Xbox Series X|S sales were apparently sacrificed for Xbox Cloud Gaming

Emails between Xbox boss Phil Spencer and Xbox CFO Tim Stuart have revealed that Microsoft seemingly constrained its Xbox Series X|S production so it could continue growing Xbox Cloud Gaming.

Both Xbox Game Pass and Xbox Cloud Gaming have been at the forefront of Microsoft’s gaming efforts in recent years, but a new email revealed during the company’s trial with the FTC seemingly shows that Xbox Series X|S production was lessened in favor of investing in Xbox Cloud Gaming.

Xbox Cloud Gaming part of the reason behind Xbox Series X|S supply issues

Back in June 2021, Microsoft upgraded its Xbox Cloud Gaming server blades with Xbox Series X hardware, just a year after the console was released, and during a time when players were struggling to get hold of the new hardware. An email between Xbox boss Phil Spencer and Xbox CFO Tim Stuart in 2020 shows that it was part of Microsoft’s strategy to bolster its efforts in “Cloud and Content” (via The Verge).

When speaking about the question; “why don’t we have more Xbox consoles right now?” Spencer equated the “yield miss for Scarlett” (Xbox Series X|S codename) and the “Halo launch date miss” as “execution issues” and not the main reason for lower Xbox Series X|S console numbers.

“From a strategy perspective I believe in our tradeoffs for Cloud and Content in Gaming over console volume,” Spencer said. “With our strategy and opportunity console volume will still be the thing we constrain to grow our long-term ambition.” While Spencer would “love to invest in all unconstrained,” he said he supported the sacrifice of console sales in order to grow its investment in Xbox Cloud Gaming. “I believe our investments in content and xCloud are critical to realizing our potential in gaming,” Spencer said. “Amazon Luna and Google Stadia do not have the console strength we have giving us developer engagement, gaming community, and catalog of content.”

New information continues to be revealed as the court case rolls on, so we’ll keep you updated with anything else that surfaces. So far, Phil Spencer has said that Sony uses Xbox game revenue for exclusivity deals, while the next Xbox console generation was given a rough date, and more.