Xbox chief Phil Spencer reaffirms commitment to physical media despite brick-and-mortar abandonment, Game Pass success

Current Game Pass titles, in context of Phil Spencer's statements on Xbox's commitment to disc.
Current Game Pass titles, in context of Phil Spencer's statements on Xbox's commitment to disc. (Image credit: Xbox Game Pass)

In an interview with Game File that reportedly took place before the recent Xbox podcast, Phil Spencer reaffirmed Xbox's commitment to physical media. This may ring insincere in light of the continued growth of Game Pass for Xbox and PC giving mass access to games for a subscription fee, but Xbox's approach to backward-compatibility does lend some credence to the statement.

The full Game File interview with Phil Spencer covers more than just statements on physical media. Spencer also spoke about the 1,900 job cuts from Microsoft's gaming division, the general uptick in cloud gaming demand, and the slowly-stagnating nature of the current gaming business.

Of the current gaming business, Spencer said, "I don't think we're doing a good enough job finding new players. Let's pick consoles as a good example: we found 200 million global households that will play console games. And that number really hasn't changed in the last five, six years."

"We've raised the price of games. [...] found ways of getting more money per player. I think at some point you reach a peak on that, and frankly, it can go to some places that are manipulative that I'm not a big fan of. The solution is to find new customers [...] through new ways of delivering games to players who can't play those games today, whether that's device, [...] access, [...] price point of video games," he continued.

The three key limiting factors he described — device, access, and price point — are all addressed by Xbox Cloud Gaming, cross-platform porting, and Game Pass's subscription model, respectively. So despite Xbox coming in third place in console hardware, Phil Spencer's "bullish" confidence about Xbox makes some sense — especially with the Activision-Blizzard acquisition in mind. They're hardly in a precarious position.

At least, that's what he seems to be implying by talking about the continued growth of PC and cloud for Xbox. Microsoft's January layoffs included 1,900 job cuts from their gaming division (Xbox and owned studios), and is still severe despite the similar cuts happening industry-wide. 

In any case, comments from Spencer and other gaming executives about seeking perpetual growth should be met with some degree of skepticism. The pursuit of excess only works as long as there is still excess to pursue, and Spencer's observation that the console market has more-or-less capped at 200 million households worldwide should serve as a sobering warning to AAA gaming executives — himself included.

Unfortunately, it seems the AAA gaming industry would prefer to undergo mass layoffs after major release cycles or acquisitions rather than tone down executive payouts or their own ambition. For now, Xbox's acquisitions and services on offer put it within a very good place within that industry, and the layoffs, if truly optimal, may have left them in prime condition. Microsoft's continued focus on producing Xbox consoles with physical game discs seem assured — at least for now. 

  • DougMcC
    Great that they're at least aware that they have a pricing problem and it is turning away users. Maybe the industry will back away from their current user squeeze strategy and embrace broader sales.
  • hotaru251
    Honestly most games now-a-days from AAA devs aren't worth their price.

    They are basically gold painted turds that have no substance.

    Why I have played more Indie games in past year as they are usually projects of love & have that substance.
  • orlandu
    The interview linked to has Phil saying 200 million households play on console, not 20 million.
  • ohio_buckeye
    I will say most games are overpriced. I rarely buy a new game at full price. Many I play even on pc are on game pass. Take Madden as an example. When I was a kid that series was fun and new features came out in the days of sega Genesis etc. But today Madden feels sometimes like copy paste and change cover.

    That said the game I will likely buy day 1 or pre order this year is the new college football game coming out this summer. I used to play those games a LOT and was disappointed they’d quit making them. So that is likely a day one purchase for me this time.