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Maybe cratering is a bit of an exaggeration. They are dipping below Xbox one sales. Basically from Xbox 360 to Xbox Series consoles they are losing more and more console players. That's not a trend you want to see continue. Nadella was emailing Phil back in 2021 asking about the status of their console sales and not wanting to get to far behind. Hardware sales have sunk even lower since then dropping below the Xbox one. Sony on the other hand has surpassed the PS4 now and well we all know how well Nintendo is doing. They've already projected another drop in console sales YOY for next quarter as well.Cratering? They're in a distant third place, but sales are following the same trends proportionally to the other two major consoles.
Monthly Hardware Comparisons - Global - VGChartz
Discover the best-selling games by Monthly Hardware Comparisons - Globalwww.vgchartz.com
Game Pass unofficially hit 30m subscribers by September 2023 according to a leak (Microsoft downplayed this figure without denying it). Since the 25 million figure was announced in January 2022, agreed, growth during that period wasn't great, but COVID made everything weird. Comparatively, despite excellent console sales, Playstation Plus subscribers went down during that same period. The stranger thing is that Phil Spencer implied that Xbox would get out of the gaming business if that figure didn't hit 110m by 2030, when there is no chance in hell of that happening, but that comment was made during the FTC case hearing four months ago, so it's insincere throwaway posturing. I don't think anyone knows what their real target or timetable is.
Obviously Microsoft isn't leaving the gaming business.
Despite the PS5 having nearly double the consumer base, only one full exclusive in 2023 (Marvel's Spider-Man 2, #4) outsold Microsoft's top exclusive in the same year (Starfield, #11). And that's what they sell consoles-- at a tiny profit margin or even at a loss-- to do: to sell games. Meanwhile, with the acquisition of Activision-Blizzard, that means Microsoft effectively published the #2, #6, #7, #11, and #20 bestsellers on the Top 20. Nintendo published #5, #12, and #19. Sony only published the #4 & #15. But Sony probably enjoyed the largest profit margin because they would have sold the most overall games thanks to so many multiplatform bestsellers dominating the chart, and Sony enjoying the largest customer base for those titles. I haven't reviewed end of year financial reports.
Circana: The US gaming market - December and 2023 Results
The US market in 2023 showed a slight increase; big games are getting user attention; subscriptions are about 10% of the content spent.gamedevreports.substack.com
If they take the full measure of getting out of the hardware business, becoming merely a software & subscription vendor, then what incentive does Sony have to pay some stiff revenue-sharing fee to give their users access to Game Pass? They have already transformed Playstation Plus into a competitor. It's inferior, but highly similar. Most of what it lacks is Microsoft published titles, the EA partnership, and the Day 1 release benefit. If Microsoft is willing to sell their top games on the Playstation, then I'd assume Sony would negotiate each of those contracts a la carte, or at least per developer under the Microsoft umbrella. No need to allow Game Pass to elbow into PS+'s subscription revenues.
Because otherwise, what does Microsoft do? Do they threaten to withhold their bestselling franchises in order to force Sony to put Game Pass on the Playstation? Without a console base, what if Sony says no? Sounds like a great way to kill your IP. Sony would hold all the cards. Because I suspect most gamers who play multiplatform megafranchises like Call of Duty are still couch-and-controller console gamers. Does Microsoft really think this would drive those gamers to buy PCs to play one game? I think it would create a better opportunity for Sony to develop a competitor IP to supplant CoD because in that vacuum there would immediately be a very large appetite for it with no competing alternative. And Microsoft already signed the Call of Duty contract to seal the AB acquisition, anyway, so I'm not sure how the terms of that contract would affect such a strategy.
I think Game pass on other systems wont happen at all. Especially with all the data both companies now have on sub services and it hurts software sales. Sony isn't going to want to hurt their own software sales with GP on their system. I also don't see Xbox leaving the hardware business at least not yet. I honestly don't know what MS's strategy is because they have horrible communication and seem to change plans every other minute. There's even rumors that changes are coming to GP.
As far as negotiating with Sony on their games coming to that system. I remember an email or something like that from Phil stating that he doesn't wan to negotiate the IPs one by one anymore and wants to use their massive library to negotiate the whole thing and get them a better deal across the board.
Insane to me that Phil is going to wait until next week to talk about this. The rumor is someone at Xbox got pissed about this move and leaked the whole thing in order to case all this backlash and try to stop it.
