BPX087: Red Vs Blue

[Neon Ignition]

Speculation has been circling for a bit now regarding Microsoft's plans to take some of its titles and give them a new lease of life on Nintendo and Sony's consoles, however today that new cycle has erupted with a slew of updates.

If we are to believe all of the updates floating out in the online discourse, the broad upshot seems to be that Microsoft will soon announce that many of its past titles will be ported to rival consoles. In addition to this at least some recent and new releases will also make the jump with the timing between the Xbox launch and rival consoles being as little as a handful of months. On the further edges of speculation is that Microsoft may take a step back from focusing on their own hardware and permit some third party hardware makers to release their own Xbox consoles.

And so now forums are alight with hopes of Halo on PlayStation 5, Banjo Kazooie 4 on Nintendo Switch 2 and Game Pass open to all.

Say that this is indeed the case - By going beyond just giving some legacy titles like Sea of Thieves some extra life by porting them once sales have dried up, Microsoft opens up a pandora's box for themselves that can never be closed again. They would be very close to, perhaps irreversably on a path to, becoming the largest third party games maker in the industry.

The shift in position would also arguably not actually make a case for Game Pass on PS5 and Switch 2, the opposite in fact, more likely placing anything up to a death sentence on the service because it would never be allowed in its current form on their platforms and it also harms the profitability of Xbox's titles by hoovering away the early adopter sales.

But also, despite the slow rate of sales leaning us that way currently anyway, it would cement the console industry into a two horse race should Xbox consoles no longer be required by MS. Neither of those two consoles being too directly in competition with each other either, Nintendo's red branding being now renowned for monopolising the home to handheld experience whilst Sony's blue branding the poster child for the traditional model and then free to take monopoly of that side of the coin uncontested.

From the current direction this seems to be heading in, given it seems Microsofts hand increasing appears likely to be forced to respond to these stories:

Do you believe that the Xbox Series S/X will be the final Xbox hardware generation?

And in follow up to that:
-How do you feel the console market would emerge from this market change?
-Would it be a good move for the market?
-Would it affect your hardware focus next generation?

[DeathAdder]

There will be one more generation of Xbox but it won’t use physical disks, If I had to bet on one outcome, I’d go for that.

[Asura]

Mine is a bit weird.

I don't believe this will be the final generation of Xbox.

But I do believe this is the final generation, inasmuch as I don't think the next generation will be as recognisable as a game console, but be more of a game-playing set-top-box, which in truth was always Microsoft's goal. Their intent, really, is to have a GamePass machine, where the purpose of the box is for the user to pay a monthly fee to use it, and I think that's going to be so much the focus that "normal" vidoegames will barely get a look-in.

[Lebowski]

You could argue going multiplatofrm would strengthen Microsoft game pass as having its games on a rival console gives you a direct price comparison, £60 -£70 a game on PlayStation £10 a month on xbox.

I'm not sure streaming games via the cloud can replace downloading a game to your console yet. My experience with Microsoft's cloud based gaming on series x is one that's slow to start (when it does start), and often a bit glitchy. Hitches, graphical degradation, pauses and muddy looking visuals are quite common on xbox cloud based gaming. The service needs to get a lot more reliable before they can base a whole console arround it.

[Neon Ignition]

I think this is why the situation, if it's happening, quickly steam rolls and is why there's so much drama online about it.

Say Microsoft release a new Xbox in 2028 or so which is a digital only console designed around being an affordable entry point for Game Pass. I would say that that system would sell even less than Series S/X have and have no chance of being profitable given the costs of being a hardware maker. Game Pass has struggled to expand its audience to date due to being so heavily tied to the Xbox consoles usersbase, we know that it's both been as successful as it has been as a service because the Xbox ecosystem exists but also that it isn't appealing enough to grow that ecosystem either.

Third party games coming to Game Pass will also largely come to an end. Game Pass will never be allowed on PS or Switch because it would cannibalise their own ecosystems, the only way they permit it is if Game Pass mirrors the likes of EA Play where the focus is solely on MS's own games. Game Pass focused solely on MS's own IP's would have a fraction of the appeal but also be near impossible for them to make profitable, whilst also sitting alongside full priced sales where Steam has highlighted consumers will pay for games in their millions rather than save tons of money buying into Game Pass.

I feel that, even delayed, MS basically pulls away too many of the key appeals of Game Pass for Xbox if they release their games elsewhere. Such a shift in focus, to be honest, wouldn't surprise me if someone high up at MS has looked at things and finally clocked the obvious - their Game Pass expansion strategy isn't going to work.



In the short term we'll see lots of the usual up front discussion. A focus on the games releasing because there's always a portion of the audience who take the stance 'exclusives are bad' and will welcome Xbox games releasing on their chosen console.

My Mystic Meg call if it turns out to be true?

This will be like pulling the ribbon on Pandora's box. The Xbox hardware line will rapidly grind to a halt in sales, with the upcoming hardware refreshes dying at retail. MS will see their revenues explode as millions more console gamers access their titles. Over the next few years the dust will settle and MS will review where it's at and realise that having so many studios, IP's and titles as a third party is unsustainable and we'll see many project shutdowns, lay offs and studio mergers/closures from them. Sony will scale back the PSPlus subscription model, they'll be free to increase their cut from publishers which will cause further price rises, their consoles will sail north of £600 as standard also along with a further reduction in the development and release of their own AAA tentpoles because there will be a massively reduced need to invest the risk and cost of those projects moving forward when they operate largely uncontested, possibly new hardware from them will push the envelope less as well in order to shift to profitability faster. In the short term it will be great for Nintendo/PlayStation gamers, in the long term it will be worse for everyone.

[wakka]

If we accept that the rumours of key first party games coming to other platforms are true, then it does make Xbox look unviable as a hardware platform long term.

The sole exclusive it could offer at that point would be access to Game Pass. The problem with that is that there is already a low-cost, digital-only access point to Game Pass, and it has flopped.

Game consoles overall are pretty good value - they provide years and years of usage for <£500 initial outlay. As a result, most buyers seem to be happy to stump up a little more upfront for a better console, and the market generally doesn't seem to be all that price-sensitive in the £200 - £500 bracket.

So it's hard to see how a next-gen, exclusive-free, Game Pass box could be commercially successful. I think it could only really be attractive to the most budget-conscious buyers. But, as we've already seen with the Series S, they don't seem to constitute a big enough segment of the ~150m strong console buying public to make a budget-focused option truly viable.

[Neon Ignition]

True, and at that point MS would be releasing their high budget AAA's with the profits being instantly knee capped by the low cost of the service and the weight of hardware profitability as well. We've seen Ubisoft dabble with the model, EA to a delayed addition extent and neither have walked away going gun-ho with the concept. It's a non-starter and only drew the attention GP did because the value proposition that MS laid out for it was so insanely good - but contingent on the basis that it would make Xbox hardware and the ecosystem grow exponentially. The opposite has happened and so it's really hard to see any of the rumoured changes being because GP is the central pillar anymore.

[wakka]

Yeah. If you look at video streaming services, they're all strongly reliant on a flow of exclusives to capture and retain customers (with the exception of Prime, which is mostly a value-add). It's really hard to see how Game Pass can be competitive without true exclusives, when Sony already offer a mostly equivalent service, even if it isn't quite as good on the whole.

If they do go truly multi-plat with the software, I think the writing is on the wall for Xbox hardware and Game Pass. They're both totally reliant on scale to be commercially viable. You can't operate them as niche products.

[Neon Ignition]

That's why, in that scenario, I imagine Sony would scale back PS+ back. No need to throw your tent poles in there or sign those big games like RDR2, GTAV when you no longer have a competing service to battle