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2024 will be remembered as a pivotal year not only for Xbox, but the game industry at large.
Few are feeling that more than Xbox right now.
The excitement from the initial Xbox Series X reveal “it eats monsters for breakfast” feels so far away in 2024.
Because indeed, it isn’t truly console exclusive, it’s coming to PlayStation in a few months.
Why is this a big deal?
Is it even a big deal?
Growth has been modest in the game industry since the pandemic, although green shoots are appearing as we head into 2025.
Why is Microsoft doing this in the first place?
Without exclusives, where does that leave Xbox console hardware?
Gen-Z is old news now (yes, you’re old).
Xbox and its OEM partners are working to improve Windows 11 for gaming.
But fans like Microsoft predict and react to a projected future.
If Xbox isn’t growing, then developerscouldone day abandon the platform in bigger numbers.
And if developers abandon the platform, then youcouldsee exciting games you want missing the platform.
This graphic fromAppEconomyInsightsreveals how Microsoft’s financials breakdown as it enters FY25. Xbox is now neck and neck with Windows, inflated by the purchase of Activision-Blizzard. Q2 FY25 should be revealing about how Xbox is doing within this new reality.
If people start feeling they can’t rely on Xbox for most content, then why stay?
If people leave, then why would developers stay?
Death spiral, etc.
Microsoft has worked tirelessly to improve the Xbox app on PC, with a focus on value via PC Game Pass. Developers still largely avoid it, without some kind of Game Pass deal, however.
The dilemma revolves around growth, and staying ahead of rising costs.
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.
Microsoft is seeing significant growth on Xbox Cloud Gaming owing to its partnership with Samsung TVs, which have Xbox features built in. Others are catching up, though.
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.
You will see the first third-party SteamOS handhelds at CES 2025 in Las Vegas, as Valve continues to target PlayStation and Xbox’s traditional user base who favor console-like simplicity.
As an investor, I’d be questioning CEO Satya Nadella’s logic, and they most likely are.
As such, Xbox has to grow.
People’s libraries are digitally-locked to the platforms they are in.
Microsoft is reacting to this trend early, bytalking about putting Steam and Epic Games Store onto future Xboxconsoles.
Microsoft is also known to be building itsown Xbox handheld.
Indiana Jones on Steam, for example, supports Xbox cloud saves.
Diablo IV keeps your progression no matter what platform you’re on, too.
This strategy is, of course, fraught with risk.
The risks
Microsoft is a data-driven, telemetry-obsessed company, and it sort of has to be.
When shareholders are involved, there’s always a weird disconnect between what shareholders want and what customers want.
This is why you often see things fall fast through the cracks at Microsoft.
On paper, Xbox is cleverly getting ahead of trends over which they have no control.
I worry that Microsoft is simply ceding ground based on faulty data, creating a self-fulfilling prophecy.
But it doesn’t matter either way.
During the pandemic service game boom, that was Xbox, and likely informed their decision to acquire Activision-Blizzard.
Microsoft even have a brief investment spree into the faddy “metaverse” which obviously went nowhere.
With Xbox, the bulk of its investment is being spread towards areas where it is seeing growth.
My concern, again, is that Microsoft is spreading themselves thin here.
These weaknesses are rife for exploitation by companies who would be happy to see Xbox fall apart.
For them, the only options will be PlayStation or Nintendo.
But … that’s what competition is supposed to be for.
Competition gave us Steam sales and Xbox Game Pass.
Competition keeps prices from spiraling out of control, and they help foster innovation.
The reward
I’ve said it before.
On paper, it would be great if no games were exclusive.
I’m catching a flight tomorrow, and my options about to play are limited to Xbox Play Anywhere.
I believe Microsoft when they say this is where things are trending.
The idea of my content being locked to one gadget is silly.
you could’t force someone to be a fan of something they don’t like, nor understand.
It feels more like a vision, than something that they can truly execute.
But what if they pull it off?
What ifallXbox games hadXbox Play Anywhere?
What if all Xbox games were cloud-capable on any rig at any time?
What if I didn’t need to jump through weird hoops to play with friends on other platforms?
What if my cloud saves were truly universal and platform-agnostic?
What if Xbox console hardware could benefit by pure virtue of being adjacent to a more gaming optimized Windows?
It’s evident in the fact very few PC devs organically support Xbox on PC.
It’s evident in the fact many vocal Xbox fans don’t feel confident in Xbox’s future.
But what if they pull it off?
