Phil Spencer, CEO of Microsoft Gaming dropped some interesting tidbits about Microsoft’s Xbox business at the Wall Street Journal’s Tech Live conference yesterday (via The Verge). After Microsoft announced that gaming revenue in the past quarter “grew slightly” year over year, Phil Spencer hinted that the company may have no choice but to raise prices for Xbox hardware and services in the future.
“We’ve held price on our console, we’ve held price on games and our subscription. I don’t think we’ll be able to do that forever,” Spencer said in the interview. “I do think at some point we’ll have to raise some prices on certain things, but going into this holiday we thought it was really important that we maintain the prices that we have.”
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Back in August, Sony raised the price of its PlayStation 5 console in most markets except for the US, citing “challenging economic conditions.” At the time, both Microsoft and Nintendo said that they wouldn’t follow this PS5 price hike, but Phil Spencer now says that this status quo won’t last forever. However, the exec didn’t go into specifics about these potential price increases.
The exec also said in the interview that Xbox Game Pass was already profitable, though he doesn’t expect it to represent the majority of Xbox content and services revenue in the future. “Game Pass as an overall part of our content and services revenue is probably 15 percent,” Spencer said. “I don’t think it gets bigger than that. I think the overall revenue grows so 15 percent of a bigger number, but we don’t have this future where I think 50–70 percent of our revenue comes from subscriptions.”
If PC Game Pass subscriptions increased 159% year over year this past quarter, Phil Spencer also said that the growth of Xbox Game Pass for Console was slowing down. “We’re seeing incredible growth on PC … On console, I’ve seen growth slow down, mainly because at some point you’ve reached everybody on console that wants to subscribe,” the exec explained.
Microsoft also announced earlier that more than 20 million people have used Xbox Cloud Gaming, but the company now wants to launch an Xbox games store on mobile devices to reach even more gamers. The Redmond giant is betting on its ongoing acquisition of Activision Blizzard to get a portfolio of flagship mobile games to drive gamers to this upcoming Xbox mobile store.