Console contraction drives subscriptions saturation
Over ten years ago, Microsoft launched Xbox One, a singular device to drive Xbox's ecosystem of games, software and services.
Fast forward to today, and Microsoft's new "This is an Xbox" campaign attempts to raise consumer awareness that smartphones, laptops, TVs, handhelds, streaming sticks, and VR headsets are also Xboxes, de-emphasizing the console as the center of the Xbox ecosystem.
- Xbox has endured two generations of console decline. As Xbox Series X/S ends its fifth calendar year on the market, Omdia's Games Hardware Database estimates that its installed base will fall short of its Xbox One predecessor by 5m units (see Figure 1). This threatens the active installed base long-term.
- Xbox's content ecosystem has become subscriptions driven, impacting full game purchase revenues as key blockbuster games content sees day-and-date releases on the platform.
- Game Pass subscriptions remain console-driven despite cloud offering. Omdia's Game Subscriptions and Cloud Gaming Market Forecast reveals that the penetration rate of subscriptions for console-focused Game Pass tiers among active Xbox consoles will surpass 66% in 2024.
- Microsoft is now the steward of valuable multi-platform content. Its $69bn acquisition of Activision Blizzard King gives it control of Call of Duty, World of Warcraft, and Candy Crush Saga, following its ownership of Bethesda series Fallout and Elder Scrolls.