Microsoft to Leverage PC and Xbox To Take On Sony and Steam

Next week, Microsoft will be hosting its annual E3 press conference in Los Angeles and the company has quite a few announcements up its sleeve including a smaller Xbox console and possibly a few streaming devices, although the timing of these devices is still a bit uncertain. While hardware always makes for a flashy announcement, what’s more important is the company’s long term gaming strategy on its two big platforms, Xbox and PC.

When it comes to PC gaming, Microsoft owns the platform that you need to play the latest games. Sure, you may buy the games via Steam but you need Windows to run the games and yes, Linux does have some support for gaming but the best experience is still on Windows. And then there is the Xbox brand, while the Xbox 360 was a big success (despite the RROD issue), the Xbox One has continued to trail behind the PS4 and it doesn’t look like this trend will reverse anytime soon.

PC gaming is currently dominated by Steam, the gaming platform by Valve has built up an ecosystem of users and games that Microsoft tried to foster with Games for Windows Live but ultimately failed with that initiative. And while Xbox Live has performed well for Xbox users and (when it’s not offline) is an excellent example of how games and services can be interwoven to create fun experiences for the user, the company is finally get its ducks in a row to take on Steam and Sony.

Thanks to leaks, insider information and public statements from Microsoft, we can begin to see how the company is transitioning its gaming model under Phil Spencer. As I noted in my podcast from two weeks ago, Microsoft is looking to align its two massive gaming communities, Xbox players and PC gamers, to create a unified gaming base that they can cater to with new services (enticing PC gamers to pay for Xbox Live) and by also expanding cross-play between console and PC players.

While shared services like Xbox Live and cross play are beneficial to gamers, the company is also building out its Xbox app for the desktop to become the only gaming hub that you need. Initially, the app was targeted at console users who also use Windows 10 but with game streaming and now that Win32 game activity will soon be in the Xbox app, Microsoft has started the shift of getting PC players to utilize the Xbox application.

When it comes to games, the company has already said they want Xbox games to be released the same time as PC games but what if they take it a step further and eventually make Xbox games also UWP apps? What’s interesting to think about, especially since the company will be releasing new hardware next year under the codename Scorpio, is that if they can make traditional Xbox games also UWP games and cross compatible, it makes development for the PC and Xbox much easier. Yes, they will have to place some hardware qualifiers in games to make sure they work well on both PC and Xbox but if Microsoft can execute this strategy, this will be a big threat to Steam.

Why? For a developer to only have to code a game once for a PC and Xbox gamers, provided it’s UWP, this is a significant cost savings over having to build two separate versions for PC and Xbox. Of course, this means the game can’t be in Steam which may be a deterrent until Microsoft can prove that gamers are willing to buy the content through the Windows store but if they prove that this model works, it will be a huge win for Microsoft.

If Microsoft goes to the UWP model, does this mean the console is dead? I don’t believe so, Phil Spencer has publicly said that he believes the console model needs to adapt which means instead of a device every seven years or so to a faster release cycle so that hardware can be updated while also improving backwards and forwards compatibility between devices.

What we are seeing happen inside of the Xbox org is that they are modernizing their processes much like how the rest of Microsoft has moved to a more rapid release cadence. By bringing Xbox and PC gamers closer together, they can streamline their services, make it easier for developers to build games for both platforms, populate the app store with high quality content which will give them a big advantage over what Sony and Steam offer as standalone services and secure their place in the future of gaming on both PC and console.