Microsoft’s The head of the games division said on Wednesday that video games can weather the economic weakness, even as the software maker expects slower growth in its divisions. other parts of the business that target consumers.
Rising prices and interest rates have prompted investors to quickly seek out financial markets that can withstand a downturn. Gaming remains a top priority for Microsoft, with the company working towards closing $68.7 billion purchase of the publisher Activision Blizzard.
Other parts of technology could be at risk during a downturn. Alphabet and Meta . Platform still make most of their revenue from advertising, the former still relying on internet search and then on social media. Patrick Lo, CEO of network hardware maker Netgearreported a 14% drop in annual revenue on Wednesday, said in a statement has a “challenging macroeconomic environment for most consumers.”
Microsoft is more diverse than those companies, though earlier this week the executive said The consumer exposure will affect current-quarter sales of Windows operating system licenses, Surface computers, and advertising on properties like Bing and LinkedIn.
In this quarter, the company is expected to register more subscribers Xbox Game Pass Amy Hood, its chief financial officer, told analysts on a conference call on Tuesday, offering unlimited access to hundreds of video games. Game revenue will decline in the low to mid-range percentage range, said Hood, due to strong growth last quarter when first-party games were introduced.
Phil Spencer, CEO of Microsoft Gaming, sounds upbeat about the unit’s prospects.
“It’s been proven over the years that, in times of economic uncertainty for families, gaming can fix it,” he said at the Wall Street Journal’s WSJ Tech Live conference in Laguna Beach, California. some of those problems.
Not everyone shares Spencer’s views.
Mat Piscatella, executive director and video game industry advisor at market researcher NPD Group, wrote in July: “The video game industry has never been ‘recession-resistant”, but the line that word is given every time the word r is mentioned”. tweet.
Piers Harding-Rolls, director of research at research house Ampere Analysis, has make the same comment.
“After two years of massive expansion, the games market is poised to recover a bit of that growth in 2022 as multiple factors combine to dent performance,” he told CNBC in July.
But Spencer can point to Microsoft’s own experience with recessions to back up his claims.
In 2008, during the Global Financial Crisis, Microsoft reduced the price of Xbox consoles in various markets as public interest in Nintendo Wii. “In terms of numbers, our greatest holiday and best calendar year in Xbox history,” said Robbie Bach, president of entertainment and devices at Microsoft.
In 2020, a brief recession coincided with the arrival of the coronavirus, but that prompted people to stay home and play more games, including on Xbox consoles and PCs. “People everywhere are turning to gaming to stay human while practicing social distancing,” CEO Satya Nadella said in April 2020.
Today, Spencer said, Microsoft lets people choose how much they want to spend if they want the console. The company offers the $499 Xbox Series X and the less powerful $299 Xbox Series S. Microsoft subsidizes costs for between $100 and $200 per console, with the expectation that it will make money back from accessory sales and in-store purchases. speak. It’s up to the player if they want to pay $10 or $15 per month for a Game Pass subscription. They can also buy the game outright or play some games for free.
Spencer said he doesn’t think Microsoft will be able to keep the price of games constant forever. But they can provide an impressive amount of entertainment compared to other pursuits. “People can play video games for hundreds of hours,” he said.
