Xbox Business Update Podcast | Xbox Everywhere Direction Discussion

[Cyan]

a guy -Modern Vintage Gamer- who worked programming for Xbox consoles talks about the situation. He makes some good points, specially when talking about Xbox Live Arcade -arcade says it all, many titles there were really good arcadey and fun games-. I don't agree with everything he says but it's good to listen to him. "Xbox has lost its way" is the video title if you can't see it clearly on the video thumbnail.

 

[function]

Xbox is corporate. I feel like some people view Xbox as like this plucky 'lower' division in Microsoft full of 'the good guys' versus the suits, but they're not, they're a major corporate entity and Phil reports to nobody else except Satya himself. Obviously they dont have full autonomy, but they aren't being run by some outside elements in MS, either.

It's Xbox leadership that is failing here. The cuts themselves shouldn't have ever been necessary, especially not when Microsoft showed they are willing to invest heavily into Xbox with the $75b Activision purchase. The problem is simply terrible management and direction.

Xbox leadership absolutely is failing, I agree. And the cuts shouldn't have been necessary, but these particular cuts - particularly in Tango's case - seem to have caught even the likes of Sarah Bond as @rntongo just pointed out.

Clearly if even the President of Xbox didn't see this coming and didn't want this to happen, it's not a strategic decision it's a reactionary one. MS gulped down Activision and have now been told they need to stick their fingers down their throat and vomit up something else because they haven't had time to - and possibly don't plan to - properly integrate Activision.

Xbox leadership has been consistently trying to shortcut their way to world domination since Kinect was a massive hit, and they've been failing at that to some degree or another every time, and every time they fail Xbox (the console) loses ground. Software to drive Xbox Series sales was sacrificed to grow Gamepass, Sales of Xbox Series consoles was sacrificed to grow Gamepass Ultimate server racks, Series S was gimped a little too much to make an attractive lower cost Gamepass box, and now the house of cards is collapsing acclaimed developers are being shed and exclusives are going away completely.

Meanwhile, no-one in management seems to even care that Xbox versions of MS games are inexplicably less polished than PS5 version, despite saying that Xbox is the premiere place for their games and also making noises about making another console.

Clusterfuck.

N.B. MS want to sell on Nintendo and in Japan, and they've just killed Tango, while somehow 343i have been degrading the Halo franchise to the groans of players for more than a decade wat.

 

[Nisaaru]

You know what? Gamepass never made sense, Sony knew it and that's why they never really copied to tried to compete, people that spent a dollar (1$ for the first month!) to play a brand new AAA game then cancelled their subscription knew it (I'm one of those, thanks for the practically free Forza Horizon 5), the only person on earth that didn't know it was Phil Spencer.

While other media is dominated by subscription services and customers expect it because they are unwilling to spend xx bucks on Blu-ray movies or music CDs anymore. So what makes sense to Sony's "we want these direct sales and juicy physical sales profits since the 80s" is pretty meaningless when the customer market itself is in the process of shifting away.

Management's job isn't keeping dying business concepts alive but to anticipate how the market will move to be in a better position.

IMHO one of MS real problems since the X1 was that they anticipated how the market would develop quite right but they moved too fast *and* voiced it *publicly*.

While the "caring" audience either didn't realise it yet or didn't want that to happen for a number of reasons. In 2013 during the MS X1 launch disaster Sony just kept their mouths shut to not annoy their potential customers while they surely thought the same way.

Just look at the no-privacy/permanent audio and soon video recording/tracking and total surveillance ideas mobile phones sneaked into people's reality and the dull masses don't really care what happens here.

Personally I considered this anathema and was enraged about the mandatory Kinect stuff MS tried to push in 2013. Imagine they did the same now? There would be no significant resistance.

Obviously my opinion doesn't matter like the opinions of people which want to own physical games won't matter anymore.

As Sony will be forced into a subscription business model even if they don't want it because that's where the consumer market moves.

Phil Spencer is a narcissistic moron who's only talent was hyping himself up. Satya Nadella took time off from victory laps for the AI stuff and surpassing Apple in market cap to finally ask "wait how much money have we been giving you, and your sales are going down?" Now Phil is in full on panic mode and just making random slapdash decisions to "make the financials look better".

I don't know him personally to make such judgement. IMHO his real mistake is not realising that gaming is about selling dreams which means it's not rational. It has far more in common with how sports work than the current style of fluffy marketing.

I'd put it at 60/40 chance Sarah Bond or someone else is in charge of the Xbox division by years end. I mean sure, the PS5 is also something of a very moderate failure purely versus where it could've been (opportunity cost), but that's a wider failure of the games industry as a whole. EG People never stopped wanting to buy good enough Mass Effect games, never the less good enough Mass Effect games stopped being made (and Tony hawk, and just etc. etc.). But Xbox's current failure has managed to be the most egregious of these examples.

MS made that mistake with 343 before. Let's *hope* they won't step on the same landmine again.

 

[Shifty Geezer]

Head of GamesIndustry.biz weighs in

Put simply, Xbox bet an obscene amount of money on a future that hasn't happened. The market has shifted under its feet and it's having to alter direction. And some of its teams are having to pay the price.

 

[Shifty Geezer]

While other media is dominated by subscription services and customers expect it because they are unwilling to spend xx bucks on Blu-ray movies or music CDs anymore. So what makes sense to Sony's "we want these direct sales and juicy physical sales profits since the 80s" is pretty meaningless when the customer market itself is in the process of shifting away.

Except it's not; not in gaming which is a different value proposition to movies and music where a purchase is all of a couple of hours of entertainment.

 

[Nisaaru]

Except it's not; not in gaming which is a different value proposition to movies and music where a purchase is all of a couple of hours of entertainment.

But the normal customers doesn't care about the business side/financing.

That was the whole point of my comment.

 

[Cyan]

Xbox leadership also failed in what Modern Vintage Gamer described, lack of ideas to create something out of the standard, and follow Sony steps, which is an impossible battle.

The OG Xbox and the X360 were two revolutionary consoles. The OG Xbox was a console that mixed the best of PCs -memory, "massive" hard drive storage, installations, custom mp3 music, a great GPU- and the ease of use of a console.

Xbox 360 was revolutionary in that it added a great online service, lots of social features like friends, groups, the gamercards, achievements, live patches, all of them now standard in the industry but back then it was revolutionary.

Also like Modern Vintage Gamer mentioned and that I had forgotten, Xbox Live Arcade, I got games there like Super Street Fighter 2 HD, Castlevania SOTN (which I completed using a gamefaqs guide), shmups like Mushihimesama, and many others. Great games on their own right, which added variety. Sometimes I can't believe how much money I spent on that console.... specially considering that consoles were secondary to me most of my life.

 

[Sonic]

MS should wipe out a good portion of Xbox marketing and replace them with people that can do by the job effectively. That may be a good start to gaining new sales whether it be increased game pass subs or more consoles and software sold. That they have failed to have effective marketing for over a decade is something they should be scrutinizing heavily. Their marketing hasn't helped them at all.

The cuts were going to happen one way or another. It should be expected from a takeover the size of what MS took. I don't agree with the cuts and don't like them but that would be going down to RPSC territory and whether one values shareholders or employees more so can't get into that. But those who are somewhat knowledgeable and can read the market did warn that layoffs and dev team closures would happen from these purchases and should be fully expected. I feel bad for the employees and do wonder what was happening with Tango for them be closed down. Seems like a boneheaded move from the outside but there may be actual reasoning behind it that makes sense.

I agree with others that Xbox leadership is utterly incompetent at their jobs and have gotten the Xbox into the position it's in now. MS should be aware by now of shareholder discontent with Phil Spencer so hopefully they make the reasonable decision to send the guy packing. I understand some will continue to defend him and all that but this is where Xbox is at now. Time for execut management to get serious and make the necessary cuts to keep Xbox and MS gaming relevant. Phil Spencer does the opposite.

 

[Shifty Geezer]

But the normal customers doesn't care about the business side/financing.

That was the whole point of my comment.

I don't understand? I'm saying the value of subscription services to customers isn't the same for games as it is other media. £15 a month to watch a zillion movies is better value, clearly, than buying those films on disc. However, £15 a month for a library of a zillion games where you only care to play a few isn't so straightforward. As such, just because everyone moved to subscriptions for TV, movies and music, doesn't mean the same is inevitable for game subscription services.

 

[rntongo]

I think it’s hubris (my apologies no offense) to think that you would know more about how the gaming economics works than he does. He has metrics you would never see or ever report on. He has worked the top position for the last 10 years. And has been in Xbox for decades before when many other platforms died out, Xbox survived.

it is really something if you’re going to flash your credentials why trust a raging YouTuber who has never worked the industry? How many people in the games industry actually understand how or why their consoles sell or don’t sell. I can assure you that ordinary gamers is not a IHV or even a ISV. He’s reading the interwebs Yet you trust him mire than someone who has direct access to actual game executives and has being doing it as a journalist and as a worker of the industry.

Okay, well. I’m done for a bit. I’ve gotta focus on exercising.

Just my opinion, if I'm wrong I'm wrong. I didn't say I know more about gaming economics more than Phil does, even though I may have more qualifications in that department and more experience with financial valuations, he's an experienced executive who relies on domain experts that are even more qualified than I was when I was still in Finance(The question is what information does he derive from that data).

But there's a growing consensus that he hasnt done a good job as head of Xbox/MS Gaming. You dont need to be an experienced executive to understand that there are serious challenges with Xbox. Actually being a active gamer gives you more insight into the quality of products than an executive like Phil who cant spend enough time using the product. Youtube/Twitter are great sources of qualitative data, even back when I was still doing Equity Research. I actually built a sentiment analysis tool utilizing tweets and gauge the sentiment of different products. This data is statistically significant and useful for example.

I listened to Mutah's video at SomeOrdinaryGamers because he speaks from the perspective of a consumer and didnt try to explain financial risk theories to his audience. I also watched the video you shared here of Alana Pearce, and my issue with it was she at times went into different subjects that maybe she didnt fully understand or couldnt properly articulate and made some wrong conclusions(the financial stuff), which is OK!!. So you're misunderstanding me and not appreciating my point. As is with the business of media, misinformation happens even when its not intended. Is Alana Pearce an experienced gaming insider? Yes! Is it possible she may have misled or misstated some finance related stuff in the video you shared? I think so, and if she did it doesnt invalidate her achievements in the gaming industry or competence when it comes to covering gaming.

 

[QPlayer]

I don't understand? I'm saying the value of subscription services to customers isn't the same for games as it is other media. £15 a month to watch a zillion movies is better value, clearly, than buying those films on disc. However, £15 a month for a library of a zillion games where you only care to play a few isn't so straightforward. As such, just because everyone moved to subscriptions for TV, movies and music, doesn't mean the same is inevitable for game subscription services.

It all depends on the amount of games.

A few years ago, I subscribed to Netflix saying that I would watch some earlier movies that I like in good quality. I knew about the service that it included a million movies, but when I entered the movie I was looking for in the search engine, it wasn't there, and then another and another... Several movies were only available through another service provider. I canceled my payment.

The wider the range of games with bigger names, the more subscribers can be reached

 

[rntongo]

So let me understand this point here; If I work daily with MBA level executives who very well explain to me what’s happening and why things are happening, why certain choices are made, where the industry is headed for the business area that we operate in. You’re telling me that you know more about my business area than I know about it even though I live it everyday and you have a finance degree that has analyzed a completely different companies and industry?

Alana Pearce is not a financial expert(and doesnt need to be), she's a good gaming journalist, if you want to understand the business/ financial side of the company go watch Bloomberg, there are real analysts covering the gaming business which is a subset of tech. She made mistakes in the video, that are so elementary I'll let you marinate in them, but that is ok, I'm sure there was other value in the video. As I initially mentioned to you when I replied, I dont want to go into a long spiel because it will not benefit either of us tbh. I may say things beyond the scope of the discussion to make my point. Its really not worth that back and forth.

 

[QPlayer]

The obscene amount of money invested in the games was validated only last fall, that is, about half a year ago. With the 70 billion dollars invested here, they are planning for the next decade. How would it be today, barely half a year after the investment was made, that this business decision can be categorically defined? They made this grandiose financial maneuver precisely to secure the next decades. Today, from here, it is hardly possible to judge how this business will be, how successful it will be.

Looking at the Xbox situation, I am not at all sure that there is any problem on the management side. I remember half a year ago when the ABK business transaction was established, how positively everyone commented on how well Spencer was doing his job. The business is just beginning to move towards a planned future. There are downsizings everywhere in the game industry, so MS's steps in this direction can be said to be natural considering the current situation of the game industry. Do they shut down a small team that they think is not functioning properly, and everyone draws the consequences? Nonsense. That's not how things work. There is a place and time for a return on huge investments in the future. It will make more sense to return to this topic in a year or two.

 

[Frenetic Pony]

While other media is dominated by subscription services and customers expect it because they are unwilling to spend xx bucks on Blu-ray movies or music CDs anymore. So what makes sense to Sony's "we want these direct sales and juicy physical sales profits since the 80s" is pretty meaningless when the customer market itself is in the process of shifting away.

People sub to show streaming because they're somewhat "fungible". I.E. the difference between one show or another as long they're in a vague "genre" you like is not much, when the average person opens up Netflix they want to watch "something" to distract themselves. Music is different, but music also charged $1 per song way back when, people weren't willing to make huge investments in music if it was just a track.

Most games are fundamentally different from both mediums. There people will pay $70 for one product, skip that they'll pay $300 for a Switch then $60 for Animal Crossing literally just to play Animal Crossing. No show or streaming piece of music commands nearly the same price, gaming is closer to concert tickets than streaming, and no one would ever assume a "generic concert ticket subscription, just get whatever we decide to chuck your way!" would be some market dominating game changer.

Gaming isn't fungible for the majority of the market, you can't offer a "gaming subscription" and expect it to be a mass market hit, because that's not how the mass market for it works. Which is why Phil Spencer is totally unqualified for his position, someone that doesn't fundamentally understand gaming at all but managed to talk himself into the head of a major gaming division. Phil Spencer is 343's (now former) management all over again, a vast over promise and under deliver non talent that shouldn't be where he is.

And it's not like others can't or don't understand how games work. Bobby Kotick was/is a noted asshole, but he was a successful asshole that kept Call of Duty firmly in the golden crown of gaming for over a decade while numerous would be challengers failed. Nintendo recovered from the Wii-U to a market cap five times their 2015 nadir, and that's currently on a down note for them. Good ol Phil has managed another series of screwups after his predecessor managed even more, Sarah Bond at least seems to have an idea of what she's doing, and if she doesn't there are certainly other that do.

 

[rntongo]

Whatever the outcome of the coming months to a year, it would really really suck if Xbox ends as we know it.

 

[metacore]

Another nugget :

"This web-based store is the first step in our journey to building a trusted app store with its roots in gaming," Bond explained to The Verge.


Frooom theeee maaakers of Windows store, trusted and with its roots in gaming. Now every mobile casual is already waiting for this epochal change.
I swear!

Its like xbox management is loosing contact with reality in attempt to create some visions of next office365 for Satya. Meaningless buzzwords upon buzzwords

 

[rntongo]

Another nugget :

"This web-based store is the first step in our journey to building a trusted app store with its roots in gaming," Bond explained to The Verge.


Frooom theeee maaakers of Windows store, trusted and with its roots in gaming. Now every mobile casual is already waiting for this epochal change.
I swear!

Its like xbox management is loosing contact with reality in attempt to create some visions of next office365 for Satya. Meaningless buzzwords upon buzzwords

There's something about MS Gaming the past 5 years where they announce something and you get a bad feeling, spider senses tingling but hope they somehow pull it off. But the outcome becomes exactly what you logically thought and not hoped. This just sounds like one of them things that turns out bad. They're hoping this will be an alternative to the game store on the Playstation, iPhones, Macs,etc. You just open your browser and play from anywhere. I think thats the goal.

 

[metacore]

There's something about MS Gaming the past 5 years where they announce something and you get a bad feeling, spider senses tingling but hope they somehow pull it off. But the outcome becomes exactly what you logically thought and not hoped. This just sounds like one of them things that turns out bad. They're hoping this will be an alternative to the game store on the Playstation, iPhones, Macs,etc. You just open your browser and play from anywhere. I think thats the goal.

This goal is much taller order than windows mobile after Nokia acquisition. Its like executives are always talking in politicly correct buzzwords (from corporate goals perspective) and not seeing what will it really take to deliver. IMO besides "liked consumer facing brand" everything xbox divisions did was kinda alien/lacking synergy to doings of other parts and of corp in hope of, once establishing impeccable brand aligning it somehow later. Xbox one era happened, accusations happened, gampass flatlining happend and now buzzwords are the last hope.

 

[Cyan]

Mike Ybarra on what Xbox should do to succeed. "It all comes down to making great games." Xbox should follow two paths to succeed in the video game market, according to the former president of Blizzard (either going full gamepass or going full 3rd party, as I understand it).

Mike Ybarra sees two clear paths for Xbox, and it's time for Microsoft to settle on one of them and bet on it with clear communication.

https://twitter.com/x/status/1788964907482013784

 

[rntongo]

Mike Ybarra on what Xbox should do to succeed. "It all comes down to making great games." Xbox should follow two paths to succeed in the video game market, according to the former president of Blizzard (either going full gamepass or going full 3rd party, as I understand it).

Mike Ybarra sees two clear paths for Xbox, and it's time for Microsoft to settle on one of them and bet on it with clear communication.

https://twitter.com/x/status/1788964907482013784

Spot on. The day Phil said great games dont blah blah, I realized he needed to be fired.