Xbox business is built on one thing above all else, Phil Spencer says

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Xbox business is built on one thing above all else, Phil Spencer says

Xbox, like Microsoft, is a service-first company. Every device serves the platform ecosystem, which isn’t tied to one device. The console hardware serves as a gateway for game sales, Xbox LIVE, and, most importantly, Game Pass, which has revolutionized the Xbox business.

Microsoft has been a long-standing company that values engagement above all else. The billion-dollar digital empire of Xbox is built on sustained engagement across all aspects of the ecosystem. Whether it’s Xbox LIVE multiplayer, Xbox Game Pass, or any other component, each piece is designed to complement/synergize and work in parallel. This is a great strategy. As a result, Xbox has had record revenues for four consecutive years, with $8.1 Billion in FY21 alone.

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In a recent interview with IGN, Phil Spencer from Microsoft reiterated that Xbox is built around one thing: Expansion. Spencer specifically mentioned Game Pass, but the same can be said for Xbox as a whole.

Xbox, like Microsoft, is a service-first company. Every device serves the platform ecosystem, which isn’t tied to one device. The console hardware serves as a gateway for game sales, Xbox LIVE, and, most importantly, Game Pass, which has revolutionized the Xbox business.

Microsoft has been a long-standing company that values engagement above all else. The billion-dollar digital empire of Xbox is built on sustained engagement across all aspects of the ecosystem. Whether it’s Xbox LIVE multiplayer, Xbox Game Pass, or any other component, each piece is designed to complement/synergize and work in parallel. This is a great strategy. As a result, Xbox has had record revenues for four consecutive years, with $8.1 Billion in FY21 alone.

Xbox business is built on one thing above all else. Phil Spencer says 634

In a recent interview with IGN, Phil Spencer from Microsoft reiterated that Xbox is built around one thing: Expansion. Spencer specifically mentioned Game Pass, but the same can be said for Xbox as a whole.

It’s effortless to use Game Pass. We invest in first-party games, and we also invest in third-party deals that bring games into Game Pass. Game Pass is a revenue stream. We have subscribers, and those subscribers pay money every month. This creates a revenue stream for us in Game Pass, and it’s pretty significant at this point.

“In addition to those games selling on our platform, we have them in our stores, whether it’s Windows, console, or now with cloud.

When we look at Game Pass’s economics, it’s more than just how many games this subscriber is playing or if they would purchase some of those games. It is not the compromise between subscriber revenue and purchase. It’s not something we ever really looked at that way.

“What we do is ask ourselves if we are increasing the number of users on our platform, and if so, how often? Then, we can see the business growing from that activity.

“People playing more on the platform is our number one metric to determine if our business growth is real.”

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It doesn’t matter what review score is or whether the consoles are sold at retail. Engagement from users is the best indicator that our platform has a healthy and growing platform. This is why Game Pass continues to grow and is profitable at Xbox.

Microsoft has ambitious expansion plans. Microsoft has big expansion plans. It will soon include an Xbox app built into smart TVs that allows game streaming via Project xCloud. Set-top boxes also offer a low-cost alternative.

Microsoft also wants Game Pass to be available on every gaming system.

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