re: Microsoft rumored to release Starfield on PS5

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Obviously you saw the Xbox fan reaction to some of the rumors, people worried about their digital library and the future of the console. How are you going to keep those fans, and keep the Xbox ecosystem alive?

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I always take the feedback from our most ardent fans very seriously. We’re coming out of a December where we had our highest Xbox engagement ever in the history of the console, more players than we’ve ever had. I know there’s this fictitious world where people think that one exclusive game kind of kicks off the sales of a platform, but the industry just doesn’t really work that way today.

We’ve made a commitment in recognizing and respecting the library of games that people have purchased on our platform. I think we have a good track record with our backward compatibility, with Xbox Play Anywhere giving you a PC and console entitlement when you buy a game from us. When we’ve talked about future hardware that we’re going to go build, compatibility and library support is just kind of fundamental for us when we think about what our plans are. So we’re very, very committed to that.

I would put our commitment on that front, that we’ve made, up against any of the other platforms. I don’t know that other console manufacturers go out and say that the games that you’re purchasing now are going to be playable in the future. And frankly with like FPS Boost and Auto HDR, maybe even playable better than they were in their original state. That to me is a pretty fundamental brand promise for Xbox.

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I want to go back to something you mentioned in the FTC v. Microsoft case. You testified that putting Xbox games on PlayStation means that Sony uses that 30 percent of revenue that they get from those transactions to try to basically kill Xbox or undermine Xbox in certain ways. So why would you want to do more games on that platform if that’s the case?

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Maybe this is why we’re doing four [laughs]. I’m going to learn about our partnership with other platforms. I’m going to learn about what happens with our players. I think it will benefit the games that we’re putting there and that’s a good thing for us, and if we can use other platforms that have gamers and maybe some of those gamers don’t want to play it on PC and don’t want to play on Xbox and that can help us grow our business, I think that’s great. If the net result is that other things are punitive to the Xbox platform and try to limit our growth, then we’ll have to think more carefully about how we support those other platforms.

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Microsoft used to track the success of Xbox, or at least the executive compensation based on Game Pass, and that switched to content and services revenue. Can you tell why that changed, and how does this overall impact how Microsoft tracks the success of Xbox internally?

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It doesn’t change how we’re tracking success. Revenue that we make on other platforms will be part of content and service revenue, as it is today. Minecraft on PlayStation counts as part of our content and service revenue today. In terms of why we shifted, I think it was important when we were kickstarting Game Pass that there was a discrete focus on trying something new.

In the end, and I know there’s people who don’t believe it when I say this, our goal is not to make everybody a Game Pass subscriber. I’ve said many times that maybe 10-15 percent of our content and service revenue is subscriber revenue. It’s a good business for us today, Game Pass, but in no way is there a plan that says ‘Okay, everybody needs to become a game pass subscriber.’ If somebody wants to play a free-to-play game on Xbox and that’s what they’re happy doing, or if somebody wants to continue to build their library of games by buying games on Xbox, we’re totally happy.

We went to content and services because it’s actually more reflective now that Game Pass is kind of at a scale where it’s a sustainable, profitable business for us. We don’t have to have a discrete focus just on Game Pass, we should really just think about the health of the overall business on Xbox, which is people buying games, subscribing to games, buying items in games, and the things that people do on the platform that drive the business.

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