Since Microsoft unleashed its new 'This is an Xbox' marketing campaign earlier this month, there's been lots of speculation about what this means for the future of Xbox hardware - but a well-known industry analyst has played down the idea of Microsoft ditching consoles anytime soon.
Circana's Mat Piscatella — who regularly updates us on gaming stats in the US — recently took part in an online Q&A about the industry at large. When asked about Microsoft potentially leaving the 'dedicated hardware market', this is what he had to say:
"If you look at Microsoft's earnings, Xbox as a whole appears to be doing pretty darn well, even with the recognized and acknowledged challenges in the dedicated hardware space. Whether something is working or not depends to a large extent on what the internal goals are. There's probably some room to debate here, as the goals may have shifted around recently given some of the surrounding reporting.
Could Microsoft leave the hardware market? I mean I guess it could but I don't see that happening. What I would believe to be the more likely approach would be the creation of an Xbox front end for portable PC Steam Deck-type devices and trying to go the OEM route so 3rd party manufacturers could make Xbox-type devices as well as what Microsoft produces. Like Windows PC and Surface devices. Would it work? Who knows."
This is just an opinion of course — albeit an informed one — but really, only Microsoft knows what the next steps are for its Xbox hardware business. Clearly, the team wants to branch out and market the brand as a platform, but that doesn't necessarily mean consoles are going anywhere anytime soon.
Still, this is an interesting take, and we're definitely curious to see where Microsoft goes next with all of this. We know for sure that a high-end console and a handheld of some sort are in the works - but what shape they'll both take, and when exactly they're set to arrive, is anyone's guess at this stage.
Any thoughts on these answers from Mat? Tell us what you're thinkin' down below.
[source installbaseforum.com]
Comments 32
"Of course not, when does this marketing campaign talk about abandoning consoles? We can clearly see Xbox consoles in the marketing campaign, right? There's nothing new, just like Xbox has expanded to PC, it hasn't abandoned consoles either. And now, it's the same, they are developing on consoles, on PC, on the cloud, on TVs, on mobile, which is part of an Xbox ecosystem, and consoles are part of it, that's all! Just asking the question is absurd!
Why does this keep coming up? Microsoft have REPEATEDLY said they are making more home consoles. More importantly follow the money, Xbox Consoles are the core of their gaming business, where they make most of their money, why would they cut that out?
The fact they want to expand into other avenues to maintain growth is sensible business. It also gives us more flexibility and choice to keep playing our games when we aren't in front of a TV.
In other news... Earth might get hit by an asteroid, we should all relocate to Mars. 🤦♂️
In regard to the first two posts here, why does this keep coming up?
It's as if the video game media keeps making up their own stories, just for the headline...aka, click bait.
Until Sony let GPU on their console then MS will need to continue making a GPU console.
@PROPS Perhaps... but chicken or the egg? They seem to be responding to the swarm of comments that suggest "Microsoft is done with consoles", or "i'm leaving xbox because they are moving to cloud/PC" etc. etc. it isn't just one or two people, it's a lot.
I agree, @themightyant, they are making more consoles. If the rumours are to be believed, Microsoft are making a handheld, and will be releasing a NeXtBoX in 2026.
The issue is though, what will they do after that? The direction that Microsoft are taking is that no first-party game will be anything more than a timed exclusive, and if they follow the path they took with PC, even the timed aspect will be phased out and then games will release on both the Xbox, PC and the PlayStation at the same time. So if enough people think that buying a NeXtBoX is unnecessary, and decide that the PS6 is for them instead, then will Microsoft continue to make consoles for the generation after the NeXtBoX?
Admittedly, it is impossible to visualise the console and gaming market in the 2030s, such is the volatile nature of the industry, but many people will have that in mind when deciding between an Xbox and a PlayStation. Having this in mind at a time when people are increasingly building digital libraries, and worrying that Microsoft may exit the console market in the not too distant future will play into peoples decision as to which console they invest in, particularly with the ever increasing cost of buying one.
When that happens, why own two consoles, when you can own one and play all games on one console?
So often I see people then say, 'but, but Game Pass...', whilst their lip quivers, however we know at least 50% of Game Pass subscribers are gaming on an Xbox console, which means there is most definitely a tipping point in which if insufficient NeXtBoX consoles are sold, that Game Pass becomes unsustainable. We may already be there because there definitely has been a noticeable dip in quality of third-party games, and indeed, many would say that were it not for the upcoming first-party games they would no longer subscribe, or that they are just seeing out their remaining subscription and then they will not be renewing. It also needs to be remembered that that dip in Game Pass quality coincides with the increase in cost for subscribing, and that in itself suggests that the Service needed more money coming in to be, or to remain to be, viable.
Personally, I have little doubt that if Game Pass ceases to exist, then one of the biggest reasons to owning an Xbox ceases with it. Add to that wanting to futureproof your digital games library with some certainty, and the PlayStation is the more obvious choice simply because no one is questioning their continued place in the console business. And that is before you factor in that Microsoft has no exclusives, and Sony does.
Ultimately, I think a lot of people that currently game on a Series console will forgo buying a NeXtBoX , and will instead wait until the PS6 comes out. That is the point in time where we will truly have a better idea of what Microsoft will do 10 years from now...
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It's strange to me that this is even a conversation to have. Xbox is a 20 year product at this point and even if the console user base is the smallest, it's still pulling in billions in revenue with engagement and spending among those users consistently increasing. The market overall isn't growing so Xbox is expanding their ecosystem into more markets. That's all that's happening.
If Microsoft still makes surface devices despite surface selling horribly and windows being an OEM that doesn't require proprietary hardware, Xbox is fine. Windows phone was killed because it was losing money and wasting resources. Xbox isn't. People also scream bloody murder over earnings calls which aren't for us. Xbox hardware is dropping in percent sales year over year. Which is completely normal. Overall revenue is still showing Xbox as profitable and lucrative in the console market. It just doesn't see future growth in a singular gaming market.
The ironic part is that they are offering more hardware choices than ever and people still believe they are getting out of that side of the business.
They will definitely continue to make dedicated consoles until consoles are no longer the general method of delivering AAA games.
I wouldn't be surprised if next gen never gets true next gen games though. I think it's possible that all games are cross gen going forward for xbox and sony. The performance upgrade will be minimal to the point that ps5/series x can play everything.
@BacklogBrad that's a really interesting thought. Obviously for AAA titles increased RAM, faster memory, faster CPU etc will probably still be the defacto way to try and innovate in that space, but there's not a right lot outside of those games that something like a Steam deck or Legion Go can't run.
The big problem with next gen as I see it is that most people will still be rocking 60hz non-VRR TVs, so a console developer still needs to work within those boundaries. I think (well, more hope) that Xbox will simply make a play into semi-open storefronts, because that would be a huge differentiating factor that you wouldn't expect PS6 to follow. It would be much more tempting to me than nonsense like guaranteed ray tracing or something similar.
There is no business sense to stop making xbox consoles today and next gen. Period.
Instead of comparing all the time with PS/nintendo, look at where majority of GP subs are and where people buy games and microtransactions across all the MS platforms (hint its still xbox series and xbox one, not the cloud and not the xbox store on PC. Maybe COD on steam is the exception but MS must pay steam cut).
Until there is a massive shift to cloud, xbox consoles will exist.
My bet is a 90% next xbox is happening and 80% xbox after that. So maybe in 15-20 years things can change. Even if all exclusives go to PS/nintendo, I dont see them selling less than 30M over the gen which is enough to justify xbox consoles.
Console gamers aren't interested in Steam Machines or anything like that. Simple plug and play all the way.
I’m totally convinced.
See over 50% of GP subs are on Xbox consoles as correctly stated above, that’s very good attach rate considering the billions of other devices GP is available on.
So what I don’t get is why are Microsoft not pushing Xbox home consoles to increase GP subscriptions as 50% are on Xbox consoles.
They have not really made a single effort in the UK and Europe to sell more consoles to help increase GP subscriptions. No series x disc or discless Black Friday deals, a crazy £429.99 for a discless series x, no advertising, no £1 console GP deals like mentioned on PC.
If Microsoft showed at least some tiny bit of interest in consoles, I might believe we would get a standard under the tv powerful Xbox console next generation.
If we get something but if I had to bet on it won’t be a standard powerful home console as we know it.
Not like Switch 2 or Switch 3 or PS5 or PS6.
They are just not making sense when it comes to Xbox consoles and GP in consoles.
It’s almost like they are slowly letting consoles die.
@themightyant it comes up because at some point it’s financially not stable.
As far as most estimates used to go there was a good chunk lost on hardware for MS. Plus R&D staffing etc if they can get similar sub numbers on other platforms like fire stick then it becomes more likely.
Is that anytime soon? Who knows? MS like to try and be ahead
@OldGamer999 the lack of series X black Friday deals here in the UK is baffling. If nothing else just to get rid of some inventory. Only theory I can think of is that they have started ramping up on using more series X internals for the cloud server blades, but even that feels too far-fetched.
The series s at £200 is interesting too. Maybe that's their only seller here?
@Coletrain
Not sure it has got me that one. As this is the first time I can ever recall Xbox not going all in BF.
Especially as it is USA thing BF and USA company.
Something not right, so I’m lowering my expectations with next generation powerful standard under the tv Xbox home console.
Just the same as my lowered expectations of any Xbox studio game the last two years being a big quality AAA that is critically acclaimed, seems those days are gone.
@PsBoxSwitchOwner Have you seen Microsoft's financials for Xbox / Gaming recently??? They may not be growing without ABK but they are still making a boat load of cash and their profit margins look strong. They don't need to beat Sony or Nintendo in console to still win big.
@Fiendish-Beaver I believe all you said is possible, I just think it's highly unlikely. People like to use the Phil Spencer quote of "we lost the worst generation to lose" to show one reason why Sony is ahead and entrenched, but it works both ways and also applies to users on Xbox, they aren't likely to shift in large numbers. It does happen, but it will take a lot for them to give up their libraries.
But if we are talking about 2030+ I think it could be just as likely that it's Sony in trouble when regulators intervene to reduce the 30% store cut and possibly allow other retailers to put games and sell on their platform, just as they are doing with mobile now. At which point many of PlayStation's advantages disappear. Then everything being an Xbox may be the way forwards and massively forward thinking.
Microsoft won't ditch hardware - the users will. And eventually there won't be enough users of the hardware or Game Pass to justify either.
No console = no longer playing games for me. I'm gone.
I think you could be right, @themightyant, to a point. Whether someone sticks with Xbox or jumps ship will largely depend on just how big their digital library is, and whether they are hugely attached to it.
As has been said above, the improvements in gaming consoles is now largely incremental, so when the NeXtBoX comes out, there may not be an imperative to own it, which would therefore allow you the luxury of both worlds; keep your existing X/S console, and purchase a PS6 instead of the NeXtBoX. That way you can keep access to your library, and also upgrade, albeit to a different platform.
Also, new blood is important too. It's all well and good if your existing userbase buys into the NeXtBoX, but Microsoft need to attract gamers new to the market too. If I were to be buying my very first console right now, and whilst what I do, I highly doubt that I'd be buying an Xbox. Factor in also that with there being two or three times the number of PlayStation gamers when compared to Xbox, and it would be more likely than not that my friends would already be on the PlayStation too, which would factor into my decision.
Again though, just look at how poor the recent Game Pass additions have been, and even take stock of how poor the reception for first-party games has been (not counting the most recent CoD). Is that really enough to ensure Game Pass subscriptions? Let's face it, the real difference, and the main differentiating selling point, between Game Pass and Sony's version is the inclusion of day one first-party games, and they have largely been pretty disappointing for years now. So if you're comparing Sony Service and Game Pass, and you see Starfield or Redfall, for example, that won't sway you to Xbox will it? Then factor in that those games are likely to end up on the PlayStation anyway, and you're choice is being made for you.
If you are new to gaming, and you know, or your mates are telling you, that Xbox literally has no exclusives, yet there are games on the PlayStation that can only be played there, and that all Xbox games are at most timed exclusives, and with just a little patience (3-6 months for Indiana Jones, as an example) you can play those timed exclusives on the PlayStation. Then it strikes me that the decision is an easy one to make.
Look I know I am being pessimistic, but I also think there is logic to what I am saying. As you said with regards to my first post, it is all possible, albeit that you see it as unlikely. I think my pessimism is borne of having been on this planet for nearing 61 years and watching the way things pan out.
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As someone that bought an OG Xbox day one, @themightyant, has bought every iteration of new Xbox console day one, bought every mid-generation refresh (excluding this one because there literally was no point), buys many of the special addition consoles, has over 1600 digital games in my Xbox library, and over 100 360 discs, I really don't want to see Microsoft exit the console business. However, when you consider all that I have just said in this paragraph, and realise that even I am hesitant to buy the NeXtBoX even though I have far more invested in Xbox than most people, then if that is how I am thinking, how will those with less invested in Xbox, or new to gaming, think? That, for me, is the problem that Microsoft has right now with the current strategy and their atrocious communications wherein they are either speaking out of both sides of their mouth, or are speaking in such ambiguities that it is difficult to make any sense of what they are actually saying, and thus rendering what they have said utterly pointless...
I wonder where the anyalyst got their info that there will be new Xbox next gen hardware ? Oh Hang on both Phil Spencer and Xbox president Sarah Bond already confirmed this TWICE over.
Meanwhile the PS5 remains a 99% 3rd party games playing console.
Anybody with half a brain already knew this.
It’s amazing this has to be said, it’s pretty clear that Consoles are part of their ecosystem and contribute heftily to their Gaming revenues. It’s hard to see any benefit to them from dropping hardware, and there are constant rumours they have more on the way.
@Fiendish-Beaver As I said I think what you say is possible, I just think it’s unlikely. And you are right you are being pessimistic, but I get the concern.
I agree they need to get in new blood… which is precisely why they are expanding into play anywhere and going where the kids are, on mobile devices and technology that they already have. From there they can get kids into the Xbox brand and if they later decide to buy a console there is a better chance it might be an Xbox. Right now I agree it’s more likely to be a PlayStation. Everything Microsoft is doing is trying to increase their playerbase. Whether it works… only time will tell.
Personally I’m pretty confident in the future of Xbox, I think they are positioning themselves well for future success. And I’m willing to move with the times, it doesn’t ONLY have to be a home console box, though that’s my priority, that is just one part of it. They also don’t have to compete with Sony or Nintendo on boxes sold to do well, that is outdated “console war” thinking.
I've never been into the whole console war thinking, @themightyant, quite simply because I have always owned both consoles. I bought a PS1 upon release, and have had every generation thereafter, though, unlike with the Xbox, I have never bought a Pro version. And, as I said above, I have bought every Xbox console, having pre-ordered every one of them, starting with the OG, and having bought every mid-generation refresh. So for me, I couldn't care less about console wars. I get to play what I want anyway, even though the Xbox is my primary console and is where I play all third-party content.
I think where I see things coming to a head is with Game Pass, as that is the real selling point for Xbox right now. I think the lack of decent third-party support that we have seen for much of this year, combined with the price hike and tier changes demonstrates that the Service is struggling. Indeed, I can honestly see it failing completely within the next 4 or 5 years, particularly if take up of the NeXtBoX is slow, or not what is needed to grow or sustain Game Pass.
I think we both agree that Game Pass is at the core of the business and sustainability of Xbox. Uptake for Cloud is much slower than was anticipated mostly because it is not fully up to scratch right now, though that may change within the next few years. So, if Cloud isn't yet good enough, and Game Pass is either not worth it, or no longer exists, then the whole pathway that Microsoft is plotting for Xbox falls apart. And whilst Microsoft can (and probably will, in my opinion) have a very successful business as a third-party publisher, that is not where they are at right now. It just seems that will be their end destination due to their current thinking, even if that is not what they are intending. It's almost as if they see becoming a third-party publisher as a safety-net should all else fail.
Ultimately, if Xbox console sales shrink further and further in the face of a rampant PlayStation, and Game Pass fails, then I think that Microsoft will pull the plug on further consoles because as people keep saying, consoles grow Game Pass. And if Game Pass does not exist, then it stands to reason that the imperative for further consoles ceases too.
So, I think Game Pass is the one to watch. If it continues to provide meagre offerings next year, then I think it safe to say that the Service is truly struggling (and obviously there is not a chance in Hell that is will reach that 100 million target by 2030). Game Pass is the arbiter for Xbox in the console sphere, and is the one to keep an eye on.
Lastly, on a side note, should Game Pass fail, it will be interesting to see how Microsoft handle those that have stacked their years, as it will cost a lot to refund those people..!
Holy cow, the clown arguments in here. "It's coming because Microsoft said it is!!" Ok, where's Keystone? Where's the quality Bethesda exclusives? Phil Spencer said, oh you guys.
If MS goes the OEM route then MS will literally not be making Xbox's anymore. You'll get a Dell made Xbox for $1200. They're not going to compete with their hardware partners or no one will bother partnering with them for a slice of what is a dying brand (2m subs lost as of last numbers).
@Fiendish-Beaver wasn’t trying to suggest YOU were still stuck on console war thinking, I know you’re not, just that there’s still a lot of it, like Xbox can’t succeed unless they surpass Sony and Nintendo. It’s nonsense, people stuck in the past.
Do I think Game Pass is as good as it once was? No. But this is sadly normal for all subscription services. Early days that have to make the best offering, while they are trying to acquire subscribers. They are effectively making a loss to make it so good at such a low price and it’s never sustainable. I was saying this years ago. Now me have moved into the retention stage (though they are still offering lower prices for PC etc).
But do I think it is still good value? Yes. This of course will be subjective, but for me I still get far more than the cost of 2.5 - 3 games out of it a year. The question is do enough other people? I think so. So I don’t see Game Pass shrinking.
This is a standard article I have seen every 3-6 months since November 15, 2001. I never see articles validating or questioning whether Sony or Nintendo will continue to make hardware.
Next we will get news articles that the sun rose today.
Do they really care about dedicated console customers? They can use cloud/an app for anything with internet/a screen. Like they have to care at all.
They get new customers all the time or they get rid of plenty of millions they don't care about. It's up to them how many people/how much that really factors into things.
@themightyant That may be true, but anyone can make up a rumor. And in all honesty, the rumor sounds like it was created by some kid that doesn't know any better and likes to play console wars.
It's short sighted and lacks any sort of logic. It's like saying Nintendo or Playstation are going to move away from consoles, into cloud gaming...which doesn't sound like a very good business strategy for any company in the market of selling consoles..
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