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Michael Pachter spoke in the latest Pachter Factor about how Microsoft wants to win in the games business, NOT just the console wars. The company could do without selling consoles at a loss (it has the money) and instead push content from acquired companies so that Xbox Game Pass subscribers can reach 250 million, but the Redmond-based tech giant has a long way to go before that happens…<\/p>\n
“I think the whole development and promotion of Game Pass has always been an acknowledgment that the Xbox is a platform, not necessarily a device you need. I think Microsoft will be perfectly happy in a future where there are no consoles and everyone has a dumb terminal connected to the Internet, to the cloud, and they stream all their games. Game Pass, that’s their long, long game, and I think Microsoft realized very early in this cycle that the future is the cloud and that if you don’t have to sell a console, your addressable market goes from 200, 250, 300 million people who own consoles to 3 or 4 billion people who play games. That’s their endgame, much like Netflix said, “How many people watch TV?” and the answer is 4 or 5 billion, so Netflix now has 260 million. I think they, Satya Nadella being the architect and Phil Spencer being the field general executing the strategy, I think they’re trying to get 250 million Game Pass subscribers without a console.<\/p>\n
Is there anything Microsoft can do to get back on track this generation? Sure, cancel Game Pass and lower the price of the Xbox. If they did that, if Xbox was $200 and they said to every Game Pass member, we’re going to give you an Xbox for $20 because you already paid for Game Pass, and by the way, if you buy Xbox, you get all of our first-party releases for free, they would pass Sony like they were standing still. They would just lose money, but they would do it. If Microsoft wanted to win the generation, they would win the generation. That’s not what they’re trying to do. They’re trying to win the business of games by offering games to 3 billion people, not 300 million people. That’s their endgame and to be honest with you, the way Game Pass is going to work is the price is going to go from $15 a month to $10 and then it’s going to go down to $5 with advertising. Every time you load up a game, you’re going to have to watch an ad. People will tune that out and Microsoft will make a lot of money. More people will play games and they’ll pay less for the privilege, so I think they win. They’re just not winning the console generation.<\/p>\n
Now they have all this other content. You’re going to get Hellblade 2, you’re going to get The Outer Worlds 2, you’re going to get Elder Scrolls 6 one day, you’re going to get the whole Call of Duty catalog, you’re going to get World of Warcraft as part of Game Pass. Yeah, they’re going to 200 million subscribers, so I think they’re executing brilliantly. I think the perception of gamers that they lost to Sony is just wrong. They lost the console war. If that’s how you measure your value, that you have to sell more consoles or you suck, then great. If the question is who’s going to be more profitable, Microsoft, 10 times or 100 times,” Pachter said.<\/p>\n
Nadella said more than six years ago that Game Pass would be the Netflix of gaming, but with around 34 million subscribers, including Xbox Game Pass Core members formerly known as Xbox Live Gold, they’re still a long way off. Activision Blizzard’s lineup of games may yet push the envelope, with Diablo IV being the first title to arrive on the service on March 28th…<\/p>\n