Microsoft has been giving increased importance to its gaming division lately, with Phil Spencer working hard to make the next iteration of the Xbox platform more successful. However, it seems like no matter how successful it is, it’ll only form a very small fraction of Microsoft’s quarterly $30.57 billion revenue. Compared to the previous year, this was up by 14% spurred by a spike of 73% in the Azure revenues, Cloud-based service, the MS Office 365 and lastly the Surface Books.
Out of all these channels, Microsoft’s gaming revenue exceeded only the Surface Books’ while the rest of the enterprise products were responsible for the bulk of the $30Bn revenue. This isn’t to say that the Xbox platform has been declining. In fact, the revenue in that segment was up by 5%, driven by growth in Xbox software and services revenue. However, it seems like MS has been turning its gaming console into a subscription service, with the Xbox Game Pass and the unification of the MS Store on PC with its Xbox counterpart. If you buy a game from the Microsoft Gaming Store on Windows 10, you get to play it on both PC as well as the Xbox One (if you own one that is).
Subscription-based streaming services like Netflix and Amazon Video are on the rise these days, with Google bringing it to the gaming space as well with its Stadia service. Microsoft is looking to fully milk this opportunity with the release of the disk-less Xbox One S, as well as the possibility of the Scarlett devices incorporating the feature.
The company already has the Project xCloud to support all this. Not everyone owns a console, and with 5G the internet is getting faster than ever. This is a unique chance for MS to cash in on this, and there’s absolutely no shortage of resources or infrastructure. This can allow streaming of games not only on the Xbox but PC as well as handheld devices that nowadays have become inseparable parts of our lifestyle.
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I’m not saying that Microsoft is letting Sony get away with the traditional gaming market without a fight, and Spencer’s efforts to come up with multiple Xbox devices in the next-gen console space, coupled with the recent acquisition of well-known Studios like Obsidian and Ninja Theory is all the evidence you need to confirm that.
Furthermore, Microsoft’s Xbox One X console is the most powerful console ever, and I expect them to hold onto that title this generation as well. By setting a foothold in the still-immature game streaming space, as well as providing different platforms for gaming (1080p/1440p for the Xbox Lockhart and 4K for Anaconda) Microsoft is first looking to cut off Sony where it hasn’t established itself. Getting first party exclusives will most likely be the second stage of their strategy. E3 is just a month or so away now, and there’s a very good chance that the next-gen Xbox consoles will be announced during the company’s press conference. Sony’s absence provides them with even more motive to draw the crowd’s attention.