Trend towards more expensive consoles could limit games market, warns Phil Spencer

In an interview with Bloomberg, Phil Spencerpresident of the gaming division of Microsoftcommented on a point he has frequently addressed: the growth panorama of the gaming industry. Microsoft has been carrying out several actions to expand its presence in the market, positioning the console Xbox as just one of the means of distributing games from the IPs that belong to the company. Spencer addressed, in particular, the issue of console prices.

Console price and impact on the market

With the PS5 Pro launching at an official price of $700, there is speculation that the new generation of consoles, like the PS6, could cost even more. Spencer highlighted the need to be creative and adaptive with the business model, diversifying the ways in which games can be accessed. The executive warned that the console market will not grow if video games cost US$1,000.

Microsoft Strategy: focus on ecosystem and audience expansion

Spencer’s speech is in line with the strategy that Microsoft has been adopting. In July, celebrating the milestone of more than 500 million monthly active users in the Xbox ecosystemCEO Satya Nadella stated: “We are bringing our intellectual property to new audiences.”

This ecosystem does not have the Xbox console as its main element. Microsoft’s hardware revenue has been fallingwhile growth in gaming and services revenue has increased. It is possible that, in the near future, from the perspective of a portable Xbox and new strategic acquisitions, Microsoft will achieve a goal that seems increasingly clear: a major expansion of the audience, especially in the mobile games market.

Acquisition of Activision Blizzard and the importance of the mobile market

As Spencer pointed out in 2023, during an interview with Eurogamer, the discussion about expanding capacity in the mobile market crucial to the future of Xbox:

“The reason we are in this acquisition discussion with Activision Blizzard involves its mobile capabilities,” Spencer explained. “Because it’s precisely something we don’t have. We already have Call of Duty on our platform, we already have Diablo. So, it’s not about new games that Xbox players don’t currently have access to. It’s about mobile capability and some broader ambitions to have the broadest gaming platform, which is mobile phones.”

With this approach, Microsoft seeks to reach an even larger player base by focusing on mobile devices as an essential platform for the future of gaming.