of Microsoft A game executive said Wednesday that video games can withstand economic weakness, even as the software maker hopes to slowly take on other parts of its business that target consumers.
Rising prices and interest rates have made investors hurry and find pockets of financial markets that can be held against failure. Gaming is still the most important thing for Microsoft, as the company works to close the $68.7 billion publisher. Activision Blizzard.
Other areas of technology may be at risk in the recession. Alphabet and Meta Platform still get most of their income from advertising, with the former still relying on internet search and the latter on social media. Patrick Lo, CEO of the network hardware maker Netgearwhich reported a 14% annual decline in revenue on Wednesday, said in a statement there was “a strong macroeconomic impact for many consumers.”
Microsoft is more diverse than those companies, although earlier this week, company executives said that its exposure to consumers will hurt sales in the quarter of Windows operating system licenses, PCs Surface media and resources such as Bing and LinkedIn.
In the quarter, the company hopes to sign up more subscribers to the Xbox Game Pass service, which offers unlimited access to hundreds of video games, Amy Hood, its chief financial officer, told analysts on a conference call on Tuesday. Gaming revenue should decline in the low to mid-teens due to strong growth in the quarter last year that saw the launch of the first games, Hood said.
Phil Spencer, CEO of Microsoft Gaming, sounded optimistic about the sector’s prospects.
“It’s been proven over the years, in times of economic hardship for families, sports are a little more powerful for those issues,” he said at the Wall Street Journal’s WSJ Tech Live conference in Laguna Beach, California.
Not everyone shares Spencer’s opinion.
“The video game industry has never been ‘compensatory,’ but that line is drawn every time the r-word is mentioned,” Mat Piscatella, managing director and video game industry consultant and market analyst NPD Group, wrote in July. tweet.
Piers Harding-Rolls, director of research at Ampere Analysis, has made similar comments.
“After two years of great expansion, the sports market is poised to give back some of that growth in 2022 as a number of factors combine to undermine performance,” he told CNBC in July.
But Spencer can point to Microsoft’s own experience with the recession as evidence for his claim.
In 2008, during the global financial crisis, Microsoft dropped the price of Xbox consoles in various markets as the public was interested in Nintendo Wii. It turned out to be “the number on the console side, our best holiday and the best calendar year in the history of Xbox,” said Robbie Bach, Microsoft’s vice president of entertainment and devices at the time.
In 2020, a brief recession coincided with the start of the coronavirus, but that made people stay at home and play other games, including on Xbox consoles and PCs. CEO Satya Nadella said in April 2020, “People everywhere are turning to gaming to support human connection while dealing with human distractions.”
Today, Spencer said, Microsoft gives people the choice of how much they want to spend if they want consoles. The company offers the Xbox Series X $ 499 and the weak $ 299 Xbox Series S. Microsoft supports the budget for the volume of $ 100 to $ 200 per controller, hoping to make money back back to selling equipment and buying stores, he said. It’s up to players if they want to pay $10 or $15 a month for a Game Pass subscription. They can also buy games outright, or play some games for free.
Spencer said he doesn’t think Microsoft will be able to keep game prices constant forever. But they can be incredibly entertaining compared to other pursuits. “People can play video games for hundreds of hours,” he said.
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