Prioritizing game exclusivity on console - as a hypothetical Xbox strategy

[Johnny Awesome]

It's hard to speculate on all of this without solid numbers, but these are the things that are potentially putting the Xbox hardware division in jeopardy:

1) GP subscriptions might have stalled at 30ish million.
2) Xbox was seemingly on track to hit 50+ million by the end of the generation, but might not actually be due to the bad Q4 2023 numbers coming in.
3) Digital ecosystem lock-in is an almost intractable problem.

It's always been my opinion that some of these issues could have been solved with more and better content delivery, but the bean counters at MS probably want results sooner than Spencer could deliver them, and maybe rightly so.

 

[Shifty Geezer]

Sometimes companies "leak" things just to gauge reactions. I'm betting this one is true to a certain degree, but the devil's in the details.

This leak is nowhere near as bad as the Insomniac leak, which is likely the worst gaming industry leak in a decade.

Is this a leak or a rumour? Have documents stating this plan appeared?

 

[Johnny Awesome]

Good point. It's more of a 'leaked rumour"

 

[AmFreak]

Wasn't it Spencer who said that they lost their one chance at gaining dominance in the console due to the disaster that was the One? That was the period that digital only was becoming more normalised and gamers were building none transferable libraries of games that would make it next to impossible to shift them from one platform to another, unless of course that platform disappears, and the PS4's popularity put the final nail in that coffin.

Guy responsible saying "it wasn't me" is shocking.
He has been at the top longer than anyone ever before him, longer than anyone at Nintendo outside Yamauchi and Iwata and longer than anyone at SCEI outside of Kutaragi. Hardware sales under him are down compared to the "disaster" - if the One had kept the sales of it's first year through the gen it would have ended up at 70+m, yet they came out at 58m. They were comfortably ahead of the 360 after the first year, but instead of a normal trajectory of increasing sales, they went down. And Series sales are on an even worse trajectory. If it were next to impossible to shift people from a platform, why are Series sales completely falling apart currently in comparison to the One? They are because software has always sold hardware and on that front they are severely lacking.

 

[QPlayer]

I dont think it's yet shown that Gamepass is profitable, at least not in any proper way. They've said it's profitable, but they've not actually demonstrated that, and there's always ways to twist figures to make something sound profitable when it's not in reality. They've given no detailed figures on what they spend or anything, nor can they really take into account the unknowable amount of games they dont sell because of Gamepass. Also, game sales are determined as profitable in relation to their development+marketing costs, but Gamepass cant be figured in the same way all the while they ARE still spending all that money on development+marketing, so that's a very easy cheat right there to say Gamepass is profitable simply by excluding these massive costs.

They did say that Gamepass accounts for 15% of their revenue back in 2022 and that they dont expect that number to rise much, if at all. So I'm not sure it's true that subscriptions bring in more than game sales, and it's definitely not a total replacement strategy. Which - well, thank god, because gaming going to a subscription future sounds like a nightmare to me.

Though all this does still throw up a lot of questions over what Xbox's actual long-term strategy is. I sometimes wonder whether Xbox themselves really have any strong vision and plan, or whether they're just trying to adapt and morph as they go along, trying to fit into whatever position in the market that they fall into.

Spencer will clear things up soon and we will see MS Xbox strategy.

 

[Newguy]

Phil Spencer:

We're listening and we hear you. We've been planning a business update event for next week, where we look forward to sharing more details with you about our vision for the future of Xbox. Stay tuned.

https://twitter.com/x/status/1754598552548904973

 

[arandomguy]

If it were next to impossible to shift people from a platform, why are Series sales completely falling apart currently in comparison to the One? They are because software has always sold hardware and on that front they are severely lacking.

I would argue that statement would really apply to it being hard to shift people off a dominant incumbent platform that has strong user tie in a mature market space. At least personally I'm not sure how often this has happened other then the incumbent self imploding themselves?

I just don't see anything realistically pulling people off the Playstation other then Sony imploding themselves (which is what you can argue actually opened with the 360 vs PS3 initially). Especially given any conventional competitor (like the Xbox) essentially pulls from the same suppliers for the most part (hardware and software), so there is basically almost no way to differentiate themselves from a platform stand point other then a massive predatory (likely anti trust violating) loss leading strategy.

 

[^M^]

At this stage it probably make sense for MS to do Sega and just publish games and not have to support an entire ecosystem as well. They can always return to the market at a later date when, inevitably, Sony falls asleep at the wheel.

I don't see a new actor being able to enter the market if there is not a technological disruption (like cloud gaming).

 

[Johnny Awesome]

I'm betting MS isn't going as 3rd party as rumored, but more than some Xbox fans are comfortable with. We'll know more next week.

 

[AmFreak]

I would argue that statement would really apply to it being hard to shift people off a dominant incumbent platform that has strong user tie in a mature market space. At least personally I'm not sure how often this has happened other then the incumbent self imploding themselves?

I just don't see anything realistically pulling people off the Playstation other then Sony imploding themselves (which is what you can argue actually opened with the 360 vs PS3 initially). Especially given any conventional competitor (like the Xbox) essentially pulls from the same suppliers for the most part (hardware and software), so there is basically almost no way to differentiate themselves from a platform stand point other then a massive predatory (likely anti trust violating) loss leading strategy.

Sega stole a good amount of consumers from Nintendo, Sony did it with Sega and Nintendo and again in the hand held market with Nintendo, Ms from Sony with the 360, Nintendo from both for a certain amount of time with the Wii, Sony from Ms with the PS4 and the Switch might now become the best selling game device of all time. In the end you can always argue from one side or the other. If Ms would make their stuff exclusive they would already have a bigger hardware base, but instead they went and still are going the opposite way. And that might be the right decision, but you can't do that and then act like it's impossible to compete with Sony in the hardware business. No one would subscribe to Netflix if you also got their stuff on Amazon Prime and Disney.

 

[arandomguy]

Sega stole a good amount of consumers from Nintendo, Sony did it with Sega and Nintendo and again in the hand held market with Nintendo, Ms from Sony with the 360, Nintendo from both for a certain amount of time with the Wii, Sony from Ms with the PS4 and the Switch might now become the best selling game device of all time. In the end you can always argue from one side or the other. If Ms would make their stuff exclusive they would already have a bigger hardware base, but instead they went and still are going the opposite way. And that might be the right decision, but you can't do that and then act like it's impossible to compete with Sony in the hardware business. No one would subscribe to Netflix if you also got their stuff on Amazon Prime and Disney.

So I think it's important here to note I did preface in both a mature market space and if the platform inherent ties in existing users. A market segment in a growth phase has much more opportunity for new entrants because they can take new customers from the growing market. Also the more a platform ties in users the advantageous it is for incumbents.

Those are large differences in the gaming space now. Don't think for instance backwards compatibility is just the platforms doing the user a favor, they realize now it's more likely for users to stay on a platform if their existing library ties them to it. That alone creates a very large inherent barrier against competition. And the conventional gaming console market, that Sony and MS compete in, is rather mature now. Pivoting to a new space rather then competing directly against the PlayStation you can argue is something Microsoft is attempting with the game pass, but directly head to head? Well unless Sony self implodes with decision making ala the PS3 to create an opening that is going to be rather challenging to say the least.

 

[AmFreak]

So I think it's important here to note I did preface in both a mature market space and if the platform inherent ties in existing users. A market segment in a growth phase has much more opportunity for new entrants because they can take new customers from the growing market. Also the more a platform ties in users the advantageous it is for incumbents.

Those are large differences in the gaming space now. Don't think for instance backwards compatibility is just the platforms doing the user a favor, they realize now it's more likely for users to stay on a platform if their existing library ties them to it. That alone creates a very large inherent barrier against competition. And the conventional gaming console market, that Sony and MS compete in, is rather mature now. Pivoting to a new space rather then competing directly against the PlayStation you can argue is something Microsoft is attempting with the game pass, but directly head to head? Well unless Sony self implodes with decision making ala the PS3 to create an opening that is going to be rather challenging to say the least.

People are shifting in droves, just not to XBox hardware, but away from it.

 

[arandomguy]

People are shifting in droves, just not to XBox hardware, but away from it.

Are you discussing something else entirely?

The Xbox is not the dominant incumbent platform. It's greatest success was when you can argue Sony self imploded via the PS3 early on in order to push Bluray.

Edit: I'm just going to clarify a bit here with what I mean with a hypothetical. Let's assume the Xbox and PS were identical this generation other then existing backwards compatibility with existing libraries. Do you think they would sell evenly? Almost certainly not, that's the advantage the Playstation inherently has.

 

[AmFreak]

Are you discussing something else entirely?

The Xbox is not the dominant incumbent platform. It's greatest success was when you can argue Sony self imploded via the PS3 early on in order to push Bluray.

Edit: I'm just going to clarify a bit here with what I mean with a hypothetical. Let's assume the Xbox and PS were identical this generation other then existing backwards compatibility with existing libraries. Do you think they would sell evenly? Almost certainly not, that's the advantage the Playstation inherently has.

I have never denied that coming of a bigger base is an advantage. I have denied that this is the reason they sell what they currently sell. There is a huge range between selling the same as Sony and selling even worse than the One. Selling the same as Sony isn't the benchmark that they fail, the benchmark that they fail is reaching the sales of the "disaster".

 

[Seanspeed]

Guy responsible saying "it wasn't me" is shocking.
He has been at the top longer than anyone ever before him, longer than anyone at Nintendo outside Yamauchi and Iwata and longer than anyone at SCEI outside of Kutaragi. Hardware sales under him are down compared to the "disaster" - if the One had kept the sales of it's first year through the gen it would have ended up at 70+m, yet they came out at 58m. They were comfortably ahead of the 360 after the first year, but instead of a normal trajectory of increasing sales, they went down. And Series sales are on an even worse trajectory. If it were next to impossible to shift people from a platform, why are Series sales completely falling apart currently in comparison to the One? They are because software has always sold hardware and on that front they are severely lacking.

I know people want to think it's more complicated than this, but I really dont think it is.

And I dont think Phil was trying to pass blame, but I do agree it's rich hearing the person in charge of their loss then remaining in charge and using that loss as justification for how they have to radically change perspective, as if their loss didn't come from simply not executing well in the most important areas under his leadership. Something they could still fix, in my opinion, and even if XSX generation doesn't become some smash hit, it at least would put themselves in much better shape for a future generation. I very much think they had a chance this generation, as I think there was a fair bit of goodwill feelings towards Xbox heading into late 2020, but they just squandered it all.

We'll see what his comments are gonna be here soon, but I'm still very much expecting it to be little more than shallow guidance, still leaving things very muddled and indistinct when it comes down to it. Some classic, wishy washy, 'hear what you want to hear' PR. I hope to be proven wrong.

 

[BoardBonobo]

Guy responsible saying "it wasn't me" is shocking.
He has been at the top longer than anyone ever before him, longer than anyone at Nintendo outside Yamauchi and Iwata and longer than anyone at SCEI outside of Kutaragi. Hardware sales under him are down compared to the "disaster" - if the One had kept the sales of it's first year through the gen it would have ended up at 70+m, yet they came out at 58m. They were comfortably ahead of the 360 after the first year, but instead of a normal trajectory of increasing sales, they went down. And Series sales are on an even worse trajectory. If it were next to impossible to shift people from a platform, why are Series sales completely falling apart currently in comparison to the One? They are because software has always sold hardware and on that front they are severely lacking.

In a way the introduction of Gamespass may have contributed to the decline in console sales, along with the lack of any compelling titles. And now they, potentially, have those compelling titles in development they have come to the realisation that it's all cost too much and they need to recoup all that somehow. And by ignoring the largest market they are just going to be losing money so why not publish there and make that money back and a profit? Because the core Xbox console owners would feel betrayed? Who cares, hardware sales are down, they spend most of their time figuring out how to get Gamespass as cheap, and for as long, as they can so they don't have spend any money on these games anyway so their support is not financially beneficial.

It's been amusing to see the sudden reversal in why exclusives matter as well, so many social media channels that spent all their time complaining that Sony's attitude to exclusives are damaging the industry, they're bad for consumers, yada yada. And yet as soon as the hint that MS might be ditching their exclusives in favour of not losing money it's suddenly the best thing for the market and the consumer and MS are crazy betrayers of faith for even considering it. The overall meltdown and double standards on view is quite spectacular.

 

[function]

MS have an unenviable ability to squander opportunities and lose console gamers generation on generation. For example:

- They burned 360 core gamers to try and get the Wii market with Kinect.
- They haemorrhaged respect with XBone when they tried to get the tv tv tv sports watercooler Bing market, and made the incredible Kinect 2 which they completely mishandled, turning it into an expensive liability.
- They endured shortages for more than two years with the Series X as they built up their streaming farms and produced a surplus of the Series S. Customers won't just wait forever to until you deign to allow them your top end machine.

All the while seemingly no-one has been on top of making sure Xbox had a steady stream of killer software, like the OG box and 360 had to start getting attention as great gaming machines.

Since the 360 became a legit hit and great machine, MS have been continually burning up good will and customer loyalty to try and force the Next Big Thing on the market, as if customers didn't have a choice and couldn't just walk off if MS wouldn't give them what they wanted.

Sony have continued to cover the basics: games that will sell systems, having systems available to sell, and marketing to everyone that might want one. Sony got a lot of respect form me for the way they turned the PS3 around. I'm not sure MS would have had the committment or the understanding at the highest levels to do that.

P.S. When Phil Spencer was talking openly last year about how MS weren't even sure they were going to do another console after XBone ran into problems, I found myself thinking "why would you say this out loud, when the Series consoles are struggling too?" I got some proper Bernie Stollar "The Saturn is not our future" vibes. MS's messaging is awful.

P.P.S. perhaps we should consider changing thread title to: "Prioritizing no exclusivity on console as a hypothetical xbox strategy".

 

[Nesh]

The PS360 era was great because both PS3 and the 360 were building their own unique library of exclusives without one interfering with the other. Apart from Sony screwing up, MS then was putting huge emphasis on content which is when they built a huge dedicated audience to the brand.

But at the upper levels of MS, the original vision was never abandoned, which is what made them enter the market in the first place. MS at large wasn't interested in gaming as such. That was unimportant for them. They wanted to own the digital entertainment in the living room (Hence why we got the One that emphasized on TV and Kinect whilst sacrificing gaming performance and was sluggish with its IPs and the production or acquisition of new interesting ones)

Sony wanted the living room too, but they saw gaming as the most powerful asset in achieving that, primarily because the Playstation was expected to break the wall that separated movies and gaming as technology progressed. This is also reflected in it's cinematic AAA single player games that keep the brand strong.

Sony had it's One moment too, but the product was still perceived as powerful enough to compete the 360 and had huge emphasis on gaming software. The price of the PS3 was the worst offender, not it's games and capabilities.

MS did learn from it's lessons though. The Series X is well designed, punches well and has all the features of a great console. But they have zero foundations of game IPs and their most (few) popular IPs were not handled properly, to the point that they were abandoned by it's old audience and not being good enough to attract new ones.

To the contrary Sony manages to overdeliver in the production value of it's games, to the point that it attracts both old and new fans. But I fear the current Sony management may repeat MS mistakes, with emphasis on GAAS titles, subscriptions and microtransactions. Cost of game production is imploding and may be looking for other business models. There is just too many remasters and remakes and GAAS is a risky venture.

 

[cheapchips]

MS have an unenviable ability to squander opportunities and lose console gamers generation on generation.

Just to add my own pet peeve - They had a digital ownership strategy which was significantly better than current proposition on all consoles and PC stores. It wasn't without issues, but their bungled delivery has left us with a much worse landscape for ownership.

This was the moment where it was all doomed and everyone applauded!

 

[Nesh]

Just to add my own pet peeve - They had a digital ownership strategy which was significantly better than current proposition on all consoles and PC stores. It wasn't without issues, but their bungled delivery has left us with a much worse landscape for ownership.

This was the moment where it was all doomed and everyone applauded!

View attachment 10781

What was so special about MS's proposition?