Say what you will about Playstation’s vast first-party games roster, its rich legacy, and its solid sales edge over Microsoft in the recent generations of the console war, but Head of Xbox Phil Spencer knows a thing or two about spin. Following the naturally unpopular announcement by Sony last month that it would be increasing the price of the PlayStation 5 in most places outside of the US by around 6-10%, Phil Spencer said in an interview last week with CNBC that the Xbox wouldn’t be getting a price increase.
In a savvy follow-up, he added, “We think in a time when our customers are more economically challenged and uncertain than ever, we don’t think it’s the right move for us at this point to be raising prices on our console.” Smooth move, Phil. Not that he ever doesn’t, but boy did he looks smug after he said that, and he had every right to. It’s another shrewd move by Microsoft, and another in a series of recent showcases that they can gain ground on Sony through sheer financial clout.
But Spencer’s words especially resonate given what the world is going through right now. Energy crisis in Europe, alarming inflation rates, and large swathes of the global populace affected by the ongoing economic aftershocks of the pandemic and now the war in Ukraine Here in the UK, the government has allowed energy companies to raise costs significantly instead of bearing the brunt themselves. While Sony’s decision to raise the cost of the PS5 by a small percentage in the UK, Europe and other parts of the world isn’t nearly as flagrant as the massive energy price increases we’re witnessing, it unfortunately puts them in the camp of companies prioritising their own profit margins over consumers.
Whether you believe Xbox is keeping their existing price is a move from the bottom of Phil Spencer’s heart or just clever PR, the end result is the same: they’re not going with the flow of many other companies and raising prices for consumers to keep up with inflation, they’re taking the burden of that cost themselves. That sends a strong message at a time when people are at their most vulnerable. The message is ‘We’ve got your back, we’ll shoulder the cost.’ That counts for a lot at a time when so many other companies – Sony included – are not prepared (or financially able) to do so.
The Xbox price fix is the latest in a long line of moves that’s slowly positioning Xbox/Microsoft as the gamer-friendly console (something I wrote about a few weeks ago). Ever since the 2014 Xbox One launch debacle, Microsoft has been on a redemptive mission; from its impressive backwards-compatibility mission, to Day One simultaneous launches on PC and Xbox, to the spectacular value of Game Pass (which contains those Day One launches), Microsoft has invested heavily into making Xbox not just a console, but a platform-spanning service that really feels designed to cater to gamers. The Xbox is transcending hardware to a kind of green amorphous entity that always seems to be there when you’re at a loss for something to play; it’s a home console, it’s a Netflix-like games app on your PC, it’s a robust cloud gaming service. It’s, well, everything.
Microsoft hasn’t neglected its hardware side either. Far from it, Xbox has taken advantage of the PS5’s supply shortages to g, with its sales slowly making ground on the PS5 in the US, Europe, and even in the Sony stronghold of Japan. Sony itself is not expecting its supply issues to stop until 2024, and while Microsoft has not been immune to the global chip shortage, it invested heavily into making sure that it effectively had ‘chip priority’ (via Tech Radar) at the factories. Sure, the PS5 may recover in a couple of years, but by that point Microsoft will have reeled a lot of consumers into its ecosystem. And with the increasingly impressive value that that ecosystem offers, even those who only bought an Xbox for lack of PS5 supply may not want to leave (even in Japan).
Microsoft is proving itself to be a bit of a crisis-proof company, and Xbox is benefitting. It’s taken advantage of the post-pandemic supply problems to put itself at the head of the queue for new chips, it’s refusing to bump up prices in the face of inflation, it’s winning.
That’s not to say that Sony is some kind of anti-consumer villain here, rather that it’s a reflection of the vastly different financial realities of these two companies. According to Statista, Microsoft’s revenue for the 2022 fiscal year was $198.27 billion. Sony’s last recorded revenue was for the 2021 fiscal year, and stood at $88 billion. Pretty big difference there. It gets even more pronounced when comparing the two companies’ net income. Sony clocked $10.77 billion net income, while Microsoft had $72.77 billion. That’s a higher net income by nearly a factor of seven.
Microsoft’s ‘Hearts and Minds’ campaign of the past several years continues apace, but of course it’s easier to present yourself as magnanimous entity when you have seemingly endless resources.
Next: Have Xbox and Microsoft Become The ‘Gamer-Friendly’ Company?
