The second day of the FTC v. Microsoft hearing focused primarily on the testimony of Phil Spencer, the Xbox chief. Spencer discussed various topics, including Microsoft’s struggles in the console wars, Sony’s aggressive competition, and the potential acquisition of Zynga and Bethesda.
One of the main arguments between Microsoft and the FTC was whether the Nintendo Switch should be included in the definition of the console market. Microsoft wanted the Switch included to position Xbox in third place. However, the FTC argued that Microsoft internally compares Xbox to PlayStation, not the Switch. The FTC presented market analysis and metrics to support its claim. Ultimately, the Nintendo Switch is still a game console, but with unique features and a diverse game catalog.
The discussion then shifted to Xbox’s performance in the console wars. Microsoft had previously claimed that it had lost the console wars and its competitors were positioned to continue dominating. When asked about this, Spencer acknowledged that Microsoft is in third place globally, behind Sony and Nintendo. He also mentioned the challenges of competing with Sony’s PlayStation platform, which he described as “hostile to Xbox’s survival.”
Despite Xbox’s struggles, Spencer highlighted the growth and success of the gaming business. He revealed that gaming revenue at Microsoft is double what it was during the Xbox 360 era and that Xbox has more players than ever. Additionally, Microsoft expects $1 billion in PC gaming revenue this year. While Xbox may not be meeting internal targets, the overall gaming business is in good shape.
Related Post
The FTC questioned why Microsoft would spend such a significant amount of money on the acquisition of Activision if the Xbox business is struggling. Spencer explained that the deal expands their business to the mobile platform, which presents a significant strategic and business opportunity. He also reiterated that console growth is not the primary focus of the Activision deal.
The discussion then turned towards the possibility of Microsoft using the Activision acquisition to create Xbox exclusives and restrict content from competitors. Spencer denied any intention of using the deal to harm competitors and highlighted the importance of maintaining a healthy gaming ecosystem.
Overall, the hearing shed light on Microsoft’s position in the console wars, its struggles to compete with Sony, and its focus on expanding into the mobile gaming market. While Xbox may be in third place in terms of console sales, the company’s gaming business as a whole is thriving. The Activision acquisition is seen as a strategic move to tap into the mobile gaming opportunity and strengthen Microsoft’s overall gaming presence.
