Xbox Business Update Podcast | Xbox Everywhere Direction Discussion

[Cyan]

 

[Cyan]

To be very fair, Phil had a huge role in atrophying the Xbox hardware ecosystem to the point that it doesnt make economic sense to have exclusives on the platform.

what do you mean by atrophying? You mean that he has created too many SKUs? Just curious....

Back into exclusivities and what Brit mentioned about studying exclusives in a case by case basis, I listened to a youtuber saying that Satya mentioned there might be some outliers which will be exclusives, but I can't find any reference anywhere.

Satya himself said more than a year ago that he doesn't like exclusives. Shrug.

An article (HUGE one, quotes below aren't even a 1/4 of it) by Jez Corden talks about the future of the Xbox, strategy wise.

Exclusive Xbox console games will be the exception rather than the rule moving forward — inside the risky strategy that will define Xbox's next decade

Microsoft's strategy has Xbox's core fans upset about the future of console hardware. Today, we're going to analyze the strategy that will define Xbox over the next decade, and settle its future once and for all.

www.windowscentral.com

2024 will be remembered as a pivotal year not only for Xbox, but the game industry at large.


With game industry growth stagnant at best and costs rising faster than ever, many of the alarm bells being rung years ago that AAA gaming was unsustainable have been playing out in slow motion over the last few years. Mass publisher layoffs, studio closures, and a decrease in venture capital investment in new gaming projects has led to vast disruption across the industry this year. Few are feeling that more than Xbox right now.

Xbox has also had some huge content wins this year too, with Indiana Jones and the Great Circle delivering what might be the best "Xbox exclusive" the company has had in years, despite the discourse surrounding it. Because indeed, it isn't truly console exclusive, it's coming to PlayStation in a few months.

After The Game Awards this year, Microsoft's previously-confirmed exclusive The Outer Worlds 2 was revealed for PlayStation, which reveals the next phase of Microsoft's gaming content strategy code-named Latitude. With comments from Phil Spencer describing how there are no red lines for what games could come to PlayStation, it's time to accept that Xbox will no longer have "console exclusives" moving forward — everything will either be timed, with a few outliers remaining console exclusive for incidental reasons, like developer bandwidth and so on

The dilemma​

The excitement from the initial Xbox Series X reveal "it eats monsters for breakfast" feels so far away in 2024. (Image credit: Microsoft)

Coming out of the pandemic, gaming engagement is largely flat, with playtime hours and spend down based on some analyses. Analytics firms like Newzoo and Circana both describe how industry growth has been knee capped by rising costs and a downturn in organic user acquisition. PlayStation alumni Shawn Layden recently laid some of the blame for that not at other gaming companies, but at social media sites like TikTok, Instagram, and YouTube, which compete for the attention of the new generation coming in.

Gen-Z is old news now (yes, you're old). It's Gen-Alpha that is coming up to the plate, and more than ever, youngers are more interested in watching videos about games than actually playing them. All markets hit their saturation point eventually, but the issue for the existing playfield is that costs have risen faster than growth, leading to a mathematical impasse which has seen PlayStation begin supporting PC via Steam and Epic Games, and Xbox supporting not only Steam but PlayStation itself .

The insta-gratification of short-form video content powered by algorithms that give you exactly what your brain at least thinks you want/need has become a central pass time for many, for better or worse. Since Xbox is on the lowest rung of the ladder compared to Nintendo and PlayStation, Xbox is feeling the pinch of the floodwaters first, which explains some of its recent decisions.

Microsoft states that it is seeing record users on Xbox consoles, in direct, legally-binding comments to its shareholders. Microsoft could be sued by the U.S. SEC for misrepresenting its business, so there's no reason to think it's lying here. Indeed, things aren't as "doom and gloom" as the internet might have you think, particularly given AAA publishers are still eagerly building games for the Xbox ecosystem. If things were truly as dire as people suggest, we'd see swaths of major AAA games skipping the platform — that simply isn't the case (for now).

The solution​

Xbox and its OEM partners are working to improve Windows 11 for gaming. (Image credit: Rebecca Spear / Windows Central)

In order to find new sources of revenue and stay ahead of rising costs, Microsoft began putting its games onto PC as far back as Quantum Break's launch almost ten years ago. Despite being in third place, the strategy has served them well.

Microsoft has been incredibly adept at monetizing the Xbox business, despite repeated disasters and missteps. The Xbox One messaging nightmare came close to killing the brand, not to mention RROD back in the Xbox 360 days. The Xbox Series X|S has had to navigate Covid-19,

And indeed, therein lies a lot of the scrutiny right now. Xbox went from being a well-funded start up within Microsoft to being bigger than Windows itself. Investors are now actively auditing what Microsoft is doing with that massive cash injection it sent over to Activision-Blizzard. Imagine if Call of Duty Black Ops 6 had been a huge flop instead of a massive success story — particularly as Google, Facebook, and xAI rapidly catch up to OpenAI and Microsoft's own AI platforms.

As such, Xbox has to grow. Microsoft CEO Satya Nadella said to shareholders today that it wants to "redefine what it means" to be an Xbox fan, with a bigger emphasis on finding players where they are, rather than sinking millions, maybe billions of cash into increasingly expensive user acquisition efforts. People's libraries are digitally-locked to the platforms they are in. Microsoft figures at events like Summer Game Fest told me they're not seeing users switch between consoles much, despite their multi-platform plan.

The Outer Worlds 2 being announced for PlayStation was not a result of a game being delayed out of 2025 nor was it the result of Xbox or developer Obsidian needing a rapid cash injection. It was decided as a result of the "four Xbox games" previously slated to move to PlayStation having no material impact on active Xbox console users. Microsoft is taking this as a signal that people are happy where they are.

Microsoft considers that the bulk of those younger Gen-Alpha and Gen-Z users I mentioned earlier are graduating from iPad and Nintendo Switch all the way to Windows PC, which more closely mimics the versatility and openness of a mobile device.

Microsoft is reacting to this trend early, by talking about putting Steam and Epic Games Store onto future Xbox consoles. It's reacting to this by investing a huge amount into improving Windows gaming performance, as well as its usability on devices like the ASUS ROG Ally and Lenovo Legion Go. Microsoft is also known to be building its own Xbox handheld. Sources tell us that Microsoft is also working on a set of in-game APIs and user interface features, called Project Rainway, which is some form of cross-platform Xbox guide menu. Microsoft has been inspired by the in-game Battle.net social features seen in Hearthstone, Diablo IV, and World of Warcraft, which lets you share and communicate cross-platform.

 

[rntongo]

what do you mean by atrophying? You mean that he has created too many SKUs? Just curious....

Back into exclusivities and what Brit mentioned about studying exclusives in a case by case basis, I listened to a youtuber saying that Satya mentioned there might be some outliers which will be exclusives, but I can't find any reference anywhere.

Satya himself said more than a year ago that he doesn't like exclusives. Shrug.

An article (HUGE one, quotes below aren't even a 1/4 of it) by Jez Corden talks about the future of the Xbox, strategy wise.

Exclusive Xbox console games will be the exception rather than the rule moving forward — inside the risky strategy that will define Xbox's next decade

Microsoft's strategy has Xbox's core fans upset about the future of console hardware. Today, we're going to analyze the strategy that will define Xbox over the next decade, and settle its future once and for all.

www.windowscentral.com

Yes its a huge and good article, I linked it here yesterday as well. One thing about Jez as I mentioned earlier he's paid(monetarily or through access) to always be positive about the Xbox brand. So when he says something mildly ciritical its to condition Xbox fans to something possibly even more negative in the future. Jez knew very early on sometime last year/ beginning of the year that MS was going to be moving almost all games onto Playstation but still kept on telling his following it wasn't true. I know this because a certain die hard Xbox fan(who's turned against them) and insider told me at the beginning of the year that this push towards putting all Xbox games onto Playstation(including Halo) was indeed true and he was done with the brand. Mind you whole time Jez and Paris were either saying its not true or on a case by case basis, yet they knew fully well the long term plan. The things he writes in the article are not things he found out this year but has known since sometime last year.

 

[cheapchips]

Xbox started to die after XB1

I always question this narrative. The XB1 was just a continuation of the strategy they'd been following through the second half of the 360's lifespan. Not just Kinnect, but they really didn't have a strong first/second party direction. Halo/Forza/Gear/Fable had all become boring and there were no delightful B-games like Crackdown or Viva Piñata going on.

 

[rntongo]

I always question this narrative. The XB1 was just a continuation of the strategy they'd been following through the second half of the 360's lifespan. Not just Kinnect, but they really didn't have a strong first/second party direction. Halo/Forza/Gear/Fable had all become boring and there were no delightful B-games like Crackdown or Viva Piñata going on.

You're both right. But Xbox One had an amazing launch line up. Its just that they told consumers to eff off and that Xbox was now a home entertainment machine as well as the DRM and also it was also still a gaming machine but a home entertainment machine but we were supposed to eff off to the 360. That culture of moving in 100 different directions that was known in the inside now came to the fore and to the public. Its how Xbox One launched with an amazing launch line up(great direction) on a gimped expensive machine(wrong direction) marketed as a home entertainment machine(another wrong direction). The founders of Xbox had set in place the success of the Xbox 360 by focusing the division while being pulled in 100 different directions from different interests within the company. After they left different interests came in to redefine what Xbox was which eventually culminated in the home entertainment machine. Phil's blunder is continuing to move in multiple directions at the same time promising different things to different groups. For example, Xbox hardware still matters but really you dont need it since everything is an Xbox. Exclusivity matters and Phil is working to ensure studios push out great games like the future Redfall title but great games dont matter. Its this movement in 100 directions thats actually killed Xbox since the Xbox One. Technical team wants to create a solid next gen Xbox?? Oh marketing thinks if you can(must) make a cheap low cost model to drive subscriber growth alongside whatever console. eff what feedback is coming from third party developers and the internal software/hardware development teams. Just make it work, cheaper means more subscribers, console requirements are stricter? Doesnt matter just make some software to make it run on both consoles. Thats the issue with Xbox. You have people who dont really like gaming posturing as though they do moving in 100 different directions. Some teams still do great work while others are a sh show.

 

[Cyan]

Xbox disappears from Poland -where they compare it to a refrigerator-, Czech Republic and Finland.

Two of them are eastern european countries where the PC is much more prominent than consoles, but still... Other countries might follow suit, in Spain for instance, Playstation sold almost 200000 units as of late vs 6000 Xbox...

Xbox znika z Polski. Szokująca decyzja Microsoftu

Zgodnie z nową kampanią marketingową Microsoftu, niemal wszystko jest Xboksem. Jeśli faktycznie uważamy, że nasz pecet, smartfon, tablet, komputer czy

www.chip.pl

https://www.reddit.com/r/xbox/comments/1hg9h9j/xbox_series_x_is_out_of_stock_in_poland_and_not

 

[Cyan]

I always question this narrative. The XB1 was just a continuation of the strategy they'd been following through the second half of the 360's lifespan. Not just Kinnect, but they really didn't have a strong first/second party direction. Halo/Forza/Gear/Fable had all become boring and there were no delightful B-games like Crackdown or Viva Piñata going on.

well I could buy that. They tried to revert the situation buying some exclusives like the modern Tomb Raider game back in 2014 or 2015, which was a very good game, but it was the constant wane and withering of the brand that caused that situation. The XB1 was a failed concept that they rectified but the worst thing about it is that it couldn't compete with the PS4 in any way, the PS4 just was more capable in every possible way and it was from Sony, which means it was game over for Xbox.

Ah, not to mention PS4 was cheaper, 400€, while the Xbox One being worse in every possible way, did cost 500€.

Also you couldn't lean games to friends, Kinect was mandatory, mandatory online, limit of gamers, etc, everything they built with the X360 was dilapidated in just a few days when they launched the XB1.

 

[see colon]

Ah, not to mention PS4 was cheaper, 400€, while the Xbox One being worse in every possible way, did cost 500€.

Not quite true. Xbox One had a slightly faster CPU, more system memory if you leveraged ESRAM, faster WiFi, more USB ports, and for the first three (?) years, the ability to use external hard drives for game storage. IIRC PS4 added external HDD support in system 4.5, and that came out in early 2017.

Also, Xbox One's GPU was narrower and clocked higher. I heard somewhere that's better.

 

[Cyan]

The games industry ‘will only have room for one non-Nintendo console next gen’, it’s claimed

The games industry ‘will only have room for one non-Nintendo console next gen’, it’s claimed | VGC

Either Sony or Microsoft will “struggle mightily” with their next console…

www.videogameschronicle.com

Video Game Industry Will Flourish 2025 and Beyond, But One of the Big Three Console Makers Will Struggle - DFC Intelligence

DFC’s Annual Market Report and Forecast Projects Console and PC Gaming’s Winners and Losers; Nearly 4 Billion Gamers Worldwide Will Spend >$200 Billion Next Year DFC Intelligence, the longest standing...

www.dfcint.com

Video Game Industry Will Flourish 2025 and Beyond, But One of the Big Three Console Makers Will Struggle.

 

[Charlietus]

Also, Xbox One's GPU was narrower and clocked higher. I heard somewhere that's better.

Woooh that's spicy

 

[Charlietus]

How is amazon a tier 1 game company? Where is Apple? Also Sony, tencent and valve not being tier one

 

[digitalwanderer]

How is amazon a tier 1 game company? Where is Apple? Also Sony, tencent and valve not being tier one

Also is nVidia really a game company? I know they're a gaming company but what games have they published?

 

[QPlayer]

These guys must have eaten a little too much of Mario's mushrooms.

I'd like to see what they said about the successor to the Wii at the time...

 

[Charlietus]

Also is nVidia really a game company? I know they're a gaming company but what games have they published?

I was thinking of a ranking by revenue on game products, but then it doesn't make sense anyways.

 

[Cyan]

Not quite true. Xbox One had a slightly faster CPU, more system memory if you leveraged ESRAM, faster WiFi, more USB ports, and for the first three (?) years, the ability to use external hard drives for game storage. IIRC PS4 added external HDD support in system 4.5, and that came out in early 2017.

Also, Xbox One's GPU was narrower and clocked higher. I heard somewhere that's better.

don't you think that that sound much like Cell and the PS3? I mean, that might be true but can you tell me which games performed better on the XB1 compared to PS4? I had Battlefield IV on the XB1 and it ran at 900p internally, while the PS4 ran at 1080p, iirc. The XB1 version also wasn't a locked 60fps.

That year I played Battlefield IV on the PC of my girlfriend's brother in law on a GTX 750Ti and the world opened up to me, but that's a different story. I remember watching the fps and it said 144fps he was running the game at.

I came home and played the XB1 version and it seemed so choppy to me.... I had a bad day that day.

 

[Cyan]

How is amazon a tier 1 game company? Where is Apple? Also Sony, tencent and valve not being tier one

dunno why Amazon is in the tier 1 too. It makes no sense to me. Regarding consoles they might have a point where a 3rd competitor wouldn't be successful.

Even ex Sony's Shawn Layden mentioned that consoles might become irrelevant as we know them.

I think we’re at a point where the console becomes irrelevant in the next… if not the next generation then the next next generation definitely.

We're Reaching A Point Where 'Consoles Become Irrelevant' Soon, Says Ex-Sony Boss

The former Sony Interactive Entertainment America CEO thinks that consoles might become completely irrelevant in the next generation or two.

tech4gamers.com

 

[rntongo]

Predicting the (actually very exciting) future of next gen Xbox hardware

An analyst recently said that next gen, only either Xbox or PlayStation will survive as a console manufacturer. Here's why that's silly.

www.windowscentral.com

Jez dropping hints at the console less future of Xbox. This business direction is imho more likely to cannibalize PC sales than move people from consoles to whatever this system will be. Steam OS is going to take a share of current Windows PC and to a much lesser extent console gamers. Missing in all of Jez's analyis is the most important thing which is what do the Software Developers think about supporting such a system. Because they can definitely make their games available to such a future PC Xbox but expecting them to put in extra unpaid work to make their games run with console level requirements is a dream. For a PC Xbox machine the requirements will have to be very similar to current PC games.

 

[Charlietus]

I mean, if it looks like a console, works like a console, and gets sold as a console, it's a console. Just because it doesn't get subsided and runs PC game code (with optional access to windows?) it's still not a PC.

Consoles are totally going to die, here is steam and Microsoft making even more consoles...