Ever since the rumour mill started churning late in 2023, with whispers of precious Xbox exclusives going to rival platforms, the core Xbox fan base has been in disarray.
I know, I know. I certainly didn’t help matters, reporting that Microsoft were looking at what plans would be needed for the release of Bethesda’s newest space-faring RPG, Starfield, for PlayStation 5 at some point in the future. This was swiftly followed with reporting from Tom Warren, Senior Editor at The Verge, that Indiana Jones from Machine Games was also under consideration for a future multi-platform release.
The Xbox fan base were not happy.
Microsoft and the Xbox team responded to the building uproar, hosting a Special Edition of the Official Xbox Podcast, where they laid it out in black and white. Initially, four 1st Party games would be going to traditionally rival platforms with the “long-term health of Xbox in mind”. It’s led to a lot of confusion and guesswork from many – why those four games in particular?
Why make this ‘experiment’ at all? I’ll come back to that.
That long term health, according to Phil Spencer, meant the following:
The long-term health of Xbox means – a growing platform; Our games performing; building the best platform for creators and reaching as many players as we can.
Phil Spencer, CEO of Gaming at Microsoft
What it didn’t mean, if I were to take statement at face value, was selling the most consoles, or selling the most copies of the next big game, but it did mean growth overall. More players, more games, more creators.
Since then, Phil did an interview with Polygon during GDC, where he ruminated on how the “math on making a game has definitely changed“, as he discussed the costs of development continuing to rise and the losses being felt throughout the game industry.
He discussed the rise of PC handhelds like the Steamdeck, the Rog Ally and the Lenovo Legion Go, and how he wished he could make them “more Xbox“. Hell, he even talked about breaking down the walled gardens and closed platforms that are and always have been how video game consoles operate, theorising on the existence of other digital stores on these devices in the future.
To me, it felt a little like Phil wasn’t just being his usual savvy and candid self, but that there was also a degree of ‘prepping’ with these talking points being laid out for the wider masses to start to at least try to understand the winds of change blowing in our general direction.
‘The way things work are going to change‘, it suggested – ‘They have to change’.
There have been plenty of opinion pieces from a variety of video game pundits, from an excellent fact-based write up from Ains over at Seasoned Gaming, to a more thoughtful and conversational train-of-thought piece from Jez Corden over at Windows Central.
Even I have dabbled previously, empathising with Xbox fans who are furious at this new direction, with members of the XboxEra team offering their own rebuttal, under the (likely entirely true!) premise that Xbox don’t really care about console wars.
The central theme of many of these pieces has been trying to communicate and understand the why of Microsoft’s decision making lately; pulling apart at the inner workings of AAA game development, costs versus returns on investment, and balancing the traditional way the console market has always operated, with a focus on exclusive software pushing players to buy the subsidised box to play the games.
To change all of this after thirty plus years of status quo is breaking everyone’s brains, and all of these conversations and opinion pieces are trying to do one thing – understanding the ‘old way’ of doing things when stacked up against this new and uncertain era.
Fact Vs Fiction
Microsoft are making many of these disruptive, long-term focused decisions now, to be better positioned in the future. This isn’t new from Microsoft of course – they have a tendency to always try new things, and push the industry in new ways, sometimes to great success; sometimes to their own detriment.
It’s one of the reasons I value what Xbox, as a platform, brings to gaming. As they now look ahead to the future, they’re making moves in directions that cause many die-hard Xbox fans concern. We’ve learned a lot about the video game market in recent years and some of the reasonable fact-based assumptions I think the team at Xbox have made are as follows:
Console Customers are locked to their platform due to the rise of Digital Libraries
Phil Spencer has been on record before about how ‘losing’ the Xbox One generation was the worst one to have lost, because this was truly the point console owners started to build massive, digital libraries. Is the consumer that swapped from Xbox 360 to PlayStation 4 going to throw away a decades worth of games they own to main Xbox Series X|S as their new platform? It certainly hasn’t panned out that way so far, has it?
Is the average current Xbox customer going to “swap” their platform of choice and effectively walk away from all their games on Xbox because Microsoft publish some exclusive games elsewhere later down the line? Microsoft probably think this is unlikely.
The Console market isn’t growing – and hasn’t been for a very long time.
The console market is flat, and has been for years, and arguably, decades. The biggest selling console of all time, Sony’s PlayStation 2, sold 155 million units (or 160 million, according to exiting Sony Boss Jim Ryan, who perhaps just wants to deny the Nintendo Switch the title of best selling console as it approaches a similar number).
There is no growth there, and instead, we see Sony and Microsoft fighting over the same sized pie, with Nintendo enjoying the fact that many gamers treat the Switch as an “additional” purchase alongside their main platform.
“Everybody else’s customer is your success state. You can’t succeed unless you draw in customers from other publishers and other platforms. And because you’re not finding new customers with the games that you’re building, everybody’s kind of fighting over the same-size pie.”
Phil Spencer, CEO of Gaming at Microsoft, via an interview with Polygon
Gen Z Gamers aren’t buying $70 games
Surprise! We’re old now, and while our way of doing things – that is, pre-ordering or buying games on release day – still has some value, younger players just aren’t doing the same thing. Not only that, but the games they do play regularly? They’re available everywhere, have been around for years and usually, are completely free-to-play.
The US Video Game hardware market peaked in 2008.
Share of console purchases is increasingly swinging to older folks. Zoomers care less about console than prior gens, and Alphas may never care.
Every video game company is thinking about expansion beyond console.They have to.
Mat Piscatella (@MatPiscatella) April 5, 2024
These new and upcoming gaming consumers aren’t taking part in the ‘my plastic box is better than your plastic box’ rhetoric that certain content creators, twitter bubbles and the mainstream games media engage in. Why? Because they can play Fortnite, or Minecraft, or Call of Duty on their phone, tablet, PC or console, and those games don’t care what device they – or their friends – are on.
The biggest games in the world, outside of admitted outliers like GTA Online, are available everywhere. Gen Z and younger generations expect mobility; they expect to be ‘untethered’.
So when I see Live Service games like Sea of Thieves coming to PlayStation 5, I totally understand the ‘why’. You remove the barriers of access, grow the games audience and give more value to the IP. And IP value is important here. If we look at Grounded, for example – it’s getting a TV show. So of course, having the game available in more places helps grow the value of that IP, so that when that TV show hits? You’re not reliant on only Xbox and PC players engaging with it.
Hi-Fi Rush, the incredible new franchise developed by Tango Gameworks, was a wonderful surprise for the Xbox brand. Do they leave this undermarketed, shadow-dropped game as is, or do they try to grow its value by getting it in the hands of more players? If I was in charge of making money as a business for Xbox, I know what I’d think about doing.
Pentiment, a more niche title, shows to me at least – and this is entirely conjecture at this point – the desire to value your creators and talent. Think about it this way – do you want to keep this super niche passion project sitting on the smallest platform (Xbox) and PC, or do you keep the legendary game designer Josh Sawyer and team happy by publishing the game everywhere?
Any creator making games, regardless of platform, wants them to be played by as many people as possible. I can’t help feel that talent retention plays a small part in all these changes too.
Gen Z players do buy subscriptions
Pretty much everything is subscription based nowadays, and for good reason. Having regular and known income month on month is vastly preferable for most companies, and Microsoft paved the way in gaming by launching Xbox Game Pass, which it has since bolstered from a content pipeline perspective with acquisitions like Bethesda and ActivisionBlizzard, promising a regular slate of great games, including behemoths like Call of Duty.
For Microsoft, Game Pass means more than just delivering value to their existing customers. The real play is expanding the access routes available for every member of the possible audience, lowering the barrier for entry at a reasonable price, making traditional console gaming available to more people that may be priced out, especially in this economy.
According to a report by Zuora’s Subscription Economy Index, subscription businesses have “consistently grown revenues about to 5 to 8 times faster than traditional businesses. This trend is reflected across multiple sectors, including software, entertainment and publishing.”
When you look at the models overall success across music with services like Spotify and video streaming with Netflix and Disney+, it’s understandable that Microsoft believe in the general consumer confidence that exists for subscriptions. With Microsoft being the first to push the gaming industry in this direction with Game Pass, we’ve already seen Nintendo and Sony follow suit, albeit tentatively.
Despite the incredible value Game Pass provides to most Xbox console gamers today, its growth has stalled. Why? A complete slump in a console sales, particularly across Europe is one reason, but the other is that, and this is conjecture on my part – Microsoft have already sold the subscription to all the hardcore gamers that want it. The challenge for Team Xbox now is, how to convince the wider masses to buy in.
Side note – Honestly Xbox, saying “Play it Day One on Xbox Game Pass” doesn’t mean ANYTHING to the average consumer. You want to grow the subscription base? Try some adverts targeting normal people – mums and dads who – I guarantee you – resent paying £60 a pop for the latest games. They don’t really know what “Play it Day One on Xbox Game Pass” actually means.
Exclusives…on your Subscription Service
There’s been a lot of passionate debate about the future of video game exclusives and their role in the industry going forward. PlayStation has made a huge name for itself in having the biggest and highest rated exclusives in the industry.
Xbox have been playing catch-up for what feels like forever, and even though the Xbox platform has great exclusive games, the general mainstream games industry often seems hellbent on fuelling console wars. Constantly pitting one game against the other, endless list wars and the constant chase for negative engagement makes an already tricky uphill battle for a bigger slice of the pie even more difficult for Microsoft.
In Microsoft’s eyes, the subscription service of Xbox Game Pass is the new exclusive, and in itself, any subscription service worth it’s salt is one fuelled by exclusive content. It explains Xbox going from garage band to a core pillar within Microsoft that makes more money than Windows, and in my eyes, explains the frankly enormous acquisition spree that result in Team Xbox owning multiple previously independent studios, alongside the purchase of Zenimax and ActivisionBlizzard.
Armed with an enormous 1st party development network, and an absolute gamut of desirable, valuable gaming IP – I mean seriously, there’s so much coming. Hellblade 2 just got a bunch of previews, and it looks amazing, Gears 6 is being teased, and that’s not to mention updates on Fable, Avowed, Towerborne, South of Midnight and State of Decay 3.
Team Xbox are now able to achieve a lot more than they ever imagined, and it’s clear they’re now eyeing up a more synergistic approach, focusing on multiple platforms beyond their own.
Due to the sheer size of Microsoft Gaming now, it’s an understandable push for growth that no platform holder has ever had opportunity for before. That multiplatform “experiment” I mentioned earlier? I expect this ‘investigation’ into broader multiplatform releases to go way beyond a mere four games, and you shouldn’t be surprised if and when it does.
Xbox isn’t leaving you behind, but they are moving forward
Of course, for many in the industry struggling with this new way of doing things, none are suffering more than the Xbox faithful.
From the normal fans, who’ve always just appreciated the differences and services Xbox brought to gaming as a platform, to the more…evangelical out there. Those fighting the good fight on social media; throwing out W’s and L’s based on the colour of the Metacritic box of whatever platform’s exclusive has recently come out, and celebrating or defending their consoles perceived victories or defeats.
Phil Spencer and team have made it very clear that Xbox, as a platform, isn’t going anywhere. President of Xbox Sarah Bond said there’s “some exciting stuff coming out in hardware” that will be shared this holiday. Many will point to the leaks surrounding the white “adorably” digital Xbox Series X, but I’m not so sure. That doesn’t scream ‘exciting’ to me at least.
A handheld Xbox, however? Phil Spencer can’t stop thinking about it huh? Neither can I. Indeed, Sarah Bond also discussed the future of Xbox hardware beyond this generation and into the next, focusing on the “largest technical leap you will have ever seen”. If you think back to the reveal of Project Scorpio (The Xbox One X), it was made a good 18 months before hitting retail shelves. Something to think about.
The point, I think, is to underline to all the existing fans of Xbox that everything they love about the platform, from the best in class service and subscriptions, parental controls and of course, the most important thing – awesome video games – isn’t going anywhere. They’re going to continue to make Xbox the best place (outside of super powerful PC’s) to play Xbox content.
Try, if you can, to disconnect your brain from the traditional console market way of doing things.
Rather than duking it out for supremacy among a user base that isn’t growing to obtain hardware leadership in an increasingly connected, digital world – Instead – think about a world where your experience is prioritised; where you can choose where to play, and on what, and with who, and how to pay for it, well…
…the future of Xbox doesn’t sound so bad at all, does it?
Well written, and I definitely agree with your side note about how “Play it Day One on Xbox Game Pass” means nothing to the average consumer (who’s not already familiar with the platform.)
They need to shout from the rooftops that you can “play this game and 400 more with Xbox Game Pass for just $9.99 a month.” You know… give the people some actual information.
Really good article. I would have liked to read your thoughts @Sikamikanico on how this new direction could affect Xbox consoles sales and therefore third party support, given that this is a major concern for Xbox fans atm.
I think you’ll know the answer when the next generation Xbox releases in 2026. If it does great and takes off in sales, there should be no worries but if it flops, then chances are that they’ll be done with hardware. This is how I see it regardless of what anyone from Microsoft says because as has been proven time and time again, you can’t believe anything they say, especially now.
Yeah they ain’t going to be done with hardware anyway Great job on the article. Agree with it
First of all, I want to preface this by saying that this was a very well written and argued article. I’ve always enjoyed reading your writing Jon, and my disagreements with this can be chalked up as much by differences in personality and worldview as anything else.
With that being said, I can’t say I fully agree with all points raised in this article.
“Is the average current Xbox customer going to “swap” their platform of choice and effectively walk away from all their games on Xbox because Microsoft publish some exclusive games elsewhere later down the line? Microsoft probably think this is unlikely.”
Taking into account that this is an assumption on your end and positioned as such, I do not disagree that Microsoft thinks this to be the case. Where I do disagree is I feel there are intangibles that go beyond the cold, hard, statistics and the almost myopic commitment to them has proven time and time again to be Microsoft’s folly.
I’m sure the statistics on paper showed the Xbox One reveal response would be in parts divisive if not apocalyptic. Obviously, history shows the latter to be the case instead of the former, in part because it viewed these changes in a vacuum instead of as part of a fluid collective market.
Sea of Thieves going to PlayStation, on its own, is not going to cause an Xbox player to switch ecosystems. However, when you couple this with headlines on reputable newssites proclaiming Xbox “waved the white flag” in the console wars, and Phil in an over-attempt to be transparent refusing to draw a line in the sand, can you blame people for wanting to get out or at the very least slow spending?
What good is having a library of games maybe compatible on next gen hardware or PC when you are more confident they WILL be on the competitor’s console? If you own an Xbox One right now and are looking to upgrade, why would you choose only Xbox games when you can get PlayStation PLUS seemingly many Xbox games with a PS5, for the same price or cheaper than a Series X? Game consumers are stickier than most but they are still elastic, and when your product id positioned by other stakeholders in a way that makes it seem on the out, at a certain point a sunk cost is a sunk cost and you reject the fallacy.
“There is no growth there, and instead, we see Sony and Microsoft fighting over the same sized pie, with Nintendo enjoying the fact that many gamers treat the Switch as an “additional” purchase alongside their main platform.”
I am largely inclined to agree here on a pure unit basis. The console market is shrinking. However, in other metrics, the console market is growing. Most notably in revenue and retention. Satya expressed as much: January 2024 was Xbox’s best on record for MAUs on Console.
Infinite growth is a capitalist joke, but I take issue with the idea that console growth is squeezed out. The problem is, a PlayStation or Nintendo customer is of significantly less value to Microsoft. Both platforms shave 30% off the top, and Phil admitted under oath that Sony uses the 30% they get from Xbox titles to disenfranchise Xbox owners. Xbox also loses the 30% cut they get on every title purchased within their ecosystem in the event someone switches to a competing platform.
While the market is stagnant on a per-unit basis, there is still blood in the stone, and Microsoft seems to be gambling that the hit to the Xbox brand, reputation and evangelists + the hit from Sony harming Xbox customers with input foreclosure deals will be made redundant by increased gains from their 70% cut. This is a risky proposition.
“Gen Z Gamers aren’t buying $70 games”
Anecdotally, I don’t believe this to be the case. People continue to purchase the right game, regardless of pricepoint.
“So when I see Live Service games like Sea of Thieves coming to PlayStation 5, I totally understand the ‘why’. You remove the barriers of access, grow the games audience and give more value to the IP. And IP value is important here. If we look at Grounded, for example – it’s getting a TV show. So of course, having the game available in more places helps grow the value of that IP, so that when that TV show hits? You’re not reliant on only Xbox and PC players engaging with it.”
I don’t disagree on a game by game basis there can be benefits to porting, but again it views things in a vacuum. Xbox has spent 6 years making SoT a pillar franchise of the platform. It has appeared on chip bags, pop cans, showcase slots, Gamestop ads, the Game Pass subscription cards. But by expanding it elsewhere, you remove that association. Moreover, you send a message that if a game this intrinsically tied to the Xbox platform can go elsewhere, everything can. In which case, if you were on the fence on engaging in the ecosystem, why would you?
As for the TV series, why is Xbox obligated to encourage growth of the TV show by expanding access? Did Sony port Gran Turismo to Xbox to increase Box Office of the movies? If anything, Transmedia is designed to bring the person to the property, not the property designed to bring folks to Transmedia.
“Hi-Fi Rush, the incredible new franchise developed by Tango Gameworks, was a wonderful surprise for the Xbox brand. Do they leave this undermarketed, shadow-dropped game as is, or do they try to grow its value by getting it in the hands of more players? If I was in charge of making money as a business for Xbox, I know what I’d think about doing”
How does getting it in the hands of players increase its value though? If anything, it decreases the value of the Xbox brand and ecosystem. What was once a viable point of differentiation is now accessible anywhere, and while this can improve discovery of a fantastic game, this comes at the cost of the ecosystem and brand trust.
“Pentiment, a more niche title, shows to me at least – and this is entirely conjecture at this point – the desire to value your creators and talent. Think about it this way – do you want to keep this super niche passion project sitting on the smallest platform (Xbox) and PC, or do you keep the legendary game designer Josh Sawyer and team happy by publishing the game everywhere?”
I agree there is a benefit to creators here but conversely, this again negatively impacts the ecosystem. Where do they draw the line? Would Halo on all platforms be good for 343? Should Clockwork Revolution hit PS5 for Brian Fargo? How do you weigh what is “right” for talent with what is “right” for the ecosystem? Unless you paint with broad brushes, you can’t. Why does Josh get his cake while Todd doesn’t?
“Despite the incredible value Game Pass provides to most Xbox console gamers today, its growth has stalled. Why? A complete slump in a console sales, particularly across Europe is one reason, but the other is that, and this is conjecture on my part – Microsoft have already sold the subscription to all the hardcore gamers that want it. The challenge for Team Xbox now is, how to convince the wider masses to buy in.”
I agree with this, but headlines like “Sea of Thieves has features only on PS5” and “Xbox winding down the console wars” don’t help this push.
“Side note – Honestly Xbox, saying “Play it Day One on Xbox Game Pass” doesn’t mean ANYTHING to the average consumer. You want to grow the subscription base? Try some adverts targeting normal people – mums and dads who – I guarantee you – resent paying £60 a pop for the latest games. They don’t really know what “Play it Day One on Xbox Game Pass” actually means.”
100%
“In Microsoft’s eyes, the subscription service of Xbox Game Pass is the new exclusive, and in itself, any subscription service worth it’s salt is one fuelled by exclusive content.”
I agree, but then, if they port this content elsewhere and continue to license their content to PS+, how do they achieve this?
“Due to the sheer size of Microsoft Gaming now, it’s an understandable push for growth that no platform holder has ever had opportunity for before.”
Conversely, Sony has 8 exclusives for every 1 of Xbox’s. The size is what leads to equality and a more competitive marketplace, no?
“I expect this ‘investigation’ into broader multiplatform releases to go way beyond a mere four games, and you shouldn’t be surprised if and when it does”
Likewise.
“Of course, for many in the industry struggling with this new way of doing things, none are suffering more than the Xbox faithful.”
And this is ultimately the problem. The Xbox faithful have been more than patient over the years. The Red Ring of Death. The Xbox One Debacle, the Halo Infinite delay, the barren 2022. When I bought into the console last gen, Xbox had just announced a new slate of developers to make AAA exclusive games. By now, excluding Playground, I am about to get the first of those next month. And it may not even be exclusive for that long.
See also Bethesda. 3 exclusives, 1 didn’t last, 1 was an objective disappointment. After 2 PS5 exclusives.
Not everyone values exclusivity but a fuck of a lot of people do, and it cannot be pretended MS didn’t sell two generations on this.
“The point, I think, is to underline to all the existing fans of Xbox that everything they love about the platform, from the best in class service and subscriptions, parental controls and of course, the most important thing – awesome video games – isn’t going anywhere. They’re going to continue to make Xbox the best place (outside of super powerful PC’s) to play Xbox content.”
But the games are, and frankly, best place to play is subjective. But the fact that Pentiment had double the framerate on launch on PS5 and HFR better shadows plays into the idea that Xbox is leaving behind their core consumers, even if this is frivolous in a vaccuum. The PS5 Pro will only make this disparity worse.
"Try, if you can, to disconnect your brain from the traditional console market way of doing things.
Rather than duking it out for supremacy among a user base that isn’t growing to obtain hardware leadership in an increasingly connected, digital world – Instead – think about a world where your experience is prioritised; where you can choose where to play, and on what, and with who, and how to pay for it, well…
…the future of Xbox doesn’t sound so bad at all, does it?"
But I don’t get to cgoose where to play on what with who. I didn’t want to buy a PS5 to play Spider Man and FF7. At the time, I HAD to buy one to play those games. I even feel duped as they went to PC after.
This future is great, but once again it feels like everyone but the people who bought an Xbox are along for the ride. They get to have their cake and eat it too, we waited for cake while the other guys had facefulls and when we finally got a slice, we were asked to partition it to everyone for “fairness”.
I frankly think in the long term MS will be proven right in many of their assumptions, but I also feel that doing this in the middle of the gen was the wrong move (see also PC day and date. Right move, wrong timing) and I don’t blame people for being frustrated when the promises were just about to come to fruition and it feels like the rug was pulled under them.
Nobody owns an Xbox 5, but just shy of the population of Canada owns an Xbox Series X or S, and many of them feel what they were promised is not what was delivered. And frankly, the frustration makes sense.
Is it selfish? Yeah, probably. Is it myopic, you fucking betcha. Is it influenced by 40 years of a suboptimal for consumers market that thrives on tribalism and plays it up? Absolutely.
But you don’t change a paradigm without pissing folks off, and when you’re thousands of dollars and hours deep, it’s easy to get pissed, especially when it looks like you are sharing the cake you’ve waited all night for while everyone else got theirs, and frankly the only way everyone benefits is if we all get more cake than we thought we would. Which requires trust in a promise of a vision, in a community whose immense trust in many visions hasn’t paid the expected dividends.
I was concerned too but then I realized most games I played outside of previous Xbox first party were mostly games from now Xbox first party studios outside of really Ubisoft. But Ubisoft has the cloud deal with Xbox so I assume they’d keep supporting it.
@DeoGame
I agree completely and very well said.
This is mostly an emotional argument without considering the business side of things. And I think it’s going a bit too far, for you and other like you to expect other gamers to care how pissed you guys are about some games going multiplatform.
It is leaving us behind though. Its sad to think that Xbox making fewer exclusives, particularly since they have a far bigger studio count than Sony and Nintendo and it always defaults to “outdated tribalism” as opposed to say…competition.
I’ll believe the industry is changing when Sony and Nintendo games launch on Xbox.
MS will never lose EA, Ubisoft or Take 2, which is 90%+ of games sales (outside of the first party)