OPINION

It’s Time To Think of Xbox As a Service, Not a Console Manufacturer

July’s Xbox showcase was one of the largest showcases Xbox has ever had. It gave us the first big look of what 9 of the 15 Xbox Game Studio’s (XGS) were working on. While Halo Infinite was a known quantity, some of the newer studio’s that were acquired hadn’t shown anything yet.

We got reveals of rebooted IP’s like Fable (Playground Games, makers of Forza Horizon), Avowed (Obsidian Entertainment), Psychonauts 2 (Double Fine) and so much more. The showcase had big announcements but it wasn’t perfect. Many viewers noticed two glaring issues with it; Many were announced with pre-rendered CGI trailers and many had no release dates, suggesting these games were more than 18 months away at least. The only 2021 game confirmed was Psychonauts 2. At the time, Halo Infinite was planned to be a launch title but the gameplay demo shown had sparked outrage due to less than impressive visuals expected of a flagship next-generation title from Xbox. Less than a month later, Halo Infinite was delayed until 2021 as well.

Many have criticized Microsoft for not really selling the Xbox Series X to consumers yet. There’s no reason to own one at launch due to the lack of big exclusives coming to the hardware at launch. Not to mention the games they’ve chosen to highlight are either cross-gen or haven’t shown any eye popping visuals yet. Many of these complaints are fair, but they come from a specific subset of fans; enthusiast gamers who follow all the news, expect top-notch visuals, and are used to console generations being about hardware.

Microsoft hasn’t sold people on an Xbox Series X yet, and that’s ok. If you look back at the showcase, everything shown is coming to Xbox Game Pass, over 22 titles. Microsoft’s Netflix-like subscription service that let’s you download games and play them across multiple devices is now the main focus of the Xbox brand. On top of the 100+ games available on the service, you get day 1 access to all of Xbox’s first party content and some third party content as well. If you want to own the games you get a 20% discount in the store to do so.

Xbox’s future is game pass and they don’t care how you consume their content, only that you pay them the $9.99USD for Xbox Game Pass or $14.99USD for game pass ultimate. Whether that’s on Xbox Series X, the rumored Xbox Series S, Windows PC, mobile or smart TV’s, they don’t care. The launch of xCloud in September, Xbox’s streaming service for games, only goes to bolster the service-focused shift for Xbox.

Everything Xbox has been doing for the last four years or so has lead to this change in narrative. Backwards compatibility, forwards compatibility (smart delivery), streaming, game pass, all ways to increase value and get people into their ecosystem. Their focus on games carrying over into the new generation with free upgrade paths is a way to enhance their offerings and get people to stay or come to their ecosystem. While Sony seems to be focused on starting a new generation from scratch, restarting their install base at 0, Microsoft will carry over an install base of 50m+ Xbox One consoles and millions of Windows PC’s. An enticing outlook for publishers and developers worried about only selling to a small enthusiast base at launch. It takes away that long wait for install bases to be built from the ground-up again.

Growing their first party stable of studios from around 6 to 15 wasn’t aimed at competing with Nintendo and Sony’s output of first party content. It was to create consistent original content for their game pass subscribers and give them a reason to stay subscribed. Much like how Netflix has tons of original content.Xbox Game Studio’s Publishing is there to fund other exclusive projects as well (Flight Simulator, Ori, Tell Me Why, As Dusk Falls, etc.)

The addition of xCloud to the Ultimate tier of Game Pass is also a great way to get non-console gamers to subscribe as that means people can play Xbox games on their phones, tablets, TV’s or set top boxes in the future. All devices aimed at the more casual gamer or gamers on a budget.

If people want a dedicated video game device on the cheap with their subscription, the Xbox Series S (Lockhart) will satisfy their needs, being able to play four generation of games locally at 1080p or higher, for much less than a next generation console usually costs. Microsoft would likely entice consumers by bundling Game Pass with the Series S and perhaps even selling it without a controller to keep costs even lower (it’s compatible with Xbox One controllers as well). Meanwhile, the enthusiasts can get the most powerful console ever, the Xbox Series X, to play all the top games at the highest resolutions, framerates, with new features like ray tracing.

The days of “console wars” are over. It’s no longer a race for market share and hardware sales for Microsoft. For them it’s about subscription services revenue along with software sales. The financial reports are going to focus on monthly active users and “game pass subscribers” from now on, no matter how well the Xbox consoles sell in the future. It’s an exciting time to be a gamer as all three console manufactures are doing something different. Sony is following the traditional model of new hardware with clean breaks in libraries, Microsoft is focusing on services and subscriptions, while Nintendo is focused on handheld/hybrid gaming.

1 comment on “It’s Time To Think of Xbox As a Service, Not a Console Manufacturer

  1. Usman Akhtar

    I think it’s easy to simply say they ‘don’t care’ with the (imo brilliant) new strategy and business model they have employed here. They are giving people vast choices to play how they see fit. They are still very, very good at building consoles just looking at the architecture on the new Series X, I’m sure the R&D costs were nothing to scoff at.

    I feel like Xbox is adopting the same strategy as the rest of the business (and for the better) by trying to be industry leaders in all areas, INCLUDING hardware. Again, I don’t think they tactics are de-emphasis of hardware, rather a pivot to a whole new business model that also centers around the new services. Only thing that has changed is the method of consumption of games.

    Nice article by the way, enjoyed the read!

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