E3: Microsoft's Focus on Xbox Games Over Console Price
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What are the big money and market headlines that open this episode?
Your Money Briefing.
Money and market stories from The Wall Street Journal. I'm J.R. Whalen in New York. Wall Street likes what it sees in Microsoft's efforts to stay competitive in the gaming sector. We'll explain in a moment. First, these money headlines. U.S. consumer prices last month had their biggest jump since the beginning of 2012. One driver of higher prices this year has been gasoline. The average cost of a gallon of regular gas was $2.90 in May, up from $2.48 in December. When excluding the volatile energy and food categories, so-called core prices also rose 0.2%, signaling broader inflation. And just to frame everything properly, last year's inflation numbers were weaker, making May's price growth reading appear stronger than it may be.
But not all prices rose. While the medical care and education, communication, and new vehicle indexes rose, the food, apparel, recreation, and personal care indexes were flat, and household furnishings and operations and used cars and truck prices fell in May. Competition for law students among law firms escalated in recent days after several national firms boosted starting salaries for recent elite law school graduates to $190,000 a year.
How did May's inflation and gas prices impact consumer costs discussed early on?
Law firms typically raise salaries in line with their peers, citing the need to stay competitive when hiring from law school campuses. Also, many mid-market firms uniformly raised salaries in 2016 to match those of the most elite Wall Street firms, despite profitability that makes the business case behind raising salaries vary widely. Now, in terms of average annual profits per partner in the nation's top 100 firms, the American Lawyer Legal Trade Publication says they range from $460,000 to $5.7 million. This is your Money Briefing from The Wall Street Journal. Welcome back, everybody. Many in the tech world will have their eyes on Microsoft at this week's E3 conference and how its new games can bolster its Xbox console.
Wall Street Journal heard on the street columnist Dan Gallagher joins us to discuss how the company plans to stay competitive with its rivals. So Dan, Microsoft gave folks a peek at its plans and its new crop of offerings already on the gaming side, and one thing not on the list was a drop in price for the Xbox console, and that might take some people by surprise.
I've been covering the E3 conference for years now, and It doesn't happen every year, but it's not uncommon for the console makers like Microsoft, like Sony, or Nintendo to use the event to bring down the price of their consoles. Because normally these things launch at a certain price, they're new, and then over time, because they're in the market for a number of years, the price comes down. And as the price comes down, more people buy into it. So there were some leaks kind of before the conference that they might drop the price, but they didn't. And I, you know, as I wrote, I'm not terribly surprised they didn't because they have other priorities.
And what Microsoft did do was preview 50 new game releases, including 18 that are exclusive to the Xbox console. And Wall Street likes that approach. It does.
I mean, because Microsoft has really become, and if you look at the company's broader strategy, even outside of games, they're really pushing towards a world where they're trying to maximize essentially services, services that use their tools. that use their tools and their software, but not necessarily has to exist on their platform. That's a big difference from the years in which they really wanted everything to exist in Windows because that was their main money driver. Specific to games, what they're trying to do is bolster the games and the content so that people are, you know, they feed more subscriptions to things like Xbox Live and that more people are coming to it. And the game business now, I think, is kind of slowly coming out of the focus on
just getting consoles out there. Xbox has undersold PlayStation 4 by a pretty wide margin. They're probably not going to ever close that gap because it's five years now and they're well behind.
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