According to a quarterly financial call, Microsoft expects the Xbox Series X and Xbox Series S to have a very successful first year on the market. Although the consoles will likely be sold at a loss, the company still anticipates a 40% increase in hardware revenue year-on-year.
As compared to Sony and Nintendo, Microsoft has chosen to take a slightly different approach to its next console launches. Rather than offer a single upgraded console, Microsoft will offer the high-end Xbox Series X and the less-expensive Xbox Series S. Although many have expressed concern about the weaker specs of the Xbox Series S, there is no denying that it is a compelling option for gamers on a budget. In conjunction with the Xbox Game Pass, Xbox Series S owners will likely have access to a large number of games inexpensively.
On the call, several Microsoft executives expressed the belief that sustained strong demand would result in increased year-on-year hardware revenue and gaming revenue. It’s not hard to imagine the consoles seeing strong demand, in light of the explosively popular pre-order process for both Xbox Series consoles. Plus, given Microsoft’s recent acquisition of Bethesda’s parent company, ZeniMax, the new consoles may be able to keep demand high over the next year. Console exclusive re-releases of games from iconic series like Fallout would likely be quick to produce and warmly received by fans.
However, the executives also suggested that Microsoft would sell its new consoles at a loss, aligning with recent rumors about Microsoft’s strategy for the upcoming consoles. This is nothing new; selling consoles at a loss is a common industry practice, and one that Microsoft used for the Xbox One. However, this strategy typically relies on strong game sales to generate profits. If gamers decide to stick with the Xbox Game Pass, it is unclear whether that would generate enough profit to outweigh the loss on console sales.
Though demand is high now, it remains to be seen if the consoles will have the software needed to sustain interest post-launch. Halo Infinite was originally intended to be a launch title, but has been delayed to 2021, sparking concerns about the Xbox launch day lineup. This is especially pressing in light of Sony’s strong launch lineup, with the blockbuster Spider-Man: Miles Morales available day one.
Still, Microsoft has good reason to anticipate a strong debut year for its new consoles. Microsoft now owns many of the best Western RPG developers, which could result in some extraordinary games in a few years’ time. Plus, major multiplatform titles like Assassin’s Creed Valhalla will launch alongside the new systems, so new owners will have plenty to play.
The Xbox Series X and Xbox Series S will release on November 10th.
Source: Twinfinite
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