Company / division: Xbox
Microsoft Promotes Xbox Head to Senior Leadership Team (Sep 19, 2017)
Satya Nadella has appointed Phil Spencer, who runs the Xbox team at Microsoft, to the company’s Senior Leadership Team, which now comprises 16 individuals. I just spent some time breaking down that SLT and there are 10 individuals in functional roles, from the CEO to the CMO and heads of HR, Legal, Finance, etc.; plus six individuals who run product or customer segment organizations, now including Spencer. Looked at that way, Spencer has been an odd omission from this team, given that gaming has generated 9-12% of Microsoft’s revenue annually for the past ten years, certainly up there with other groups like Windows and Devices (15% this past year), and LinkedIn (3%). But the Xbox has always been a bit of an oddity at Microsoft, a company which has always been much more geared towards business than consumer markets – indeed, Spencer is the first explicitly consumer-focused executive on the current SLT. More broadly, gaming is one of the bigger individual chunks of revenue, and as Mary Jo Foley points out in the piece linked below, even beyond Xbox hardware gaming is an increasingly important part of Microsoft’s strategy to monetize its consumer efforts, many of which today are free to the user. Arguably the next logical person to add to the SLT would be whoever is running Bing today, since advertising contributed 8% of Microsoft’s revenues last year and it’s another important chunk of its consumer business, albeit with a much lower executive profile (despite spending some time searching, I can’t actually figure out who that is, which tells you something).
Microsoft Xbox Game Pass Will Launch in June (May 24, 2017)
Microsoft first announced the Xbox Game Pass subscription service back in February, but as I don’t seem to have covered it then it’s worth briefly talking about now, as the launch date has been announced today. The subscription is a sort of Netflix for Xbox games, featuring 100 games at any given time, though the specific titles will rotate in and out over time much as movies and TV shows do with Netflix’s library. It costs $9.99 per month and users will be able to download the games and play them as long as they remain available and the user remains a subscriber (Sony’s equivalent service merely streams games, so that’s one competitive differentiator). The service is notable mostly for the fact that it’s yet another example of a content category that’s traditionally been transactional moving to a subscription model, a trend captured in the Subscription Everything narrative here on the site. That’s both a better fit for many consumers who would rather pay a smaller amount monthly than big lump sums infrequently, and a more predictable revenue stream for Microsoft, which has already shifted to annuity models for other aspects of its business. From a consumer perspective, the subscription seems like a good deal – just the eight featured titles Microsoft highlights in the service at present are priced at an average of around $20, versus $10 to play all of them and lots more for a whole month. We’re going to continue to see more and more content consumption move to subscriptions, squeezing out those providers which continue to sell using only by-the-drink models, though there will always be those consumers who prefer to purchase at least some content that way.
via The Verge
This is an interesting strategy for Microsoft, which is releasing specs but not many more details for the next generation Xbox, which is codenamed Scorpio. On paper at least, it’ll be more powerful than its major competitor, the Sony Playstation 4 Pro, in several departments, but the consensus among gaming blogs seems to be that what Xbox needs isn’t so much better hardware as better software, or in other words more compelling games. This is where the Sony console has taken the lead in the current generation, and where it continues to do quite a bit better than the Xbox for now. It’s possible that the better hardware might spark better games from developers keen to push the limits, but Microsoft will obviously have to work hard and directly to get more developers and more titles on board. For now, this spec release by itself does little to tell us how the next-generation Xbox will do.