Xbox Chief: Amazon, Google Are the Greatest Threats the Xbox Faces

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This console cycle hasn’t been kind to Microsoft or the company’s gaming ambitions. Lifetime sales of the Xbox One are estimated at 46.52M units according to VGChartz. Call it 50 million by the time the Xbox Series X comes out, and you’d still be 35.8M units short of the Xbox 360’s lifetime total.

Given the hammering MS has taken over the past seven years, you might expect that the company would be laser-focused on taking the fight to Sony with the upcoming Xbox Series X. If it is, someone forgot to tell Phil Spencer. Microsoft’s President of Gaming recently spoke with Protocol, where he had this to say about the future of gaming and where Microsoft believed the greatest threats to its own video game business will come from.

“When you talk about Nintendo and Sony, we have a ton of respect for them, but we see Amazon and Google as the main competitors going forward,” Spencer said. “That’s not to disrespect Nintendo and Sony, but the traditional gaming companies are somewhat out of position. I guess they could try to re-create Azure, but we’ve invested tens of billions of dollars in cloud over the years.”

Spencer said Microsoft was willing to cooperate with Nintendo and Sony on initiatives like allowing gamers on the various companies’ systems to play with and against one another. He added: “I don’t want to be in a fight over format wars with those guys while Amazon and Google are focusing on how to get gaming to 7 billion people around the world. Ultimately, that’s the goal.”

Spencer made these comments in the context of an article about how tech giants like Google, Amazon, Facebook, and Apple have increasingly monetized gaming or gaming-adjacent services. Amazon owns Twitch, Facebook has Oculus, Apple launched its Arcade service last year, and Google owns both Stadia and YouTube. That’s why he’s on the topic in the first place. But even with this context, Spencer’s comments are downright odd.

First of all, Sony bought Gaikai (a cloud gaming service) in 2012. It launched PlayStation Now in 2014, and it partnered with Microsoft to deliver the service in 2019. It’s a bit odd to see Spencer treating Sony as if the two companies weren’t already working together.

What’s a little more ominous is the reference to “traditional” gaming companies, as if Microsoft isn’t in the traditional gaming business now. After the debacle of 2013, I’d expect Microsoft to be emphasizing the Xbox Series X’s gaming capabilities. Media services, game sharing support, and streaming options are absolutely important to some of the console’s audience, but Microsoft blew the entire last generation by focusing on all of the wrong features of its new platform during the critical lead-up period.

At best, this feels like Spencer awkwardly shoehorning in mentions of Azure and cloud computing because under Satya Nadella, Microsoft has become a cloud-first company. At worst, it sounds like Microsoft once again misunderstanding what its own customers want. Game streaming services may be the future, but they’re not here yet. Nobody trusts Stadia. Nobody trusts Facebook. I genuinely want to see VR succeed, but the business market has been growing faster than the gaming side and Sony, not Facebook, has the largest VR ecosystem by deployed headsets. Many people in the United States cannot purchase the kinds of internet required to make flawless game streaming a viable replacement for local play.

Remember Crackdown 3?

This isn’t the first time Microsoft has made a lot of noise about the supposed advantages of cloud rendering and how it would make the Xbox One a better experience than anything the PS4 could offer.

Eurogamer did a major writeup on what happened to Crackdown 3 between 2013 and 2019. They conclude: “Looking back at the messaging of the time, it’s difficult to avoid a sense of hyperbole in the pitch, and whether it’s down to latency issues, varying levels of user bandwidth, or the sheer logistics of coping with a vast user base, cloud gaming as Microsoft defined it back in 2013 failed to happen.”

Microsoft has been discussing Project xCloud, its game service that leverages Azure’s back-end and allows gamers to take their titles to any device they want to play on — but again, this is the kind of feature that you’d explicitly expect to see the company mention as an advantage over Sony and the PS4. It’s an ecosystem play and potentially a good one, at least in areas with strong wireless connectivity. But the people most likely to subscribe to a service like xCloud are gamers already. xCloud could theoretically compete against the Switch for mobile-centric gamers who want the convenience of handheld play and the existing Sony / MS console space. The sorts of gamers who focus on Farmville and Facebook titles seem a genuinely poorer fit for the company’s projects.

I don’t want to slag Spencer, because I’m open to the idea that MS has some fundamental idea for better Azure integration than we’ve seen before, but I don’t think Google, Facebook, and Amazon are likely to represent Microsoft’s largest gaming competitors in 2020 or 2025, for that matter.

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