Microsoft makes its case for why it's all-in on gaming

Microsoft has plans to bring Xbox and Xbox Game Pass to more screens in a variety of ways, and is counting on its cloud, communities and commerce to advance its gaming business further.
Written by Mary Jo Foley, Senior Contributing Editor
Credit: Microsoft

Not that many years ago, many Microsoft watchers, partners, and customers were scratching their heads, wondering why Microsoft was continuing to pour so much money into Xbox. Many thought and expected Microsoft to either sell off its gaming division or at least spin it out, as it didn't seem to fit with the rest of the company's mission. Over the past few years, the reasons why Microsoft held onto its gaming business have become clearer. And this week, via a virtual "What's Next for Gaming" briefing for press and analysts, Microsoft officials worked to solidify that message further.

Gaming is the main piece of the consumer market where Microsoft has a measurable fanbase. While Microsoft admits it isn't making a profit on sales of its gaming consoles (and no longer reports publicly the number of consoles it sells), the company has found a way to build a credible gaming subscription business. One of Microsoft's biggest acquisitions to date -- ZeniMax Media/Bethesda, which it bought for $7.5 billion -- is a gaming company. And Phil Spencer, Executive Vice President of Gaming, even has a seat at the Senior Leadership Team table.

During this week's virtual briefing, Microsoft officials hammered home the message that video games are important to the company on a variety of fronts. Microsoft officials also offered a few teasers about how and where the company is investing to further build its gaming franchise.

First, the newsy bits:

  • "Xbox is working with global TV manufacturers to embed the Xbox experience directly into internet-connected televisions with no extra hardware required except a controller." Officials declined to name any TV maker names or provide a date when this Game Pass for TV offering will be available.
  • "Xbox is exploring new subscription offerings for Xbox Game Pass so more players around the world can experience the most immersive and fun games across devices, geographies, and financial realities." Microsoft is adding more countries (Australia, Brazil, Mexico, and Japan) to its list of places where Game Pass Ultimate is available later this year. And it will be implementing a "try-before-you-download" program by integrating cloud gaming into the Xbox app on PC.
  • "Xbox is working with telecommunications providers on new purchasing models like Xbox All Access, which allows consumers to buy both a console and Game Pass for a low monthly price, rather than spending money upfront." Officials mentioned Telstra in Australia as one of those providers with which it is working but declined to name any others.
  • "Xbox is building its own streaming devices for cloud gaming to reach gamers on any TV or monitor without the need for a console at all." Officials declined to say what kinds of devices would be coming, but they've hinted previously about a streaming stick. They also declined to provide pricing or timing for these devices.

When I listen to Microsoft briefings -- especially ones that aren't on my primary radar screen -- I listen for repeated buzzwords and phrases. There was a lot of talk among execs about "the joy and community of gaming," "empowering" people to play games, and "democratizing" gaming. Community and communities have become a lightning rod for just about every division at Microsoft these days. Acquisitions (and near-acquisitions) often are done in the name of buying and building communities.

During an executive Q&A that was part of the briefing, Microsoft CEO Satya Nadella said: "I believe we will need that virtuous cycle between content consumption, commerce-driven by communities for everything we build. And there's no better example of this than gaming."     

"Cloud" was another oft-cited term in Microsoft's virtual gaming presentations. Microsoft's contention is it is better situated than many of its gaming competitors because of its deep pockets and its strong cloud platform and services. Microsoft is finalizing the deployment of Xbox Series X devices in its data centers so that cloud-gaming users will see faster load times, improved frame rates and better overall performance on Xbox Series X and S optimized games, officials said.

Microsoft's xCloud game-streaming service runs on Azure. Game developers, including Microsoft itself, can take advantage of Bing maps, Microsoft Mesh, Bing Maps, Azure AI, PlayFab developer services, and other Microsoft cloud technologies in building and maintaining their games. And in turn, all the work game developers do on Azure "informs and accelerates cloud computing," said Jason Zander, the Executive Vice President of Azure, during the briefing, given that games are among the most complex apps and push the boundaries of latency, resolution and cloud workloads. 

Microsoft is hosting an Xbox & Bethesda Games showcase on June 13 to show off a number of the new games it will be introducing in the coming months.

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