Are Xbox consoles done? Not today
Everyone wants to see something fail, but few understand how
The media outlets are having a field day thanks to the new (unfounded) rumors that Xbox would be exiting the videogame industry. That narrative took force the last days thanks to correlating the existence of once-exclusive games on Xbox appearing on other competing platforms.
The reason is simple: by bringing titles like Hi-Fi Rush, Starfield, Gears of War, or even Halo, to platforms like the Nintendo Switch or Sony PlayStation 5, Microsoft gets another source of revenue and profits. That’s just what investors like — bring me one who doesn’t.
There is some logic behind the panic. Exclusives have been always part of the equation to pick a console, as most people only can buy one as the rest is spent on games. By negating the content of other platforms by mere choice, it feels like “deception” or “betrayal” when that locked content you had access to now escapes to other platforms, broadening their appeal.
In other words, look at the Xbox console, and think if you could have bought a PlayStation 5 if it had Game Pass on it.
In that regard, this would kill the confidence on the Xbox brand as a whole. It already happened once, which almost made the entire Microsoft gaming division irreparable beyond expectations.
There is, however, a problem with the “Xbox is going to die” narrative, and it's that it lacks coherence with what we know from Xbox itself. As a conjuncture it makes sense, but looking the broader picture, is does not.
The Past — Don Mattrick be damned
Everything that has been happening with Xbox can be tracked down to Don Mattrick’s era on Xbox.
He, and his minions, are the direct culprits of the shaky foundations for Xbox as a digital platform, which sounds odds as Xbox was the one who pioneered paid-multiplayer (Xbox Live) and digital delivery (Xbox Marketplace).
By offering a draconian, too-far-off-of-its-time, anti-consumer platform, and with Nintendo slurping glue with their own Wii U, the entire consumer base moved to PlayStation 4, and the industry followed. The E3 of 2013 was the moment Xbox lost the “Console War”.
Sony kicked them in the floor with an excellent, if not the best, E3 keynote of the decade, may be ever now the E3 is no more.
I still remember that keynote while I was working on media. It was at that moment I published “Sony won” as the part of the article title because it was honestly true, only for my editor in chief to change the title due to concerns with the ad partnerships. You can still see the original title on the original URL, however.
Don Mattrick was yeeted of the company the very next month.
There were talks about Microsoft giving up by putting Xbox on sale in later months. That never materialized, however. Maybe the price was too high for any company to pay, let alone make it profitable on a short-term to recoup. Maybe they convinced investors that Xbox had more value in Microsoft that outside it, along with Bing.
The vision for Xbox is not being a console, but a platform you can access through multiple devices.
I like to believe that was Phil Spencer the one who convinced Satya Nadella that there was a future beyond losing the console wars, by showing hope on Xbox Game Studios and their content to turn this around. Even if that didn’t happen, I highly doubt Xbox would have been sold either way. Microsoft would have made Xbox the new SEGA, shrunk in scope and funding, licensing most of their IP to other studios or publishers.
In any case, that hope was enough to convince Satya Nadella to go full on acquiring Activision-Blizzard-King (AKB) with all of its IP and problems years later. Imagine the sweat trying to convince the CEO for such endeavor after the division literally plummeted and gave not one, but two console generation to the direct competitor, just after a pandemic.
From there onwards, Xbox quickly moved away from the mantra of past decisions. They gave up Kinect, released Game Pass, brought an affordable Xbox Series S, and even announced console-financing. The idea was to bring players in by lowering the entrance barrier to Xbox, something PlayStation 5 wasn’t forced to do has it already had PlayStation 4 users onboard on their turf, more than ever I suppose.
The present — One last battle
Instead of “throwing the towel”, as easy as it sounds, leaked documents from the ABK acquisition showed that Microsoft had (and probably still has) plans to fuel another console war with the next generation of their consoles.
Specifically, the documents show three important bits:
- Commitment to release a next-generation hardware through 2030
- Attention to rising technologies trends, namely AI-enabled hardware and portable devices.
- Intention to bring Xbox as a platform to more devices.
These documents were not just made from wit. These are planned business strategies. Contracts with hardware partners, like AMD or Foxconn, are made ahead of time, so I would take these timeframes as set in stone, and only varying in scope (investment) or months rather than sole intent.
AMD Xilinx acquisition should have impact on enticing console makers to keep their partnership on by bringing hardware features with a competitive contract — AMD surely doesn’t want them to flee to NVIDIA, Intel, or even Qualcomm, who surely are lurking for any AMD misstep. There is a hardware backward compatibility layer to take into account when a new console generation wants users upgrading their devices without friction, so Intel and NVIDIA seems more plausible partners if AMD can’t deliver or weirdly refuses to.
But that is not the focus of the document. Of course, the new consoles codenamed Ellewood and Brooklin would take most of the stage in the news. It’s on the very starting pages where you can see that the vision for Xbox is not being a console, but a platform you can access through multiple devices, including Xbox consoles, Xbox handled and Xbox “cloud device”. Note that these icons are not outlines, but screenshots from concept images.
You can see for yourself there is no “console” as gateway for Xbox. Instead, these are being considered as another access points.
The intent is to move away from putting all eggs on one basket, or one single point of failure for a business, which is the console. This key strategy is what will make Xbox different from PlayStation or Nintendo, as they depend on a console itself to have a business, and lack the resources, infrastructure and partnerships to do the same as Microsoft is doing with Xbox. You can’t play PlayStation or Nintendo games outside their platforms, so you’re forced to buy them.
But that strategy is the future, not the present.
The Near Future — Xbox as a platform
What rumors don’t take into account is that moving away from the console market to only content is something they cannot do overnight.
Xbox still needs a console market to drive players in, because there is no replacement. The PC Gaming market became a luxury since the RTX 2000, Portable Gaming (Steam Deck-like) is on its infancy, and Low-End Gaming (Laptops, Mini PC) can barely move pixels. Plus, there is still availability challenges on the Xbox Cloud service.
For Microsoft to “kill the Xbox console” they have to replace it with multiple devices. Even if all content on the oven for Xbox has clear signs of interoperability between devices (to some extent), moving exclusives to other platforms right now would kill the brand in the consumer space: What separates an Xbox from other consoles without its exclusives experiences?
The “worst console generation to lose” still holds true to this day, 10 years after that E3 2013 disaster.
In other words, look at the Xbox console, and think if you could have bought a PlayStation 5 if it had Game Pass on it.
Game Pass is another clear sign of lower barriers of entry, being compatible with PC and “cloud devices”. Their push for Xbox Cloud is still unreliable, as it depends on Internet connection speeds and latency, plus access to near, strategically placed datacenters. Is something still being built by Microsoft, so I expect they announce more countries later this year.
The Far Future — Xbox without console
The future is content. What Microsoft wants from Xbox is to not depend on consoles, but to allow these to co-exist with other alternatives, much like Steam Deck has its own “competitors” from other brands like ASUS, MSI and so forth. Even Intel may jump into the bandwagon.
By pivoting Xbox into a videogame ecosystem rather than a console-oriented platform, they push the problem of access far down below the industry chain, which is something that has been proven successful for Windows and Android.
Let’s put that into perspective. An OEM would create hardware “Xbox Compatible” certified by Microsoft, while the entertainment platform (OS and content) would be offered by Xbox itself. This is not far from what happens similarly with Windows laptops or Android phones, which have very low barriers of entry. Microsoft also sells their own Surface devices as official alternatives.
This kind of business is how Valve works. Their game release cadence is very niche compared to Xbox, PlayStation and Nintendo. They drive instead by offering an excellent platform for PC games: marketplace, discovery, technology (Steamworks), discussion, and now software and hardware (SteamOS + Steam Deck).
Xbox would become Valve competitor, sorta.
“Exclusives” are still, and will be, an important part of the Xbox ecosystem, because Xbox is still tied to an unreplaceable console hardware platform. You may expect Gears of War 6 exclusively on Xbox, but who knows if Gears of War 7 becomes available on all platforms that are “Xbox Compatible”, like a Nintendo Switch 3 or PlayStation 6.
As long consoles are pivotal to the development of the Xbox business, titles with perpetual or temporal exclusives will exist. Once first-pary consoles become less critical for the business, you will see Microsoft pushing Game Pass and Xbox Cloud into PlayStation 6 and Nintendo Switch 3 with the win-win scenario: console makers get a cut for the subscription, Xbox get more subscribers.
Xbox already paid a high price for trying to bring the “future” with the Xbox One ahead of if time, the trends, and what was conventionally accepted in the moment. The “worst console generation to lose” still holds true to this day, 10 years after that E3 2013 disaster. I doubt they will make that same mistake; its aftershock still rumbles around their offices constantly reminding that their core consumers are, first and foremost, gamers.
I don’t think Phil and company will make that same mistake, with so much evidence on the aftermath. Even if it happens, I doubt it will be by its own hand. Investors are also part of the power struggle and decisions within a company, and when investors look desperately for short-term profits, they usually become…
