Microsoft’s gaming chief: 3 billion people play video games today

By: Wajeeh Khan
Wajeeh Khan
Wajeeh is an active follower of world affairs, technology, an avid reader, and loves to play table tennis in… read more.
on Jun 14, 2021
  • The Xbox unit generated $3.6 billion in revenue for Microsoft in fiscal Q3.
  • The U.S. multinational is widening its investments in the gaming segment.
  • Microsoft believes in a creator-led market and is unlikely to take a 30% cut.

The Xbox unit generated $3.6 billion (£2.55 billion) in revenue for Microsoft Corp (NASDAQ: MSFT) in its recent financial quarter. In the future, however, the tech giant intends to take some, or even all of the console users to the cloud.

Phil Spencer’s comments on CNBC’s “TechCheck”

Commenting on the need for cloud gaming and how big it could be, Microsoft’s gaming chief, Phil Spencer, said on CNBC’s “TechCheck”:

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“There are three billion people who play video games on the planet today – almost half of the world’s population. It’s a $200 billion top line tam, business growing at double digits last year. In order to continue to grow this business at that rate, it’s got to be about accessibility. We’re talking a lot about accessibility of technology but also business models; subscriptions, ad-funded games – I think the diversity of devices and business models are great tools for the creators to continue to grow this business.”

Spencer further highlighted that Microsoft is a small percentage of that $200 billion business but is committed to growing faster than the market. To that end, the American multinational is widening its investments in three primary segments; content, cloud infrastructure with Azure, and the Xbox live community. As the gaming business continues to grow at double digits, Microsoft’s investments, Spencer expressed confidence, will help it secure a broader share in the market.

Microsoft is unlikely to take a 30% cut

According to the Xbox head, Microsoft believes in a creator-led market that focuses on returning much of the generated revenue to the creators. The Redmond-based company, therefore, is unlikely to follow Apple in its footstep and take a 30% cut.

“We know that the creator has to be the one that’s succeeding in our market. That’s true in our subscription, that’s clearly true in our store. We think democratising that content, so it releases to more people in more direct ways from creator to consumer is a key for us as Microsoft creators have been at our core from the beginning.”

Microsoft opened at $257.80 per share on Monday and closed the regular session at $259.89 per share. Including the price action, the stock is about 20% up year-to-date after an annual gain of close to 40% in 2020. At the time of writing, Microsoft is valued at $1.95 trillion and has a price to earnings ratio of 35.28.

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