One Year Later | Is Bethesda the catalyst to gaming’s next paradigm?

All In

September 21st, 2020!  If you’re a gaming enthusiast, specifically one who leans towards playing on Xbox, there’s a chance you remember where you were when the news broke.

One year later and after an estimated 7.5 billion dollars exchanged hands, we step back to take another look at the impact of the second-largest video game purchase in history.  Was this partnership simply about adding eight studios to shore up Xbox’s 1st party…or is it something more? 

Can Bethesda be the catalyst that allows Microsoft to lead gaming’s next paradigm shift?  

Fast forward to the precipice of the Xbox and Bethesda Games Showcase only a few months following the completion of what could be one of gaming’s most consequential acquisitions.

Nadella would publicly assemble the puzzle pieces of Microsoft’s gaming vision and the picture it would form would be one of a bold new gaming world. 

“As a company, Microsoft’s all-in on gaming. We believe we can play a leading role in democratizing gaming and defining that future of interactive entertainment, quite frankly, at scale,”

Satya Nadella

During an hour-long business discussion as to why the leadership at Microsoft was “all in” on gaming, they’d share a vision of a world in which advances in technology will collapse the plastic walls that stand between creators and consumers.

Where accessibility will shift the type of creations that can be built and shared.  Some may view this predictive picture with skepticism as there appears to be a chasm between where Microsoft currently sits and where they want to go.

Their Game Pass subscription and cloud streaming would be clearly stated as the vehicles that drive this journey, however today they represent modest components of a seismic 200 billion-dollar gaming industry.

This is where we unpack Bethesda’s trove of assets and speculate on whether they can narrow the gap and accelerate Microsoft’s gaming dream.        

The Scrolls Foretold

Content is king!

This quote would gain fame from an essay Microsoft founder Bill Gates wrote in 1996 ironically four years before he’d eventually give blessing to the Original Xbox console. Over two decades later, the statement has intensified its truth, specifically for Microsoft’s gaming division.

As discussed in our “Xbox Game Pass – Is Microsoft on track to be the ‘Netflix of Games’?” article, in order for Xbox Game Pass to achieve its lofty ambitions, it needs large tent-pole IP’s that register with the masses. While a diverse lineup of high-quality games will keep users engaged, the mega-hits that trend on social media with mainstream mindshare are what bring new customers to the door.

From 2007, when Netflix started streaming until five years later in 2012, they gained 23 million subscribers. In 2013 they’d begin their exclusive Netflix Original’s that would go on to win Emmy nominations. From that point forward, they’d grow by 87 million subscriptions over the same five-year time span.

More recently, we witnessed Disney over-take a multitude of competitors in the streaming space with a fraction of the quantity of content due to the weight of their IPs and mainstream hits such as The Mandalorian.

For Microsoft, while they have called in the backup for Halo by loading their pipeline with projects that could grow into future IP Superstars, none are likely to have the gravitas on launch day that a Bethesda single-player RPG comes with. Even Halo, with its multiplayer mode going free to play, has uncertainties surrounding the potential to drive Game Pass like it once may have.

Elder Scrolls and Fallout have sold an estimated combined 100 million copies worldwide. Skyrim has been credited by some to be one of the most influential video games of all time. When Starfield launches on November 11, 2022, it should be the biggest new IP from Microsoft 1st party since they published the original Mass Effect 14 years ago.

Todd Howard has explained that Starfield is the most hardcore RPG they’ve done in terms of player autonomy and if it can recapture the essence that made millions of people fall in love with them during gaming’s seventh generation, it could be Game Pass’s “House of Cards” moment. A rising tide to lift a fleet of incoming boats.

As Starfields Align

Taking his turn to speak during Microsoft “All-In on Gaming” meeting, Spencer would talk about Microsoft’s Azure cloud technology.

“When I was a kid, it was crazy to think about having a Galaga machine or a Ms. Pac-Man machine in your house. You had to go to the arcade. More recently, if you couldn’t spend hundreds of dollars on a game console, potentially thousands of dollars on a high-end PC, you simply couldn’t participate in the global gaming community in a significant way. The cloud will allow us to completely remove these barriers to play worldwide. Through the cloud, we will be able to deliver a robust gaming experience to anyone connected to the internet, even on the least powerful, least expensive devices, even on devices people already own,”

Phil Spencer

While Nadella and Spencer make it clear that the potential of Xbox unlocks with cloud streaming, there is still much uncertainty among the general public, specifically the core gaming enthusiast. Up until recently, Project xCloud was only capable of 720P, 30fps streaming. More recently, it’s seen a boost to 1080p/60fps however still has a ways to go in terms of reliability across all regions. As we await full 5G networks and other ISPs that promise to reduce latency worldwide, Xbox Game Streaming will need to lean into any boost available.

Enter Orion Tech. At its 2019 E3 showcase, Bethesda revealed Orion, its patented cloud streaming SDK. Bethesda claims Orion allows games to run at “max settings” with minimal bandwidth usage, even for those that don’t live close to a data center.

“We believed we could achieve significant savings and significant improvements and enhancements to the player experience by starting our optimizations at the very earliest literal possible point, which is on the game engine level,”

James Altman

At current time, Bethesda is continuing to hire for the Orion project indicating a belief that it can move the slider on streaming quality closer to “good enough” for more of the world’s population.

Another element that will move the aforementioned “good enough” slider is content that is suitable within an environment with average internet latency. RPGs in general, with their long engagement cycles and more methodical action, are one of the most appropriate genres to offset less-than-perfect internet conditions.

Bethesda RPGs will not only present potentially the most compelling single-player exclusives to the Xbox platform in years, but they also may be the quintessential type of game to work over average internet streaming. Consider this; a PlayStation customer who’s never owned an Xbox or gaming PC will be able to sync their Dual Shock or Dual Sense controller to their TV and play Starfield…for $15. Starfield could be the stimulant for mainstream awareness of game streaming starting in late 2022.

Boats Lifted

Founded in 1999, Arkane Studios has grown to become one of the most renowned developers in the industry….critically. While their games have been an archetype for consistency, quality, and great game design, they have remained obscured from the mainstream gamer and therefore experienced limited commercial success.

As other AAA developers have veered away from single-player games whose IP hasn’t already established substantial mindshare, one had to wonder if there was a future for Arkane under gaming’s traditional model, and Arkane is but one example. Machine Game’s Wolfenstein 2 fell short of sales expectations despite high critical acclaim. Tango Gameworks’ Evil Within franchise never caught on with the mainstream.

Microsoft believes its subscription service is changing the habits of gamers much like TV subscription services exposed consumers to new types of content, increased fanbase sizes of niche genres, and perpetuated a cycle where unique, diverse quality content could continue to exist.

Earlier this year, the company said its Game Pass subscriptions had passed 18 million. Microsoft said that Xbox Game Pass members play 30% more genres, 40% more games, and more than 90% of members said they played a game that they would not have tried without Game Pass.

EA Play has seen record usage on Microsoft platforms compared to before the integration, driving up hours played by more than 200%. The result of games going into Xbox Game Pass is that they get a lift at retail, Spencer said, and publishing partners see the benefit of being on the service.

“For the first couple of decades, the only way you could play the game was to buy the game outright, and for many players, this can be an investment that limits their ability to play. That cost, the retail model, has limited the audience for creators and the entire industry. That’s why we created Game Pass, to open up the ways that players can play more games with their friends, ultimately bringing in more players, making games more accessible to everyone.”

Phil Spencer

As the catalog of Bethesda’s high-quality hidden gems begins to get discovered, it may create a cycle of excitement where the boats riding the waves set by the tentpole games today create waves of their own for others in the future.

Overcoming an Arrow to the Knee

It wasn’t that long ago that many felt Xbox was a damaged brand. Identity in question. Cupboards bare.

In late 2017, Microsoft moved Phil Spencer and the gaming division to the head table. The shift of their structure would be a signal of a change of attitude towards gaming. In 2018 Microsoft announced that Game Pass would see all 1st party games on the service Day One.

That was followed by a slew of studio purchases. It would become clear that Microsoft was once again committed to gaming, but just how committed still remained a debate. On September 21st, 2020 – a year ago today – that debate would significantly scale down.

Approximately 7.5 billion dollars to marry one of the industry’s most storied gaming companies was the pointer finger to the lip of Social Media’s loudest doubters. Of course, Microsoft’s gaming journey isn’t complete. This re-imagined platform is still under construction and preparing for new industry roads.

Bethesda may not have been the start of this road back, and it very likely won’t be the end. However, when we look back, will we see they were the catalyst? The move that allowed Xbox to level up the quickest? I think so.

“See that mountain in the distance? Now…you can go there.”

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