Satya Nadella Says Microsoft ‘Full In The Game’ As It Teases New Hardware For Subscription Service

Microsoft is doubling down on its Xbox Game Pass video game subscription service with the intention of integrating it directly into internet-connected TVs, requiring only one controller to play Xbox games. The tech giant is also working on a new standalone streaming device that plugs into a TV or monitor and lets people play Xbox games without a console.

The company revealed the news during a pre-recorded presentation titled “What’s Next,” hosted by Xbox director Phil Spencer with appearances by Microsoft CEO Satya Nadella and other senior executives.

Microsoft is trying to make it easier for anyone, anywhere, to play games on Xbox. Between the Game Pass subscription service, the use of mobile devices as ersatz consoles with Project xCloud, the All Access program and the introduction of the Xbox app on other platforms like iOS, the Xbox itself is more and more of a concept than a console.

“As a company, Microsoft is betting on the game,” Nadella said. “We believe we can play a leading role in democratizing gaming and shaping this future of interactive entertainment.

He added, “There are really three key areas where we believe we have an incredible competitive advantage: First, our leadership in cloud computing. Second, the resources we have to build our subscription service, Xbox Game Pass. And third, our overall focus on empowering creators.

If there’s one big takeaway from the What’s Next presentation, it’s some useful behind-the-scenes data on how Xbox’s Netflix-style Game Pass subscription service works for the business. At a glance, it’s a good deal for consumers, but it’s hard to see from the outside how the Game Pass, which features a rotating selection of dozens of games for $ 9 to $ 15 a month, could be profitable.

According to Microsoft, that’s because it increases engagement. “And so over and over again, we see that game engagement increases eightfold when it enters Game Pass, and Game Pass subscribers are actually playing 30% more genres and 40% more games,” said Sarah, head of Game Creator Ecosystem. Bind.

Members of the Game Pass service would spend 50% more on Xbox games than non-members. Electronic Arts, which has partnered with Microsoft by offering its EA Play subscription service as an integrated supplement with Game Pass Ultimate, claims to have seen a more than 200% increase in EA Play game hours played on the platforms. Microsoft forms.

“Rather than crowding out retail sales, we find that when many games enter Game Pass, there is actually an increase for the game, not only in our service but also in digital retail, both in our store and in others like Steam or the Epic Games Store, “said Spencer.” The Game Pass has become a real engine of discovery.

Spencer also reported that the ID @ Xbox program, which allows creators to self-publish games on Xbox platforms, has led to the creation of 2,000 games that have generated $ 2 billion in revenue.

This reinforces Microsoft’s unconventional business strategy in recent years. Instead of the traditional method of selling consoles, which was to entice consumers with big, glowing exclusives, Microsoft tried to make access to Xbox easier and cheaper, through subscription services, Project xCloud and the All Access payment plan.

“The hardware only exists as a gateway to the games themselves,” said Liz Hamren, vice president of Gaming Experiences. “And today the cornerstone of the Xbox experience is Game Pass. Now players no longer have to spend $ 60 or more on individual games. “

Saying this out loud is a bigger deal than you might think. It comes at a time when various publishers are quietly trying to normalize the idea of ​​$ 70 as the base price for new video games.

The xCloud project in particular, described as the “natural next step for us” by cloud gaming manager Kareem Choudhry, is confirmed to arrive directly on the Xbox app on PC later this year.

Hamren also noted that, contrary to the predictions of many industry analysts, “the console remains our flagship experience.” Instead of switching entirely to cloud-based solutions for future generations of games, Microsoft is not slowing down or abandoning hardware production.

“We’re actually speeding it up,” Hamren said. “We are already working hard on new hardware and platforms, some of which will not be revealed for years to come. “

There may still be a physical Xbox in the tenth generation console, whenever that happens, but it seems less and less that you need it to play Xbox games.

Ultimately, it’s worth remembering that Microsoft’s What’s Next presentation was actually a show for E3, meaning it was all about getting people on the hype train. (To some extent, this sounds like a shareholder briefing that leaked somehow.) Take everything with the usual two cents.

It’s a useful barometer, however, for knowing where Microsoft’s priorities are and what they’re currently working on. The most interesting thing about the modern Xbox is its slow evolution away from its own hardware, as well as its expanded focus, and that evolution is expected to both continue and accelerate over the coming year.

Microsoft will likely talk about the next line of Xbox games at Sunday’s Games Showcase, which is slated to be a collaboration between Xbox and its recently acquired Bethesda studio; smart money is that we’ll hear more about games, including Infinite Halo, Psychonauts 2, and maybe that of Bethesda Starfield, his first original RPG in 25 years.