If you grew up playing video games in the 1980s and 1990s, it can be a little difficult to shed your preconceptions of the structures of the industry. Back then – and still today, to an extent – playing video games meant that you had a console, a cartridge, or a disk, and it would be connected to your television. The important thing to understand, however, is that games and the medium for playing them (the consoles) were physical items. And the companies behind those games and consoles, such as Nintendo and Konami, made money by selling those physical items.
Today, things are a little different, of course. You don’t need to buy physical games anymore; you can simply download or stream them.
Moreover, we are also moving towards a future where the idea of having a console to play those games is no longer necessary. Sure, both the PlayStation 5 and Xbox Series X, which are the latest generation of consoles, sold relatively well. But we won’t be sure about the next generation or if there will even be a next generation. We know this because the companies themselves hinted at the information.
Xbox Head Wants a World Without Xbox
The best example arguably comes from Phil Spencer, Head of Microsoft Gaming and thus the de facto boss of Xbox. Spencer is a curious character as he keeps hinting at a future where an Xbox will no longer be needed for Xbox games. Moreover, he keeps directing Xbox’s policy to facilitate that future. That’s not to say Spencer is doing a bad job – far from it. He may, in fact, be a visionary, understanding how access anywhere is the future of his industry. They term this Xbox Play Anywhere.
Of course, the idea of access anywhere is not new in and of itself. We can point to a variety of examples, from the cloud-based offerings at Amazon Luna to the games at McLuck, which you can play on any device. The point of these services is that the account is what gives you access, not physical hardware. Both Xbox and PlayStation promote these ideas (to an extent) with PlayStation Plus and Xbox Cloud Gaming, but the latter is really pushing for a future where we won’t need an Xbox at all.
Activision Deal Shows that Content is King
There are two key actions that Microsoft/Xbox has taken to demonstrate that they are putting their money where their mouth is to see through this goal. The first was the acquisition of Activision Blizzard. At around $70 billion, it is the biggest tech deal in history. But what is Microsoft paying all that money for? Not infrastructure or factories but intellectual property. That’s important – content is now king. The company will now own so much important gaming IP, from Candy Crush to Call of Duty.
The second statement is, unlike Activision Blizzard, not yet a done deal – Microsoft intends to launch a gaming app store, one that will rival the app stores of Google and Apple. This is a big statement, but gaming apps make up so many of the items on the Apple App Store and Google Play. Microsoft sees the opportunity, and it also understands the key to making it successful is by widening access as much as possible, i.e., by not limiting the App Store to Xbox owners.
While not all of this will seem wholly dramatic, we still have to laud Microsoft/Xbox’s prescience. Business history is filled with examples of failures to recognize an industry will be disrupted and changed irrevocably – Blockbuster Video’s failure to anticipate the power of streaming is an oft-cited example, but there are so many more. Microsoft is aware that gamers’ expectations have changed. They want to play on any device, anytime they want, and wherever they want. It’s all about accessing anything anywhere.