The cost of living crisis has played a key role in everyone’s lives, we all have to cut back and make difficult decisions. But the question remains: how do non-essential entertainment like gaming affect this?
Recently in an interview with The Verge (opens in a new tab)Microsoft Gaming CEO Phil Spencer talked about how the cost of living crisis has affected companies like Xbox and what one of the biggest AAA companies is trying to do to help gamers during this time.
Nobody pretends that game consoles and games are essential items. “We’re clearly in an entertainment space,” said Spencer, “we’re not food or shelter.” As families must find a way to reduce spending, non-essential sectors such as entertainment will inevitably see less spending.
Spencer also talked about how families not only pay for consoles and games, but also energy costs, an expense that isn’t always at the forefront. But this is not the end of the doom and gloom for the games.
“Gaming tends to be a bit more resilient and withstand these times better than some other sectors,” said Spencer, “because we have good value for money.” good value; this seems to be the strategy for Xbox for the future.
Weather the storm
One of the best things Xbox is doing right now to provide value for money is making games available on old and cheaper consoles like Xbox One and Xbox Series S. While it’s not popular around the world as some developers feel these older models are holding back next-gen consoles, other developers seem to feel their complaints aren’t entirely legitimate.
The whole “Series S is holding back next-gen gaming” argument seems really broken to me. Most of these games are also available for PC and already have to cover a wide range of configurations. For example, take a look at the Steam Hardware Survey from time to time. Lots of older stuff with significant percentages.October 20, 2022
Average fans also see the great value these older consoles have to offer. “The demand has never been greater,” said Spencer. “If we go back to the original Xbox, Xbox 360 and Xbox One, we’re selling more consoles than ever.” It turns out that people want to have access to cheaper consoles and still play the latest games. Not everyone can talk $499 / £449 / AU$749 by Xbox Series X or $499.99 / £479.99 / $799.95 for PS5.
Xbox is also moving forward with more game subscription models. Subscriptions mean “you don’t have to pay $70 for every video game I make,” said Spencer, “you can build your library in other ways.”
Mobile Futures
I think everyone can agree that paying $70 for a single game can be tearful at best. So it’s no wonder that companies are looking for different ways to make money selling games.
According to Spencer, “games have their own business model” and while free-to-play is a great concept, it should also be “sustainable and profitable for the developer.” That’s why you get microtransactions and battle passes.
Making money is one thing, but making sure your product is good value for money should still be at the heart of this deal. That’s why subscription games should have “extras and stuff that makes you feel like you’re a special part of this free community.”
Unfortunately, free-to-play games can still cost a lot of money with micro and battle passes. After all, in the long run, they can cost more than an expensive one-time payment. That’s why Xbox is starting to look at other areas of gaming that still have a chance to succeed at a time when spending money on entertainment is becoming increasingly difficult. It turns out that the obvious successor was looking them straight in the face.
“Let’s say the gaming industry is currently worth $200 billion and could grow by 9 or 10%,” Spencer said. “If consoles as a business are flat, and PCs are basically flat, and yet they still grow 9 or 10%, that means all the growth is in mobile.”
If you want to see how much money mobile gaming is making, just look at one of the biggest gaming companies, Tencent. “So much of their revenue comes from mobile,” said Spencer. Like it or not, it looks like mobile phones are a key part of the future of gaming.
The main way Xbox is preparing for this future is with Game Pass Ultimate. Now it can compete with mobile giants and bring games to iPhone and Android. This is also a good time; things aren’t getting cheaper, and if the future is mobile, Xbox needs to start now to catch up.