Microsoft CEO Satya Nadella had a talk with Xbox gaming leader Phil Spencer about why Microsoft is so ambitious to give it all in the gaming industry.
Nadella made the following statements:
“Games have been one of Microsoft’s core values since Microsoft was founded. Our oldest currently supported software is actually our Microsoft Flight Simulator, which we released three years before even the first version of Windows. The game is basically in a structure that fits our mission as a company. I can say that Xbox’s mission to bring the joy of gaming. Also, building communities in the world is Microsoft’s mission to empower every person and every organization to achieve more in the industry.”
These statements well cemented the CEO’s confidence in games, which are a very small part of Microsoft’s overall business and value as a company.
“As a company, Microsoft is doing everything it can when it comes to gaming. We believe we can play a leading role in democratizing gaming and defining the future of interactive entertainment at scale.” continued Nadella.
Nadella said there are three areas where Microsoft has a competitive advantage. He said the first is cloud computing, the second is the resources Microsoft needs to build subscription value with Xbox Game Pass, and the third is to focus on empowering developers.
Xbox Game Pass’s global impact on gaming
Spencer turned to Microsoft’s Xbox Game Pass subscription service, which provides access to a wide variety of games and can be purchased for $10 or $15 a month. He stated that Microsoft initially approached the job with trepidation because it wasn’t sure how fans and developers would react. But Spencer said Xbox, like the rest of Microsoft, has successfully moved from sales of bundled physical software to online services and subscriptions.
Microsoft is making pretty big sales in its subscription service for games that it believes are changing the habits of players. Earlier this year, the company said Game Pass subscriptions crossed 18 million. Microsoft says Xbox Game Pass members play 30% more genres and 40% more games. More than 90% of members said they played a game they wouldn’t try without Game Pass. Spencer said that as a result of the games entering Xbox Game Pass, they have seen an increase in retail sales, and publisher partners have benefited from being on the service.
“With Game Pass, we’re really starting to re-experience how games are distributed, played, and shared. Content is the driving force behind Game Pass’s growth, so I’m thrilled to have purchased ZeniMax, which brings some of the world’s most iconic, beloved games to life. With the arrival of Game Pass in the browser, the value of the subscription will move from console to PC and mobile, and experiencing this progression is truly amazing. And I look forward to how we continue to invest in Game Pass to add more content and expand the service to more geographies as we progress.”
On average across the Game Pass library, partners see engagement increased by more than eight times when they sign into Game Pass. It’s also true that members spend 50% more than non-members, whether it’s buying games inside or outside the library, or purchasing additional content for games they like.
“In the early years of the gaming industry, the only way to play the game was to buy the game directly. For many players, this can be a situation that limits their ability to play. This cost limited the target audience for the retail model, creators, and the entire industry. That’s why we created Game Pass to open up ways for gamers to play more games with friends, ultimately bring more players, and make games more accessible to everyone.”
The company claims that Xbox Game Pass has increased game sales. Microsoft announced today that since its partnership with EA Play to launch the Game Pass Ultimate subscription, EA Play has seen record usage across Microsoft platforms compared to pre-integration, increasing game hours by more than 200%. Nadella had the following to say on the subject:
“When you look back on the next decade and the evolution of technology, I think one of the most defining trends will be how to balance consumption and creation and the changes it brings. Already more and more people are creating something new and magical every day. You see this on all kinds of platforms. There are growing communities that want to discover something new and improve the work of others. I believe we will need this cycle of content consumption, driven by communities, for everything we build. And there’s no better example of that than playing a game.”
Xbox Game Pass will also be available on other platforms
In addition to new subscription offers for Xbox Game Pass worldwide, Xbox is also working with global TV manufacturers to embed the Xbox experience directly onto internet-connected televisions with no extra hardware required.
Xbox is working with telecommunications providers on new purchasing models, such as Xbox All Access, which allows consumers to purchase both the console and Game Pass for one low monthly price. The company also makes its own streaming devices for cloud gaming to reach gamers on any TV or monitor without the need for any console. Cloud gaming via Xbox Game Pass Ultimate will launch later this year in Australia, Brazil, Mexico, and Japan.
Later this year, Microsoft will add cloud gaming directly to the Xbox app on PC and integrate it into its console to power features like “try before you download”.