Do Xbox Consoles Still Have a Place at Microsoft?

Two decades ago, when the first Xbox arrived, it used the internet for small-scale multiplayer and every game came on a disc. Microsoft built a massive business on selling consoles that grew to play games beyond those discs. As the company looks forward to its next 20 years, it’s doing so in an industry shifting away from gaming brought to you by a single device, one where mobile inevitably will overtake Xboxes, and cloud gaming is eradicating physical platforms entirely. One where it’s easy to ask: Does Microsoft need to make consoles anymore?

It’s a tempting prospect. Supply chain shutdowns and a global chip shortage—both spurred by the Covid-19 pandemic—have made the Xbox Series X/S very hard to find without constant vigilance or overpaying a reseller. Meanwhile, the Xbox gaming app is coming to Samsung smart TVs under its Gaming Hub on June 30, allowing anyone with the right Bluetooth controller to stream Xbox titles without a console at all.

But for Phil Spencer, the man at Microsoft responsible for its household-name gaming device, hardware is still key. For him, the shift to the cloud has been about creating a hybrid approach, one that allows Microsoft to expand its market beyond Xbox fans. He told the Verge in 2020 that he didn’t think the latest generation of consoles would be the last ones the company shipped, and his stance on the matter hasn’t changed. “We’ve lived through two years of real constraint in the market,” Spencer tells WIRED. “Giving people more choice in how they can play games definitely has been a good thing, both for our business and for gamers.”

Cloud-based gaming via platforms like Google Stadia haven’t had the smoothest of launches, but companies like Sony and Microsoft are better poised to make this work. Sony just merged its cloud gaming service, PlayStation Now, with its more popular PlayStation Plus subscription. Microsoft has name recognition that makes the service easily identifiable over would-be competitors.

Spencer also notes that while cloud gaming can bring in new players, there will always be “people that are looking for dedicated, high-end devices to play games in the highest fidelity they can in their homes.” For many of those players, that device is an Xbox, something even the head of Samsung’s service business team, Won-Jin Lee, agrees with: “The hardcore gamers will always play their games on consoles.”

The Xbox App will be available on Samsung TVs first, but not exclusively. The company says it is exploring other partnerships. Similarly, Samsung won’t end with Xbox. Lee says the idea was not to build their ecosystem around Xbox, but rather to work with it and companies like it. “Working with Xbox really gave us the foundation in terms of how to build this service and how to move forward,” Lee says. “From the get-go, our philosophy has always been to offer the discovery experience that is very open.”

In lieu of E3, Microsoft is preparing to show off upcoming games during a streamed event on June 12. Spencer points to the company’s library of games—as well as its recent acquisition of Activision Blizzard—as a key focus for the company going forward.

Indeed, it’s video games that make the sell, whether it’s hardware or cloud gaming. Without a strong lineup to woo players, it doesn’t matter how many TVs Xbox overtakes if no one wants to play.