"Xbox customers we have across 360, Xbox One and Windows"
They should simply count all Windows users as Xbox customers. Bam, generation won, no more need for China's 1%.
Sorta. It seems more like they're starting to count XBox users as Windows users.
On the topic itself, I like delivery of the xbox as a software platform message. The "XBox Unifying with windows" pr line is awesome in its power. Its time for the xbox business to wind down, and they are successfully selling the story that it's about to be bigger than ever. I couldn't imagine a more graceful exit.
Well, I guess that's a good point. They've kind of been hinting at where XBox is headed since Nadella took over, but I count figure out why they weren't being more clear about it. A 'graceful exit" is as good an explanation as any, I suppose.
I was gonna post a lot of this in the "Why ____ aren't launching on Windows" thread, but this thread took off before I got a chance. Anyway, it sorta covers their overall strategy for XBox moving forward in the wake of their most recent defeat, so I guess it's sorta on topic for either thread.
Okay, Nadella said he wanted to use XBox "in ways that make sense" after having said MS need to refocus on their core competencies; Windows and servers. A lot of people took that to mean that XBox's future was ensured, but I interpreted as a change in strategy, and he planned to
start using XBox in ways that made sense for a company who's business is built on Windows and servers.
As a product, how does XBox benefit MS? Thanks to the nature of the console market, unlike phones and tablets, they're not able to sell the hardware for a significant profit. There's the obvious issue of platform royalties, so let's look at those.
I'm sure we're all familiar with
The Anatomy of a $60 Video Game. When a 3rd-party game sells, Nintendo, Sony, and MS collect about $7 from the publisher. If CoD sells a million copies on the Bone, as platform holder, MS collect $7M from Activision. Pretty sweet, right?
But let's take a look at digital publishing. The industry standard split for publishers and retailers is 70/30. Now MS are collecting $18 on each $60 copy of CoD sold, more than two and a half times what they collected on the physical copy. That's a massive increase in revenue, and all it cost them is a bit of drive space and bandwidth. In fact, the price of the digital version would need to fall to about $23 before MS were collecting less than the $7 they'd get from a $60 physical game. From Activision's perspective, they're collecting $42 on a $60 sale, instead of the $27 they get on a physical sale.
So clearly, digital transactions are far more profitable for both publisher and retailer, and as we know, digital distribution is the future. Eventually, at least. So while it's nice to have both, digital sales are ultimately worth more than physical sales, and more so as the world shifts to digital.
You know who are making lots and lots of digital sales these days? Valve, with their Steam store. And they're making huge profits, because their business is basically nothing more than a glorified datacenter. Hey, weren't data centers supposed to be one of
Microsoft's two core competencies? And not only are Valve serving more of this data than MS are, they're mostly serving it to Windows users! And now they're coming out with their own OS, FFS!!
While MS have been dicking around with the XBox, gaben just waltzed in and snatched up an incredibly lucrative market that Microsoft should've been all over from Day Zero. Now, instead of dominating that market, they need to fight someone
else out of a dominant position, while simultaneously defending from an attack against the
other pillar of their business, Windows. If Valve can finally do for Linux what Apple did for UNIX and make it in to a truly consumer friendly OS, that's probably the biggest threat to Microsoft hegemony, well, probably since Jobs returned to Apple with NeXT in hand. I'm not saying Valve will finally put Linux in to non-geek homes, but it's a possibility MS can't afford to ignore.
So while XBox owners have been asking themselves what W10 integration means for XBox, with MS being beaten at their own game by some dude that made a couple of popular games, I think Phil's been more focused on what meaning XBox has for Windows. I think that's what Nadella meant by "ways that make sense." Can XBox offer anything that makes Windows more attractive? Can XBox help us expand the Windows ecosystem? If so, how? If not, it's dead weight, given the company's stated focus on Windows and servers. MS need to start luring users away from places like Steam and in to their own marketplace. The XBox division may be able to contribute with any remaining mindshare/goodwill they have, services possibly worthy of store preference if not an actual subscription, and possibly even games exclusive to the MS storefront.
Beyond that, with XBox finally becoming "just another Windows device," the XBox product itself doesn't really have anything to offer MS. Selling the hardware itself doesn't do anything for them other than tie up a bunch of capital. It makes no difference to them if a game is sold for Windows or XBox if they collect the same 30% of the sale either way. As I understand it, going forward, all development will be done for Windows 10, and if developers tick the Universal box, it will magically deploy for all of the WinDevices phones, tablets, and consoles as well. With no real interest in making hardware themselves, in the future MS may license an XBox-like UI for Win10 that companies like Dell can use in an HTPC kind of like Big Picture Mode, or maybe they'll just include it as an optional UI in every copy of Win10. Perhaps an "XBox Certified!" sticker Dell can stick on the case so people can tell the gaming boxen from the ones that just play Blu-rays and stuff.
Anyway, it seems like the general idea is that once again, MS are all about Windows. If you're a Windows user, they've now extended that ecosystem in to additional devices phones, tablets, and consoles to help improve every aspect of your life.
Everything is Windows now, but if an experience makes sense on an additional device, that dev should definitely click that button and give it to you! At least, that's the direction they appear to be headed.
