We Don’t Use Sales Numbers For Xbox Because Monthly Active Users Is A More Accurate Metric, Says Microsoft

Last Fall, Microsoft announced that they would no longer use sales numbers to judge the success of the Xbox division- instead, they would move to using Xbox Live subscriber numbers as their primary metric to judge success. Speaking at Microsoft’s Xbox Spring Showcase in San Francisco (transcription by DualShockers), Xbox head Phil Spencer justified Microsoft’s decision to do so.

“The next thing I want to talk about is how we’re gauging our success, because there has been a little bit of dialog on this as well. Back in the fall, we pivoted how we talk about our Xbox success. We’ve been talking about monthly active users,” he began, before moving on to tackle the crucial point.

“Let me talk a bit about why I feel that is the critical point for us in thinking about success. People ask me: “does this have anything to do with how Xbox One is doing relatively to PlayStation 4 lately, is that why you’ve gone to monthly active users?” And the answer is no.

“The fundamental answer why on monthly active users, the number of people that in the last 30 days have engaged with an Xbox Live game on Xbox One, Windows, or Xbox 360, is the critical factor for our team to gauge our success, is that that’s what our partners want,” Spencer explained.

“Our partners in games, they want the largest collection of active gamers who will buy and play games. That is the ultimate metric in any service that you gotta talk about. What’s the monthly active userbase.

“It’s not how many consoles I sell. If I sold a console two years ago and now it’s in the closet collecting dust, that’s not good for the gamers, that’s not good for the developers, and frankly, it’s not good for Microsoft,” Spencer said, probably referring to the tens of millions of Wii consoles Nintendo managed to sell last generation, that ultimately did not have an engaged userbase, being retired to closets after a few weeks of Wii Sports.

“The other risk with us taking on MAO as our key engagement metric and frankly success metric for us in gaming, is that it can go down. The nice thing about us selling consoles is that you never really have a negative month in selling consoles. Your console installed base almost always goes up. But that’s not really a reflection of how healthy your ecosystem is.

“We focus on monthly active users because we know that those are gamers that are making a conscious choice to play our content, our games, our platform, our service, to go play games, and we want to gauge our success on how happy and engaged those costumers are.”

Spencer tried to justify how MAO may be a more accurate reflection of how well a console is doing versus its overall install base.

“It means we need to keep [our customers] happy. So we have some Live issues like we had in the last week, and that’s not great for our MAO count. We go a long stretch without great games on our platform? That will negatively impact MAO. It’s great that we’re seeing more engaged gamers on Xbox that we’ve ever had. We are incredibly proud of that, but we know we have a lot more work to do.

“So we picked this metric not to hide something, but I think we’re more exposed, by picking a number that actually shows how many people are really using our platform, using our service every month, and reporting that publicly.

“But we did that because we do think that for you, the press, for the gaming developing community who wants to know how many people they get to by building these games, and to the gamers themselves, that how many people we have playing our console, is the fundamental point of how we’re doing. This is the metric that we all should be looking at.”

In a sense, a lot of what he says does make sense, yes- and while I can understand Microsoft choosing to focus on MAO over LTD sales, what I cannot understand is why Microsoft chooses to ignore LTD sales numbers entirely- as a matter of fact, a combination of the two metrics together is probably going to provide the most accurate picture, rather than picking just one. Unfortunately, Microsoft’s insistence on not reporting hard sales numbers does give the impression that they are hiding sales numbers because of their relatively poor performance compared to the PS4.