Phil Spencer: Microsoft Will Quit Game Industry if Game Pass Doesn't Grow
Game Pass is the apple of Microsoft's eye, and the company may even abandon the game industry if the service fails to meet the company's expectations. At least that's what Phil Spencer has assured.
The head of Xbox is now undeniably one of the most recognizable people in the industry. However, Phil Spencer and Microsoft as a whole allegedly may give up on video games if the black scenario related to Game Pass comes true (via Wccftech).
That's another piece of information from documents attached to a lawsuit related to the U.S. Federal Trade Commission's (FTC) investigation into Microsoft's acquisition of Activision Blizzard (which appears to have been accidentally leaked by Microsoft; via Insider Gaming). Lawyer James Weingarten, representing the organization, asked Spencer for his opinion on the Redmond giant's non-public slide, which presented projected growth of Game Pass on PC and Xbox and in the cloud: 100 million subscribers by fiscal 2029 (i.e., by June 30, 2029).
"Too slow" expansion of Game Pass would be enough of an excuse for Microsoft to abandon the game market.Source: Microsoft / Wccftech.
Spencer expressed doubts about whether "this is what the future of the Xbox business will look like." The brand chief stated bluntly that if Microsoft's subscriptions don't make more progress beyond consoles, the company will withdraw from the game business. Heck, he even stated that he does not believe that in the event of "projected" growth, the Redmond giant will "continue to exist in the market."
"I can firmly say that if we don't make more progress [with Game Pass - ed. note] beyond consoles, we will withdraw from the game industry. If that were to happen, I don't think we would still exist in this business.
Most of our customers will be outside of our own hardware, I hope, sooner than 2030. So, to the question of whether I agree with this graph, my answer is that the light green and blue - depending on the colors you see there [corresponding to PC and cloud user share of Game Pass - editor's note] - would have to be much bigger much sooner. I would say that by 2026-2027 fiscal year we should be in that position, otherwise we would have to make a different business decision."
We've known for a long time that Microsoft has high hopes for its service. It's hardly surprising, since Game Pass was one of the main reasons why the Xbox brand recorded excellent revenues in fiscal 2023.
Nevertheless, one gets the impression that Spencer embellished the facts a bit. In the struggle to convince officials (and, in the case of the FTC case, the court) to agree to Activision Blizzard acquisition, Microsoft steadily emphasized that it is losing in the console and game market in general (to which Sony responded in a similar tone).
The quoted statement fits into this strategy, but it is hard to imagine that Microsoft would abandon video games just because of the insufficient success of Game Pass. Especially when the corporation has invested tens of billions of dollars in buying the companies that make them, with the aforementioned Activision Blizzard and Bethesda at the forefront (not to mention other well-known studios and publishers).
In this context, Spencer's statement should be read as another confirmation of the importance of Game Pass for Microsoft as a tool for expansion beyond consoles (and PCs). Nevertheless, perhaps his words are worth taking to heart?
