The growth of Xbox One is good for the whole industry – editorial

Microsoft recently suffered a major financial turmoil, after announcing its biggest quarterly loss ever: $ 3.2 billion in the three months ending this June. The company’s shares have not lost as much value as might have been expected, as the loss was largely expected (mainly due to the disposal of the divisions acquired by Nokia a few years ago), but the news is still worrying and some observers have. they are asking questions about the possible consequences it may have, especially with regards to the performance of the company’s enterprise divisions.

A section that instead posted positive results is that of Xbox, where earnings have grown by 27 percent on an annual basis. The last quarter of the fiscal year, which runs from April to June, has traditionally been pretty quiet for the video game industry, so we can imagine that growth will translate into an even bigger increase when the holiday season arrives. This result is even more impressive when you consider that the Xbox One’s average selling price has dropped by about 20% over the past year, and that the same quarter of the previous year included the big push to sales represented by the abandonment of Kinect and the resulting $ 100 price cut (in June 2014). If the takings have risen by 27%, therefore, it is likely that the number of consoles sold has increased by an even greater margin.

Healthy competition between the two flagship consoles is the best scenario for the entire industry, including users.

This doesn’t mean Xbox One is finally out of the swamp, since PS4 sales are still a long way off. Sony’s success means that the mission to catch up on Microsoft hardware, in terms of installed base, will still be long. Getting the top spot again isn’t entirely out of the way, but it will require several years of work and flawless vision and execution, both from a hardware and pricing point of view, and, obviously, some software. Even if all of this happens, the current 10 million gap between Xbox One and PS4 will be very difficult to bridge.

The recovery made by Xbox One under the leadership of Phil Spencer is still impressive, and anyone interested in the fate of the games industry (consumers, developers and publishers) should be happy. Sony has created a great console and launched it flawlessly, promoting and supporting it properly, but seeing it become the absolute monopolist of the market is not in anyone’s interest. Competition is a healthy and positive thing: it drives innovation and creativity, forces companies to work even better to satisfy their customers, and makes gaming more exciting and cheaper.

Of course, today’s consoles also suffer from competition from mobile devices, tablets and a PC market that has never been so fit, but “internal” competition is also important. Without it, one could succumb to the temptation to aim more and more at the console equivalent of what in the mobile field are called “whales”: gamers willing to spend large amounts of money constantly and regularly for a fixed type of entertainment. . These consumers obviously represent a very interesting segment, but they do not constitute the totality of the market and do not offer great opportunities for growth. If companies cannot lean on them and their predictable spending habits, then they will be forced to turn to other potential markets and audiences, rather than entrench themselves more and more in a lucrative but limited niche.

With the changeover of Satya Nadella to the management of Microsoft, an era in which Microsoft was willing to go lightly at a loss to establish itself on the console market ended.

This is why watching the return of Xbox One is fantastic, and so is seeing games like Splatoon helping the Wii U enrich the final phase of its troubled existence. When both Sony, Microsoft and Nintendo are in the best shape it is the entire industry that benefits, while the opposite situation (with a single leader and two distant pursuers) is undoubtedly the most negative scenario. It should also be pointed out that Microsoft, being the only Western company to have found success in recent years as a hardware manufacturer, has brought something new to the culture of gaming consoles: the Xbox may not suit the tastes of all gamers. but it has a different approach and culture than PlayStation or Nintendo consoles, and it helps to increase the variety in our world. Losing such wealth would be a real shame.

After all, the risk of witnessing the disappearance of the Xbox in recent years has perhaps become a scenario that is perhaps not probable, but certainly not even impossible. Microsoft is no longer the same company that lightly decided to lose $ 4 billion in the black hole of the first Xbox. Or the one that agreed to offer a full guarantee for the Red Ring of Death problem, which ended up costing him 1 billion dry. That Microsoft disappeared at the same instant that Satya Nadella took over the reins of the company as the new CEO. Today, therefore, the entire Xbox project is more than anything else a remnant of the past, of a time when Microsoft saw itself as a company committed to conquering not only our PCs, but also the space under the television and ours. pockets (with his smartphones). Nadella has a completely different vision: much more oriented towards services and businesses. It is above all from here that the constant rumors arise according to which Microsoft would like to get rid of the Xbox branch.

To date, however, the future of Xbox within Microsoft seems safer: after all, it is a division that produces good revenues. Maybe it doesn’t suit the company’s current vision too much, but the operational branch is certainly in better health than a year ago, and light years ahead of the disastrous Xbox One launch period. As long as it continues to grow and improve, Xbox will likely secure its tenure within Microsoft.

The Nokia acquisition resulted in the loss of $ 7.5 billion and 25,000 layoffs. Microsoft is unlikely to accept a liability in other sectors, including video games.

The question, therefore, could become: what will happen if instead there are new stumbling blocks? I do not believe at all that the “new” Microsoft is still willing to lose money in this area as it has in the past. From now on, probably, the home console will have to stand on its legs: the capital of the parent company will help it to grow, but will not represent a safety net for the most abrupt falls. In a nutshell: the Xbox has grown up, Microsoft’s mom took the wheels off and now it’s time to ride alone.

After all, we have just seen the way in which Microsoft treats the divisions that are no longer part of the company’s overall strategy and are unable to sustain themselves: in order to get rid of the branches acquired by the ex-Nokia, Nadella has agreed to report losses equal to as much as 8 billion dollars. Nokia’s smartphone division was acquired only a few years ago, but today it is outside the company’s plans, it cannot produce the right profits … and then it is time to download it, regardless of the storm that will break loose. immediately. If someone imagines that a troubled Xbox would have a different fate, they are probably deluding themselves.

Such a situation might seem entirely bad, but I personally have a lot of faith in Phil Spencer and his ability to continue the great work of relaunching the Xbox brand. In a sense, the disappearance of the “rescue net” for the Microsoft console could lead to a new stimulus for the entire division. The important thing will be to stay focused, make your customers happy, create a loyal user base and obtain the right growth through prudent but constant innovation (not with sudden changes of direction, such as the bizarre vision entirely based on TV and sports). Spencer will have to keep the quality bar high, will have to clearly communicate the company’s messages to the public and will have to continue to offer great games: a mission certainly within the reach of the Xbox team.

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