I want to start by saying that this isn't a total defense of Phil Spencer and everything he's said and done in his time as head of Xbox and in his current position as chief executive officer of Microsoft Gaming. He's made plenty of mistakes that are his to own. Instead, this is a recognition of the facts of today's video games industry, and the lemonade that Spencer is already making from the lemons Xbox has dealt with in recent years.

Hardware sales are no longer the factor on which success in the video games industry hinges. The industry doesn't operate in the same ways it did a decade ago, and Spencer has, correctly, spent his time shifting Xbox to align with those changes. Whether traditionalist gamers like it or not.

Software and services are king

Pass the baton; there's a new game in town

Xbox 'lost' the console generation, where players built and established their digital libraries. Spencer has openly admitted this before, first in an interview almost two years ago on the Kinda Funny XCast, and then in nearly every interview since, where the topic has come up regarding Xbox's changing strategy. He repeated it again in his most recent interviews with Gamertag Radio, and Destin Legarie, respectively.

Losing the bout of the PS4/Xbox One generation was a devastating loss for the platform, no doubt, because now there was no way forward for Xbox if it kept trying to pull players over through exclusive games. I find it hard to believe that any PlayStation player, who had built up a library of games on PlayStation 4 and now PlayStation 5, would have left Sony behind if one of Xbox's first-party studios released a game on par with The Last of Us. Or if Halo Infinite had been the best Halo game the world has ever seen.

Xbox and Phil Spencer can't change the fact that by the time the PS5 and Xbox Series X/S rolled around, players had invested thousands of dollars worth of games and hardware outside the Xbox ecosystem. This is why he's right, in today's industry, to direct Xbox down the path of becoming one of the biggest publishers in the world. Spencer and his team acquiring ZeniMax and Activision Blizzard King were two big moves that immediately catapulted Xbox's portfolio of first-party games and IP. Added with the legacy franchises that Xbox already had to power its crown jewel, Xbox Game Pass, and it's a winning long-term strategy.

Now, Xbox is home to the best subscription service offered in the video games industry today, Xbox Game Pass. Xbox is also home to some of the biggest software IPs in the history of video games, with Call of Duty, World of Warcraft, The Elder Scrolls, Fallout, DOOM, Diablo, and Overwatch, to name a few, all under one banner.

If you don't want to pay for Game Pass, you can purchase any of these games at a premium as they are drip-fed onto other platforms. Whether you buy directly into its ecosystem through its hardware, subscription services, or from a third party, Xbox gets its cut. And sure, when 'everything is an Xbox,' there's no real reason to buy an Xbox console. But there doesn't have to be, and that's already starting to show.

The numbers are already turning

And it'll keep happening.

According to data from Ampere Analysis (reported by VGC), a data analytics firm "specializing in the media, games, and sports sectors" (as it says on its website), Microsoft was the number one games publisher in the world, for December 2024. $465 million was spent on Microsoft-owned games, during the busiest month of the year for video games due to the holiday season.

Granted, those numbers were largely driven by the fact that it was a time of year when people were spending more on entertainment, like video games, and they were driven more by big games like Call of Duty: Black Ops 6 than by other major releases in Xbox's portfolio, like Indiana Jones and the Great Circle.

That's also just one month of dominance, but it's going to continue happening. With more of Xbox's portfolio coming to other platforms, whether they're brand-new games like DOOM: The Dark Ages, or games that Xbox players have already washed, like Forza Horizon 5. Xbox now gets to double-dip, so to speak, on games that were released years ago, like Forza, or just months ago, like Indiana Jones's upcoming PS5 launch.

As Spencer said himself, when asked by Destin Legarie in the aforementioned interview about whether Starfield will come to PS5, "There's no reason for me to put a ring fence around any game, and say 'this game will not go to a place where it will find players and have business success for us.'"

"There's no reason for me to put a ring fence around any game, and say 'this game will not go to a place where it will find players and have business success for us.'" - Phil Spencer

Those examples are also just on individual games. Per GamesIndustry.Biz, Microsoft reported a "new quarterly record for revenue" from Xbox Game Pass, and an overall increase in its games and services. Dropping hardware sales pushed the company's overall games revenue down by 7%. Still, the drop from its hardware sales will gradually be offset as Xbox continues to flesh out its publishing portfolio. Microsoft, as a whole, has always been a software company first, and Spencer is simply shifting Xbox's business strategy to align with the same strategy that turned Microsoft into a company worth trillions.

Again, as Spencer told Dustin Legarie, "What we find is we're able to drive a better business that allows us to invest in a great game lineup like you saw. That's our strategy. Our strategy is to allow our games to be available. Game Pass is an important component of playing the games on our platform, but to keep games off of other platforms, we don't think is a path, that's not a path for us."

Multiplatform releases can power better, more interesting games

You've got the money; use it well

Again, when talking about the reality of today's industry, an Xbox that publishes its games on multiple platforms makes for a more interesting Xbox platform. Especially now that Xbox has some of the industry's biggest games under its belt that consistently sell millions and bring in revenue every month through live service elements. The recurring revenue even just Call of Duty brings in can help power smaller, more unique games that we wouldn't otherwise see.

Xbox's latest Developer_Direct event was even the latest example of how Xbox Game Studios is doing exactly that. In 2025, we have multiple games to look forward to of varying sizes, either developed in-house at Xbox or published by it, from legacy franchises and new IPs. Not everything will be a smash hit. I don't expect South of Midnight from Xbox's studio Compulsion Games to set the world on fire, but I am looking forward to playing something new, something that could become a seminal experience for me. In the same breath, I'm just as much looking forward to jumping into a new DOOM game, and get back to a franchise I'm already enamored with.

And again, not everything will work out. Redfall sure didn't. Nor did Halo Infinite, at least not in the way Spencer and Xbox would have liked to see when it launched in 2021. But as long as Spencer can keep using a multiplatform approach to empower developers to make the games they're passionate about, then we'll have the chance at getting games like Hi-Fi Rush, or Indiana Jones and the Great Circle. Though, with regard to the former of those two games, hopefully Spencer has learned not to let go of the people he's meant to empower.

For better and for worse, Spencer has Xbox on the right path

Phil Spencer has not been perfect in steering the massive ship that is the Xbox platform. The mistakes that he and the leadership team made helped put Xbox solidly in third place compared to PlayStation and Nintendo. I don't really see Xbox ever regaining the console hardware market share that it lost beginning in 2013. However, I see Xbox and Microsoft growing in the video games industry to be the number one publisher in the business, and not just for one month out of the year.

Traditionalist gamers who have been with one console platform their whole lives can be upset about the changes. As someone who grew up with one console platform their whole life, I get it. But I also recognize that exclusive games on proprietary hardware help no one but the executives and shareholders of the companies who create those ecosystems.

As former PlayStation executive Adam Boyes put it in a recent interview when talking about this very topic, "When Phil [Spencer] and his team are putting amazing content on more platforms, who's the victim? I ask a lot of people, 'who's the victim?' And there aren't any." Phil Spencer is right about Xbox's future, and I for one, can't wait to see a competitive Xbox firing on all cylinders once again.