Microsoft to pitch new Xbox console with monthly showcases

Microsoft Corp., gearing up for its biggest-ever year of launches for Xbox products and services in the middle of a global pandemic and economic recession, will replace its plan for a splashy public game-conference event with a monthly series of online showcases.

The virtual events start on May 7, with a look at third-party games planned for its new console, called Xbox Series X. In June, the company will highlight the Xbox platform and services, and July's session is intended to cover games produced by Microsoft's own 15 game studios, including the next iteration of its biggest franchise, "Halo." The Redmond, Washington-based company had originally planned to unveil many of the details about the new products next month at the E3 conference, which has been canceled.

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Gaming audiences "love the authenticity of us showing up in our sweatpants here in our home office and talking about what we are doing," Xbox chief Phil Spencer said in an interview. This also seemed like a good time to eschew the typically flashy, celebrity-studded events the video-game industry is known for, he said. "We can all look at the unemployment numbers right now. We can also understand we're in video games, while we have front-line medical workers out there that are keeping people alive." 

Microsoft is set to release the new console for the holiday season, and is planning its first game-streaming service, called xCloud, for later this year. Shifting events online and toning them down aren't the only changes possible because of the Covid-19 virus that has disrupted workplaces and production schedules, as well as the global economy. While Chief Financial Officer Amy Hood said last week the console launch is "on track" and device manufacturing in China is returning to normal, there may be delays in some outside developers' games for the new device, Spencer said. 

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Microsoft has taken steps to make it easier for third-party game developers to work from home. For example, Microsoft gives these teams specialized development kits that let them simulate the environment of the unreleased next-generation console so they can build games for it. Normally those kits are closely guarded and have to stay in the office, but now the company is letting them be used from developers' homes. 

A lot depends on how far along in development games were when their studios were forced to move to remote work. Programming and some other tasks can be done from home offices, while complicated motion-capture of animation used for games is harder to do on the computing rigs most people keep at home. "That's just not happening right now," Spencer said.

"In terms of timelines, we're finding now that game production is in some ways more challenging than hardware production," he said. "You have one hardware timeline and then you've got all these games." 

Already some developers have announced delays for games intended to arrive this spring. Microsoft shifted Minecraft Dungeons to May from last month, and CD Projekt Red moved a game to September from April. Some games for Sony Corp.'s PlayStation, including "The Last of Us" and "Ghost of Tsushima," have also been pushed back. 

Because Microsoft now sells a video-game subscription called Game Pass, which gives customers access to more than 100 titles, Spencer said there's less concern about what will be ready when the new console goes on sale. Spencer is confident there will be enough exciting new games ready when the Xbox Series X hits the market.

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"I feel good about the lineup that's there, but I've also said I am not going to hold the launch of the console for any one game or any collection of games," he said.

So far, the coronavirus pandemic has mostly been positive for Microsoft's video-game sales, as stuck-at-home gamers of all ages turn to their consoles for entertainment and social engagement. Last week, Microsoft said Game Pass topped 10 million customers. But the longer-term economic impact and rising unemployment will probably affect how many people can afford to pony up several hundred dollars for a new machine later this year. 

"Families will be making different trade-offs around where their dollars are spent," Spencer said. Microsoft hasn't yet disclosed the price of the new console.Spencer said the company can weather economic fluctuations as long as Xbox gamers keep playing, regardless of device.  A few years ago Microsoft began seeking ways, like Game Pass, to generate revenue in a continuous stream that is less dependent on a new console purchase. Microsoft's games run on Xbox and personal computers, and the new xCloud streaming service will add the ability to play its games on phones and tablets.

Still, Spencer—who joined Microsoft in 1988 as an intern and has been in consumer software for so long that he worked on things like the CD-ROM version of Encarta—said a lot remains unknown as Microsoft navigates its new-product push amid unprecedented global market forces.

"There's not a lot to rely on," he said. "Our teams and our customers are dealing with a once-in-a-lifetime moment."