Microsoft Sees Amazon And Google As Their Main Competitors, Not PlayStation Or Nintendo

microsoft xbox google amazonImage: Rae Johnston (Gizmodo)

This holiday season, both Sony and Microsoft plan to launch new, so-called next-generation versions of the PlayStation and the Xbox game consoles. Goodbye, PlayStation 4 and Xbox One! Hello, PlayStation 5 and Xbox Series X!

It marks the fourth game console “generation” in which Microsoft and Sony have gone head-to-head, starting with the PlayStation 2 and the original Xbox around the turn of the century. Nintendo moved away from competing directly with Sony and Microsoft’s consoles years ago, choosing instead to create consoles geared to a different audience with the launch of the wildly successful Nintendo Wii in 2006.

These days, the “console wars” are a head-to-head between Sony’s PlayStation and Microsoft’s Xbox. But in 2020, Microsoft is shifting its business strategy in a way that could end them for good.

“When you talk about Nintendo and Sony, we have a ton of respect for them,” Xbox leader Phil Spencer told Protocol in an interview published this week. “But we see Amazon and Google as the main competitors going forward.”

But why would Microsoft’s Xbox division, which makes the Xbox game console line, be focused on Google and Amazon?

One word: streaming.

In the case of Google, the service is named Stadia – a Netflix-like game service that streams games to a variety of devices, no game console required. In the case of Amazon, there’s no service just yet – but Amazon has a robust cloud infrastructure in Amazon Web Services (AWS) to compete with Microsoft’s similarly robust Azure cloud infrastructure.

Neither Google nor Amazon has publicly announced plans to launch a game console, but both are positioned to compete directly with Microsoft’s Xbox when it comes to what Spencer sees as the next great expansion in gaming.

“Amazon and Google are focusing on how to get gaming to 7 billion people around the world,” Spencer told Protocol. “Ultimately, that’s the goal.”

Though game consoles like Xbox One and PlayStation 4 sell in the tens or, in the case of PS4, hundreds of millions, the real potential market for gaming, Spencer believes, is in the billions of people on Earth who don’t – or can’t – own a game console.

“There are 2 billion people who play video games on the planet today. We’re not gonna sell 2 billion consoles,” Spencer told me in an interview in June 2018. “Many of those people don’t own a television, many have never owned a PC. For many people on the planet, the phone is their compute device. It’s really about reaching a customer wherever they are, on the devices that they have.”

Sound familiar?

Image: Netflix

Do you want to play games on an Xbox? A PC? Your phone? Microsoft wants to reach you there – ideally across all three.

It’s a similar approach to the Netflixes and Spotifys of the world – reach people on whatever device they have, wherever they are, with the media they want to consume.

To that end, Xbox has major initiatives across all three platforms: a new game console (Xbox Series X), a cloud gaming service (Project xCloud), and a Netflix-like gaming service (Game Pass).

“That remains core to what we’re trying to do,” Spencer told me in a more recent interview this past June. “To allow creators to reach the customers that they want, allow players to play the games that they want with the people they want to play with, anywhere they want. And it fits right into the opportunity ahead.”

It’s part of a broader effort at Microsoft to bring Xbox games to as many people as possible – even if those people don’t buy a new Xbox console.

And it could mean the end of the console wars as we know them.

This article was originally published on Business Insider. Read the original version here.


Comments

    Microsoft isn't shifting business strategy as this has been their goal for a number of years. It's just that now more people are becoming aware of it. Iv'e actually been saying this in most posts trying to compare PS and Xbox sales for the last few years. I realised this after watching a video by Simon Sinek on "The Infinite Game". Outsiders judging Microsoft are doing so thinking they are playing a "finite" game of PS V's Xbox. They can't understand why Microsoft doesn't seem bothered by the PS leading sales by comparison. Microsoft have been playing the "infinite Game" for a very long time which can make it hard to understand some of their moves for casual observers.

    An early indication if people remember, was the backlash against Microsoft when they tried to have a download only strategy with the original Xbox One and people lost their minds that they couldn't share game disks (even though that was the Steam model for years previously). The Steam model was what they were going for. Then the Xbox operating system essentially became Windows 10. Why people never compared PS v's Xbox + PC I'll never know because that was what it actually was. Next came game pass as the gaming subscription model.

    Anyway, the rise of the Azure datacentres is where Microsoft is at. They have such immense computing and networking power available globally now at their fingertips that they really are the front runner this time. Combined with Game pass and their existing relationships with game studios they have the ability to be well ahead of anyone else for a long time.

      This.

      Amazon and Google have been nipping around Microsoft's ankles for over a decade now. They are all competing in the space of owning data and the ways people access data.

      Microsoft Office's most direct competitor is Google. Both Amazon and Google are aggressively moving into back end systems.

      PlayStation Or Nintendo present no long term threat whatsoever to any of Microsoft's core businesses and never have.

        Except for the fact that the main reason Bill Gates greenlit the original Xbox project in the first place was because he was concerned about Sony "intruding" into what he saw as their space of electronic home entertainment. Also, Microsoft actually tried to buy the entire company of Nintendo to become a first party developer and end their hardware business, but were knocked back (instead they acquired Rare). They also came close to purchasing Sega and Squaresoft as well, but Microsoft withdrew their offer in both cases after both companies asked for more money.

        At least back when the original Xbox was conceived and also the Xbox 360 to a large degree, Microsoft were indeed competing directly with Nintendo and Sony (Sony especially).

          You're not referencing that old 'suck my yellow balls' photoshop for the MS buying Nintendo claim are you?

            No. There are plenty of resources if you looked for it. Here's just one:

            https://www.theguardian.com/technology/gamesblog/2008/sep/11/playstation.microsoft

            he wanted to know how I was going to win for Microsoft, how we were going to take on Sony, how would we compete with – or acquire – Nintendo. Those were the conversations in those days. It was a classic build or buy conversation. Xbox had launched but it was an aggressive black box for shooters, and how do we evolve that, how do we build the next Xbox, how do we get after Sony?

            In just those couple of sentences he confirms that A - Sony was indeed their main competition back then and B - That they tried to purchase Nintendo.

              TIL, thanks for that. I had honestly never heard of it.

      Well said. For context, it was part of Satya Nadella’s broader corporate shift of “services first” ... and, frankly, it’s turned Microsoft around. It needed someone with a gaming lens to really commercialise it in interactive entertainment though, and by God, Phil Spencer has delivered on that front. I’m surprised it took this long to build out Xbox PC, but I know Microsoft can be a bit of a large, bureaucratic behemoth, so it might have taken him that long to convince the higher ups.

      The internet PlayStation pissants had a real crybaby moment this week when this story dropped about how Phil Spencer was being ‘disrespectful’, but any nuanced look would see that he’s right. I don’t think Amazon are likely to be an immediate player though, considering xCloud runs on as many AWS servers as it does Azure (I suspect the plan is to slowly migrate off AWS over time and this is a short-term scale up approach), and they have their foot in the development space, but who knows what Bezos wants to do with his money? In any case, I’d be keeping an eye on Google’s moves in this space ...

      Anyway, the short answer is you’re right. PlayStation 5 might be Sony’s best console yet ... but given where we’re at with internet and streaming now ... unless they can compete like-for-like, I suspect it’ll be their last.

        well considering Stadia is basically dead in the water... that and I don't think i've actually met anyone or seen online comments anywhere that are actually excited about streaming games at this stage. maybe in the future but, really it could also cost Microsoft big. hell I have one of the best connections I can get in this country and still have issues with a lot of big online games because they don't give a damn about australia. as good as my network is comparatively to most people I can't even feel confident that streaming games will work in this country at all.

        At this stage this seems to be a pretty common sentiment. In the end this much like the article implies could change the field entirely or destroy microsofts place in the core gaming sphere.

          I think it really depends on how Microsoft approaches it. Correct me if I am wrong but I was under the impression that Stadia was 100% streaming from the server. If Microsoft's products did some local processing and perhaps acted as a part of some orchestration technologies, it is possible they could not make the same mistakes.
          I think Stadia's main problem is that it is ahead of its time.

            maybe. it's also a matter of perception. people like being able to own things. now in this age it is harder to do that but, people do find ways and places like GOG do allow for games that aren't managed by DRM. it helps a lot. then with this sort of thing you go, well they can cut me off at any time. if the servers bust I can't play. it'll be always online so if the ISP hiccups or what have you can't play either. people lose that feeling of control over their games.

            it's a really tough sell for a lot of people. it could work but, the presentation is going to need to be eleven taken up to eleven thousand to not nose dive.

              People used to like buying videos too, however Netflix has gone pretty close to putting that entire distribution model out of business.

              The reality is that, like with movies, the vast majority of people will never look at a game again once they've completed it, if they even get that far, and an 'owned' copy at that point is no more nor less than the next EB trade in.

              I'd wager that there's a hell of a lot of untapped potential in a Netflix-style all you can eat streaming service.

    The issue here ends up being the same as we've seen with video streaming, though - fragmentation. If game streaming actually becomes mainstream, the next thing you'll see is EA start up their own streaming service. Want to play FIFA or Madden or Battlefield? You need to subscribe to EA's service. Want to play COD or Diablo or Overwatch? You have to subscribe to Activision. Ditto Ubisoft, Take Two and any other major publisher. It doesn't matter if they have their own data centres or just partner with Google or Amazon or even Microsoft, if they don't mind the Azure division eating the XBox division's lunch. Take those major IP's away from XBox, and MS's first party output isn't really appealing enough to sustain a service like that.

    It becomes about content, not who owns the data centre. Stadia"s issues are not technical but lack of content, and the service is just about stillborn as a result. But with the investment already made in the tech, a partnership with Nintendo and/or Sony (along with any number of other publishers / developers) would hold some appeal for Google to join their tech to other parties" content.

    The end result is more likely to be the XBox division disappearing, while Sony and Nintendo carry on in partnership with Google or Amazon or Azure. Because when the battle comes down to content, Microsoft don't have the IP to compete with Sony or Nintendo. Microsoft will almost certainly flourish by providing the infrastructure for some of these services via Azure, but it's hard to see the XBox division remaining as relevant in a streaming oriented world.

    Yesss you guys. are alright. Wonderful You have such information about inside information about this, but as someone who plays. Xbox everyday and who has the inside and Have the streaming service? 4 Microsoft I am one. who gets to play his Xbox anywhere on his phone or tablet or PC any where the hell I am 50 games with more added each month This is something that no one has yet. How does a game changer when I can play? Halo 5 on my phone Or Madden 20 on my phone.

    I mean, you can say that, sure. But when someone sits down to play a console it's usually Nintendo, Sony, MS or PC. Google and Amazon aren't really offering anything in that space besides phone games.

Join the discussion!

Trending Stories Right Now