For several months now, we’ve been speculating that the current Xbox will be the last “real” console. The next generation could well be a complete shift to the PC. There are many reasons why we support what is only a theory. It would take a long article to list them all and repeat what we’ve been saying for some time now. But we think we can isolate 3 that are major in our reasoning.
Despite the upheavals, the gaming division is an economic success story
All the ups and downs that inevitably accompany takeovers aside, Microsoft generates a great deal of money from its video game creation business. Revenues from video games have exploded, making the Xbox division one of the key elements in the company’s strategy for the years ahead. In its second fiscal quarter, Microsoft posted sales of $62 billion and profits of $21.9 billion. In recent months, Microsoft’s gaming sales have increased by 49%, with revenues from Activision Blizzard exceeding forecasts. Video games generated sales of over $7 billion, more than Windows.
Console or PC? Xbox remains an expensive challenger.
The Xbox is a blot on the gaming landscape. Its sales are still far below those of its Japanese rival. The real problem is that Microsoft doesn’t make money with this console, as Sony does. One way forward would have been to produce more exclusives by buying out its studios, in order to bend the market’s arm. But the demands of the competition authorities forced Microsoft not to consider this option. What’s more, why “rein in” this cash machine and not give it all the room it needs to expand? Consoles, PC, streaming – the wider the audience, the easier it will be to recoup the investment. Finally, stepping back from hardware, which will always be a risky bet, and focusing on the lucrative software segment is what Xbox has been doing lately.
PC gaming is doing well.
The latest gaming figures show that the PC platform is growing, while consoles and mobile are stagnating. This may be a snapshot in time, but the advent of new platforms has completely changed the picture. Once a pirate’s paradise and a publisher’s nightmare, the PC has arrived and is becoming an increasingly relevant choice for publishers seeking to develop their revenues. What’s more, new uses such as portable consoles look promising. Finally, for years now, the console has been nothing more than a vulgar PC, frozen in time and running on a proprietary OS.
These three arguments seem fundamental to us, but they’re not enough to tell you that the future is written. And yet, there are other elements that, in our view, reinforce this thesis. A few days ago, Jez Corden, the very informed editor-in-chief of Windows Central, stated that the next Xbox console will resemble pre-built PCs with a strong “Windows slant”. Microsoft could be building a new console, but more with the ambition of making it an exercise in style, a model to follow much as it tried to do with its Surface PCs.
Finally, this slide expresses Microsoft’s ideas and ambitions for future gaming platforms. A mix of PC (or laptop) hardware combined with the ability to play 100% locally, but with the support of the Cloud.
There’s a lot of talk about future Windows evolutions, such as AI-boosted functionalities (Super Resolution…). In short, the possibility of a ” made in Microsoft ” Xbox for the next generation is still there, but it could be the brand’s “Founders Edition” that would open the doors to ASUS, MSI, Lenovo and co. to offer their own versions.
Let’s get crazy: let’s put a coin on a Rog Ally or MSI Claw-style handheld console with a docking station that gives it extra graphics power when plugged into a display. A PC with a simplified design, but just as capable of receiving the Xbox game pass as Steam games.
What do you think?
