A new report shines a light on Microsoft’s (NASDAQ:MSFT) game console plans for the next two years, including the code name of its forthcoming high powered console: Xbox Anaconda. The company is determined to reverse the outcome of the current generation of consoles that has seen Sony’s (NYSE:SNE) Playstation 4 outsell the Xbox One by a two-to-one margin. At the same time, MSFT is keeping an eye on Nintendo (OTCMKTS:NTDOY) and its highly successful Switch mobile games console.
If the company succeeds, there is significant upside for Microsoft stock over the next few years. Just look to Sony to see what that could mean. The Xbox rival PS4 generated $4.9 billion in revenue in the last quarter alone — about half of what MSFT booked in gaming revenue for an entire year.
Microsoft’s Next Gen Console Plans, Including Xbox Anaconda
We previously reported about MSFT’s next generation console strategy, under the code-name of “Scarlett.”
According to a new report from Windows Central, Scarlett is still the code-name for the family of next gen hardware, but now details are emerging about individual devices.
First up will be a disc-less version of the current Xbox One console, coming as soon as spring 2019. The idea behind this console is to come after the PS4 with a low-cost version of the Xbox — even cheaper than the Xbox One S. As part of that release, MSFT is working on a “disc-to-digital” program that would let gamers convert physical Xbox One discs they’ve purchased to digital copies that can be downloaded to the new console.
According to Windows Central’s sources, MSFT has two consoles planned for launch during the 2020 holiday season.
The first is code-named “Lockhart.” This is expected to be the affordable option. It would be the equivalent of the current Xbox One S in the lineup, but as powerful as the current Xbox One X.
The more interesting version is “Anaconda.” This is expecting to be a console that pushes the limit for the video game experience. It may even include an SSD for storage, which would dramatically reduce game load times. Of course that would also drive up the cost, but Xbox Anaconda is all about appealing to hardcore gamers for whom sticker shock is less of an issue — especially when the affordable Xbox Lockhart can still play the same titles.
In a nod to the mobile threat from the Nintendo Switch, Microsoft is also reportedly working with accessory vendors for its “Project xCloud” game streaming service. Project xCloud would let gamers stream their Xbox games to any mobile device. But in order to make the games playable on devices like smartphones, having high-quality controllers available is critical. So MSFT is lining up its ducks on that front.
Reversing the Current Console War Outcome
The ultimate goal for Microsoft is to reverse the outcome of the current console generation that has seen the Playstation 4 outsell the Xbox One by a two-to-one margin. MSFT is pursuing a multi-prong strategy to accomplish this.
Powerful new hardware like the Xbox Anaconda and the more affordable Xbox Lockhart to take on the Playstation 5 are key, of course. But Microsoft is also buying up game studios in order to ensure more platform exclusives, something that has been a PS4 advantage.
MSFT is also pushing to get more of its current generation hardware out there to build the user base who will shell out to upgrade to that Xbox Anaconda when it arrives in 2020. This effort includes the recently-launched Xbox All Access service and will continue with that low-cost, disc-less Xbox One in 2019.
Gaming is an increasingly important contributor to MSFT’s bottom line and to Microsoft stock’s impressive performance. For its full fiscal 2018, Microsoft reported gaming revenue surpassed $10 billion for the first time, and in October’s Q1 earnings report the gaming division posted a 44% Year-over-Year revenue increase.
With the Xbox Anaconda and other new hardware releases over the next two years, MSFT is gunning for video console supremacy, and the gains that would come with that.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.