May 10, 2022
Hello, and welcome to Protocol Entertainment, your guide to the business of the gaming and media industries. This Tuesday, we’re discussing Microsoft’s Xbox Everywhere initiative and what it means for the future of game distribution, as well as the deluge of game industry earnings dropping throughout the day.
Microsoft Gaming CEO Phil Spencer is well known for this follow-through. Back in 2018, the exec, speaking to a crowd at a San Francisco business conference, said of the company’s Xbox Game Pass subscription service: “It started on console, it will come to PC and eventually it will come to every device.”
Back then, and with little knowledge of Spencer’s bonafides, that probably sounded a bit like corporate bravado falling somewhere between a long shot and wishful thinking. But Microsoft has proven that it has the resources and desire to deliver Game Pass “to every device,” which means Spencer’s long-term vision might be closer than we think.
“Xbox Everywhere.” That’s the nice, neat slogan Microsoft is now using to sum up its distribution ambitions. Ultimately, the company is not so much concerned with growing Game Pass as its singular hope for the future. Instead, the goal is to ensure that the Xbox audience includes as many possible customers.
Microsoft dropped the Xbox from Game Pass. The company said last year it plans to bring Game Pass to streaming sticks and smart TVs, and that it would be developing its own hardware to help accelerate this shift. That way, a new customer could subscribe to Game Pass, hook up a controller and start playing, no Xbox required.
There are plenty of hurdles. Chief among them is connectivity concerns. Microsoft this weekend experienced a major Xbox outage that disrupted customers’ access to online services, including Game Pass and multiplayer, and even in some cases blocked authentication of digital games players had purchased and downloaded.
Xbox Everywhere is the culmination of many different business strategies Microsoft has deployed over the years, many of them undeniably pro-consumer, like the cross-buy program Xbox Play Anywhere. But it’s always worth noting how the company might have gone in the direction of Nintendo or Sony had it not fallen so far behind the competition during the years of the Xbox One. Instead, the company put its faith in Spencer to architect a turnaround, and the results are finally bearing fruit.
“The ever-present smile and impish squint of Mr. Miyamoto’s eyes were gone. ‘Neither of you understands the challenges of creating software that people love to play. This is something we constantly push ourselves to do. We do not give away our software,’ Mr. Miyamoto stated.” — Former Nintendo of America President Reggie Fils-Aimé recounted the internal debate to bundle Wii Sports with the original Wii console in an excerpt of his new book published in The Washington Post. Fils-Aimé won the argument, thankfully.
“We at Double Fine Productions stand steadfast in our support of essential healthcare rights for all. We firmly believe that a decision to overturn Roe vs. Wade would deny people their human rights, and directly impact the lives, freedoms, and choices of everyone in this country.” — Microsoft-owned studio and Psychonauts creator Double Fine joined Bungie as the only other major game developer to speak out about abortion rights following last week’s Supreme Court leak.
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Electronic Arts heads back to Middle-earth. EA yesterday announced a new mobile game based on “The Lord of the Rings” called Heroes of Middle-earth, which will be developed by Star Wars: Galaxy of Heroes studio EA Capital Games. It’s EA’s first LOTR game since 2009.
Take-Two CEO’s new contract. Strauss Zelnick had his contract extended through 2029, and it includes stock incentives tied to increasing microtransaction revenue like virtual currency and the sale of future NFTs, Axios reported.
Call of Duty Mobile’s major milestone. Activision’s version of Call of Duty for smartphones, developed by Tencent’s TiMi, has been downloaded more than 650 million times, with consumer spending in 2021 topping $1 billion.
The New York Times makes a Wordle edit. A Monday blog post from the newspaper’s parent company said the word “fetus,” which had been loaded into Wordle prior to the acquisition, had been replaced “for as many solvers as possible” due to the recent news surrounding Roe v. Wade and abortion rights.
FTC takes aim at Sony’s Bungie deal. The Federal Trade Commission is taking a closer look at Sony’s acquisition of Destiny developer Bungie, The Information reported last week. The investigation may focus on whether Sony intends to make Bungie products exclusive to PlayStation.
Russian TVs display anti-war messages during Putin's speech. It appears that hackers attacked a metadata provider to change TV station names to messages including “blood is on your hands.”
Spotify is shutting down its Stations app. The app, which will be shut down on May 16, was supposed to provide a Pandora-like personalized radio experience to listeners not interested in on-demand music subscriptions.
How Apple has been holding back AR. By not adopting the WebXR standard, Apple has made it harder to build AR experiences for mobile phones, according to industry insiders.
By the time you’re likely reading this, it will have already started. A number of high-profile game companies — from Sony to Nintendo to Electronic Arts — are reporting earnings today, with many more to come in the days and weeks ahead. For those companies based overseas, this news dump has already begun.
Why does this matter to non-investors? Aren’t earnings a snooze fest? Usually that would be the case. But the game industry is different, and its culture of intense secrecy means earnings announcements are often regular and planned moments of rare corporate transparency. Game reveals, sales performance and other highly sought-after bits of information are often coupled in these scheduled reports, and it’s made following earnings releases and investor calls a strange but dedicated pastime for even casual industry news hounds.
The intense interest in game company financials is also a core pillar of the culture; gaming fans tend to make their love of certain brands and series core parts of their identity, and that can involve rooting for your side’s long-term financial success. Anyway, I’ll see you all on today’s earnings calls. After all, we’re likely to get some news.
— Nick Statt
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