Phil Spencer says the Xbox business will become ‘untenable’ if it remains ‘irrelevant’ on mobile

Thread: Phil Spencer says the Xbox business will become ‘untenable’ if it remains ‘irrelevant’ on mobile
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Microsoft's head of gaming has said that Xbox will struggle to continue as a global business if the company doesn't establish a foothold in mobile.

While the company's proposed acquisition of Activision Blizzard is often framed as the Xbox maker seeking to purchase Call of Duty, Phil Spencer has reiterated previous claims that the $68.7 billion deal is primarily driven by Microsoft's mobile gaming ambitions.

"The idea that Activision is all about Call of Duty on console is a construct that might get created by our console competitor," he told The Verge's Decoder podcast (transcribed by VGC).

While not naming Sony directly, the Xbox boss went on to reference concerns the PlayStation maker has submitted to competition regulators currently scrutinising the transaction.

"I haven't heard [that] Nintendo has been sending in any complaints about the deal," Spencer noted.

He said that over the past five or six years, all of the growth in the $200 billion global gaming business has come from the mobile segment, while console and PC revenues have remained "relatively flat".
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Spencer, asked about a recent comment Microsoft made to a regulator about being a small player on PC and mobile, said: "I don't think anybody needs that quote from us to understand how irrelevant we are in mobile. Anybody who picks up their phone and decides to play a game would see that on their own.

"And PC as well, our trials and tribulations over the last five, six years in PC gaming are well kind of documented, and we continue to work at it, and I love the work that the Xbox app team has been on, and our PC studio is doing great work on PC, but it takes time."

He added: "In terms of the Activision opportunity, and I keep saying this over and over, and it is true, it definitely starts with a view that people want to play games on every device that they have, and in a funny way, the smallest screen that we play on is actually the biggest screen when you think about the installed base in phone.

"That's just a place where if we don't gain relevancy as a gaming brand—we're not alone in seeing this—over time, the business will become kind of untenable, for any of us. If we're not able to find customers on phones, on any screen that someone wants to play on, you really are going to get segmented to a niche part of gaming that running a global business will become very challenging."
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Spencer added: "As a percent of the overall gaming business, the console business is shrinking, because the overall business is growing and console stays relatively flat as a business, same thing with PC.

"And then when you look at the largest gaming companies out there, Tencent being the biggest gaming company in the world, so much of their revenue comes from mobile, and then they put their business success that they've earned through the work that they've done into the market acquiring other studios at a very fast rate.

"That puts a lot of us out there who are maybe traditionally segmented to one screen and one device, in a position of, OK, if you play this out over 10 years, if console itself is not going to grow, and PC will grow in certain years and not [other] years, and mobile continues to grow, how do you continue to run the business and stay competitive with others that are out there either acquiring talent, building new business models, new distribution, building new franchises?

"It's critical that if you're trying to run an at-scale global gaming business that you meet your customers where they want to play, and more and more, mobile is the place people want to play."
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Activision Blizzard said last week that its monthly active user base totalled 368 million for the quarter that ended in September 2022. Candy Crush maker King accounted for 240 million players, World of Warcraft and Diablo studio Blizzard for 31 million, and Call of Duty publisher Activision for 97 million.

King has more players than the other Activision Blizzard divisions combined and generates more revenue too. So, it was put to Spencer, Microsoft is actually buying the Candy Crush company rather than the Call of Duty one.

"Absolutely," he responded. "And in addition, the number that's not in the Candy Crush King number is Call of Duty Mobile, and Diablo mobile, which are big franchises that exist in the Activision bucket and in the Blizzard bucket, that are also major players on phones."

Spencer said: "If you look at the totality of what Activision Blizzard King does, where their customers come from, where they make money… it's the same reason that Take-Two looked at Zynga and said we've got to build out our mobile capability.

"I'd say Activision Blizzard King did a better job of doing that earlier, definitely better than we did, and they're now in a position where they've got great PC franchises, great console franchises and great mobile. For us the real differentiation that they add to us is their mobile capability."
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www.videogameschronicle.com

Phil Spencer says the Xbox business will become ‘untenable’ if it remains ‘irrelevant’ on mobile | VGC

The Xbox boss claims the Activision Blizzard deal is primarily about Candy Crush…
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I fucking hate mobile. I fucking hate it so much. It's the most absolute shittiest place to play or to try to play anything. This is a huge groan for me. Android itself is just a very shitty OS to try and play a game on. Fuck this and the mobile horse it's riding in on.
 
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I thought the NPD thread this month said mobile is contracting.

Seems like misdirection - don't worry about CoD, this deal is really all about mobile.
 
Optimus said:
I fucking hate mobile. I fucking hate it so much. It's the most absolute shittiest place to play or to try to play anything. This is a huge groan for me. Android itself is just a very shitty OS to try and play a game on. Fuck this and the mobile horse it's riding in on.
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its the worst way to do anything but maybe call and sms texting. That keyboard cramps your thumbs up after a bit. Heck maybe it was a mistake to get rid of the physical keyboard the blackberry had but even then browsing the web is more difficult than it needs to be. The screens range from too small to too large for your hands as well. Then you got the privacy issues that it possesses. The constant tracking the phones do and the absurd amount of data it collects on you and your surroundings. It makes me want to just buy a frickin' flip phone or wait until one of those linux phones start taking off or they at least allow you to remove the stupid crap like the "shelfie cam."
 
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Why should Xbox be relevant anywhere?

How about creating and nurturing your IPs so that they'll be successful regardless of where they are? Two years into a new gen, two consoles and almost nothing to show for but empty promises (and it's not like they spent the Xbox One gen releasing bangers or anything...)

If this guy pivots to mobile after stringing people along for so long I'm going to die from laughter.
 
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nominedomine said:
Why should Xbox be relevant anywhere?

How about creating and nurturing your IPs so that they'll be successful regardless of where they are? Two years into a new gen, two consoles and almost nothing to show for but empty promises (and it's not like they spent the Xbox One gen releasing bangers or anything...)

If this guy pivots to mobile after stringing people along for so long I'm going to die from laughter.
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The game industry can't keep going like this. Taking 5 years to make a game is just too long (and it will still be buggy as shit at launch) and it will only get worse with new generations. They are constantly looking for revenue from other sources partly because this model is just not sustainable.
 
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Zog said:
The game industry can't keep going like this. Taking 5 years to make a game is just too long (and it will still be buggy as shit at launch) and it will only get worse with new generations. They are constantly looking for revenue from other sources partly because this model is just not sustainable.
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I'll be dammed, if it's not sustainable then why did this guy spent 80B buying mostly AAA game publisher?

Seems like plenty of AAA games have been successful and made a lot of money this year, but you got to release the games at some point and not just announce them.

Boswollox said:
I've said this for months. Xbox is going Mobile and is looking for Mobile Whales and MTX/Lootbox infested games to pad out gamepass. Every month you'll get a AAA game, once a quarter you'll get a banger.

90% of gamepass will soon be Mobile/indie shite
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Gamepass has already changed a lot, you rarely get any significant AAA games on the service anymore. Seems like all the big stuff is going to be internally developed by MS going forward (good luck).

PC gamepass is the one that seems to get still get some quality AA stuff (because it's the one they are trying to grow right now, they even have dedicated market campaign for PC Gamepass on it's own).
 
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nominedomine said:
I'll be dammed, if it's not sustainable why did this guy spent 80B buying mostly AAA game publisher?

Seems like plenty of AAA games have been successful and made a lot of money this year, but you got to release the games at some point and not just announce them.
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Microsoft has money to burn, doesn't mean it all came from the Xbox division though.

I could be wrong but I think that eventually people will start getting annoyed at how long it takes for games to come out. They could start by not announcing games that are years away. I am personally annoyed that it is taking Nintendo 6 years to make a sequel to a game using the same engine and likely many of the same resources. Are they incompetent these days? Remember when a single platform was supposed to speed up development?

That's just one example. If Nintendo takes 6 years for a sequel on outdated hardware, imagine how long development cycles are going to get going forward on better hardware.
 
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Zog said:
Microsoft has money to burn, doesn't mean it all came from the Xbox division though.

I could be wrong but I think that eventually people will start getting annoyed at how long it takes for games to come out. They could start by not announcing games that are years away. I am personally annoyed that it is taking Nintendo 6 years to make a sequel to a game using the same engine and likely many of the same resources. Are they incompetent these days? Remember when a single platform was supported to speed up development?

That's just one example. If Nintendo takes 6 years for a sequel on outdated hardware, imagine how long development cycles are going to get going forward on better hardware.
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In the case of Nintendo it's pretty understandable that they would eventually run in the same issues that most other devs had to overcome many years ago when they started to make more complex games for less ancient hardware. Their output slowed to a crawl with the Switch and they were saved by the fact that not many people had the WiiU.

As for MS, with the exception of the Forza studios every other studio seems to be struggling to put out quality games consistently in a reasonable amount of time. It doesn't help that they seem so reliant on Unreal Engine and pretty much no UE5 seems anywhere close to release.
 
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nominedomine said:
In the case of Nintendo it's pretty understandable that they would eventually run in the same issues that most other devs had to overcome many years ago when they started to make more complex games for less ancient hardware. Their output slowed to a crawl with the Switch and they were saved by the fact that not many people had the WiiU.

As for MS, with the exception of the Forza studios every other studio seems to be struggling to put out quality games consistently in a reasonable amount of time. It doesn't help that they seem so reliant on Unreal Engine and pretty much no UE5 seems anywhere close to release.
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There is no excuse for it to take 6 years for Breath of the Wild 2. Same engine and some of same resources. Incompetent is a term I would have never used for Nintendo until recently.
 
Zog said:
There is no excuse for it to take 6 years for Breath of the Wild 2. Same engine and some of same resources. Incompetent is a term I would have never used for Nintendo until recently.
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I'll give them the benefit of the doubt on this one given how good the last one was and how much more ambitious it is that most other Nintendo games (but it better be damn good).
 
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Technically speaking our phones would make insane handheld gaming devices, my phone which cost me less than a switch is 3 times more powerful than the Switch so just imagine the amazing games that could be made for such a device. Sadly mobile gaming is mostly just garbage f2p microtransaction-heavy gacha games.
 
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nominedomine said:
I'll give them the benefit of the doubt on this one given how good the last one was and how much more ambitious it is that most other Nintendo games (but it better be damn good).
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They made an open world game like so many other developers before them. Not seeing the ambition. That's just me though, I know the game is beloved.
 
Wasnt a big draw of the Activision/Blizzard deal due to what the companies brought to the table from a mobile standpoint?

I have no qualms overall, I enjoy playing games on my tablet
 
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I think MS will cut xbox loose in the next 10 years barring WW3.

MS needs to unfuck windows 11 and learn to make a good OS. Stop filling it with bloat, spyware, and adware. Xbox is probably never going to be successful again, and dedicated consoles aren't growing. Any studios bought by them are mismanaged.
 
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zebraStraw said:
I think MS will cut xbox loose in the next 10 years barring WW3.

MS needs to unfuck windows 11 and learn to make a good OS. Stop filling it with bloat, spyware, and adware. Xbox is probably never going to be successful again, and dedicated consoles aren't growing. Any studios bought by them are mismanaged.
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Everything now is riding on Stafield being as big as Skyrim, if they don't get that one right they might as well leave the console business because none of the other games they have on the way is going to move the needle, MS has already showed their hand by announcing everything years ago.

Halo is dead, Gears is not nearly as relevant as it was in the 360 days, Forza has been milked dry... Redfall, Fable, Perfect Dark, Avowed, Hellblade, none of that has any shot at changing that status quo.
 
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nominedomine said:
Everything now is riding on Stafield being as big as Skyrim, if they don't get that one right they might as well leave the console business because none of the other games they have on the way is going to move the needle, MS has already showed their hand by announcing everything years ago.

Halo is dead, Gears is not nearly as relevant as it was in the 360 days, Forza has been milked dry... Redfall, Fable, Perfect Dark, Avowed, Hellblade, none of that has any shot at changing that status quo.
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You're not exactly a neutral observer in this

Forza hasn't been milked no more than Gran Turismo has. Each one of those you've listed has potential to be a significant title in their line-up moving forward

Given its exclusivity, Starfield won't reach Skyrim's success, but it's going to make waves of some sort

They're making the right moves, but goddamn are they taking their sweet time. Hopefully it's to avoid further pitfalls
 
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Not sure what folks are getting up in arms over. Phil is spiting the basic truth. GLOBALLY mobile is growing and consoles are stagnating. If MS wants to be competitive GLOBALLY they will need to embrace this very real trend. Xbox has essentially no mobile presence, having one would be good. End of story.

Next on action news at 11, wood the deadly kindling. Do you have fire hazards growing your back yard?
 
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Companies always seek new ways to generate money, so yeah I understand that. A ton of money involved in mobile gaming, with the right games you can make an incredible amount of money without the extreme development costs of triple A games.

That said: lol MS.
 
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What Phil said is true for all consoles, not just Xbox. Market's flat. That's why Playstation is pivoting into multiplatform/GaaS. Nintendo so far has been doing fuck all though. I wonder what their plan is.
 
Bernd Lauert said:
What Phil said is true for all consoles, not just Xbox. Market's flat. That's why Playstation is pivoting into multiplatform/GaaS. Nintendo so far has been doing fuck all though. I wonder what their plan is.
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Well, Nintendo... is going to Nintendo. They'll just throw some weird ass stuff out there.

Didn't they do mobile games and did a bunch of money off of it?
 
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Bernd Lauert said:
What Phil said is true for all consoles, not just Xbox. Market's flat. That's why Playstation is pivoting into multiplatform/GaaS. Nintendo so far has been doing fuck all though. I wonder what their plan is.
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Sony and Nintendo both saw massive growth last gen and are more profitable than they have ever been.

Both are also already in the mobile gaming market, which has proven an unreliable (if still profitable) minor additional revenue stream, despite both seeing well above average success compared to 99.99% of new ventures into that deep red ocean of competition.

Ironically Sony seem to be of the same opinion as you however and are pivoting away from what has been proven to work, following in the footsteps of MS off the cliff to irrelevance.

Nintendo meanwhile have seemingly learnt the lesson of not trying to reinvent the wheel from their WiiU debacle, so if they keep on their current path with the Switch 2, may end up the only console still around in a generation or two.
 
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nominedomine said:
Everything now is riding on Stafield being as big as Skyrim, if they don't get that one right they might as well leave the console business because none of the other games they have on the way is going to move the needle, MS has already showed their hand by announcing everything years ago.

Halo is dead, Gears is not nearly as relevant as it was in the 360 days, Forza has been milked dry... Redfall, Fable, Perfect Dark, Avowed, Hellblade, none of that has any shot at changing that status quo.
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Dude, they want to sell you a subscription, they don't care about your console war.

It's about earning money, not about giving people ammunition for their petty fights about which toy is the best.
 
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Seriously though, how much of this shit( attempts to break into mobile, subscription services, GAAS crap) is a direct result of them stretching themselves too thin and causing losses in profit chasing more profit and now theyre desperately chasing all of these other avenues in search of more profit therefore stretching themselves even thinner? Maybe focus on being consistently profitable instead of more and more expansion in search of even greater profit?

Sometimes the pursuit of more is exactly how you wind up with less than what you already have.
 
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Bernd Lauert said:
What Phil said is true for all consoles, not just Xbox. Market's flat. That's why Playstation is pivoting into multiplatform/GaaS. Nintendo so far has been doing fuck all though. I wonder what their plan is.
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Xbox chasing mobile
Sony going VR
Nintendo going handheld

All three are diversifying in their own way. Xbox is the exception as it is moving away from its core tenants and market quicker than the other two. They're also backing themselves into a corner that only has one way out
 
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