I think all the work with the content and promotion of Game Pass has always been a recognition that Xbox is a platform, not some gaming device that you need. I'm sure Microsoft will be happy in a future where there are no consoles, and every player has some simple gadget connected to the Internet, connected to the cloud, and they can stream all their games.
Game Pass is a long game. I see Microsoft realizing very early in this strategy that the future is the cloud. If you don't have to sell game consoles, your target audience will grow from 200-250-300 million people who own consoles to 3-4 billion people who play games. They are getting there. Remember when Netflix said, “How many people watch TV?” and the answer is 4 or 5 billion, and Netflix now has 260 million subscribers.
I think they, Satya Nadella being the architect, and Phil Spencer being the field general executing the strategy, are trying to get 250 million Game Pass subscribers without a console.
Is there anything Microsoft can do to regain its position in this generation of consoles? Sure, cancel Game Pass and lower the price of Xbox. If an Xbox cost 200 bucks and they told every Game Pass member that “we'll give you an Xbox for 20 bucks because you already paid for Game Pass and by the way if you buy an Xbox you'll get all of our own releases for free”. In this case, they will rush past Sony, who will simply stand still. They may just lose money but do it. If Microsoft wanted to win this console generation, it would have won.
But that's not what they're interested in. Their goal is to conquer the gaming business by bringing games to 3 billion people, not 300 million. They strive for this. I'm sure the way Game Pass will work in the future is that the price will drop from $15 a month to $10, and then drop to $5 with ad support. Every time you download the game, you will have to watch ads.
People will stick it out and Microsoft will make a ton of money. More people will play the games and pay less for the privilege, so I think they will benefit. They just don't win the console generation, they don't need it.
They now have a wide variety of content. You'll get Hellblade 2, you'll get The Outer Worlds 2, you'll get Elder Scrolls 6, you'll get the entire Call of Duty catalog soon, you can also get World of Warcraft on Game Pass. Yes, they will have 200 million subscribers, so I think they are doing brilliantly.
I think that the players' opinion that Microsoft lost to Sony is wrong. They lost the battle of consoles. But if that's how you measure your value: you need to sell more consoles or you suck. However, if the question is who will be more profitable, Xbox or Playstation, then Microsoft is definitely 10 or 100 times more profitable.