Was more to do with them not being able to break into mobile. Saying they need the ABK deal to do so otherwise the only answer they could think of was killing Xbox and just focusing on the mobile market.
Funny how sites are trying to make this out to be done new revelation or turn it into another MS are getting it of gaming narrative.
Q. Have you ever reached the conclusion, sir, that Xbox "lost the console wars," to Sony and Nintendo?
A. Have I reached that conclusion?
Yes.
Q. And what does lost the console wars mean?
A. In a relatively fixed market size of console games globally, we have no opportunity to kind of improve our third-place standing.
Q. Why launch a Generation 9 console?
MS. WINKINSON: I'm going to object to asked and answered. I think you asked him the exact same question.
Q. How much money did Microsoft invest to develop and launch the Generation 9 Xbox console, ballpark?
A. I don't have a good answer for a specific amount that we invested, maybe a billion dollars.
Q. Why -- what is your understanding of why Microsoft invested a billion dollars to compete with a Generation 9 console after it had lost the console wars?
A. There are three billion people who play video games on the planet. The industry is about $200 billion in revenue, all up, most of those players playing off of console.
For us, we felt we had an opportunity to help connect player and creators of games, and the creators of the games are building games on our console. Without having a console in the market, you'd really have no developer engagement to help us connect players' engagement across all devices.
Q. Given that, what you just said, is having a console offering a necessary part for Microsoft Gaming to compete in the gaming
industry today?
A. No.
Q. How does that reconcile with what you just said about needing to offer a console for developers, et cetera?
A. Keeping our console relevant and engaged with developers, I believe gives us the best opportunity to be relevant in the future of gaming, but there are other options that you could take, other strategic decisions you can make that are not
continuing to build the console.
Q. The decision that you have made as the leader of Xbox/Microsoft Gaming that Microsoft Gaming should continue and will continue to invest in console; is that right?
A. We're continuing to invest in the
Xbox console, yes.
Q. Okay. And why are you continuing to invest in Xbox console despite your conclusion that you lost the war?
A. Because our console -- we have developers that focus on our console platform and we believe that we have the opportunity to make games that are running on our console available to more players across more devices.
Q. So, in your view and understanding of the strategy for gaming, you have chosen to continue offering an Xbox console into the future as part of your strategy, correct?
A. We have chosen to continue to build Xbox consoles as part of our strategy, correct.
Q. And I take it, am I correct, that your objective in continuing -- one of your objectives in continuing to offer consoles is to do so in a manner that makes as much economic sense for Microsoft as you can, correct?
A. In our inroads in the gaming industry all up, yes
Q. Is Microsoft Gaming presently planning to launch a Gen -- strike that.
Is Microsoft Gaming developing a Gen 10 console?
A. We are not currently developing a Gen 10 console.
Q. Have you started discussing among the gaming leadership team and the Microsoft senior leadership team about offering a
Generation 10 console?
A. We have started early discussions on what a next generation could look like.
Q. Have you discussed a launch date 24 for Gen 10 Xbox console?
A. We have roughly talked about 2027 or 2028 as potential launch years.
9 Q. And as of today, is it your understanding of Microsoft Gaming strategy and plans that Microsoft will continue to develop a Gen 10 console?
A. I think that question remains to be answered. For planning purposes, we are assuming that Gen 10 would happen until it's proven that it should not.
Q. What are the factors that would potentially lead you to no longer offer a
Gen 10 -- strike that.
What are the factors that would lead you as leader of Microsoft Gaming to decide, you know what, we're just not gonna do anymore consoles, we're not gonna offer a
Gen 10?
A. If we're not able to gain relevance off of console and expand the market opportunity for us in Xbox, I would not encourage us to do another console.
Q. I think you said, it is your current planning at Microsoft to grow off console and develop a console device, right, for Gen 10?
A. Those two are very -- they're both big concepts and they're kind of unrelated. I would say the first one is an imperative, our business must grow off console otherwise this business makes no sense for us.
The second consideration of I have to keep teams focused on what we might be
able to do so that we have the opportunity to make a decision on a Generation 10 console down the road.
Q. Do you agree with the projections that are expressed in this chart?
A. I do not believe that that is what the future Xbox business would look like.
Q. So, Ms. McKissick is wrong?
A. This is a presentation from our devices organization to the gaming leadership team, so this is the view from the team that
is chartered with building our hardware on
what the future business would look like.
I can fairly safely say that if we do not make more progress than this off of console, we would exit the gaming business.
Q. And how wrong is she by 2030? How would you rearrange the chart basically to
make it more accurate for your projection of 2030?
A. I wasn't trying to make a projection on 2030, I was saying if this were the outcome that we were trending towards, we would not continue in the business, so the numbers would go down. So, I wasn't trying
to make a counter prediction, I was just saying if this were the outcome, we would --
I don't believe we'd still be in the business.
Q. And what outcome are you driving towards so that you could still be in the business?
A. Well, a majority of our customers are found off of our own hardware.
Q. By 2030?
A. I would hope by earlier than 2030. So, when you asked me if I agreed with this chart that the light green and blue depending on what colors you see there would have to be much larger much earlier.
Q. And when is it your goal to have a majority of Xbox subscribers off console?
A. I would say by FY26, '27 that we should be in that position or we'd have to make a different decision with the business.
Q. If it doesn't work out to gain efficient share in mobile, would Microsoft then have an incentive to start pulling some of these levers to ensure that business can survive in the 200 million TAM for console?
A. If you look at Microsoft as a global business and its scale, the Sony business inside of Microsoft is really no more meaningful than the Xbox business, it's not a -- the size of business that Microsoft is pursuing with all of its resources. Our pivot in this business is to constantly talk about three billion gamers, $200 billion in revenue top line and our ability to be a
participant in that growth. I don't -- in any world where we would not succeed on mobile and PC and decide that we would go backwards to a closed device flat TAM market and invest our resources there, I would not advocate for that.
Q. So, it's either -- I want to be clear about this, in three to four years,
it's either that Microsoft succeeds --Microsoft Gaming succeeds in going to achieve what you think it needs to achieve in the vision for mobile and PC or said shutdown was too draconian, but -- or what?
A. I'll call it divesting of what we have. My view is if we don't succeed on mobile, that it's really been caused by the two mobile platform holders excluding us from distributing our service. And we see that today where Apple blocks us from launching on their platform, through their store, I should say, and Google really constrains our ability to succeed. And how we're trying to counter that is to acquire some popular mobile content to help us create some allure for gamers that we can then use to have some engagement on those platforms where we might be able to use cloud and other distribution to gain a foothold on those platforms. Because if we don't gain a foothold on mobile, there's really no future for us, in Microsoft investment in gaming.
Q. Do you think that thesis that you just expressed --
THE COURT REPORTER: I'm sorry. Can you say that again?
Q. Do you think that thesis that you just expressed is understood in the marketplace --
A. No.
Q. -- about Microsoft Gaming?
A. No. No, in terms of -- in terms of trying to drive excitement with our customers and our developers and our partners, I try not go out with the Phil doom and gloom conversation about where we are. But I know from the time I took this job, Satya, one of the first conversations I had with him is, he wasn't sure why we're in the gaming business. But at that point, in the Xbox One generation, he said we clearly are -- we're out of position with our product, so let's go try to fix that and then decide what we should go do. And we've made progress through innovations like Xbox Cloud Gaming and Game Pass and shipping our games on PC. But we will reach the asymptote of where we can make progress definitely on console, we're probably already there. We will ship probably half of the consoles that PlayStation does this next year. And if we
don't, so we have to make progress in mobile. But I don't go out with that on my kind of gaming T-shirt when I'm doing PR."
Funny how sites are trying to make this out to be done new revelation or turn it into another MS are getting it of gaming narrative.
Q. Have you ever reached the conclusion, sir, that Xbox "lost the console wars," to Sony and Nintendo?
A. Have I reached that conclusion?
Yes.
Q. And what does lost the console wars mean?
A. In a relatively fixed market size of console games globally, we have no opportunity to kind of improve our third-place standing.
Q. Why launch a Generation 9 console?
MS. WINKINSON: I'm going to object to asked and answered. I think you asked him the exact same question.
Q. How much money did Microsoft invest to develop and launch the Generation 9 Xbox console, ballpark?
A. I don't have a good answer for a specific amount that we invested, maybe a billion dollars.
Q. Why -- what is your understanding of why Microsoft invested a billion dollars to compete with a Generation 9 console after it had lost the console wars?
A. There are three billion people who play video games on the planet. The industry is about $200 billion in revenue, all up, most of those players playing off of console.
For us, we felt we had an opportunity to help connect player and creators of games, and the creators of the games are building games on our console. Without having a console in the market, you'd really have no developer engagement to help us connect players' engagement across all devices.
Q. Given that, what you just said, is having a console offering a necessary part for Microsoft Gaming to compete in the gaming
industry today?
A. No.
Q. How does that reconcile with what you just said about needing to offer a console for developers, et cetera?
A. Keeping our console relevant and engaged with developers, I believe gives us the best opportunity to be relevant in the future of gaming, but there are other options that you could take, other strategic decisions you can make that are not
continuing to build the console.
Q. The decision that you have made as the leader of Xbox/Microsoft Gaming that Microsoft Gaming should continue and will continue to invest in console; is that right?
A. We're continuing to invest in the
Xbox console, yes.
Q. Okay. And why are you continuing to invest in Xbox console despite your conclusion that you lost the war?
A. Because our console -- we have developers that focus on our console platform and we believe that we have the opportunity to make games that are running on our console available to more players across more devices.
Q. So, in your view and understanding of the strategy for gaming, you have chosen to continue offering an Xbox console into the future as part of your strategy, correct?
A. We have chosen to continue to build Xbox consoles as part of our strategy, correct.
Q. And I take it, am I correct, that your objective in continuing -- one of your objectives in continuing to offer consoles is to do so in a manner that makes as much economic sense for Microsoft as you can, correct?
A. In our inroads in the gaming industry all up, yes
Q. Is Microsoft Gaming presently planning to launch a Gen -- strike that.
Is Microsoft Gaming developing a Gen 10 console?
A. We are not currently developing a Gen 10 console.
Q. Have you started discussing among the gaming leadership team and the Microsoft senior leadership team about offering a
Generation 10 console?
A. We have started early discussions on what a next generation could look like.
Q. Have you discussed a launch date 24 for Gen 10 Xbox console?
A. We have roughly talked about 2027 or 2028 as potential launch years.
9 Q. And as of today, is it your understanding of Microsoft Gaming strategy and plans that Microsoft will continue to develop a Gen 10 console?
A. I think that question remains to be answered. For planning purposes, we are assuming that Gen 10 would happen until it's proven that it should not.
Q. What are the factors that would potentially lead you to no longer offer a
Gen 10 -- strike that.
What are the factors that would lead you as leader of Microsoft Gaming to decide, you know what, we're just not gonna do anymore consoles, we're not gonna offer a
Gen 10?
A. If we're not able to gain relevance off of console and expand the market opportunity for us in Xbox, I would not encourage us to do another console.
Q. I think you said, it is your current planning at Microsoft to grow off console and develop a console device, right, for Gen 10?
A. Those two are very -- they're both big concepts and they're kind of unrelated. I would say the first one is an imperative, our business must grow off console otherwise this business makes no sense for us.
The second consideration of I have to keep teams focused on what we might be
able to do so that we have the opportunity to make a decision on a Generation 10 console down the road.
Q. Do you agree with the projections that are expressed in this chart?
A. I do not believe that that is what the future Xbox business would look like.
Q. So, Ms. McKissick is wrong?
A. This is a presentation from our devices organization to the gaming leadership team, so this is the view from the team that
is chartered with building our hardware on
what the future business would look like.
I can fairly safely say that if we do not make more progress than this off of console, we would exit the gaming business.
Q. And how wrong is she by 2030? How would you rearrange the chart basically to
make it more accurate for your projection of 2030?
A. I wasn't trying to make a projection on 2030, I was saying if this were the outcome that we were trending towards, we would not continue in the business, so the numbers would go down. So, I wasn't trying
to make a counter prediction, I was just saying if this were the outcome, we would --
I don't believe we'd still be in the business.
Q. And what outcome are you driving towards so that you could still be in the business?
A. Well, a majority of our customers are found off of our own hardware.
Q. By 2030?
A. I would hope by earlier than 2030. So, when you asked me if I agreed with this chart that the light green and blue depending on what colors you see there would have to be much larger much earlier.
Q. And when is it your goal to have a majority of Xbox subscribers off console?
A. I would say by FY26, '27 that we should be in that position or we'd have to make a different decision with the business.
Q. If it doesn't work out to gain efficient share in mobile, would Microsoft then have an incentive to start pulling some of these levers to ensure that business can survive in the 200 million TAM for console?
A. If you look at Microsoft as a global business and its scale, the Sony business inside of Microsoft is really no more meaningful than the Xbox business, it's not a -- the size of business that Microsoft is pursuing with all of its resources. Our pivot in this business is to constantly talk about three billion gamers, $200 billion in revenue top line and our ability to be a
participant in that growth. I don't -- in any world where we would not succeed on mobile and PC and decide that we would go backwards to a closed device flat TAM market and invest our resources there, I would not advocate for that.
Q. So, it's either -- I want to be clear about this, in three to four years,
it's either that Microsoft succeeds --Microsoft Gaming succeeds in going to achieve what you think it needs to achieve in the vision for mobile and PC or said shutdown was too draconian, but -- or what?
A. I'll call it divesting of what we have. My view is if we don't succeed on mobile, that it's really been caused by the two mobile platform holders excluding us from distributing our service. And we see that today where Apple blocks us from launching on their platform, through their store, I should say, and Google really constrains our ability to succeed. And how we're trying to counter that is to acquire some popular mobile content to help us create some allure for gamers that we can then use to have some engagement on those platforms where we might be able to use cloud and other distribution to gain a foothold on those platforms. Because if we don't gain a foothold on mobile, there's really no future for us, in Microsoft investment in gaming.
Q. Do you think that thesis that you just expressed --
THE COURT REPORTER: I'm sorry. Can you say that again?
Q. Do you think that thesis that you just expressed is understood in the marketplace --
A. No.
Q. -- about Microsoft Gaming?
A. No. No, in terms of -- in terms of trying to drive excitement with our customers and our developers and our partners, I try not go out with the Phil doom and gloom conversation about where we are. But I know from the time I took this job, Satya, one of the first conversations I had with him is, he wasn't sure why we're in the gaming business. But at that point, in the Xbox One generation, he said we clearly are -- we're out of position with our product, so let's go try to fix that and then decide what we should go do. And we've made progress through innovations like Xbox Cloud Gaming and Game Pass and shipping our games on PC. But we will reach the asymptote of where we can make progress definitely on console, we're probably already there. We will ship probably half of the consoles that PlayStation does this next year. And if we
don't, so we have to make progress in mobile. But I don't go out with that on my kind of gaming T-shirt when I'm doing PR."
found the same ship elsewhere, almost stole it until I found the crew and they were just stranded, so I let them be….for now.