It’s no secret that Xbox has been struggling lately, even more so after the Activision acquisition, a deal that cost $69 billion to buy the company. This makes it the largest acquisition in gaming but not necessarily the smartest. It’s been even more challenging for Xbox, as the overall gaming market has stagnated significantly, primarily due to events like the pandemic, which made the industry even more volatile than it already was. One of the significant factors in the industry now is how inaccessible games are to many people, with blockbuster games costing $70 to purchase as the average gamer. Sarah Bond, the Vice President of Xbox has said that they are now looking into other areas aside from the “traditional gaming business” and aiming to reach into “untapped areas.” By discussing her next moves, she’s hinted at new Xbox hardware, where Phil Spencer has continuously expressed interest in a handheld device.
Of course, while discussing new hardware, they are also peddling Xbox-exclusive games and promoting their subscriptions, such as the Xbox Game Pass, with a heavier focus now on the subscriptions instead of the consoles. While the Activision acquisition has much potential for Microsoft, Bond must continue to make more sacrifices in the game division. Over 2,650 jobs have been lost this year, adding to the total industry-wide job losses of 11,500.
Despite Microsoft’s belief that the Activision acquisition will benefit them in the long run, the gaming unit is operating under a challenging set of revenue and profit goals, as those who are familiar with Xbox’s business capabilities state.
Bond is very aware of the challenge ahead of them, saying, “The opportunity on the other side is way bigger for all of us,” an opportunity that the company has been fighting for almost a year. A few months after Bond started working at Microsoft, Game Pass was implemented, a subscription service that Microsoft spends $1 billion on yearly to get third-party games.
It’s not a secret that most of Microsoft’s profits come from the company’s other sectors, which have nothing to do with gaming. While the higher-ups who work in these sectors don’t know much about gaming, Spencer said, “You could see the board grasp how Xbox could be so much bigger than it is today.”
According to Microsoft, Game Pass subscribers spend 50% more on games than non-subscribers, and a large part of the credit goes to Sarah Bond for making the subscription service viable. To this date, Bond still recognizes that she’s “making decisions that we’re going to live with in the next decade” in an industry that is incredibly volatile and constantly changing.
Although many believe that Xbox won’t see another console released, Bond has said that a new console will feature “the largest technical leap you will have ever seen.” Whether this will include a handheld console remains to be seen.
