Microsoft in radical shake-up of its Xbox strategy

Microsoft Gaming chief Phil Spencer. Image: Microsoft

Microsoft will make four exclusive Xbox games available for Nintendo’s Switch and Sony’s PlayStation, sharing homegrown titles with rivals in the first significant way as the company looks to boost revenue in a stagnant gaming market.

Having more outlets to increase games sales will give Microsoft the resources to move forward with some “early plans” for future consoles, as well as new devices, Gaming CEO Phil Spencer said in an interview.

“We’re going to be able to do more innovative things in hardware, the more the game side of the business is having success,” he said. “I get excited about different form factors that allow people to play in different places.”

Not all four games will be available on both rival consoles, Spencer said. He declined to name the titles.

After a nearly two-year process, Microsoft completed its US$69-billion acquisition of Activision Blizzard in October, giving Xbox a vast array of new content but also an imperative to reap financial returns.

Microsoft now faces choices about when to give Xbox an advantage with exclusive games. Exclusives can drive purchases of Xbox hardware. But sharing titles with Nintendo and Sony means more copies of games will be sold.

Over the past decade, Microsoft has sweetened the appeal of owning an Xbox by making three large game acquisitions and several smaller ones, giving the tech giant access to more exclusive content. But Microsoft also has to tread carefully in making titles exclusive, since that was a major sticking point in the antitrust review of its purchase of Activision Blizzard. As a concession, Microsoft agreed to continue selling Activision’s highly lucrative Call of Duty on rival platforms.

Diablo IV

When Microsoft buys a company that supplies games for Sony, for example, and then makes those games exclusively for Xbox, it’s losing a revenue stream. The company has kept Minecraft, the first big acquisition under Spencer, on rival platforms and delivered on games promised exclusively to Sony after acquiring ZeniMax and its storied Bethesda Softworks in 2020. And in documents filed with Brazilian regulators in 2022, the company said it simply wouldn’t be profitable for Microsoft to keep Call of Duty games off PlayStation.

Microsoft said on Thursday that the first Activision Blizzard game coming to its Game Pass subscription service will be Diablo IV on 28 March. Game Pass will remain Xbox and PC-only.

“If you’re a PlayStation customer, you should not think that there’s some plan that this is the beginning of all of the games coming to PlayStation or Nintendo,” Spencer said. “We don’t have that plan today.”

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For now, there is no intention to make the role-playing game Starfield and a new Indiana Jones game, from Microsoft’s Bethesda studio, available on other consoles, Spencer said, despite speculation to the contrary.

“We want to learn, to see what’s going to happen,” Spencer said. “I don’t know if these games are going to be considered Xbox games when they hit those other platforms, and maybe they don’t find an audience for some reason.”

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By not identifying the four games that will be available on Switch and PlayStation, Microsoft risks continuing to anger Xbox players, who have taken to social media to protest the move. Without exclusive games, they say, it makes no sense to buy an Xbox. Game developers, they worry, will come to the same conclusion and make their titles for PlayStation or Nintendo, which have more market share, further eroding the value of owning an Xbox and ultimately killing the possibility of any future Xbox hardware.

But Spencer has said in the past that the idea of games made exclusively for one device “is something we’re just going to see less and less of”.  — (c) 2024 Bloomberg LP

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Source: techcentral.co.za