Phil Spencer, the current CEO of Microsoft’s Xbox, has stated that he believes gaming is “somewhat resilient” to economic downturns. Despite being extremely successful in its own right, Xbox’s gaming ventures have also been hit by mounting economic difficulties, and the company appears to have adjusted its expectations for the upcoming fiscal year to account for these concerns.
As one of the three console gaming behemoths, Xbox has always been a major player in the gaming industry, and this is especially true now that the company has embraced its PC branch more than ever before. Its yet-to-be-completed acquisition of Activision Blizzard for $68.7 billion underscores the notion that Xbox is doing well, but it is unlikely to be fully ambivalent to the recession.
Spencer recently discussed the state of the gaming industry, focusing on the issue of economic uncertainty in particular. “Gaming is somewhat resilient to those issues,” he said, referring to issues that arise during recessions. However, Spencer did admit a few days ago that price increases for Xbox Game Pass are possible in the future, implying that the resilience Spencer described may stem from the industry’s ability to adapt to the economic context at an extremely rapid pace.
Of course, not everyone agrees with Spencer. Piers Harding-Rolls, research director at analytics firm Ampere Analysis, told CNBC that the gaming industry is “poised to hand back a bit of [its] growth” by 2022. Given that the company may raise the prices of its services to compensate for decreased revenue, it’s worth noting that Xbox’s potential price increase could have far-reaching consequences for the rest of the industry.
Despite Spencer’s comments, it’s worth remembering that Xbox Game Pass missed its subscriber goal for the second year in a row, which coincides with the looming threat of recession. It’s a difficult, layered issue on which Harding-Rolls and Spencer have both made valid points in the past, and it’s a simple statement of fact that there’s no way to predict how the market will perform over time.
It goes without saying that the acquisition of Activision Blizzard will have a significant impact on how Xbox behaves in the coming years. Spencer admits that legislative scrutiny is warranted given the magnitude of the acquisition, but he remains confident that the deal will be completed before all is said and done. Having access to Activision Blizzard’s IPs and production capacities would undoubtedly boost Xbox’s output during a potential recession, but the specifics of how things might play out remain hazy at best.
