Xbox Series S/X: Thread 05

[hudson]

360 times was the last big 'Oh my goodness look at those graphics' moments for me. Remember seeing Oblivion and thinking, finally I am a knight in a real world where I can be respected, unlike here where my family laugh at me for wearing a cardboard armour.

[Neon Ignition]

The trouble they will have faced is that they needed Xbox Studios to turn things around and so have now spent $80-90bn over the span of a few years on a variety of acquisitions and decisions. In that time every company that they've bought has come in running far, far more profitable and efficient than the company that bought them and then once they're under Xbox's management they've ground to a halt.

The cost and PR impact of buying Activision will have been so great that it will have inevitably brought a lot of internal eyes on to Xbox within MS that weren't on it before and the most obvious question they will ask is the same as everyone else, why is it that since Xbox bought these studios the performance of the system has only become worse and how do they turn the ship around?

The most obvious thing to the MS execs would be to look at the clear successes in both Bethesda and Activisions libraries and the immediate lesson that will have screamed out to them is how the companies were managed during the hits and being multiformat. Literally every metric will have told them that the most money comes from not being a platform holder which means that the MS execs then need to contend with the core notion behind the Xbox itself - do they believe that the Xbox console holds the potential to be a mass market, under every TV device?

Here's the real screw tightening moment. Xbox have spent billions on a variety of approaches and nothing has worked. PS5 and Switch have been immense successes but they also go to prove a very difficult lesson for all three companies, that there is a very clear roof to the console markets sales potential and not enough room for three competitors. Looking into the rear view mirror, the situation is also different to the 360 days. Microsoft now has over two decades of its own history to reflect on and there's only one conclusion they can come to - Xbox consoles don't work and clearly aren't going to. They just can't get any traction in most of the markets, every approach they've ever taken has failed to shift the needle. They can't spend a decade finding a successful niche, can't go toe to toe with Nintendo's demographic, clearly can't stop Sony by being incredibly similar, can't effectively buy the market out as well. That then leaves the real awkward elephant in the room.

Game Pass

We clearly have our final answer. It's incredibly good but also not at all sustainable. The chain of events definitely seems to be that Xbox took a gut punch after the 360 years, too little investment in its studios when it looked like they could knock stuff out on the cheap via Kinect only for it to bite them. The XBO then struggles and with xCloud etc the decision is made to introduce Game Pass as a way of improving revenue from the system. It works and the profitability goes up but it's from mining a declining number of users. Xbox sees the immense growth rates for Game Pass and mistakes the popularity of a too good to believe, low priced service amongst Xbox users for something the entire tech market will jump on. They invest deeply in companies because streaming services have told them that content is king but Game Pass fails to get properly off Xbox as other platforms see it as a threat to their ecosystems, MS also can't get the content onto the service because its multitude of new studios can't get games released at the rate required to drive new users. Xbox declines because existing users are increasingly dependent on a subscription service for content rather than AAA big hitters and that raises fears that Game Pass will decline. Bringing Call of Duty might help Game Pass but the question is will it hurt Call of Duty more than it helps Game Pass - Yes.

Game Pass is an excellent way to monetise an existing, stagnated user base. It clearly doesn't drive people to the platform and isn't going to play a role in driving the Xbox platform forward. If the average user spends £100 year subbing to Game Pass MS will spend a good chunk of that just providing the content to the service, they only need Switch, PC and PS5 users to buy 1 game and the potential profits dwarf Game Pass becuase there's north of 200m extra consumers available to them. Likewise, most of the 20m Game Pass users would likely still buy the games if Game Pass didn't exist. Game Pass in a great crutch for Xbox but when the console itself ceases to be the focus, Game Pass loses its relevance and MS can potentially increase the value of its games by removing GP from the equation.

We've talked a lot recently about events heralding the end of Xbox consoles and MS as a first party company but the direction of travel feels like we'll end up going further than that and will eventually see a scaling down of Game Pass to something more EA Play level.

Absolutely no way Spencer is sticking in post long term, I almost expect someone senior at Activision to be given the job in time. MS clearly want Xbox to start making money immediately and I don't see any way where that equation now ends with Xbox being a hardware maker, Game Pass being a notable feature and them not utterly gutted throughout and restructured into a third party giant.

[dataDave]

Embedded Tweet

This is the sort of protest i can get behind funny and shows how annoyed people are with Microsoft




The House has returned from the dead and this time it's personal!!!!

That tweet has more engagement than their marketing post for Hellblade II. A game I’d completely forgotten about until reading the comments there.

[Neon Ignition]

As a side note, when it comes to the stuff doing the rounds about MS saying it wants smaller games that bring prestige/awards but canning Tango I can see the logic behind their comment despite the complaining going on. Hi-Fi Rush did score positive responses but the game was something MS inherited, I'm doubtful they would have greenlit it themselves. The game's positive reaction, I expect, wouldn't have been as glowing if MS hadn't launched it the way it did, if it had gone the traditional route and released it purely to retail instead of being a surprise title then I reckon most who enjoyed it will have never picked it up.

Even for those who did, the game is rooted in past gen which is highly appealing for some but it was blatantly a financial loss to the company that was shadow dropped because of a lack of percieved sales potential. I expect the recent PS5 launch will have cemented that there's no demand for the game so despite the stories yesterday about Tango pitching a sequel I doubt one would have been greenlit. The rest of their library consists of Ghostwire and two Evil Within games, I'll just say it. Hi Fi Rush was more of a happy accident. Ghostwire isn't amazing and frankly, niche fans be damned, they're both **** games that filled a small gap whilst Resi was still re-finding itself. Tango was never going to deliver the standards expected from first party and certainly not the sales so they're not actually that shocking a choice.

[hudson]

Those 360 times though, it's like they had a great focus on the games. Games of all shapes and sizes. XBLA for example. They could have kept this up - now they have that mobile dev, they could add similar small app games to an 'Arcade' section of GP or whatever. How have they lost sight? Did the times change that dramatically that XBLA could not exist now?

[nonny]

Despite the current situation I just don't see Xbox exiting the hardware market. I am careful to say console hardware though, as I think the indicators are there that show they're about to pivot to something entirely different.

I think they're going to broaden the console hardware to be a more hybrid "steam machine" type offering. This whole, we will support other stores bit is just too much for it to be nothing.

So they'd indirectly still support a console experience but on an entirely different box. Whether that is just a handheld, or a conventional box and handheld remains to be seen but the indicators are there.

They've just announced more changes to the PC Xbox app to operate better on handheld. They've mentioned supporting other PC stores and they can lean into the Windows OS.

If Phil Spencer steps down I would be shocked if Sarah Bond didn't take over that role.

Alao big props to whoever nukes Phil's settlement on FO76. That is pure gold.

[Neon Ignition]

There's an opinion piece on EG at the moment that hits a nerve with MS's approach to Xbox. The pursuit of massive growth.

With the 360 they had two advantages, they got in early with a good machine and Sony messed up their own launch. XBLA was good because it was new and growing so MS put a lot of focus on to it, as soon as it platued they drifted away to the next thing. Even the 360 wasn't entirely amazing, you get just past halfway through its life and then MS pivots to focusing on Kinect, it's next area of massive growth. By the time the XBO launched the momentum had already been lost which is why there's no slew of titles slowing to a crawl on that system and why it was so sowefully misfocused.

If MS could reverse fortunes with Sony they'd snap your hands off... then a year later get frustrated that they can't drive sales even further.

I think Xbox exiting hardware won't be fast but it will happen. I can believe they will pivot the approach but any variation such as a Steam Machine or Steam Deck styled hardware release is destined to seel even more poorly than the existing consoles do. As much as the Deck is amazing it's worth keeping in mind that comparatively to other devices its sales figures would make WiiU blush. It's a device for a specific audience by a company that likes the idea, which isn't MS's approach to things at all and the Xbox brand doesn't have any currency at all to make that work. Especially when there's an infinitely more elegant mid-term option - release the games on Switch 2.

It's why they're so invested in Steam releases for their titles rather than forcing Windows Store purchases, the approach of pushing their ecosystem has failed whereas opening the gates away from exclusivity has worked wonders for them. It's an interesting move too as it would force Sony's hand. Whilst they'd have a monopoly on console sales they'd also be shackled to it, if they withdrew themselves to go third party the market would collapse because they still need the systems to sell. It's best to be the first out the door on that front.

I do think another gen of Xbox consoles will launch but I fully expect they'll be wishy washy in focus and absolutely sell less than Series X/S, easing people into migrating off their hardware altogether.

[Tobal]

I don't think xbox will never get close to the position and prestige they got during the 360 era, losing the One/Ps4 battle was the worst generation to lose, solely down to beginning of mainstream digital games catalogue and the rise of live service games, you go where your library and progression is.

[Neon Ignition]

And MS will be looking at the 360 and thinking that even at their peak they could only hit half of what their rivals do, and that peak still ended up marginally placing 3rd in a 3 horse race. When you consider the intentions MS originally had in 2000 the Xbox as a whole has been an unmitigated disaster for the company, it's surprising it's taken this long for a higher up to start making brutal decisions and it should probably come as a relief that the plan isn't the shut it down completely and revert to a downscaled MS Games. The acquistions have probably staved that option off.

[Lebowski]

I expect, wouldn't have been as glowing if MS hadn't launched it the way it did, if it had gone the traditional route and released it purely to retail instead of being a surprise title then I reckon most who enjoyed it will have never picked it up

https://www.eurogamer.net/devolver-believes-in-selling-games-first-over-day-one-launches-in-game-pass-esque-subscriptions-says-co-founder

Devolver digtial wants a word, to say Hi-Fi rush wouldn't of found an audience without gamepass is rubbish, it had a unique style interesting gameplay mechanics as well as a lot of cracking reviews, you just have to look at something like Cult of the Lamb, Hades or Balatro to see that the appetite for polished inventive indies is still out their.

[randombs]

Time for Sega to get back into the console game. It's House of the Return from the Dead time!

Considering all the angry keyboard warriors in various comment threads, maybe it’s time for TYPING OF THE DEAD

[Neon Ignition]

https://www.eurogamer.net/devolver-believes-in-selling-games-first-over-day-one-launches-in-game-pass-esque-subscriptions-says-co-founder

Devolver digtial wants a word, to say Hi-Fi rush wouldn't of found an audience without gamepass is rubbish, it had a unique style interesting gameplay mechanics as well as a lot of cracking reviews, you just have to look at something like Cult of the Lamb, Hades or Balatro to see that the appetite for polished inventive indies is still out their.

Edit - I'll reword it better now I have a keyboard instead of a phone

Had Hi-Fi Rush not launched via Game Pass then it would have followed the traditional release cycle of announcement, lead up, store release. As an Xbox exclusive it was never destined to do strong numbers, it was a project Bethesda greenlit three years before MS took over, and even the prior Tango Gameworks games that were multiplatform only managed 1-4m.

Even by MS's own occasional updates, by now the game would have been played by around 1/9th of Game Passes user base, 1/5th if we're more realistic about Ultimate figures, and that's those who can play it at no additional cost right now. It's the same as how the game has spluttered on PS5 even though it's known it was well recieved.

It's 1000% no knock against the game, plenty of decent to good games don't see the success they should do, but ultimately - unlike Devolver's position - Hi Fi Rush isn't an indie game. After six years of development it's not the bullet MS would keep in the chamber even if they switched to multiformat without GP today.

Like Evil Within, it definitely has an audience but not in the way that the axe falling doesn't still make sense. Even pushing a more brutal TG focused view aside. If Hi Fi Rush 2 made commericial sense, MS is completely free to give it to another studio or not axe Tango, or scale them back to focus solely on it rather than two projects like Arkane has been, or create a new studio to shepherd the IP like 343 or Coalition were made, or outsource like KI. I'd bet easy that Hi Fi Rush 2 was never going to be greenlit in any scenario which sucks but glancing at the market as it exists, is sadly not surprising.

[Neon Ignition]

https://www.linkedin.com/posts/bradhilderbrand_there-are-two-reasons-why-all-those-bethesda-activity-7193668143305670657-wUSw?utm_source=share&utm_medium=member_desktop

EX Senior PR lead for MS blames Game Pass and Activision

[fishbowlhead]

https://www.linkedin.com/posts/bradh...member_desktop
EX Senior PR lead for MS blames Game Pass and Activision

Xbox is NEVER getting out the red because of Activision, ever. To earn the 70b in profit back MS had in the bank to drop on Activision would of taken, I’m not even sure how to work that out as I’m not familiar enough with MS gross/net & profit margins.

Even if you generously said they turned over 800b to generate that profit to just sit in the bank waiting to be spent (and I mean that’s a generous outlook on their margins, because to generate money like that your not even using means you’ve generated outrageous amounts of money)

So year that money is gone and the Xbox division will pay the price forever for that one.


Still, Kotic made out like a little pig in a truffle field though eh? Glad he’s ok.

[Neon Ignition]

Xbox Division Financial Year 2023/2024 Conference:





Xbox Division Heads:






MS Head: "You took $70bn from corporate accounts, to buy Activision and save Xbox..."





Xbox Division Heads:







MS Head: "You spent the entire amount on one company... one without a single title on the platform still?"




Xbox Division Heads:







MS Head: "And you're telling me business is declining except for the one we just paid billions for?"







Spencer: "We can sell 400m units of hardware if we give COD away for free on Game Pass"




Xbox Division Heads:




MS Head:




Spencer:




MS Head:




Xbox Division Heads:









MS Head: "This is a twenty year travesty that is now going to cost thousands of peoples jobs, billions of dollars in losses and wipeout the brand power of the platform... do you have anything... anything to say for yourselves?"





"....."





Xbox Division Heads: