As Microsoft prepares to introduce its next-generation Xbox Series X, the company is ready for its most ambitious gambling tendencies. But it's not just about the console.
As well as introducing a new piece of hardware capabilities, the company is discovering a host of new features that are proving to be a major turning point in the way it is purchased, distributed, and played. These are subscription-based services such as Xbox Game Pass and in-house xCloud Development.
All this too much, many seem contradictory. Microsoft, on the other hand, wants to continue selling better consumer electronic devices, backed by $ 60 worth of software purchases. On the other hand, it is also interested in running a Netflix stack feed service, a cloud-based streaming service that does not require Xbox ownership.
Through Xbox All Access, Microsoft is even experimenting with a mobile-style subscription service that includes a console and a built-in upgrade mechanism.
As part of the hardware, the Xbox Series X is an important technological step up from the Xbox One, but the central point of its launch has less to do with sharp-looking games and faster loading times. This generation will be changed in terms of How people are playing, rather than playing.
In a discussion with leading analysts, we've tried to integrate Microsoft's current thinking about gaming over the next decade, and how the company is approaching the Xbox Series X – not just as a new console, but as part of a broader effort to expand the company's appeal in sports.
Entering the executive discussions, and the opinions of these time-consuming analysts and decision makers of Microsoft, it is clear that the company sees this generation as a betting chain designed to secure its position in the traditional hierarchy, while protecting itself from new attacks that could use the cloud as a partitioning platform – companies like Amazon and Google.
Microsoft recognizes its potential in the form of brand artists, as well as in its ability to produce display video games. But I also know that with the new generation of players growing up, a team that needs motivation, ease of use, and communication is more important than reliability and strength.
Put another way, Microsoft's Xbox Series X is rolling out its bet on the future of the game.
The Spencer doctrine
In a recent interview, Xbox CEO Phil Spencer gave a few clues to the company's current thinking. Speaking on Academy of Internet Arts and Science podcast to Ted Price of Insomniac's head, Spencer has made three arguments that clearly reflect Microsoft's current thinking. His three points are noteworthy, because although they differ from ideas about the future, they are inherently contradictory.
Polygon asked to discuss the deal with Spencer, or with the Xbox chief executive, but was denied.
Moving away from the device's centric plan.
Spencer said Microsoft wants to "release content from a single device," and use the world's most popular games to prove its point. “If you ask, what kind of device Fortnite played on? & # 39; s sort of answer … & # 39; Yes. & # 39; ours Minecraft played everywhere. ”He also adds that gaming on all devices is" the most time-consuming thing within Microsoft, "making direct reference to touch controls for games originally intended for viewers. He added: “How can people play (Xbox games) if they don't have an Xbox or PC? We have a great place to go in that space, and that's where we focus. ”
Continued commitment to the comfort boxes.
Despite this acceptance of the future of multidevice, which is thought to be cloud-based distribution, Microsoft is still in the hardware business. "I think I will have to be connected to the game console on my television for the next 10 years," he said. “It will be a great way for me to play on my television, download and play on the traditional phone. But sometimes I'm not in front of my television … and that's our bet. "
A straightforward subscription belief, with specific subcategories.
“The Game Pass as the business operates today and will definitely work as it continues to grow,” Spencer said. He pointed out that the subscriptions encourage experimentation: "The rising cost of clicking on the next game is zero." But he does not believe that the future of the games is entirely based on subscribers. "Our view is that there is no single business model to govern them all," it said, adding that the sports industry should "embrace monetization."
Critics and the big picture
Analysts are important investors, so they are often compensated by high levels of access to companies. Organizations that use analysts as litmus tests for new ideas and risky strategies. Analysts take junk food with CEOs when off-the-record discussions are used to convince investors, without the constraints of official statements. Journalists rarely get this kind of access.
"Like all console companies, Microsoft understands that there is a fence in the audience for buying something more expensive to play games," said Piers Harding-Rolls, research director at Ampere Analysis. "So they changed their strategy from one of trying to sell a lot of boxes, to a process where they release Xbox key products to sell content and services more. People want to use games, but not through consoles."
Michael Pachter, a leading game analyst at Webbush Securities, has a much more pronounced forecast. "I think Microsoft and Sony realize their days as juggernauts are numbered."
"Combined, console manufacturers sell around $ 250 million for generation after generation," said Pachter "That probably goes to about 150 million people, since most people buy more than one device. Throw 100 million gaming PCs , and that's a market. "
Pachter sees a lot of growth in subscriptions and cloud streaming. But these opportunities also attract major new rivals, such as Google and Amazon.
"The target market in the broadcasting industry is anyone with an internet connection, that is, 2.5 billion people," Pachter said. "That includes your mom who doesn't play sports, but it also includes high school boys, who want to play Madden again and again, but not so much that they buy a console. But if they have to do just sign up for a cloud subscription, then boom."
He says that Microsoft is "generally in good standing" because it provides cloud technology, while also maintaining brand equity and gaming content. “Google is already here, or it is doing poorly (with Stadia),” Pachter said. “Amazon is coming. But Microsoft has a direct relationship with the gamer. It has games like Halo. It is also one of the largest cloud companies in the world. ”
"Microsoft is establishing itself as one of the leading players in the world of multi-device devices," said Global Data technology analyst Ed Thomas. "The Xbox Game Pass and xCloud are signs that they understand that we are going to a world where you don't have to have one gaming machine."
When Thomas talks about "specific" games, they refer to first-team festival types such as Halo, Gears, and Forza. In the past, these have been seen as "killer apps" that have locked consumers in the hope of comforting something, without all the other options. This is the most commonly used example of "ringtones," where gaming companies made their money from only high margin games that were released below the bottom line.
Even Nintendo allows some of its games to appear on non-Nintendo devices, such as mobile phones. But Microsoft seems to have all the power in pursuit of a new console design strategy, while opening a market where its most popular games are available on non-Microsoft platforms.
This raises a tricky question. If the cloud is the future, and the razor blade model disappears, what's the point of the box?
Magic Thinking for Microsoft
Microsoft's success has not always been in line with its goals. The original Xbox was introduced in 2001 as the last home PC to rival the growing power of Sony, and in particular the introduction of the PlayStation 2. Although the Xbox was a worthy success, the PS2, however, was a huge battle, albeit not costly. home PCs, which have always been a part of our lives to this day.
Back in 2005, when Microsoft apparently believed that it would create and central entertainment center, company praise the Xbox 360 as a gateway & # 39; billion people & # 39; with media resources and non-gaming games Although the Xbox 360 builds on the previous key gains, especially in the introduction of online console games, the desire for "billion" gaming has been quietly reduced.
The Xbox One is probably Microsoft's best example of magical thinking. Putting the Kinect sensor at the center of the launch should entail a generation of consumers, when we will all get our hands on changing the TV channel to The Bachelorette, when the Dragons were killed and bought pizzas online. It has taken Spencer’s rise to the ranks of companies to pull the company back into the strategic direction.
"When they launch efforts, tech companies always like to have a bigger idea than just selling them," Harding-Roll said. "They want a certain definition of value, in what they do in the market, in the form of long-term opportunities."
With the Xbox Series X, Microsoft has a messaging problem. If a company believes in a quasi-platform-agnostic future, where the cloud stays alongside subscription services (and other business models), its vendors will no longer be able to box itself in the full size of technological innovation.
If Spencer's words are to be taken literally, we can play some kind of new, Xbox-style games directly on our TV screens (without a console), or on tablets and mobile phones. A company can launch a front-end tool specifically designed to work with the cloud. It will be named "Xbox" in the same way that PC owners can install the Xbox app and register for the Xbox Game Pass.
So the position of the box extends far from the center of the image towards the edges. It becomes a premium suggestion, not a context.
"They both play," said Thomas. "They are dependent on the customer base to be divided into people who are willing to participate or are occasional participants."
Entrants will always be happy to pay a few hundred bucks for an excellent experience, even if they have lost out on the lack of access. And the new Xbox Series X is impressive enough to keep the cloud gaming experience in its rear view mirror.
Pachter believes that Microsoft will boost its hardware sales by offering the Xbox Series X, alongside the Xbox Game Pass, as a monthly rental package.
“Millions of iPhone users have a plan. They get Hardware and Services for a monthly fee, and if there is a new phone, they know they will get it, ”he explained. “That's what Microsoft is doing now with the Xbox One (with Xbox All Access). I'm sure they'll do that with Series X to try to get people to collect subscriptions. ”
A Microsoft representative told Polygon that Xbox All Access says it "continues to use fans' feedback to execute and expand the program in the future," and that subscribers who have paid at least 18 months may be eligible for updates on the Xbox Series X.
In fact, the cloud can serve as a marketing platform for inspiring consoles. "Even if you don't need to buy an expensive console to play games, and sign up for a cloud subscription, you can enjoy the experience and look for other benefits of owning an Xbox," Thomas said.
Enter the cloud
Microsoft's publicly-tested project for Project xCloud is underway. A company spokesman said it was "expanding," but would not provide further details. To income in January, Micros oft chief executive Satya Nadella said the program had "hundreds of thousands" of participants.
"There's going to be some disruption to the model, with people who need to buy a piece of Hardware to play games," Harding-Roll said. "Over the next few years, more and more people will enjoy the service of cloud games."
"The streaming service means you don't have to spend hundreds of dollars on a new console," Thomas said. "I'm glad that gamer is sometimes interested in sports, but doesn't want to be too committed. They know they can cancel at any time."
But the cloud, as Google's controversial Stadia launch, has come a long way since contracting, whether commercial or technological.
"There's a big sign of cloud games sales," Harding-Roll said. "We have to remember that it is never a guaranteed business. Providing users from the cloud is an expensive proposition, and it is not easily measured. If you own a cloud, like Microsoft, then there are obviously ways you can cut down on those costs: servers, electricity, cooling, etc. But using cloud-based applications -GPUs in the cloud will still be more expensive than just working for a console. "
"Some of those people (Xbox console owners) will move to the broadcast," Pachter said. “And Microsoft wants to keep those customers. But they need to keep strikers who want the best game experience and are happy to pay for it. ”
Microsoft's commitment to the cloud deepens. With it Game Stack program, the company provides development tools and services that help third parties find their products in the cloud, as well as to consumers. Even Tony signed up, with a “memorandum of understanding,” to leverage Microsoft's capabilities and expertise in the cloud.
"XCloud reaches a lot of people and makes them money," Harding-Roll said. “But Microsoft also offers the back end with Game Stack, which does everything. As a developer, you can use these services to create, deliver, and maintain your content as well as acquiring users. This end-to-end capability also offers great potential for Microsoft. ”
Subscriptions nirvana
If the cloud-vs.-console debate offers consistency against this generation, its drumbeat belongs to the question of business models – in particular, the subscription role.
It's been a long time since game purchases have been tightly packed goods for sale for $ 50 or $ 60. MMOs are usually based on subscriptions. Mobile games are made from in-game purchases. Even the most advanced games get their bread from a mix of downloaded content, episodes, loot boxes, and other “extra stuff.”
While services such as PlayStation Plus and Xbox Live Gold have shown a basic consumer need for subscriptions, gambling is notable in the home entertainment world with its lack of comprehensive sales going into the subscription model. Despite various attempts to faint over the years, neither Netflix dominates nor Disney Plus, neither Spotify nor visible.
This is driven in part by the game's breaking game history, and by the form factor. Streaming games are a lot more complicated than streaming songs or videos. However, it is often assumed that buffet business models will have managerial power, which is why console companies spend a lot of money locking gamers in their subscription offers.
The Xbox Game Pass is a great quest effort, offering all first-team games, as well as various third-party titles, previous indie shows, and a strong library of classic games and classics. For Xbox One owners, it costs $ 9.99 per month (or $ 14.99 alongside Xbox Live Gold memberships, which includes free games every month). Microsoft would not say how many people signed up for Game Pass, but the company said its subscription base doubled in its last reported quarter.
During an interview with Spencer and Print, the Xbox host was well-lit in one area of data. "People play lots of games and hours," he said. "So what's this going to go down? It's actually time for TV." In short, services like Game Pass feed on Netflix. This idea is supported by a report from global financial advisers, Deloitte, who found that many thousands pay for sports subscriptions than a paid TV service.
"The sign-up model is one of the most pressing," Harding-Roll said. “It's a very powerful way for them to have first-team games, to get started. Microsoft has the financial capacity to do so. ”
"Microsoft is constantly expanding its subscriptions, which will be a huge benefit for companies that do not have access to Amazon," Pachter said. They continue to increase their numbers. This is how Facebook has prevented Google Plus from kicking their ass. Your mother was already on Facebook. Why would he switch to Google Plus? ”
Trial and error
Spencer likes to say that for most people when playing games, at best, the thought that the time spent playing games will eventually become hard money. You might be right, but the actual magic that goes into this transmission remains a challenge, especially as new business models emerge, driven by technology providers such as the cloud and big driving machines.
Microsoft is developing a lesbian series in the hope that it will allow it to feature various unseen scenes. When the consolation period is over, the company has its own cloud. If the cloud fails to emerge as a winning platform, or it takes longer than expected to be launched, it still has a box (and even Windows). At all times, it holds and collects guaranteed registration fees, which increases its ability to negotiate with third-party game publishers and developer.
In the past, Microsoft introduced hearts as expressive practitioners of its aspirations, with its vision of how sports and entertainment will change. Usually they were wrong with the details, but the company is still able to position itself for a great change ahead.
Spencer has the humility to understand that more questions remain than answers. "I don't want to make it look like I was enlightened and I have seen it all tomorrow," he told Price. "I'm on this road like the rest of us."
Of all the revelations, perhaps, this admission from Spencer: “We'll definitely try things that don't work. I have a long list of those things. ”
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