an Xbox fan...
marketing isnt going to turn things around (atm). They need to focus more on quality services in RoW (not just america only mindset), and they then need to bring the games, and keep bringing them, and build up consumer trust and brand strength (at that point, when they have a reason too, then marketing comes in). This would be a years long battle, to once more grow xbox.
I think Phil is right in identifying the problem. As far as the solution goes, I don't see opening up the current ecosystems as meaningfully moving the needle on its own. If you could survey those 7.9 billion-ish non-console gamers, I doubt "closed ecosystems" would rank anywhere near the top ten for what's keeping them away. There's a lot more the console industry could be doing to broaden its appeal, accessibility, and reach to new players.
My Question is where is Rare Replay on Steam?
Maybe this is just a last resort strategy to make money off of their consoles. It could make them more than keeping Xbox a closed platform, because it doesn't benefit them anymore anyway
This Sixth Sense BS has to stop. First it was their games in their direct competition and now it's the competition in their hardware.
Xbox is so dead it's funny it doesn't notice.
MS knows it and all the Xbox execs know it but all it's fans refuse to accept it
Hate to say it but traditional consoles are a thing of the past. I dont know anyone (except for old people) who sit around Infront of a TV anymore. For the most part, Xbox and PlayStation are limited to the TV screen.
One of the reasons why Steam, and Switch really took off/have been taking off over the past few years is because it's not limited or confined to a TV and can be played pretty much anywhere.
And internet access is everywhere. All the subways here in GZ and HK have free internet that you can access your profile whenever you need too.
"one of the reasons steam really took off over the past few years is because it's not limited or confined to a tv" BS. a TV or a PC monitor, same differnce. Do you mean steamdeck? how large is the group that actively plays stuff on steamdeck? something tells me that like 95% of steam users are typically "sit infront of a tv" type people. So I'm calling BS.
