- The make around 5 billion in revenue per quarter
- The problem according to them is profit margin - around 150-160 million
So first of all, they are big! Secondly they are not at a loss. They just have a "thin, non-growing margin". So to fix all this they are trimming down, so they can "return to growth" (which I think is ridiculous).
Some points -
- They are huge business even now - 5 billion per quarter revenue is no joke
- They did not have to buy all those studios
- They looked at Netflix, and wanted the sweet monthly subscription cash stream
- Then they did not have to give away popular games day one on Game Pass
- And finally, they did not have to raise Game Pass prices to improve the profit margins. Of course, consumers pulled out.
- Once again, short term vision, crazy decisions, bad spending spree and a constant need to "make numbers go up" and who has to pay for all this?
150M at 5B revenue is not great: that's 3% margin!
The bigger issue is that console manufacturer revenue is highly cyclical. This is hard to see in e.g. Xbox and Sony since they are both part of a larger conglomerate, but really obvious for nintendo.
You generally have a cycle of
- "Launch": high marketing costs, low/negative HW margins
- "Mid-cycle": lowering manufacturing costs, large game sales, high margin DLCs
- "end-of-cycle": falling HW sales, fewer exclusives (-> preparation for next gen), fewer consumers (-> waiting for next gen). Here you usually have maximum profits since you don't subsidize HW and marketing is minimal (platforms are already locked in)
Generally you have to establish a big userbase during the mid-cycle such that you can levarage it during the late-cycle to be able to afford next-gen. Xbox has the big issue that their mid-cycle was catastrophic, which means they now don't have the console base to get into the next generation:
If they have 3% margin _right now_ in the end-of-cycle where marketing and development costs are at their lowest, this does not bode well for the overall health of the business.
> Oy vey maybe this kind of money grubbery is not good for our society.
No, it's a signal from the market that the product being sold is not wanted by the market.
They've mismanaged all their IP pursuing that yummy subscription revenue. Turns out gamers really don't like to buy subscriptions. As a poster downthread pointed out, the games that are not always-on and subscription-based are doing fine. It's the recent AAA model of subscription that is bleeding money.
> Oh yeah I forgot 5 BILLION dollar in revenue is a signal that the market does not want your product
Doesn't matter how big the revenue is if the market is not interested at the price you are selling.
I mean, by your logic, if I sell a dollar for 64c, and do $5b revenue, that's an indication that the market does indeed want the product, but not an indication that the market wants the product at the price you need to sell at to stay in business.
They are not selling at a loss though. The real issue here is that businesses such as Microsoft do not exist to serve a market or make enough money to survive and pay their employees. They exist to increase the value of their owner's shares. This is predicated on an unsustainable model of continual growth, with the expectation that every market they operate in can produce high margins and endless expansion. But demand is not infinite and persistent high margins are the exception, not the norm.
Maybe it isn't a loss, but as an investor (never directly in them), I consider 3% profit margin a bad sign - at that return I'd prefer a savings account: FDIC insurance means that after accounting for risks the savings account is better. I know stock returns don't directly track profit margin, but that is one input into the complex consideration of stocks.
You are right, and this is why not everything should be a stock. Whatever they will cut to avoid emitting "a bad sign", may involve:
* firing people
* making services worse
* sacrificing their own future
Whether it actually does involve those things is effectively arbitrary, because the consideration of the "bad sign" is also arbitrary. If there is no objective value judgement of their operation there is no objective value judgement in their streamlining either, so all bets are off.
Overall they are not selling at a loss, but parts of what they're selling are being sold at a loss. The market is telling them to slim the f- down and get rid of those money-losing parts.
This is all normal and justifiable. Where is the logic that corporations need to preserve dysfunctional parts of their operations?
Corporations don’t need to, no. But they are systems, and it’s a beginner mistake to assume changing one part is going to affect the whole in some simple, predictable, logical way.
That sounds like an extremely lame excuse to preserve money losing activities.
I'll counter by saying that pruning off failing things is not only good, it's the core of capitalism. Creative destruction, as Schumpeter called it. You get efficiency by hunting down and eliminating inefficiency, redeploying the resources elsewhere.
> pruning off failing things is not only good, it's the core of capitalism
It's quite serious that you see "being good" as something inferior to "the core of capitalism".
Also, the core of capitalism is making money for private individuals, nothing more, nothing less. Whether that's done with or without "failing things", is really beside the point.
It's a lot more than $1.07 future money, a mortgage is more like $2 or these days $5
If you're offering even 25 year 75% LTV mortgages at such a low interest rate it's $1.07 future money you're going bankrupt. And these days people are taking 30 year, 95% LTV or even asking for 40 year 100% LTV which is fully batshit.
Why is it that every person who tries to make these dumb arguments in favor of destructive capitalistic greed always attempts to make it look like the multi-billion dollar profitable business is somehow self-sacrificing or a force of good? "If I sell a dollar for 64 cents!", yea, as if that's even close to what's happening.
What's not to understand that when you're having to spend 4.85B in order to get 5B in revenue makes your business quite risky. You want to be operating on larger margins than that
Pretty normal margin in some kinds of businesses, like supermarkets. Then again, supermarkets aren’t likely to see all their customers leave at the drop of a hat.
The scale is also very different. Costco earned $70.53 billion in a recent quarter (not 5B here). Their operating margin is 3.93%, which is also healthier.
The awareness of a poor return on investment is a good thing for society. We want to do more with fewer resources.
Making terrible decisions, such as investing in distractions for your company and consumers, and then letting your workforce pay the tab.. is the thing that is not great for society.
Who is the "we" here? Because the profit margin not being high enough is certainly not a problem for consumers. The only people who should care about that are the company's shareholders and "shareholders" certainly isn't synonymous with "society".
Making crazy changes like squeezing out every last dollar out of your existing, loyal customers (looking at any PE firm ever) certainly affects the wind I'd wager.
Absolutely, and plenty of companies have made that mistake.
But the point is locking up money in a 3% margin business doesn’t impress investors.
So you either need to improve the margin with lower costs or higher price (or both). Or bail from the market entirely and put your money in something that makes more money.
What makes more money? The investment is all in AI because TINA - There Is No Alternative. There's too much money in the system to cover all reasonable investments, so it fills up all reasonable investments and many unreasonable ones too.
Is a low profit margin a problem for consumers or is it the company's "money grubbery" of not being satisfied with that profit margin that is causing the problem?
When XBOX fires a bunch of people and shutters studios leading to fewer games with worse support, that's a problem for consumers.
I think people often forget that in a society we rely on companies making and serving things. They make our food and our medicine and build our homes and make our games. It's a good thing when their finances are healthy. It's a bad thing when they form monopolies and rent-seek.
Once again, what is the actual problem here? The company was making a profit at their current employment level. They are laying people off and shuttering studios because that profit isn't enough for them. This entire argument keeps coming back to "money grubbery".
How is making more and more every fiscal year "healthy"?
This is madness and it doesn't make any sense besides the one case where you pursue a monopoly.
All of this has nothing to do with the consumer of the product besides the fact that he'll get a worse and worse product while simultaneously being forced to pay more and more. Enshitification is aresult of this "healthy" business culture.
Our society has a finite capacity to do projects and to run industrial processes. We want that finite capacity to provide as much quality of life as possible (and as much expansion of our capacity to do projects and run processes as possible), and achieving that is a thorny intellectual problem, which for many centuries in our society has been solved mostly by lawyers and judges knowledgeable about corporate law, stock markets, corporate managers, accountants and investors. This entire ecosystem is predicated on the assumption that investor will try to maximize their return of investment, which is strongly correlated with profit margin.
One of those terrible decisions was probably hiring too many developers, how do you suggest they fix that issue, besides changing leadership?
Many of those developers may not have the job elsewhere, or job paying much less. They now have the experience working in a proper software engineering environment.
But doesn't that make situation even worse? They likely would be 100B+ market cap/total asset value if spun off into independent company, but not able to generate even 1B in annual profit? Activision Blizzard managed 1.5B income/20% margin by themselves before being bought by Xbox -- and somehow whole of Xbox now earns less?
It didn't destroy itself, it was intentionally harvested and the husk was sold to the highest bidder. The original leadership is long gone, the shareholders got their money back long ago, and the staff has turned over significantly. The Blizzard of yore is long gone, and that's ok.
Not exactly - stocks are already sold, you don't run out of cash from the stock price going down. You only run out of cash if you want to sell more stock to raise more cash (this happens, but it is somewhat rare).
However the owners are still going to be mad because their cash is down and they will demand changes to fix that.
Our society uses return on investment (which is correlated with profit margin) to decide what projects and what processes our society's workers will focus on.
So for example, if I can make twice as much money as a software developer as I can as a musician, that is strong evidence that my doing the former kind of work will benefit society about twice as much as my doing the latter kind of work.
I disagree. "Benefit society" means something that can't be defined or tracked so easily. And consumer behavior is heavily biased by things that aren't optimized to benefit society. I have in mind this book, Hooked by Nir Eyal: https://www.nirandfar.com/hooked/
We should try our best to improve our society. Sometimes that will mean doing things that are economically inefficient. Your example of Stanford professor Nir Eyal is an excellent illustration: by advising corporate managers and product designers how to fulfill their role in our economic system more efficiently, Nir Eyal made our society worse.
We should expect more from our elite professors. Nir Eyal should've known better than to make a career out of studying how deliberately to addict users. But we should also expect our professors, politicians and policymakers to understand the basics of our economic system and to understand when a proposed change to our society sounds good or feels good, but has severe adverse effects on economic efficiency that outweigh the societal benefits. Those aren't the only proposed changes we should avoid, but they form an important class of them.
That was true historically but is no longer the case. Even last gen manufacturing costs didn't go down as much as they used to. This current gen they actually increased multiple times.
The cheapest xbox should cost 129. Instead it is $399. That is how consoles work. It gets cheaper, the back catalog grows and now you have a mass market item that ideally could source games from anywhere.
Consoles losing physical media and not allowing 3rd party app stores, or gasp, the ability to run user programs is going to kill the consoles. Expensive and marginal future utility.
Exactly, it seems their only way to make money is charging for online play which used to be $5/m and now $10/m for Game Pass Essential. Now that their high console prices aren't getting new players, the only play is to squeeze the existing ones and increasing the cost to play online.
They actually tried this a few months back when Game Pass Ultimate went from $20/m to $30/m. I cancelled my sub and went to essential. Then Asha backtracks and reduces it to $22/m and people are like wow, she will save Xbox. No, it just shows me they probably saw so much churn, especially from long-time subs, that they backtracked.
I've always thought it was borderline crazy that Xbox charged a monthly fee and I never had an Xbox for that reason. It always made me wonder how many people they failed to bring into their ecosystem for that reason.
Reads to me like multiplayer and server-side games incur a hefty infrastructure cost that eats into their profits, subscriptions notwithstanding. Maybe XBox should focus more on single-player exclusives. They certainly have enough studios to do it.
Considered as a raw percentage in a vacuum, sure, I guess, but we're talking about...
- A company which has undertaken a concerted, long-term effort to consolidate the industry under its umbrella (something they themselves call out as a problem in this post), reducing consumer choice
- A company which has captured a significant chunk of the console market. They're one of the big three (alongside Sony and Nintendo), and have been since the early 2000s, arguably, for crying out loud.
At a certain size (typically as measured by market capture) the expectation for growth needs to be reality checked. This is still $150M of pure gravy every single year. Sure, this is going to a corporation, but that's more money than most people could possibly dream of earning in ten lifetimes.
Every year. For a company that's already putting money towards opex in the form of developing new games and new content for existing ones, for a ridiculously broad portfolio.
To be clear: it is Microsoft's and Xbox's prerogative to pursue more profit, but I reserve the right to call this out as absurd under the circumstances.
If you want to make the argument that Xbox has suffered from a lack of focus in the past decade (... or even longer), or that there's been mismanagement (I would say since around the time 343 got created), then those are fair arguments, though I don't think those are justifications, on their own, for cutting thousands in headcount.
Allowing this org to balloon to fourteen levels of management on any vertical is a joke. Allowing the absorption of so much of the game dev industry and still being unhappy with $150M in annual profit after being such an active participant in the oligolpolization of console gaming is just a bit unserious.
> This is still $150M of pure gravy every single year. Sure, this is going to a corporation, but that's more money than most people could possibly dream of earning in ten lifetimes.
That actually seems... tiny? Xbox is nearly 17,000 employees. That's like $8k in profit per employee. That's worse than big box retailers and like 1/100th of what is common in big tech and (to the letter's point) far worse than their biggest competitor.
Like sure at least you can say they aren't losing money, but Nadella can't be looking at that after just spending 75 billion on Activision Blizzard and be happy with it as the status quo.
EDIT: BTW these numbers you quoted from OP are quarterly, not annual
I agree that at some point you do, but again I think the fact that Sony Playstation is doing this with larger annual revenue, less studios, AND better margins is an indicator that it isn't the problem here.
> This is still $150M of pure gravy every single year.
The issue is rate of return. They are evidently spending $4.85bn on Xbox per year. The US federal interest rate is 3.5% so if you just put that money in US bonds you would get about $175M per year of much purer simpler gravy.
Russ: "Anyway, next thing you know, we IPO, stock triples in a day and AOL gobbles us up. All of a sudden, I'm 22 years young and I'm worth 1.2 billion. Now a couple decades later, I'm worth 1.4. You do the math."
Richard: "Okay. Well, that's a gain of $200 million over 20 years. Um, 16.66 repeating. That's less than 1% return. Inflation is, like, 1.7. I think CDs are 2%. So that's less than a CD."
I know this is a TV show reference and a point about investment strategy but...
If I had 1.2 billion dollars I wouldn't care what investment strategy I had. I've got enough to spend $30k a day for 100 years. At any age, that'll do.
In generally spending increases to cover income. 30k per day sounds like a lot, but it isn't hard to spend that once you get used to having that much to spend. Your mansion with the heated indoor pool is expensive to maintain. Plus you probably have a vacation mansion someplace. Then you see a nice yacht and think "why not" - more costs. You aren't flying coach to get to all those things - and one day you realize your bills are more than the 30k/day you have to spend and you are broke despite being objectively rich.
It sounds like a nice problem to have, but it appears to be very stressful from what I can tell. (I'd still like to have it, and like most I think that I personally wouldn't get that far over my head)
> but it appears to be very stressful from what I can tell.
sounds like there is a win-win in there somewhere. I wonder what that would look like.
for real though, what are we talking about here? 30k a day is not enough because ... habits? plus, it's incredibly hard to spend that much. that's exactly why, after a certain point, it's basically impossible to get rid of wealth.
What does enough mean? That's why I didn't use that word. Beans and rice is enough, but I'm glad I can afford nicer food. I don't need as large a house as I have and yet my house is modest by modern standards, and I would like larger.
I'm not arguing your idea that there is a point where you no longer can find anything to spend money on. However that point is different for different wealthy people and I don't know and you don't likely don't know either where your limit is or my limit would be. It would not surprise me if I personally had the money and decided to buy a yacht and then later sold it when I realized that while it sounds good I wasn't actually using it. But I don't know. Maybe if I had the money to afford a nice yacht I would use it all the time. Similar for those mansions. Would I live in a mansion or would I buy one first test symbol and then realize I didn't actually care and downgrade? I know someone who has made a lot of money remodeling the mansions of rich people who have decided downsize. For them downsize includes a master bedroom that is bigger than my entire house. And there were other bedrooms in that mansion, but it is still a down size.
That is an ideal way of seeing this. As a for-profit company their priority is shareholder value, so the focus isn't "people paid and games were made", it's the money left-over, and even more importantly that the number must grow.
No, because the customers bought the games. That means the customers valued the games at some value higher than the purchase price. There's a ton of surplus value for society produced as part of this process that doesn't end up on a company's balance sheet.
It's a question of "value created" vs "value captured". They captured about as much value as the risk-free rate of return.
Value that is created but not captured (e.g. the value of consumers enjoying games and consoles above and beyond the price that those consumers paid) is typically not considered when making business decisions.
That's pretty accurate when you consider the unfiltered slop produced by studios like Bethesda, Blizzard, Activision, King and most other Microsoft XBox studios.
But the revenue is coming out of the same org. That $5bn revenue only exists because of the $4.85bn expense. That money doesn't exist to put into bonds unless it's coming out of the games org. They can only make their margin percent look better by making their absolute margin $150mm worse.
Another point of view is that your people are so good that their division turns a profit under mismanagement. It costs MS negative hundred mil to keep the whole thing spun up on a bad day.
You’re saying that they should take the money people pay to buy Xboxes and put it in T-bills instead of delivering Xboxes? What happens when people ask where the Xbox they ordered is?
> This is still $150M of pure gravy every single year
You're neglecting to consider that any time they acquire a studio or have a flop or two -- poof goes that $150M and probably more. It's not a risk-free venture. Entertainment is all about hits, and misses hurt.
Would you put up $5K to win $150 on a hypothetical roulette wheel that hits 90% of the time? The math's not perfect obviously but Xbox is a somewhat similar situation. Microsoft is putting up nearly $5B a year to make $150M. They'd be better off stuffing the $5B into bonds or something. There is a point where the returns aren't high enough to justify the expenses when risk is taken into consideration.
ROI lags. If they laid off 90% of the Xbox division and left only enough to keep the lights on (they don't run their own factories I guess), then they'd still get nearly the same amount of income the next year with far lower costs. Of course revenue would start to sharply decline as the number of games produced was much lower, as the tech became obsolete. But it's not like revenue would evaporate instantly.
So they could do that and invest the income they still get into bonds, and then that would be where the returns come from.
They don't want to do that obviously, hence why Xbox needs reform.
Sure, 3% is terrible. But the point is you spent a fortune buying all these studios-- aka key strategic intellectual properties-- and then you manage them badly. Then you just sell or shut them down at their absolute bottom and you end up just destroying value.
Older forms of media understand this. WB loses money and its still really valuable because people see the potential of Batman, Harry Potter etc.
IP studios are really valuable because they can drive attention to your platforms. Try starting a premium streaming service or a console without IP. But you can't manage it like tech. It's not going to grow all the time and returns are uncertain.
MSFT could be in the XBox as a platform business. They could have a few in house studios to prime the platform pump. Once it started being a content business they got lost.
Depends, Tesco (the UKs largest supermarket chain - one of the largest in the world) on average net about 2.5-3% profit on a given year and they have to do a lot more than pump out a game or two every few years.
The thing to understand here is the risk premium. Tesco is less risky on many levels. It also does not live inside a tech company that has really high gross margins.
I just don’t know how great the IPs at Xbox game studios are. They have a few staples but most studios they bought have struggled to put out any major successes in the last 5+ years. There’s only a few Pokémon’s and Harry potters out there. They even ran Halo to the ground ffs
I assume a bunch of them print pretty reliably, like Call of Duty, when you're not using them as a loss leader on an expensive subscription that nobody wants.
The mismanagement here was actually Microsoft giving studios free reign and they flopped with projects like Starfield. This needs to be understood really within the larger industry trend of quality decline of AAA, which I suspect has to do with changes in overall dev culture and discourse than corporate decisions. There hasn't been a time when developers have been more disconnected from their audience than now.
> There hasn't been a time when developers have been more disconnected from their audience than now.
There are studios that routinely put out games that people love. For example, my wife and I will happily pre-order the next co-op game from Hazelight Studios. FromSoftware, Ghost Ship Games, and others fall into the same boat for many people.
The difference, in my opinion, is that games from these studios don't focus on creating an "always on" service, microtransactions, day-1 DLC, MRR, etc. Those things that blight games made by corporate studios are evidence of corporate executives putting their thumb on the scale.
There's only so much you can do, as a developer, to polish a turd.
With the obvious exception of Elden Ring, most of the games from these studios are quite modest small to medium sized projects.
I wish devs would stop trying to make every game an uber-game. They need all the monetization because they've already blown the budget before work even started.
Nintendo figured this out. When will the other big players?
For games like Starfield, monetization isn't even the main issue but rather political ideology. You can only do so much ESG-approved preaching before customers go elsewhere.
At one point you could have said the same thing about Blizzard, that everything they did was gold. It’s hard to pinpoint where they went wrong, but it’s not clear to me that it was business model or game format related. Like, WoW was a fabulous success from day 1 and it was a live service game.
Free rein is bad management by definition. You don’t need a manager to have free rein.
I’d be curious what you think the changes in dev culture are. I have worked for or with a lot of these studios and to me they have different cultures. But I could be missing the forest for the trees. MSFT has one culture that imo lacks a creative vision.
> There hasn't been a time when developers have been more disconnected from their audience than now.
I'm curious what you mean by this. It seems like gamers have never been more vocal and there have never been more avenues (social media, short form video platforms, etc.) for them to voice their opinions than we have now.
How exactly do you know that developers have never been more disconnected from their audience? And how would that be relevant to declining AAA game quality when it's the responsibility of management and leadership to ensure the quality of the final product?
I think developers = studio in this case, management included. It’s the same issue as Hollywood really, making content for a loud minority will not generate revenue.
Compare how Marvel Rival performs to any Marvel Hollywood content after Endgame.
One way is developers making game for far left silicon valley ideologes when their audience is full of horny young males. I.e. the game is primarily designed to push an agenda rather than be fun.
> The bigger issue is that console manufacturer revenue is highly cyclical. This is hard to see in e.g. Xbox and Sony since they are both part of a larger conglomerate, but really obvious for nintendo.
There is absolutely no reason to be in sync with Sony on their console release date. They could have effectively released consoles bit more frequently. But they choose not to do so. Their acquisition has been questionable - Activision/Blizzard.
At the end of the day, the employee pay the price for bad management decision which they keep on making.
As a Blizzard and Overwatch fan, the acquisition has not been ideal. Activision nearly ended competitive professional Overwatch and significantly scaled back their big esports events to look more profitable. Lately, they seem to be chasing Marvel Rivals for no good reason, but at least in the younger competitive leagues, Rivals is picking up steam and Overwatch no longer looks like a contender, despite being significantly more balanced competitive play.
It’s possible stadium sized esports wasn’t directly profitable or was break-even, but seems like it could have had the potential to catapult the idea into the mainstream when there are 7 figure prize pots, and the games are accurate to anyone with equipment.
Overwatch released in 2016, but the merger took place in 2008. I feel like overwatch was always more of an Activision game than a Blizzard game. Or at least, pre-World of Warcraft Blizzard would never have entered that genre of gaming.
You do need to be somewhat in sync. Too early and you get Dreamcast effect where the customer isn’t ready for a new console. Too late and your customers bought the competition (I’ll call this the PS3 effect).
Nintendo get a pass because Switch is a very different console, closer to Game Boy.
Development costs are far from their lowest at end-of-cycle.
That's exactly when the prototype development kits come out of small scale testing (maybe tens of units, all incredibly expensive bespoke units, probably hand soldered and assembled), production ramped up a little and the evaluation kits are produced and distributed to first party studios and large third party studios, with thousands of consoles produced with the expectation that their lifespan is likely only going to be 3-6 months. These are then extensively tested by developers, both to see what needs to be done to get their launch titles actually working on the machine, but often very serious hardware bugs are found in this period that may require fixes to the chips themselves or software workarounds that affect performance. For some of the recent console launches there have been 2 or 3 rounds of evaluation kits in a year, and the previous evaluation kits are effectively bricked.
After the evaluation kits seem to have converged on a final product, the development kits are produced to ideally match the final version of the evaluation kits, but again these are tested before production is ramped up because some things do change (most trivially the case, even if the board is fine). At this point tens of thousands of dev kits are produced, each different enough to retail kits (more memory, maybe extra ports, etc), usually at least 6 months to a year before console launch so studios can make a final push on the launch day or first quarter titles, and in the background the same evaluation process for retail kits (usually just stripped down from the development kits, but usually different cases etc) starts, and eventually a final design for the retail product is produced that's good enough for manufacture.
This time is definitely not just when the console manufacturers kick back and rake in their profits, this is when they're already spending big on the final push to get to the point where they even have a new console to start a new cycle with.
Separate to the console manufacturing side, the years before release are when big money is spent getting studios on board to produce launch titles, because without those, the console will be dead on arrival.
TLDR: revenues at the end of the console cycle aren't funding the next generation, because it's probably already been in development since the launch of the current console, rather those end-of-cycle revenues are hopefully paying off the gamble they took funding development for the current generation.
>> 150M at 5B revenue is not great: that's 3% margin!
and yet everybody - including Microsoft - is in a big rush to sell us AI services, which could look an awful lot like a historical utility business. 3% will be a dream return in that scenario!
AWS isn't a utility because utilities sell commodities for which you can switch to a competitor easily, as you're buying the same thing. There are companies selling similar products to AWS but none that sell AWS itself.
Early utilities tend to not be built on standards. See how early electric utilities within a country or even a city couldn't agree on voltage, frequency, phase, or even AC vs DC.
Still, there is a difference of degree. The engineering cost of making one city's electrical grid compatible with the consumers of a different city's grid were much lower (even if one grid was AC and the other DC) than the engineering cost of moving from AWS to a competitor because electricity is not that complicated.
Also, I doubt anyone was referring to electricity as a commodity in the early days before the industry developed standards.
most utilities are natural monopolies. The cost to run wires/pipes to my house are a significant portion of the cost to serving me, so you wouldn't run wires to my house in hopes that I buy from you later.
With due fairness, these are two different sets of leaders and two different strategies.
A lot of the strategy you outlined -- buying all these studios, replicating netflix, giving away day one games, raising game pass -- was a strategy put in place by Phil Spencer. Phil pushed for this investment with the promise it would pay off later for MS. He's talked publicly about having to convince Nadella to put up ungodly amounts of cash for these investments and about how the bar for expected return was very very high. It seems like it clearly hasn't worked out to Microsoft's expectations or they've lost patience for waiting, and Phil has now "retired to spend more time with his family" (i.e. been fired).
Now Asha is here and presumably has a mandate to fix this and get back the profit margins that were expected from xbox. Sarah Bond, the xbox president, has resigned, and with this letter it seems the previous Xbox COO is out too. There is clearly a huge shift in Xbox leadership happening and it shouldn't be surprising that Asha -- who is known as a business-driven executive and not a 'gamer' -- is going to be reverting a lot of previous strategy decisions.
My 2c is that Phil's strategy made sense on paper, but I don't think they were able to manage this many studios in practice: nearly all the studios they bought have failed to produce the number of games expected on time or on budget. It also turned out that overly cheap gamepass would cannibalize their business and overly expensive gamepass turned away subscribers. I think the netflix model isn't something you can speedrun and execution of it turned out to be very hard and expensive. Maybe it would've worked out with more time but it seems Nadella didn't think so anymore.
I never understood the esteem Phil Spencer was held in, seemingly both by fans and industry insiders. I never understood Phil’s strategy.
Buy a plethora of studios. Pay an order of magnitude over the odds for the big ones - just to be sure you get them! ‘Rescue’ smaller ones of questionable financial value - as part of Xbox they’d somehow be successful enough to justify the price paid. Heavily manage the studio heads - but, uh, also give them total creative freedom - and allow them to make niche games. Sell hardware at a loss - but also make the games available on all platforms. Don’t allow any software that takes advantage of your most powerful hardware, because it also has to run on the other, less powerful console you are also selling. Also, the future is streaming! But, uh, maybe not!
Not just the strategy, but almost every aspect of the ‘strategy’, was incoherent - as current management is very close to outright saying.
I’ll admit to being ‘out of gaming’ for that era (I’m a pandemic gaming-returner), but I wasn’t aware of that. Was his reach bigger than his official title?
Wikipedia doesn’t show him in an ‘overall leader’ role until 2014, a year into the relatively disastrous Xbox One era.
IIRC Xbox had been criticized for quite a while at that point for having very few exclusive/first-party games worth buying an Xbox for. I always assumed this move was to try and fix that problem.
The (an?) incoherency with that is that this was happening at the same time as the ‘everything’s an Xbox’ strategy that saw them produce games for other platforms too.
That was a side effect from ABK acquisition, they bought studios that traditionally were cross platform, the year long acquisition discussion always promised not to touch them in that regard.
So you end up with this schizophrenic way that XBox became more of a publisher than a console brand, with a leadership used to cross platform (Sarah Bond), thus ‘everything’s an Xbox’ pivot for the "curve must always go up".
Which games of their output were Xbox exclusive? They were basically transitioning into a publishing house with no real hardware impact. In fact what did Phil in finally was trying to sabotage the hardware brand itself with the 'This is an Xbox' campaign. I said out loud when I saw the first ad, 'Phil will get shitcanned for this.'
To be fair to Phil Spencer, this was the strategy across the industry right after COVID. Remember the shopping spree Embracer Group went on between 2020 and 2022? I think we were in an e-sports & live service bubble that has now popped.
Acquiring a game studio only makes sense if you see a way to make it grow either by providing capital or better management. E.g. Activision acquired Treyarch in 2001 for $20M, which was probably 4-5x of its annual profit at the time. Seeing that very few people played (or even heard of) Die By The Sword or Draconus you could imagine that there was still a room to grow so there was a good chance you break even on your investment even sooner than 5 years and start making profit for yourself. Treyarch, who did not need to do the sports games contracts anymore and could hire more people, proceeded to making Spiderman and, later, CoD. I believe Spiderman alone made way more than $20M spent in the acquisition.
Buying Activision for 20x of its annual profit, on the other hand, makes zero sense. ABK was not lacking capital, had the same MBA management Microsoft has and did not have much room to grow, Blizzard alone had 5K employees. Their IPs had long time since plateaued or had been in decline already. What was Microsoft plan to increase profit? Switch everyone to Teams? Put more people to work on CoD and release 2-3 CoDs per year, hoping they all will sell as well as the annual CoD? The more realistic path to return of the investment could come from increasing Xbox's share of the market by making their newly acquired IPs Xbox exclusive. But they did not do even that.
IMO, at the time, it was to buy ABK and make CoD an Xbox exclusive. That clearly didn't play out when everyone screamed about it being (rightly!) anticompetitive, and so they had to resign themselves to accepting that day 1 gamepass exclusive was going to be their way to get people to switch over from PS. That also didn't work.
The 'K' part of ABK was also probably going to be their way to drive mobile into Xbox as well with their 'everything is an Xbox' push at the time.
Even if they had made it exclusive, $70B is too much for this. CoD sales would fall - not everyone buying it would go out and buy an Xbox, Xbox hardware sales would raise. Let's be optimistic and say every CoD player (including ones who already bought Xbox ) goes out and buys another Xbox and then buys 2 xboxes in the next generation. So it's ~20M more Xboxes sold. To break even on this investment in 10 years MS has to make ~$2400 from each console sold over lifetime ($68B - 10*$2B annual profit = $48B over 20M extra units). Of course, if each sold Xbox made that much money they would not sell them for $400, they'd pay you to get one.
Yeah, they could have spent the money on founding new studios. With that sheer amount of money you could pretty much poach any talent you wanted too, but it wouldn't be as obviously anticompetitive.
Instead, they paid way over the odds for IPs that seem past their prime.
IMHO, there is no room for a 70B investment in games at this time. The industry is mature and won't be growing any time soon, at least in the West. There had been a rush of investors founding new studios and propping old ones in the past decade but the vast majority of those had already been wiped out. And all of those were probably just a fraction of what Microsoft had spent just in this acquisition.
Another crazy deal like this is the EA's buyout, I wonder if it will come through or the investors will eventually realize that they are not going to see their money ever again.
Phil and the likes were too hands-off on these studios post-acquisition. They got too complacent enjoying steady paychecks over years of delays while working on their niche games that only highlight their artistic vision over generally fun gameplay. That's where they failed. The Activision/Blizzard acquisition and GamePass fumble were just a nail on the coffin
Yes, I agree. I empathize with Phil in spirit on it. He's a real gamer and tried to create a space for the developers to do their own thing and create what they want. But it doesn't seem to have been great business.
I remember the glowing praise at the time for the policy of being hands off and allowing studios to cook. Gamers all over the world were very happy about that approach. Unfortunately it looks like many studios do in fact require hands-on management to make tough calls and keep things moving. I'll remember this next time studios complain about management interference.
We already saw this during the Kickstarter era where all the temporarily confused AAA studios sold themselves as having been held back by unreasonable publishers all this time only to produce the most bland and still unfinished games now that they were funded directly by fans.
You need two different types of management. You need the creative type who understands what customers want and ensures that is what you deliver. You need the financial type that understands profit margins.
If the company lacks either, or either gets too much power they are in trouble. Creative types will spend too much money on things that are nice but won't deliver enough value and so the company goes bankrupt. Financial types don't understand what customers want and optimize away all the expensive creative value the customers buy.
Note that the above applies to every type of company. Exactly what "creative" means is different for different industries, and some need it more than other (how much innovation do you need in soap?...). It always applies though so you need to ensure you get both types in leadership positions even though they don't like or understand each other.
Yeah, cool, but right now they're axing idsoft, which was anything but "artistic vision over fun gameplay". What they did also pretty much kills idtech as a viable engine.
Now with all these layoffs, most likely the numbers will change, but how many are aware that Microsoft actually owns a big chunck of well known studios?
One reason is that from the public eyes they kept their names and independence from Microsoft/XBox branding.
Undead Labs has shipped nothing
Compulsion shipped South of Midnight topping at ~1600 players on Steam
Ninja Theory has shipped Bleeding Edge and Hellblade 2
and
Double Fine shipped Keeper and Kiln.
It's a net positive that these studios and this culture is gone.
I am sure that food was amazing.
It's on the publisher and owner to guide studios in a direction that makes money. That's literally their purpose. If these studios aren't releasing anything and they aren't making money, that's on Microsoft. So things aren't better if these studios are gone. The same people who managed this mess for ten years are still there. If you're not going to do anything to ensure these studios actually do what you need them to, I don't understand what the point was of acquisitions.
It was a risky bet that became even higher risk when MSFT spent ~$80 billion dollars rolling up game studios near the peak of the historic COVID gaming bubble. They bet it would greatly increase Game Pass sub growth. Instead, Game Pass sub growth slowed down. At the time I thought it was a reasonable plan - but not at the prices MSFT was paying for content. Then the DRAM drought killed hardware sales to gamers forcing the issue.
They were the cheapest DVD player you could buy for a while, and they were also the most available DVD player. That changed fairly quick, but at launch they were your best value. (though dedicated DVD players generally had better controls)
So, Phil gets a golden parachute, and all the studios that got bough up because of him will be "set free" if they're lucky and disbanded if they're not. Yay for capitalism...
I certainly enjoyed gaming their rewards system for years on a series S. $300 for the box, maybe spent $40 over roughly 4 years for gamepass. It was nice while it lasted!
> - The make around 5 billion in revenue per quarter - The problem according to them is profit margin - around 150-160 million
> So first of all, they are big! Secondly they are not at a loss. They just have a "thin, non-growing margin". So to fix all this they are trimming down, so they can "return to growth" (which I think is ridiculous).
How is that profit margin distributed though? King (Candy Crush etc) and Mojang (Minecraft) are specifically called out as money-makers, it's possible that they're carrying the majority of profits while everything else is a dud:
> We have also learned that we are not the best home for every type of studio; in a typical year, we lost 64 cents for every dollar we invested.
As an example, Double Fine (one of the studios being chopped) has released 2 games since 2021, Keeper (191 peak player count on steam) and Kiln (163 peak players); these would be flops even for a normal indie game, for a studio getting Microsoft salaries those are enormous flops.
On the margins, that's crazy thin for the size of the org... One bad quarter could turn from a few million in profits to hundreds of millions in losses. It's too close, and there's no way to build/store funds for any kind of storm at that level.
Now, I think the vast majority of the pain is more than self-inflicted... I think actual business, marketing and focus need to start taking priority over idealistic political PoV. Let the games target their natural audiences and have the broadest appeal... at a certain point, trying to gain 1% of audience means alienating 25% or more.
This is the industry in general though, and why you see so many historical AAA studios go bankrupt after one bad game.
The problem was that if you kept a studio small and lean, you were often at the mercy of predatory publishers who controlled the distribution channels (pre-network, physical media).
So most studios tried to vertically and horizontally integrate into conglomerates: own their own publishing + have a diversified enough pipeline of games that one flop wouldn't take down the entire works.
Unfortunately, that works at Activision (pre-Blizzard) and EA (00s) scale, but not Microsoft scale (where you essentially own a large chunk of all studios).
This was a reckoning long in coming, as MS XBOX leadership, after some initially brilliant ideas, got high on their own supply and forgot they couldn't endlessly acquire more studio with their parents' cash.
Tbh, they probably should have lured away one of Berkshire Hathaway's acquisition people and put them in a go / no-go decision role.
It's the acquisition price, product, and financials that make something a good deal or not, but XBOX spent the last 10 years valuing potential acquisitions on intangibles (synergy, strategy, if we don't they will, etc).
If you're a grocery chain you know exactly how much an item costs and exactly how much you sell it for. You also simply order more or less stock of the item depending on how it's selling.
If you're a video game company, you invest millions of dollars in a project up front, for years, and you don't know until after release whether you:
- Make back all the money you spent plus a healthy profit on top.
- Just break even, but you lost the opportunity cost of all the other things that money could have been spent on with better utility.
- Your game flops and you wasted all the money you spent developing it.
It's also highly uneven. Extremely likely that King (Candy Crush) and Mojang (Minecraft) are making a ton of money, and everything else is a money pit where you pour in millions of dollars and you don't even make your money back.
food demand is pretty inelastic their margins are low but they're fairly consistent. modern games can have budgets of a few hundred million dollars with absolutely no guarantee of sales. at those margins 1 failed triple ai have could wipe out several years of profits.
Keeper needs an optimization pass so badly. Once I finished the first zone the framerate dropped to the floor on my Steam Deck. Presumably it runs okay on the current XBox, but it sure feels like Double Fine's attention has moved on and will never return.
Absolutely drop-dead gorgeous but I don't think I am going to ever finish it until I get a Deck 3/4 in like 5-7 years.
You can easily compare to the figures for other games that are also on GamePass. Another Crab's Treasure, for example, had 4.7k Steam players on launch, of a similar nicheness stratum.
The split is usually not a multiple. There are people with computers, and people with xboxes. If there are that few people on steam, there are probably a similar number on Xbox. Not 10x or 100x, and at least 100X would be what you need for that game to be worth further investment.
> Only people without GamePass subscription and no desire to get it for even a month or two would buy the game on Steam
So the majority of people?
I jest, but I honestly don't know anyone who consults the GamePass offerings before making a decision on whether or not to buy a game. It's Steam or pirate.
Completely anecdotal (which i think both of us are guilty of) but i generally keep my PC game pass subscription active, and will check if games are on there before getting them elsewhere. I don’t really know how to measure how many people are doing that though.
>Double Fine (one of the studios being chopped) has released 2 games since 2021, Keeper (191 peak player count on steam) and Kiln (163 peak players); these would be flops even for a normal indie game, for a studio getting Microsoft salaries those are enormous flops.
Hard to really say. Kiln and Keeper can easily be made up for by the sales of Psychonauts 2. I'm sure an indie Double Fine would not have been able to make those kinds of games.
This takes me back to Pertinent, another small game from a reputable studio, had its main writer saying that "this kind of game would not be possible without Gamepass". Which I 100% believe. Microsoft definitely didn't buy Double Fine trying to make the next Fortnite, but that arthouse strategy clearly isn't a factor these days.
Psychonauts 2 was funded we-got-kickstarter-at-home and already well into development before MS acquired DF. If anything this exemplifies that DF did not function under MS if they couldn't replicate that post-acquisition.
Yes, apologies for the misspelling. Very likely another game that wouldn't "succeed" in a traditional release, but would potentially get people into a subscription service.
Despite that loss leading strategy, Obsidian has had quite a few other releases that did to make up for that side project. So the studio would overall be in the green despite that.
Xbox around 2021 had around a 12% profit margin and the gaming industry as a whole was around 17-22% . In 2023 the target for the division was put to 30% . We see this new restructuring because the target was put this high. Microsoft really wanted Game Pass to be a steam competitor which is pretty much what everyone in the industry tries to do and fails. The push for Game Pass prices to be higher was to get the 30% margin and that didn't work out. They aren't operating at a loss they are operating at a goal and they failed the goal. From other child comments many studios they bought probably were below average. We can see this restructuring basically is that they failed the target, the old guard went out as the new guard came in.
Being a Steam competitor involves making a store that's actually good. All the other major stores/platforms don't really seem to give a shit, to be frank. Steam has like 20x their feature set, and the gap appears to be still growing.
If anything, it should be easier to make cool new features when you own the hardware side of the platform experience too, but no, it's Steam that has stuff like remote play together, not PSN or Xbox.
I don't know if I care about the features, what I do care about is the games and a lean-back experience which is not sweaty. I play games to escape the drudgery of software development and the last thing I want to do is mess with an .INI file.
I love the Steam Deck because it feels like a consumer electronics device: it has the reliability of Linux but not the sweat. The Steam Deck is the only device I've seen that works 100% perfectly with Airpods, for instance, including Apple devices.
I was at Best Buy the other day and saw an ASUS device that looked pretty cool until I picked it up and saw a Windows desktop with fonts not scaled appropriately for the size of the device. Like, wazzup? Steam Big Picture turns my big Windows machine at home into a game console and does the same for my Mac Mini. How is it you can have the back of frickin' Microsoft and not be able to do the same?
Not to say that Steam isn't packed with features that are valuable to many gamers, but just having a great selection of games that "just work" and knowing I can enjoy my investment on the devices I have now and devices I get in the future is worth a lot.
I think it's one of those things where people only care about a small percentage of the features, but which small percentage varies.
For example, I used the example of remote play together, which is very neat and a lot of people love it, but I personally don't use it.
On the other hand, I make extensive use of Steam's gifting feature, including its ability to handle multiple gifts to multiple people in a single transaction, and to schedule exactly when those gifts will land. And this is something that the other major stores don't seem to support at all, a big advantage for Steam for me, but I'm sure there's many people who don't care at all about gifting.
It used to be that you could get gift keys/links that worked just like any steam key you can buy outside Steam and you could gift those to people in whatever manner and on whatever schedule you wanted. I liked that a lot more than a gifting feature built into the store no matter how well designed it is.
yeah like i assume this is better by now, but when gamepass was relatively new i got a free month with my laptop but just installing games would frequently fail, same with updating them. same with epic games for that matter, though not that bad. also at the time the xbox app would install everything in this readonly directory that you couldnt even access with admin rights, which ofc made modding impossible and also after reinstalling windows left me with an external harddrive where i wasnt allowed to delete a huge folder of games... fixed this by mounting it in linux.....
> The Steam Deck is the only device I've seen that works 100% perfectly with Airpods, for instance, including Apple devices.
Oh weird, mine have always made weird clicks and dropped audio here and there and shit like that when using them with my Deck.
They don’t do that when I use them with my Franken-PC bazzite machine. Instead, that one disconnects my BT mouse a couple times an hour and sometimes seems to stop processing BT keyboard input and “queue up” my presses instead, to be processed at random intervals over the next minute or so. Both of which are fun when playing games.
Microsoft is focused on AI and enterprise sales. I don't think they're institutionally capable of making a good end-user experience. You might just as well ask why SAP makes bad UIs - it's because the executives just don't really care.
I still love developing for the .NET Framework using C#. However, the number of reasons to keep using anything made by Microsoft continues to dwindle with each passing year.
As you already said, Azure is awful and only in second place behind AWS because of how much worse Google Cloud Platform is. Windows is back to sucking again, this time so hard that I'm seriously considering learning Linux and/or switching to macOS on my home system, & playing games on SteamOS instead. I almost never use Microsoft Office anymore, outside of household budgeting spreadsheets that I could easily work with LibreOffice instead.
> As you already said, Azure is awful and only in second place behind AWS because of how much worse Google Cloud Platform is.
I expect Azure is in second place because Windows-only shops use it because of the Official Microsoft Active Directory integration (which might be called Entra now?).
For basic "Create a VM, attach disks and networking, and use it as a computer." tasks, it is my professional experience that Azure is the worst of the Big Three US "cloud" providers by far. Their "control plane" is flaky and unreliable, so it's something that you'll probably only notice if you create, destroy, or modify VMs a lot. [0]
If you have a support contract, Azure makes it much easier to talk to a human than GCP does, but I never encountered an issue that they were able to solve. "File a ticket, but don't expect support to be able to help because they won't understand the problem, and it will eventually go away." was the lesson I eventually learned.
[0] And the word on the street is that a huge chunk of Github's reliability problems are caused because of the move from AWS to Azure. Having used all three pretty extensively, I believe the rumors.
> Steam Big Picture turns my big Windows machine at home into a game console and does the same for my Mac Mini.
Well it turned mine into a 2000s linux/wine debugfest flashback when I wanted to play GTA IV: Ballad of Gay Tony... Also don't get me started on having to keep the poweroff button pushed on the xbox controller for mouse emulation for games not having controller support in the menus. It is far from the polished experience you had, but possibly I just held it wrong.
GTA IV: Ballad of Gay Tony is listed as silver on protondb, meaning 'works with tweaks', so that sounds about right. Things obviously aren't perfect. That last 10% of games is a massive pain, since every game is different (all the ones that are well behaved are in the first 90% that already work).
The Xbox can't even reliably play video trailers of the games MS in theory want to sell you. They don't even require every game to have a video. They don't even require every game to have a screenshot, as I've encountered some that don't even do that! Fundamentally unserious about making a good experience.
If they want to be Steam competitor, then at least they should have more clear branding. Currently they put xbox to anything game related, but it's not cross platform. At least when I had xbox, they had separate gamepass subscription for different platforms with different set of games. Games that you buy on xbox store on console in most cases also are not shared with your PC. And all their first party games are available on steam, while a lot of indie games probably are not in their store.
They really should make a choice between xbox as separate platform and xbox as windows pc. I has been like 10 years where they were kept advertising it as some kind of single ecosystem, while it was not
Yeah, there's lots of stuff in Steam that I never use and don't even understand. Like the Steam Points and the Trading Cards and Steam Level and so on.
But the purchasing experience is top notch and they even have a generous refund policy. It's just lightyears ahead of the competition.
I can share nearly my entire steam library (~23 years worth) with my kids. There is no way in hell Sony or Microsoft will ever allow that. In fact, I've had to re-buy Minecraft because their account migration was such a shit show. They cannot and will not ever come anywhere close to competing with Steam on this feature. For that alone, I will never buy a console. Just glad I built PCs for my kids before the AI boom...
Steam is competent at what it does and has been for decades. No other online game store is as good as what it does: Nintendo, Epic, Microsoft, & Sony have all failed to do well what Steam has gotten better at over the course of 2+ decades.
People would likely juggle the use of two stores if the value proposition was great enough. But it isn't, which is why Steam dominates and all their competitors operate in comparatively tiny fiefdoms.
A lot of games are less latency-constrained than you'd expect. FPSes are obviously rough with input lag, but stuff that's turn based and even many platformers feel "good enough" up to like 150ms
Play anywhere is a killer feature for me (that's a game license that works on multiple platforms). Before steam deck came out it meant I could swap between PC and TV seamlessly. Should've been on every game they sold.
>Microsoft really wanted Game Pass to be a steam competitor which is pretty much what everyone in the industry tries to do and fails.
Gamepass is quite literally the most anti-steam strategy ever. It's a massive loss leading (or rather, low margin leading) service relying on a pseudo-rental service to provide value. Steam got to where it is by keeping all its costs lean and developing a service around taking a cut from premium digital goods.
>From other child comments many studios they bought probably were below average.
In revenue, maybe. That's the fault of Microsoft in two fronts. One for purchasing game studios who always operated at low margins, and two for directing them to focus on quality over budget. Double Fine and Ninja Theory aren't studios you buy with an expectation of 30% ROI in 6 years (ignoring the pandemic in the middle of that). Let alone when you explicitly tell them not to worry about finances.
On an artistic level, Hellblade was an insutry darling and about as close as you can get to an "oscar-bait" of a game. It's something you buy for prestige. Double Fine is a very seasoned indie studio who delivered several cult classics. You buy that for a brand that gives you variety from the current "online FPS juggernaut". Those strategies changed dramatically over the decade.
I wrote a while ago about how companies seem to have gotten the idea into their head that subscriptions are unconditionally good, rather than a contingent good based on the exact circumstances of the subscription: https://jerf.org/iri/post/2023/streampocalypse-and-first-pri...
Gamepass as a subscription to make sure you always have something to play, that has a lot of old games or indie games and other games that have no commercial value makes sense to me. The back catalog for any of the current consoles is plenty deep with games that have lost their ability to move units independently but still have a lot of value and can also give that perception of value. Such a plan is picking up pennies, but it's a lot of pennies.
I've never understood putting your new releases out on gamepass and bragging about that as your primary value proposition. Many new games are, say, 20-30 hour experiences, assuming you play them from start to finish once. One does not need to spend too much time with "this % of other players got this achievement" to see how many players tend to drop off of a game even that long. So if you put your new game that you would have sold for $60-80 dollars to me directly and it translates to three weeks of engagement on your $15-ish/month (depending on level) subscription, it's hard to see how that is an economic win. Put that game on Gamepass in a year or two, sure, that can make sense, but on release? And that not as a mistake, but a deliberate strategy? I can not fathom the mindset that leads to that.
As a deal for customers it seems to have been pretty good but I've never understood how Microsoft expected to make money on that plan. The streaming-video proposition of making a high-budget release to keep your subscribers makes quite a bit more sense, you could never have counted on getting $70 out of a customer for those anyhow, and even that economic proposition I think has proved more complicated than the streaming companies expected. The Gamepass model has just seemed insane.
I expect it to move to more like what I described at the beginning. As a way to turn a lot of old and hard-to-monetize content into a subscription stream it's brilliant. As a way of releasing new AAA titles it's crazy. Movie studios played with that model and I don't think they liked it at all.
> So if you put your new game that you would have sold for $60-80 dollars to me directly and it translates to three weeks of engagement on your $15-ish/month (depending on level) subscription, it's hard to see how that is an economic win. Put that game on Gamepass in a year or two, sure, that can make sense, but on release?
I think that's what I thought it would be, too. XboX has a really good track record of backwards compatibility. I can (and do, occasionally) play 360 games on my series X.
A model where people can buy the latest games, can not only keep them but play them forever on future consoles, and can have access to an increasingly vast back catalogue of older games, seems like a huge win. And maybe each full price new game gets them a bit of a discount on their next month's game pass, to make it slightly better value than the playstation equivalent full priced game.
But they didn't seem to want to do anything like that.
The logic of day 1 releases, at least how it seemed to me, was that a % of those people who get gamepass just to play the game for cheaper would stick around. That’s potentially worth way more than 1x $60 (now $70-$80) sale. That didn’t happen I guess
It’s funny how a strategy like this would work on me, but I am a busy adult who doesn’t really game.
Compare that to my nephews who have a lot of time for gaming, but they’re always fighting to scrounge up the money for another month of Nintendo online or Xbox online and go without it for at least half the year
I _think_ the thinking is that not everyone is going to buy more than a couple full priced new releases per year (in general). $80 or whatever is just too much for most people to drop on a game they "might" like. On the other hand, most people would have few reservations being perpetually subscribed to a service that lets them play every new game "for free" (so long as they keep rolling in on a monthly basis). Theoretically, the subscription money would exceed what they'd normally collect from the average person buying the usual 2 or 3 full priced games per year.
Where I think it breaks down is quite a number of gamers are hopelessly addicted to playing all the latest games, all day every day. MS is surely losing money when those guys substitute buying physical games for a subscription.
I agree that's what they seem to have been thinking.
I don't entirely understand... well... from a rational perspective anyhow, of course companies are not entirely rational... why it didn't become clear that this was a silly idea and not working. It's easy to make Gamepass stop cannibalizing your main game sales. You don't need a big announcement, you don't need to advertise your plans. You don't need a huge internal political fight. You just... stop. You just stop putting your brand new AAA games on your cheap subscription service plan. You don't even have to remove the old ones, they turn into your old AAA games naturally in the fullness of time. Nobody has to lose face. It's easy. It's like falling off a log.
Game Pass was never a sustainable business model. People liked it because when a new game came out, they could buy a month of game pass for like $15, play through the game in a couple weeks, and cancel. It was a really good deal because Microsoft has spent the past decade+ trying to recover from their terrible fumble of the Xbox One launch, so they were subsidizing gamers to come back to their platform.
With the money being spent on AAA titles these days, they are not going to make any money without increasing the price of Game Pass majorly. The big price bump they quickly backtracked on was an attempt to make Game Pass somewhere closer to being profitable.
Traditionally if you're going to play through a game in a couple weeks and then not own it anymore, that means you sell it and someone else buys it for their own couple weeks, and the company should be happy if they make $15 per person in the chain.
Also this is part of why I'm really worried about how weak the concept of game ownership is getting.
See also how anyone buying GTA6 near launch will be unable to resell it.
How can you say that? No credible reporting has proven that there ever will be a version of GTA 6 on a disc. The physical versions that are announced will all consist of a one-time code.
The kind of person that actually cancels gamepass within a month is the kind of person to actually trade in the game. And with an efficient trading market they'd get more than a few bucks so early on.
Not necessarily. I was never the type to trade in physical games, but recently for Forza 6 I could either pay $99AUD to "own" the game, or buy one month of the PC game pass for $15AUD. An obvious choice.
The friend I played the game with did the same. Honestly, if they didn't include Forza 6 in Game Pass we both would've purchased it full price.
I see what you mean, but I think gamers on a budget will cancel. Other gamers would've paid full price for 12 games and instead paid $15 each for 12 games.
The writing's been on the wall about physical games going away for quite some time now.
You can tell the PS5 was designed to be a digital-first system by the disc drive slapped on the side like a tumour hanging off the otherwise symmetrical body.
I don't mind physical copies dropping in importance, and all else equal I even like the move to digital, but we desperately need to fix ownership of digital copies and stop having loopholes around "it's just a license".
I very much doubt a typical AAA game is bought new then resold 3 times on average. Very much doubt. And even if the used game market does cannibalise new games, they also generate a demand. Some gamers will pay full price knowing they can recoup some of it on the used market. Some of those gamers may not have made the purchase otherwise. Game Pass does not perform the same function.
Those metrics are hugely misleading because they account for current fiscal year revenue and margins.
For Xbox being what it is today, which is mostly about the subscription and not the hardware console or the exclusives, you have to compound their acquisition frenzy of 2018-2020 or so, which totals about 75 billion+.
They didn't want the developers nor the catalog. What Microsoft wanted is to change the economics and dynamics of the entire games industry, to make it Netflix-like (play what's in the catalog today, pay monthly even if you don't play anything) vs. what Steam offers (purchase once, own "forever", even if it's de-listed).
But that didn't play out. Optimistic estimates put total revenue for Xbox since then in the 20B ballpark. At a ~5% margin (as other commenters have pointed out) the profit is about 1B dollars.
It means that after almost a decade, the entirety of Xbox is in the red for about 74 billion dollars, which is 74 billion away from breaking even.
Steam still dominates PC gaming. Xbox consoles can't be more irrelevant today.
This isn't about over-hiring or AI. It was a bet at the executive level that went horribly wrong. They can still do things like selling IPs at a bargain to compensate, but still. Horribly wrong.
Note: Microsoft doesn't publish hard factual data so the numbers above are somewhat speculative (e.g. "analysts data")
It seems really odd to have a Netflix consumption model for games. Generally people want to play a few favourite games for a long time and get very skilled at them. You just don't need to churn through content like movies.
You see 10 hours for indies and art games maybe. For big budget full price games people expect at least 60+ hours, which is why they tend to be full of padding.
The vast majority of "gamers" play freemium "games" on their phone. The next largest likely buy a console for one or two games, and maybe pick up another now and then (back in college one person's lamecube was permanently playing smash bros; another was on golden-eye - the two xboxes were for halo and madden respectively).
> Then they did not have to give away popular games day one on Game Pass
A company that sells consoles complaining about not having enough games after 25 years in business and acquiring most popular game studios is hilarious.
They keep cutting game studios, killing games and then set ambitious profit margins. At some point you have to question, do the people in charge understand their own business at all?
They just gutted bungee and basically killed Destiny 2, not because the game won’t sell, but because it won’t generate the profits they unrealistically set.
While Bungie had historically been tied to Xbox / Microsoft during the Halo era, Bungie spun out to be its own company in 2007, and then was bought by Sony in 2022. It was Sony, not Microsoft, driving the most recent layoffs at Bungie.
Edit: even though i inaccurately associated Bungee with MS, they are not. However, the comment stands when you replace it with any of the other successful studios like Bethesda, Id software, Blizzard etc. A bunch of studios and their ips were gutted not because their games sucked, but because they didn’t meet the profits Microsoft expected, which is ridiculous.
It seems like a simple fact is often overlooked: you can't just throw money at art and expect it to be good, no matter the form. Netflix tried it and ended up with a lot of weak stuff, Microsoft did the same with similar results. Most games these days are just copies or rehashes of others, not original, full of clichés or old-fashioned mechanics. Acquired studios tried to mash up different ideas, hoping it would stick, often with really bad results, like Redfall. It's like the E.T. game disaster, but forty years later and spanned across the whole company. Hardware is great, GamePass is great, but Microsoft can't produce games.
One thing money can do is enable polish - you might not be able to directly force the next great game, but you can make your games excellently coded and polished.
Polish and Microsoft is a funny pairing over the last few years. More and more things are coming apart at the seams as the vibe-coded duct tape is failing.
Completely agree. Their problem is that corporate wants more money to funnel back into AI and it is really inconvenient that Xbox provides only a couple billion dollars per month whereas Office and Cloud provide many more billions. What a complete joke.
It comes across to me as a really honest letter. At least they are talking about spinning out studios instead of shutting them down, I think that plays better than previous announcements. (e.g. make a hit game like Hi-Fi Rush and get shut down!)
> - Then they did not have to give away popular games day one on Game Pass
> - And finally, they did not have to raise Game Pass prices to improve the profit margins. Of course, consumers pulled out.
I saw this coming from day one. The instant they did Netflix for Games, it was going to gut their margins. And then the inevitable pullback, either holding new games for months or raising the price, was going to kill the value proposition.
They said "This will make us a mint" and celebrated the victory years too early.
Another thing that is crazy to me (and maybe this is a premonition) is that if you play MS games online on Xbox, you have to have a subscription, but if you play on other platforms you can play for free. They are literally punishing their own users with additional fees. I thought this was just Minecraft, which is why my kids and I always play Minecraft on our iPads instead of on the Xbox, but when I recently bought Forza Horizon 6 I was amazed to see that I could play online with other players for free, whereas on Xbox I had to pay to play online in Forza Horizon 4 and 5. So they are basically saying "you gave us a bunch of money for hardware? Cool, now give us more money every month to use it online!" It's absurd, and it's one of the things that drove me away from Xbox. I also have friends who have been lifelong Xbox fans who have had enough and are leaving for Steam.
The times when companies only restructured when they were actually making losses are long gone. Today, if they "underperform" (i.e. they're not as profitable as the stock market thinks they should be), investors want to see blood today rather that tomorrow.
If everyone thinks like that, no jobs are created. Xbox hires a ton of people and creates genuine value for consumers. Okay, that last part you can question, but I’m an original Xbox-er so I believe in it.
3% profit should be totally fine for any business. The planet is cooked, I think we can live with the shareholders making a bit less.
a couple are symptoms of their problems and the others are causes. They lack the understanding to know which ones. They tried (and failed) to build a subscription model out of game renting while cannibalizing the very studios they purchased. There was no saying no. They were going to take you over whether you wanted them to or not. They would also scheme to half-ass your marketing partnership so you wouldn't make targets so you would be vulnerable to a take over. It's Microsoft at it's finest. A lesson in Greed Above All Else.
> - The make around 5 billion in revenue per quarter - The problem according to them is profit margin - around 150-160 million
How are they still doing 5 billions in revenue per quarter? Are Xbox and games still sold? In my area they seem to have disappeared from the physical stores alley. I realized that a few weeks ago there were Playstation and Nintendo products in the video game area but no Xbox anything.
Revenue is just not a useful concept to understand the state of a company. I can easily generate revenue by simply exploding costs. Blockbuster had huge revenue.
If we talked about costs as much as we talk about revenue (which carries roughly the same amount of information) people would judge theses reports very differently.
xbox is not a startup and neither m$ a vc. the board is not in love with gaming to continue sponsoring it. but if the solution is to make it even worse to game in their platform, then i hope this crashes and burns for good.
That's a 3% margin which is unsustainable. It's less return than you can get from buying treasuries, which means that if they don't improve it they will go out of business.
This is the frustrating thing reading these comments, where people seem to assume that any profit margin is good enough to sustain a business.
People see a 3% return and think, "Well, they aren't losing money so there is no reason they can't just keep doing business as usual." What this idea is missing is that the investors in a company aren't choosing between "keep my money in this company" and "sit on the cash", they are choosing between "keep my money in this company" and "invest my money somewhere else"
In other words, you aren't just looking at direct returns on an investment, you also have to think of the OPPORTUNITY COST of the investment. By keeping their money invested in a business making 3% returns, they can't invest that money somewhere else.
It's more like evolution through natural selection. If you can buy a treasury that returns 3.6%, you will NOT invest money in a business that has more risk, is only returning 3%, and has no believable growth story. Even worse, if you own shares in that company, you will sell them and shift the investment dollars to something with better returns or better chance for growth.
It's this competition that leads to prosperity, the alternative is central planning which leads to poverty.
I wonder how are they taking in 5 billion per quarter when their latest console barely outsold the first Xbox. I doubt it was making a bit less than 5 billion per quarter with quotes like "Ultimately, Microsoft lost an accumulative total of $4 billion from the Xbox, only managing to turn a profit at the end of 2004." on wikipedia.
So how are two consoles with roughly the same sales numbers so far apart in revenue?
Might work if you don’t: out-price your hardware, get rid of disc trays, make GamePass expensive, force Microsoft accounts and online mandates, buy up every studio and force them to out out crappy updates,… ahm, no it’s the users, they’re getting old and cranky.
Yikes, I bought every Xbox console and plenty of day-1 releases, but skipped the last gen when it became clear that the platform isn’t about gamers anymore.
Triple-As are also getting tiresome, so I think plenty of people are happy to get a cheaper title on Steam that feels like better value.
You also missed the part where they positioned themselves as the value offering. That's gonna be hard to beat whilst still achieving "return to growth".
I agree with the mess part. I also feel like a reset is necessary and they are messing it up more right from the start. Fourteen layers of management? That's insane. But 3200 layoffs is a hell of a lot more than middle management cruft. Asha certainly has her hands full over there and the honeymoon period - if there even was one - is definitely over.
> And finally, they did not have to raise Game Pass prices to improve the profit margins. Of course, consumers pulled out.
Myself and 2 of my friends stopped our subscriptions the day that happened and never went back. I know it’s anecdotal but I’m happy to see others did the same.
"Chasing the highest margins" is almost the entire point of a market based economy, and is the main selling point for capitalism. I get your complaint, but if you reframe it I think it isn't the real problem here.
The whole point of a market-based economy is to allocate resources to making things people actually want. How does the market figure out what people want more of? Well, profit margin. If someone is making a lot of profit selling something, that is a really good sign that people want more of that thing. Other people see the high profit margin, and move to get into that business. More of that thing is created, and people's demand is satisfied.
The high profit margin is the signal (and the incentive) to get more of that thing.
In other words "Compulsively chasing only the highest margins" can be rephrased as "investing in things that people want more of"
>"Chasing the highest margins" is almost the entire point of a market based economy, and is the main selling point for capitalism
That's news to the ALDI brothers and Henry Ford. Capitalism used to be about the exact opposite. We moved from low volume - high margin, extractive feudal-like economics to consumer capitalism, high volume low margin. You create wealth by churning out commodities at low margins that the average worker could buy.
The tech industry is trying to exactly reverse this, as Varoufakis appropriately points out, by returning to techno-feudalism where you're not a consumer but a sort of platform serf. High volume commodity markets is exactly what these people try to eliminate to return to a kind of direct resource extraction.
50 years ago, publicly listed companies understood that chasing short-term growth targets undermined long-term sustainability. The current failure mode is not an inherent property of being a publicly listed company, it's a consequence of incompetent leadership and bad regulatory policy.
Well this is the new Xbox boss, Aska Sharma trying to course correct her own actions after pushing out Phil Spencer (and team). Phil had a deep understanding of the game world about profit margins and how the Xbox is essentially a stake in keeping Microsoft in the minds of consumers, a place in the home. Aska has a shallow understanding and sees only the financials and wanted to increase profits. Now she is burning it all down to try and “reset” and replace people with LLMs to increase profit margins. I imagine she will be pushed out herself end of year or next Spring (2027) once her naïve plan back fires.
I don't really have an opinion on Sharma since she's very green, but Phil Spencer's tenure was an unmitigated disaster. The strategy of rolling up studios and trying to grow through GamePass both completely backfired, with the studios producing few and generally unsuccessful games, and GamePass failing to convert casual players while demolishing your take from your hardcore players.
Was definitely time for major change at XBOX. Is this the right direction? I have no idea.
A part of me wants to be generous in interpreting that and say, OK, maybe it's the first time she's playing games semi-seriously in order to understand the capital G Gamer. Surely she's played games before, like say, the Sims, Bejeweled, Mario Kart, or picked up a Nintendo DS or Switch in her lifetime. Heck, even Wii Sports should count here in some capacity. Most people have played games casually in their lifetime by this point.
The other part of me though says that, no, it is in fact pretty possible that she hasn't played any video games of note, other than Wii Sports that one time. And even if she has played games casually, is it really too much to ask to have the person leading the Xbox brand be someone who can press the X button on their controller and not be confused by that?
It's a publicly listed company. They needed someone without the emotional attachment to 'Gaming', but with business nous, to make the decisions needed to meet her mandate, which is to ultimately increase shareholder value.
A 'Gamer' would have found that more difficult to do.
Would we say that about any other industry? Can you run a film studio if you have never watched a film in your life? Can you run a publishing house if you’ve never read a novel?
There's this little concept of "cultural sensitivity". Given the size of the King thing it would even be fair to have somebody who had a serious Candy Crush habit.
At least they didn't create a fake profile for her the way Elon Musk made one.
I think the "glass cliff" is going to claim another victim.
Asha came from the AI division of Microsoft, she didn’t pop out of nowhere. She is strongly tied to the Microsoft LLM plays.
IMO Phil was very clearly pushed out by “AI will cut costs talk”. No one makes huge investments into acquiring companies and then suddenly retires (after running the division successfully for decades) and none of his underlings were promoted into the role, they all left when he did.
I think Phil was pushed out by the complete failure of his strategic vision when confronted with reality. He had a vision of growth and prestige, and money would follow. I loved his vision in its grandiose and lofty goals, but he completely failed to capture any of the "how to make it happen". It stays a fantasy.
She’s been in her position for less than 6 months. All of the problems were under Phil, so I don’t understand what you mean by course correcting her own actions
Don’t know why this is being downvoted because it’s absolutely on the money. She’s a very green exec that is doing the classic “change everything to make it look like I’m doing something” while also not really achieving anything.
The rebrand to ‘XBOX’ is a good example of how they’re already out of ideas
Spencer's strategy for Xbox was very 2010 coded: rely on the billion/trillion dollar company to undercut the competition and gather market share and leverage. Classic embrace, extend, extinguish. That's why they bought a bunch of arthouse studios who don't immediately make money, invested hard in a subscription service that was wildly unprofitable (a strategy that even TV services couldn't make profitable, mind you), and focus on moving software more than hardware.
That strategy shifted dramatically between rising interest rates, a cooling consumer market, business uncertainties, and companies simply wanted to throw any excess fat into the AI rat race. So those art house studios were removed, Gamepass needs to enshittify pre-maturely,production needs to slow from a variety of offerings to the usual safe and sure releases. And of course, the biggest expense needs to be trimmed down on: because no one is stopping them from doing it in the US.
The number will still go up, but in different ways. They aren't doing this because they are in the red, they are doing it because they want all the money instead of a lot of it.
It was pretty rich seeing armchair video game industry analysts act like the new CEO was gonna usher in a new age for Microsoft's gaming division because she got to announce the updated logo and some games that would have obviously been in development long before she became CEO.
Microsoft is never going to figure out gaming. It's more art than engineering and they can barely manage the engineering with all the intervention from marketing and HR in their products.
To me it's mostly unfortunate that this has left PlayStation with no direct competition because they've noticed and leaned into the not-giving-a-shit attitude after they had such a great console generation with the PS4. It's kinda crazy that we're already almost due for a new console generation and there's very little appetite for new consoles after this generation where it feels like it barely got started. And between graphics almost certainly at the point of diminishing returns, and hardware prices like they are right now, I can't imagine there's a market to sell something more capable than current gen consoles. The industry is in a very strange state.
To me, the graphics abilities have been there for a decade... what we need are better games and gameplay. More fun games without gotcha, pay to win, loot box efforts. Too much effort is going for dazzling graphics at the expense of overall gameplay. How many people are still playing CoD, WoW and so many other games from over a decade ago? How many refreshes of Final Fantasy have we seen?
The graphics can only carry you so far. There's indy adventure games with SNES level graphics that have millions of daily users.
> Too much effort is going for dazzling graphics at the expense of overall gameplay.
Yes, 100%. I love good graphics, but game play is the most important thing. If you don't have good gameplay the graphics mean nothing. A game with great game play and great graphics is something to behold.
I recently finished Split Fiction and they really nailed it. I hope studios take notice!
Split Fiction is fantastic. My wife, about 0% gamer when rounded down, is still talking about it months later. I had a blast too - the game manages to be extremely fun and a decent challenge for both gamers and non-gamers alike. We'll be replaying it, but swapping characters next time.
When we played it, we had just finished It Takes Two, which was also great, but Split Fiction immediately dethroned it. I can't wait to see what Hazelight comes up with next.
Is Split Fiction easier? While I thought the platforming in It Takes Two was fairly pedestrian, it was challenging enough that I was unable to get the other half to tough it out to the end.
Split Fiction has a couple of mechanisms that make it accessible for people who are not experienced gamers. There is a general "reduce damage done by enemies" setting that make dodging attacks unnecessary. If you get stuck on something, there is a "skip to next checkpoint" button. This is very helpfully for the one or two really oboxiously hard parts. This is an improvement in accessibility over the developer's previous game It Takes Two.
I'd highly recommend Split Fiction, both for its game play and story. It is also superior to It Takes Two in that there is no part where the games "to continue playing, press X to dismember your daughter's anthropomorphic stuffed animal to make her cry". That was a jarring and unpleasant shift in tone for an otherwise mostly light-hearted game.
This has been a recurring theme since the dawn of video games: Everyone talks about graphics (devs and gamers), but ultimately the good and beloved games are the ones with great gameplay.
Also dazzling graphics has been mostly visual instead of experiential, that is, with the advances in GPU capabilities, we do get beautiful effects, but the intractability with the said infra is seems to be stagnant (and in some cases regressed)
The way things interact in the game world peaked around mid 2000s, just in time when CPUs started to not follow moors law.
As of now, interactive environments are still almost as good as half life 2 from 2004. Gaming is all about the feel of it, which also includes the visual component.
I think graphics peaked ~2015. But interaction still leaves a lot to be desired; we still have slipping and characters who can't walk stairs in AAA games to this day. Making characters more physically grounded and present seems like the obvious thing to improve to me.
This is something audiences are clearly desperate for today. I think it's obvious when looking at the huge success of Helldivers, Bodycam, Ready Or Not, Arc Raiders, (none of which are particularly innovative) players appreciate high quality, tactile and grounded world interaction.
Counterpoint is Roblox, which had one of the most innovative game engines ever. It could multiplayer simulate thousands of blocks of destructible terrain in 2006.
This feature was mostly ignored by the playerbase because developers found it easier to create static setups and focus on iterating on other parts of their gameplay.
The technological innovation still needs to be fun, though. Red Faction: Guerilla (2009) had destructible buildings to the point that they were constructed by laying down blocks in a physically correct way and letting the physics engine handle the rest, and blasting the hell out of them in the middle of open combat was incredibly fun.
It was very fun. Brick Battle, Galleons, the game with many towers. The explodey terrain put Roblox on the map initially.
The problem is the opportunity cost of destructible terrain was too high. Developers could get fun for lower effort by creating linear levels with better design/graphics/etc as destructible terrain makes everything "blocky" without significant developer work.
This is where Nintendo is at. It’s hilarious how much fun me and my kids are having playing games like Animal Crossing, Super Smash Bros, Mario Party, Pokemon Pokopia, and the surprise smash hit has been Tomodachi Life: Living the Dream. My kids make all the neighbors and have them get married and laugh about it and it’s just such a goofy concept. The graphics are good enough that you no longer notice there’s graphics, just the art.
Switch 2 is a fantastic console with an astonishingly fun first party library, and Nintendo just over there doing their own thing like they’ve always done.
Nintendo are basically the only people who held out against in game spending, for which I salute them.
I spent a few years in and around the industry and there was so much insanity around the need for in game monetization that it just made things much worse.
And because the game studios didn't care about it, none of the money stuff worked, making executives even more upset.
All to catch some vision of F2P money which is an entirely different business that these companies couldn't possibly support.
It's very sad for the industry overall (this particular decision is MS killing stuff off because the margins aren't good enough to funnel more cash into GPU gods).
Nintendp dabbled briefly with it. But they know their audience and very much did not want to risk any PR hit by associating too closely with the typical gacha/lootbox model. They saw the Roblox/Fortnite smoke long before most of the industry and turned off very quickly.
But there's one specific statistic to why Nintendo can keep doing what it does in a way no one else can: 98% retention rate. You get into Nintendo and you basically never leave. Even for Japan, that's well above the 70% retention rate you'd expect. Keeping that kind of institutional knowledge for an entire career makes them really good at what they do, and the unfortunate decades of Japan's economy meant they were less tempted by amassing huge loans or risks on experimental stuff.
Maybe they didn't become trillionaires, but it means they amassed a huge war chest and can weather storms that US companies are currently in the middle of.
There's a lot I don't like about Nintendo, but the one thing I admire about them is they understand that fancy cinematic graphics aren't what make a great game.
There are many great quotes by Nintendo folks about this approach. One of my favorites:
> I like to think of it like buying a car. Admit it. Your left brain looks at a vehicle in terms of the numbers. What's the horsepower? The towing capacity? The 0-60? That's our competitor's approach. But your right brain is different. There's only one question out there: sitting behind the wheel, where will this baby take me? In other words, do you want to go just a little bit faster, down the same streets you've always driven, or down a new road, to places you've never seen before? That's the difference with Nintendo DS.
Absolutely... They've been able to make a lot of games just fun even if the graphics aren't stellar. To this day, I wish they'd have released a Wii Sports Golf as a separate title with several courses.
There's a bit of Mad Libs in there as well, you can for example add your own conversation topics or draw your own food items or pets which the characters will then talk to each other about.
Yeah, I don't mean "mature" in the sense of the rating system, which does in fact mean "made for 14-year-old boys."
I don't like or understand David Lynch, but you get what I'm trying to say. There is no one in the video game landscape doing something similar to what Welles or Kurosawa did in cinema, or what Yorgos Lanthimos and Ari Aster are doing now (or Matt Reeves and Guillermo del Toro, if you're not into arthouse stuff).
Every time someone argues about this, they cite the same old examples (Disco Elysium, Outer Wilds, some narrative indie game)... but those examples usually lack in gameplay, which is, in my opinion, the most important part of what makes a video game its own medium.
I hope to see in my lifetime someone do to video games what the French did to cinema in the 50s and the Americans did in the 60s: graduating the medium from a disposable entertainment artifact into an art form for the ages. The medium is still young, it's not impossible.
like story driven games that Sony is famous for. Imagine a Spiderman, a last of us, or Uncharted. Large story driven games largely for older 30-40 year old market
It's... odd that while Steam is the biggest PC gaming platform and the biggest platform for new, unique, interesting games ever, Microsoft isn't investing more in the people developing games for it. Microsoft can use it to filter out the slop, make offers to the best games, offer help with porting to consoles, and (probably most importantly) offer to put them into the xbox live program, because the xbox live subscription is xbox's biggest source of recurring revenue.
Access to Steam's library for a fixed monthly price would be huge. Actually I'm surprised Steam/Valve isn't offering that yet, it'd be huge, and for their new consoles it would be a perfect fit.
> Access to Steam's library for a fixed monthly price would be huge. Actually I'm surprised Steam/Valve isn't offering that yet, it'd be huge, and for their new consoles it would be a perfect fit.
As a consumer, I really hope they never do that. I hate subscriptions and strongly prefer to just buy games. Once there's a subscription option, I would imagine the great sales would get significanty watered down. If you're a game seller and you can get that sweet sweet recurring revenue, it's too strong a temptation. We've seen that story play out time and time again in SaaS (and even some desktop applications now).
There's improvement in tech - check out the Unreal Engine's tech demos for example - but that doesn't really translate into visible end results because one, modern hardware can't handle all the bells and whistles, and two, when you're playing it all just blends into the background, and composition/art direction trumps details and fidelity every day of the week.
That said, the tech isn't wasted, it's also used in film graphics and animations and the like. And photo mode, where games can open up all the registers because framerate isn't as important then.
But yeah. Unreal tech demos, or if you have a PS5, there's a free tech demo called The Matrix Awakens that showcases advancements from a few years ago (heck it's been 4 years already).
We are well into the diminishing returns era now. It not done via better art designs, now you have to push significantly significantly harder to get improved results via brute forcing it.
I am very cautiously optimistic about this. It seems there has been a lot of tooling change over to integrate ray/path tracing into systems.
Once this becomes a little more ubiquitous we might start to see some decent stuff but so far it has been 7-8 years since the first ray tracing hardware came along and it is still far from implemented consistently.
you don't get the insane profit margins they want without those predatory practices, not in this industry and if you do it's a one-off and not something you can do every fiscal year
I’ve been saying this for 20 years. I care much less if the game is visually stunning than if the core game is fun. It could be a paintball themed FPS for all I care as long as the core mechanics are fun and the story is engaging, I care very little. Also, good graphics don’t have to be hardware intensive—not everything needs to seem photorealistic.
I do still play a good bit of Black Ops II Zombies... which came out in 2012. Treyarch took notice, and the last CoD was a crappy attempt to cash in on the fact that the last good CoD game was over a decade ago.
A few great games I've played in the last 8 years, about the span of a generation, a mix of AAA and indie:
If you want to see what modern AAA gaming should be and haven't already played it, I highly recommend Cyberpunk 2077. It's not perfect, mostly due to time constraints, but it excels in most categories, and it looks and plays great. No microtransactions, no DRM and the one DLC is very good. It's on sale for $18 on GOG. No DRM should be enough reason to signal to the market to produce more games like this. Also, the developer owns the GOG storefront and so 100% of your profits go directly to them.
I also cannot recommend Supraworld enough to anyone who likes classic 3D platforming and puzzle games such as Portal or Antichamber. Supraworld has ruined other platformers for me. The developer, David Munich, is a puzzle maestro who has already put out other successful games such as notpron https://notpron.com/ and Supraland. His philosophy for puzzle design is going to influence the genre for decades to come.
And of course, if you haven't played Red Dead Redemption 2 already, it's a bonafide masterpiece, deserving of 10/10. The game is an absolute behemoth in terms of development/marketing costs and profit, and is just a sight to behold. I know it borders on last-gen because it came out in 2018, but the ninth-generation of consoles was where it found its home, since the eight generation could barely handle it. Dan Houser left Rockstar after finishing this game due to being a 50-year-old man completely exhausted from inflated development cycles, so this might be the best game Rockstar will ever make.
Of course I could go on to recommend dozens of other memorable recent indie games, but I definitely think AAA has mostly stagnated. Cyberpunk 2077 initially released 6 years ago. Red Dead Redemption 2, the modern gold standard, released 8 years ago. I have heard great things about Clair Obscur, but I haven't given it a chance. There are some worthwhile remasters, like the Shadowman remaster and upcoming Thief Gold remaster done by the Kick brothers at Nightdive Studios, or the recent Final Fantasy Tactics remaster.
Game production could stop today and I'd probably be good for the rest of my life. There's still such a vast back catalogue even after playing all of the classics. With development cycles for groundbreaking AAA titles closing in on a decade and production costs surpassing half a billion, I get a sense that a mature ecosystem of AI-augmented tooling is what might end up bringing some sanity back to this business.
I'll also point out that in the 80s, AAA video games have been $40-70 since the 80's. If the price of games had gone up with inflation, we'd be paying $100-150 per AAA game, there would be more money in the industry and ideally better salaries and working conditions across the board. As consumers, we need to stop and analyze the perverse incentives driving this market and figure out how to have better dialogue with developers so that we can come to an agreement on more realistic prices but less anti-consumer bullshit.
That's the thing -- for a while they had figured out gaming. The xbox and 360 were solid consoles with lots of great internal and external games. Halo was incredible.
Then the company did the thing that Amazon did, Blizzard is doing, and all the big tech companies do -- they thought their big war chest meant they should make bigger games. Budgets ballooned, game timelines extended. Now they are stuck with games and studios with 10 year dev cycles trying to create the biggest, the most incredible, the most expensive games.
There's SO many devs out there making incredible games for fractions of the cost. It's a shame Microsoft (and others) keep thinking that reaching for bigger means better outcomes. No one wants "the game only Microsoft can make", everyone wants another great Zelda. Or Gears of War. Or Satisfactory. Or Mina the Hollower. Or UFO 50. Or Animal Well.
Hell, people want a game about shelving 3000 books in an Arcane library. Let games be smaller, more exploratory, more creative experiences. Let your studios get weird with it. Let them explore spaces and take risks. Stop sinking tens of billions into games. Start sinking tens of millions into them.
> No one wants "the game only Microsoft can make", everyone wants another great Zelda. Or Gears of War. Or Satisfactory. Or Mina the Hollower. Or UFO 50. Or Animal Well.
This IMO is a display of what is wrong with a lot of online gaming discourse — it is dominated by people who spend more time playing and critiquing games than 99% of the population and has a tendency to overemphasize indie darlings and ignore the massive commercial success of mainstream titles. Forza 6 released in May and is wildly popular among normie gamers. So is your yearly call of duty instalment which is now a Microsoft property. Go ask people coming out of a Walmart if they know what is Animal Well and they will probably think you are soliciting donations for a local animal shelter.
I'm not saying you can't criticize mainstream AAA games. I get they are boring, formulaic and increasingly rely on predatory business models. But if you want to talk about business and what kind of games companies should invest into, you can't just ignore the massive commercial success AAA already enjoys or the fact that most indie games flop anyway.
And yes, people will play games that can only be made in an established franchise by a major company. Forza is able to license real world car models from companies like Porsche because it is a well known and safe brand backed by a big company. Not to mention games like Microsoft flight simulator or GTA.
Sure, I love a Forza Horizons (I'm not much for mainline Forza), but those games aren't really experiencing the same scope creep as the the rest of the industry.
Call of Duty is, but it's also noteworthy that sales of CoD are slumping. Hard. Like down-by-60% hard. And the gamepass numbers aren't really boosting it back up.
Also, I think you'll find my list absolutely included big games. Gears of War? Zelda? These are not "indie darlings".
I think another big issue they have is their insistence that most (ideally all?) of the people working on their games should be temporary employees. When your most valuable studios get out of the business of providing secure and sustainable employment, you lose the ability to build institutional expertise. When you treat your creatives like a commodity, you'll get generic assets and writing regardless of budget. When you focus on everything but the games themselves, it shouldn't come as a surprise that your big franchises degenerate into undifferentiated revenuemaxxing slop and unique new projects that might get people excited die on the vine.
Overall I think western AAA game development is dead. The executive class killed it with their greed and incompetence, and as long as these huge corporations are allowed to keep buying smaller studios/publishers and shutting them down a few years later, nothing is going to change.
It was once the Wii with anemic hardware and waggle ended up outselling the 360 that MS changed. They went from pushing forwards to chasing trends.
I agree, they need to be focusing on smaller projects that take risks. Maximum 24 month dev times but with modern tooling could do some special things. Maybe if after 6-12 months they see something that is gold, they can give it more resources but that would be on a case by case basis.
I might be looking at the Kinect with rose-tinted glasses, but bringing depth and camera-based pose tracking to the masses in 2010 is pretty impressive.
Sure they were chasing the Wii, but they did try to innovate on the hardware and capability front, and back then VR was nascent, but investing in this area for gaming made sense then (it was very easy to imagine VR games being the 'next big thing').
Unlike Nintendo, Microsoft couldn't really figure out good and fun gameplay for Kinect. Basically only dancing games took advantage of it well IMO?
I feel they kind of did in the Xbox 360 era. Maybe it was just down to luck because Sony dropped the ball in the early years of the PS3 and Microsoft got the jump on them a bit.
The 360 was amazing looking back on it, Xbox Live, trying out innovative ideas like 1vs100, attracting lots of publishers to the platform for games, Xbox Summer of Arcade.
I was a big OG Xbox fan but even then I knew deep down it was never going to catch up to Sony with the PS2. Then the 360 came out and it was brilliant.
Sadly they threw it all away with the Xbox One and while recovered some credibility somewhat with the Series X, it's definitely not the same as those golden years of the 360.
Maybe the 360 was an aberration in Microsoft's history and the years since then have just been a regression
Xbox Live Arcade, and the accessibility it bought for smaller studios and indie developers was massive.
You could say it's just a response to Steam and the PC gaming indie scene, sure, but the 360 era is definitely one where Microsoft hit all their strides. Then they ruined it with the Xbox One.
> Microsoft is never going to figure out gaming. It's more art than engineering and they can barely manage the engineering with all the intervention from marketing and HR in their products.
Gaming is like cuisine. Can it be art? Sure. But most people will never visit a Michelin starred restaurant in their whole lives. They go to McDonald's and their local equivalent. Mainstream games have been like McDonald's for a long time. It's not about being a thought provoking artistic expression. It's about engineering a predictable entertainment experience that the average Joe can enjoy while being half checked out after a day of work the same way he enjoys a Budweiser or a Big Mac.
Of course, no critic will ever be caught praising McDonald's for its culinary artistry. But it doesn't matter. People will keep spending money on it, and the business continues. Same deal for gaming.
> And between graphics almost certainly at the point of diminishing returns, and hardware prices like they are right now, I can't imagine there's a market to sell something more capable than current gen consoles.
I haven't bought a console since the Xbox360 and Wii. But I have a friend who still games pretty heavily and is low income. He can not afford the latest PS5 and is still on a PS4. We were talking the other day and he said "I love consoles because they are simpler and cheaper than a PC but now I can't afford either. The graphics aren't getting much better so what am I paying for? What happened to $400-$500 consoles? Remember when consoles were 200-300?" Of course those last few prices were 90/00's but I agree, the cost of a new console is quite insane for not much gain.
Two years ago, you could get an XBOX/Switch for 300, or a PS/Steam Deck for 400. Granted, the PS and XBOX were digital only. But now the cheapest XBOX is 500, the Switch 2 will soon also be 500, the PS5 starts at 600, and the Steam Deck is 789. Things have been going up slowly, but the last year has been absolutely killer.
$200 in 1985 (NES launch price/date), adjusted for inflation is just shy of $600 in 2026. RAM and GPU prices are really hurting the consoles right now, but compared to inflation benchmarks up until about 2020 they were considerably below inflation.
At those prices consoles would no longer make sense. I don't think there would be enough people who could afford them to have a good enough install base for AAA games. And non-AAA games don't need any more hardware than what we already had last gen.
I read that when they designed the Xbox Series S and X they knew it was going to be difficult to lower prices down the road because wafer costs were increasing every year. Which is why they launched with 2 models from the get go, one cheaper than the other. And even so they were losing between 100 and 200 dollars per console.
Now things are even worse with the RAM and SSD components crisis. The Series S has now the price of the Series X when it launched.
I'm in software and I do alright, but I'm still on a PS4 too. Just can't justify the upgrade when there's still so many great old games available. Maybe when the next Horizon Zero Dawn comes out, I'll be forced to upgrade, but I'm taking my time about it.
Same here. At no point has the PS5 held more than 3 total exclusives I wanted. Mostly by virtue of them constantly de-exclusivating them. Right now, only Astrobot and Demon's Souls (which was there since the start) could even convince me.
I don't think I'll need a PS6 honestly, I am okay with waiting or going without titles sony is releasing.
The pandemic and scalpers really destroyed peoples apetite for the "new thing" when this generation came out, and with that boost missing studios saw little point in going exclusive perpetuating the vicious cycle, it's just in the past few years that there's really been exclusives for this generation that didn't also support older consoles.
And even then, already the PS4/XbOne generation added stratification making it more "PC-like" with the XbOne-X having heftier hardware (not to mention it being PC-like compared to PS1/PS2/PS3/Xbox360), that then continued with the Xbox-series-X and Xbox-series-S.
Consoles aren't specialized hardware for "magic experiences" and everyone knows this, it's just another "device" that happens to be connected to a TV with a controller where people are gatekeeping software availability.
Microsoft also didn't do themselves any favor with that naming scheme. In the current generation (I think?), you have:
- Xbox X
- Xbox S
- Xbox Series X
- Xbox Series S
Compared to:
- PlayStation 5
- PlayStation 5 Pro
or:
- Nintendo Switch
- Nintendo Switch OLED
- Nintendo Switch Lite
Anyone who's literate in English (and knows that OLED means "nicer screen") can immediately rank the PlayStations and Switches into "good, better, best". But with the Xbox, how is anyone supposed to know which one is which? Is the Series version better or worse? Is it a whole new generation, with whatever backwards-compatability implications that a new generation brings? I need a chart and I probably still won't be able to tell you if you ask me in a month.
Slight correction. Last generation was the Xbox One (already a confusing name because some people thought that was referring to the original first Xbox)
A few years into the generation they updated the Xbox One, putting it into a smaller form factor called the Xbox One S, and at the same time released a spec bump model called the Xbox One X. I don't believe any of these are still available for purchase.
The new generation has the smaller/lower-powered Xbox Series S, and the higher-specced Xbox Series X. Leaving the overall generation with seemingly no name, other than "Xbox Series" I guess?
But yes, the names are terrible because S and X both refer to consoles from last gen and current gen.
This is absolutely correct, I game on Xbox pretty much every day or every other day, I have been with Xbox since 360 or whatever the first one was called. I am still constantly confused by the naming. There also was another revision to the top of the line Xbox series X and the Xbox series X digital edition. I can’t imagine someone looking at the naming scheme pre-release and saying yes, let’s go with that.
(Tiny rant - and even THAT name sucked. Internally, since it ran on DirectX (already a name that only a mother could love), it was called the DirectX Box. And rather than come up with a real name, they got attached to their lazy idea and shortened it to Xbox. They have made miserable naming choices for this thing since day one. Since BEFORE day one.)
It's a pretty good name actually because it's unique, easy to Google, and is never ambiguous in conversation. It's all the suffixes that made a mess of it.
Switch vs Switch OLED is fine, comparatively, because you are forgetting about the worst (non-Microsoft) naming choice of all consoles: the New 3DS.
This lead to situations where you could have a new 3DS that wasn’t a new New 3DS, and didn’t play the games you bought with it. You could also, somehow, have an old New 3DS, a logical impossibility.
Anyone in charge of naming anything that just calls it the “new” thing should be fired for not taking their job seriously.
The OLED Switch has the same specs and is the same gen, just a different screen. Like the Vita 1000 vs Vita 2000, they play the same games. Xbox One and Series are different gens.
just like the person you responded to already said: cos there is like basically no difference between the two. unless you care a lot about screens (in which case you will know what oled means) just get the cheaper one.
> Consoles aren't specialized hardware for "magic experiences" and everyone knows this, it's just another "device" that happens to be connected to a TV with a controller where people are gatekeeping software availability.
Arguably; Sony and Microsoft have both played it safe for a long time, with their consoles mostly being "just for video games", but it wasn't always like this. Current-gen has VR additions, but the previous generations had things like Kinect, the PS camera addon, things like that. But they seem to have given up on fun things like that, they were innovative but probably not a sweeping commercial success like idk, subscription services.
Nintendo still makes their stuff unique though. The Switch is great, portable, detachable controllers for multiplayer and wiimote-like interaction, etc.
Console generations are a cultural construct. And just like the bit wars of the 90s, they are cultural constructs that cannot explain the current situation.
We have not left the PS4 era. Both Sony and Microsoft use modern CPU and GPU in the PS5/Xbox Series that can 100% replicate the previous console. They use the exact same online store, ushering in a modern era where old devices will lose access to the store, but the store's never gonna close. All of this makes the use of generations to describe console gaming obsolete. We don't talk about generations in phones, or laptops. Same thing with gaming.
Microsoft is not an engineering company any more. Just look at their products. They placed ads in the start menu and file explorer. Azure is one of the worst clouds when it comes to features and reliability.
Microsoft is a dying company, and they are trying not to end up like IBM, but their fate is inevitable.
I'd say games can be either art or hype. Call of Duty is not art, really, it's hype. In the same way that no one thinks Marvel films are moving film forward, but they are hugely popular. GTA is somewhere in the middle, being mostly hype driven, but based on solid "art" in good gameplay. Indie games tend to be art over hype.
Microsoft can't do the art because it's too big, too safe, and it can't do the hype because it's not cool.
It can be art even if you don't consider it artistic. CoD is an example of military art. Marvel is American blockbuster art translating American comic book art to the screen. They are their own kind of artistic expression and achievement, even if you personally don't consider them art.
They had it figured out perfectly in the Xbox360 generation (and for PC games by the late 90s), but I guess that the MS Games and Xbox divisions had a lot more freedom and were more decoupled from the Microsoft org chart back then.
More capable than current gen consoles is going to be local AI. Calling it now. It won't be as much about graphics as it is about selling some notion of human like NPCs and smarter enemies and some other use case they can sell to the masses.
> human like NPCs and smarter enemies and some other use case they can sell to the masses.
npc ai has been capable of being much more realistic for a long time, and smarter enemies as well; if enemies in a game are too smart it stops being fun which is to say enemy ai being too stupid or not realistic enough is a non-problem and current-gen hardware is in no way a blocker to such aims anyway
When she was announced it was broadly assumed that she was being brought in to kill the division.
But then she did some minor, pandering actions and suddenly everyone was "oh boy! A new era of xbox!" Only it was all a ruse to ensure people didn't jump ship too quickly and make the bleeding too heavy. They want people to keep pumping money into a platform heading to the graveyard.
>It's more art than engineering and they can barely manage the engineering with all the intervention from marketing and HR in their products.
truth. far too many MBAs in that company. "Let's monetize Solitaire!!!!" Only an idiot would even come up with that idea, never mind follow through on it.
I mean, here you are too declaring a XBOX defeat. You are no better than those armchair industry analysts. The 10th gen hasn's even properly started, we don't even have rumors of WHEN it will be.
Not saying that I disagree. I absolutely agree. I think Xbox is downright moronic to buy Bethesday on a promise of Starfield being a massive hit, and after it hilariously fails, they throw out a bunch of studios just so they can focus on their next thing even more.
It's just, come one. You have to see how ironic and conceited your opening paragraph was.
At some point, the games industry decided it wanted to be interactive Hollywood, and the consequences are entirely predictable. Meanwhile, Nintendo just quietly shipped 3.8 million units of Tomodachi Life in two weeks, and 4 million of Pokopia in five. They're making actual games. Sony's obsession with prestige cinematic bloat, like Xbox, has also put them in a slow-motion death spiral that's going to become painfully obvious in a few years.
My kids begged for me to buy Tomodachi Life and Pokemon Pokopia and they’ve been absolute smash hits in the house. Pokemon got me hooked for a month or two until I mostly beat it, and the kids play Tomodachi Life every day and have funny little stories to tell. So many modern games just aren’t fun, it doesn’t matter what the graphics look like if the game is boring.
Sandboxes. Minecraft was one. Now it’s getting called a platform, at least in the submitted article. That’s good for engagement and monetization I guess, but sounds way less fun.
Minecraft, Roblox, Fortnite, MMOs, Second Life, there's heaps of sandbox games where people can just hang out and do their own thing. It's the metaverse that Facebook / zucc just completely misunderstood.
They could've just bought any one of these titles and they'd have a better metaverse than whatever it was they pumped billions into.
Pokopia and Tomodatchi only look like sandboxes at first glance. They are far more directed. They're not a perfect square with you in the middle. They're a star shape with you in the middle.
To some extent - but you can't get away with Hollywood Accounting Practices in the same way.
Also one must consider the likes of Hideo Kojima who can sell ~7 million copies of a new IP that is effectively a cinematic Walking Simulator as an Auteur acrimoniously splitting from the traditional studio system.
Clair Obscur: Expedition 33 also shipped over 5.4 million copies as a AA, in what is also arguably an interactive cinematic on-rails RPG.
Nah, expedition has enough of a game in it. Parry mechanic is pretty addictive, and gameplay is kinda fun. Exploration, too, is strictly gaming aspect, not cinematic.
God of war is plainly movie on rails compared to E33
> acrimoniously splitting from the traditional studio system.
Yeah, he split from the traditional studio system to create... his own traditional studio system.
Kojima is precisely what happens when you stop thinking of games as actual an interactive entertainment format and start thinking of it as a "cinematic experience" instead.
Death Stranding is only a game by the narrowest of margins. What it is is a movie with Kojima's Spotify 'favourites' list as the soundtrack that so happens to have one interactive element or two thrown in there for good measure.
It's pretty telling that all he's done after splitting away from Konami and surrounding himself with his own sycophantic group of developers is Death Stranding. Kojima is the direct result and pretty much the face of a lot that is wrong with the games industry right now.
> Death Stranding is only a game by the narrowest of margins
I strongly disagree. I'd say that Death Stranding has an incredible open world "sandbox", rivaling the ones of GTA. I can spend dozens of hours there without worrying about the campaign - it's not a Hollywood movie.
> Death Stranding is only a game by the narrowest of margins.
I can't even entertain this notion, never mind agree with it. Death Stranding and its sequel are among the best games I've ever played, and I've played several hundred, maybe thousands of games spanning every decade and genre.
death stranding made just moving through the game world engaging and challenging. and on top of that it has very satisfying combat mechanics and async multiplayer gameplay elements. yeah the game has long cinematic cutscenes, but i do not see how that detracts from the actual gameplay
> ...on top of that it has very satisfying combat mechanics...
Man, the sequel made the combat totally trivial. I'm at the sequel's "Episode 10", and I've the opinion that DS2 took nearly everything that anyone ever complained about in Death Stranding and made it effectively optional. I don't like the decision, but I'm still enjoying the game.
> Kojima is precisely what happens when you stop thinking of games as actual an interactive entertainment format and start thinking of it as a "cinematic experience" instead.
And for Western devs, we have Rockstar doing that. RDR2 is a wonderful movie, but a pretty poor game. Unfortunately, they forgot what medium they were working with.
> Unfortunately, they forgot what medium they were working with.
I strongly disagree.
You didn't like what RDR2 was doing, and that's fine. I had a blast with it, but I'm the kind of psycho that loves games whose big thing is traversing gorgeous terrain. Similarly, there are games that people absolutely adore that I absolutely cannot see the point of.
Agreed, I was shocked to see a second person saying that RDR2 is movie not a game and the gameplays the weakest part, which was confusing to me as someone who spent a LOT more time enjoying the game than touching the main story and cinematics, and know people personally in the same boat, but then I realized I was about to just reply to the same guy with the same take under another post about gaming and not a super common reoccuring opinion haha
Nintendo also shipped Metroid Prime 4, with massive delays and unsatisfied customers, following the same "interactive Hollywood" philosophy which disappointed Metroid fans.
Same thing goes for Star Fox, a remake of a remake of a remake, with poor visual and dialogue choices.
And meanwhile, the same silent push for digital-only, forced upgrades and the like...
> Nintendo also shipped Metroid Prime 4, with massive delays and unsatisfied customers, following the same "interactive Hollywood" philosophy which disappointed Metroid fans.
I'm not convinced that Metroid at least really is a great data point for "Nintendo is ruining things in-house". From Wikipedia[1]:
> Nintendo announced Metroid Prime 4 with a teaser trailer during the Nintendo Direct presentation at E3 2017, and announced that Retro Studios, who developed the previous main Prime games, would not be involved.[15][16] In February 2018, Eurogamer reported that Prime 4 was being developed by Bandai Namco Studios in Japan and Singapore.
> In January 2019, the Nintendo EPD manager Shinya Takahashi announced that development had restarted under Retro with Tanabe remaining as producer. Takahashi said the previous studio had not met Nintendo's standards and that the decision to restart was not taken lightly.[21] Shortly after, Nintendo reevaluated Prime 4 after noticing changing attitudes towards open-world games, but maintained the direction as the development was already taking longer than planned. The team ignored new developments in action and shooting games to prioritize the adventure elements.
There's a perspective where this is almost the exact opposite of the problem being discussed about Microsoft. They chose to let it get developed externally, suffered delays, and by the time they moved it back in-house, the ecosystem had moved from under them. They probably could have chosen to rethink everything and delay it further, but they also arguably could have avoided having to make that call by keeping it in-house and letting the studio who made the previous entries work on it from the start and landing it in time that the original vision still fit what people wanted.
My point wasn't about Nintendo ruining things in-house rather than them following the exact same trends than Sony & Microsoft, only a few years late.
MP4 is what OP was talking about, an "interactive Hollywood" experience that betrays previous Metroids, adds discutable open-world design cues, and locks features behind $30 figures.
Metroid has always been a very (very) small series in the grand scheme of Nintendo. If they screw up the next Zelda or Mario they might be in trouble. But they also seem to have actual magicians work on those games.
Metroid is a secondary or tertiary IP, and the Metroid Prime subseries has always had more smoke online than its sale figures would ever suggest, with only the original on Gamecube selling north of 2 million, and it was a pack-in title.
That’s what a pack-in title is. I had one of those GameCubes, and I ended up trading in the packed-in Metroid Prime to EB Games for like $5 in store credit cuz I didn’t like the game.
Prime 4 was a fine game, except for the MacKenzie character who would never shut the hell up. It was like having a redditor in your ear for 10 hours. Absolutely insufferable. If they would have just removed him and worked on the desert hub world a bit more, it probably would have been 2025's game of the year.
This isn't the first time Nintendo has outsourced a disappointing Metroid game, if Other M is any indication. Remains to be seen if this is part of a larger trend for that company.
I’ll concede that Metroid Prime 4 has been sitting on my shelf.
But Star Fox? Phenomenal. Such a fun game. Luckily I have the pro controller so I could map A to the back paddle or else my poor old tendons couldn’t handle the rapid fire shooting required at the high levels, but I’ve had an absolute BLAST playing the remake.
Star Fox (SNES), Star Fox 2 (SNES mini), Star Fox 64, Star Fox 64 3D, Star Fox Zero and Star Fox (Switch 2), while having minor gameplay differences, are all retellings of the same in-game story (the eponymous Lylat Wars).
Moreover, Star Fox was kind of... programmed by teenagers. Miyamoto is credited as both the producer and designer, but both Cuthbert and Goddard were 18 or 19, and Wombell (artist and designer) was maybe in his mid-20s.
Star Fox's development is an incredibly wild story where British teenagers argued what the SNES could do with bespoke hardware, and they ended up being shipped out to produce it because Nintendo felt they couldn't ever do it themselves. It all started with Argonaut's demo of what would eventually be released in Japan as "X". Entirely software-based 3D, on the original Game Boy.
There's actually a very humble quote by Miyamoto where he learned that someone can't just get better as a function of age and experience, after he clearly realized that these teenagers could produce something no one else in Nintendo ever had a hope of. Perhaps it's why the franchise has done so little -- Nintendo's just not in a remotely similar headspace the Argonaut lads were.
The previously unreleased Starfox 2 is not a retelling, it is a proper story sequel. That is the one game where you're wrong, every single other game is a remake, with Starfox Zero the most tenuous one, but still a reimagining. They've remade the same story five times.
Between 1 and 2 was the 3DS remake which added levels and cleaned up the story some. The Switch Starfox includes those parts, too, from what I've heard.
I can understand complaints about Metroid but Star Fox fans were probably expecting jack squat from the start of the year. Putting it in the last movie is a pretty strong indicator for more content.
A lot of Nintendo's remakes end up being training exercises for the real deal, such as Metroid 2 remake to Dread. Meanwhile, some of the laid off devs here might have never seen a properly produced title with zero crunch and anomalies. Not every title should be an auteur title, but we have too many auteurs and we want more auteurs.
Metroid 2 Remake, for all its warts (many), is at least a full-on reimagined remake. Star Fox 64's latest remake, is mostly a carbon-copy of the original, which already had an "HD" remake on the 3DS.
What I mean by "interactive Hollywood" is a game with a $200M+ budget that relies entirely on high-fidelity graphics and cinematic stories to differentiate itself, while offering almost zero new gameplay innovation.
Neither of your examples fit that description. Metroid Prime 4 wasn't chasing Hollywood cinematic design; it was a highly targeted attempt by producer Kensuke Tanabe to make a tight, isolated first-person exploration formula resonate (especially in Japan where it has consistently failed). Its goals are mechanical, not cinematic. Meanwhile, Star Fox is a classic arcade rail-shooter remake with modernized cutscenes, not a prestige movie-game. Early sales data shows it's actually working well, too, having just debuted at #1 on the physical charts in Japan and nearly doubling Star Fox Zero's launch week in the UK.
Ultimately, Nintendo operates like a Consumer Packaged Goods company. They treat their library of IPs like a diversified product portfolio rather than betting the farm on individual interactive movies. They use massive, high-margin, mechanics-first games like Tomodachi Life and Pokopia to generate enormous cash reserves. They then use those profits to subsidize legacy IPs like Metroid or Star Fox to keep core fans happy and feed their broader brand ecosystem. Because Nintendo spreads its risk across a wide spectrum of lower-budget games, they can easily absorb a minor product flop. Sony's interactive Hollywood model sinks $300M into a single basket, meaning one bad miss can completely wreck a studio.
Although Nintendo is still following the path of "gaming enshittification" with lesser budgets; and I would argue that Star Fox mostly sells because there's barely anything to play on that 500$ thing...
Sony has been pretty successful with that though, and there was a time where they pushed many fan favourites in the cinematic genre. They aren’t arcadey games like Nintendo ones of course, but something like The Last of Us has its own value and audience. It sells too.
They have. Which makes this hard skew towards live service all the more baffling. Having your premier studio basically miss the generation trying to make a multiplayer version of one of these games then cancelling it really shows how much they overextended.
And it's not like it had to be Naughty Dog: They had some dozen titles published or in house being prepared (including one that sunk what could have been an amazing remaster/remake studio). And in the end they really had one come out as the dark horse, with one megaflop, and 2-3 stragglers that don't seem long for this world (one of which seems to be taken down the existing, safe life service Sony spent billions on).
Gen 9 will be a huge blemish carried by their very smart acquisitions of Insomniac and Housemarque, with some decent support coming from Santa Monica and Guerilla. But at what cost?
Sony's had to bet the house on those types of blockbuster, crowd-pleasing experiences. The PS5 has yet to crest the cinematic peaks of the PS4 (PT, Bloodborne, Uncharted, etc), so people are rightfully getting a little worried that this gamble won't pan out. The bestselling PS5 exclusive is currently Ghost of Yōtei, behind eight better-selling crossplatform titles.
Nintendo's exclusives outsell Sony's by a significant margin, and they're usually simpler games that are broadly accessible. They leaned the right lessons from the indie gaming boom, and didn't try to resist it by pumping billions into making the next Overwatch killer or whatever.
I played TLoU and while the story was interesting, the feeling of being steered, forcefully and constantly, was very frustrating.
"Press this button exactly when the game tells you" and "as soon as you cross this exact point, this exact enemy will appear" - that's year-2000-ish (or worse) gaming tech.
The final confrontation was essentially ruined because the designers apparently never thought you'd use a sniper rifle, so you can set off a deafening shot that kills an enemy and the other enemies don't even notice the shot because it apparently happened outside their detection range.
I'm glad Nintendo does a bit of everything. Taking the time to try out new IPs, give older ones a chance to rise, and go truly off in the weeds with series no one else can really do (the Fit series and Labo being some of the biggest examples). It really feels like there's something for you there, no matter what kind of games you like (unless you only play the GTAs/CODs/Maddens of the industry). Even if you're not actually someone who games. My mom loves the Fit games.
Nintendo does family-friendly games. Which have their place.
However if for example movie industry had its crisis, and someone were to point out how Pixar is doing great, and latest Toy Story is a big hit (it is btw), I'd say "And what if I want to watch anything that is not a family-friendly movie?".
Could Nintendo ever make Baldur's Gate 3? Not in a million years. Doesn't fall into children-friendly bucket and so would completely run against Nintendo brand image.
If the game industry managed to come even close to the top writing and cinematography from Hollywood then it would already be much better than it is now. Instead the part of Hollywood they are chasing seems to be the big budget wide appeal movies that will be forgotten in a decade.
That is encouraging, but my stock portfolio paints a different picture. Nintendo is unfortunately doing terribly this year. I still believe in their core mission, even if some of their litigiousness and anti consumer practices have put me off
Nintendo is also a Japanese company and japanese stocks aren't doing great due to their economy and the weak yen. Also, stock price does not correlate with good games or a healthy business.
Weak yen should be great for Nintendo, most of their costs are Japanese staff which are now cheaper. Maybe the local Japanese market is softer. More likely the trouble is the increasing memory pricing is eating their margins
Basing an art form on your stock portfolio is a good half of everything wrong with the industry.
And it's not surprising Nintendo isn't doing well in this clown market. They are taking a hit because they resisted pressures from shareholders who wanted them to raise prices on its new system. Nintendo eventually gave in, but with a much smaller price increase and a delayed effect from announcement to implementation (~4 months forewarning). And on top of all that they are not hyping AI to the moon.
And I haven't even gotten to the overall economic climate of Japan yet. Nintendo's stock falls would happen regardless of if they followed the above.
These are good, pro-consumer moves. It shows that more companies need to think past next quarter and resist the whims of people who don't have your company's long term interests in mind. You're the expert here, not them.
I find it really sad that the GameCube and N64 were where they were the most innovative and also happens to be where they floundered the most in sales.
I don't know how you can say that when some of their most recent well received games include Tomodachi life and Rhythm Heaven. Those aren't the kinds of games made from those maximizing bean counters.
Yes. And an environment like Microsoft wouldn't think a dormant, niche franchise like that would be able to achieve an overwhelming success after 2 generation.
But sure, if you want the last new IP, Nintendo has played it safe with Arms and focused more on bolstering dormant IP's on the switch. With Animal Crossing and Zelda in particular finding new winds. Splatoon was their last huge success as a new IP in 2015.
Labo came in 2018, but I have no idea how to evaluate the success of that.
Huh? They are trying a lot of things and when they want to establish a new franchise they are often successful, see e.g. Splatoon. Innovation also does not correlate with new IPs.
Yeah, I kind of loathe the cinematic direction Sony and others have taken. Their games aren't really innovative or fun but people lap them up for being B tier movies. It makes no sense to me. They don't bother making Bloodborne anymore, just more open world cinematic slop like Horizon.
sony's cinematic games sold well and are well regarded, but when was the last time they released any such game or even just a single player game? when they rerereleased the last of us?
This is incredibly sad for a lot of my friends who are finding themselves out of work despite delivering well received products.
But at the same time I appreciate the candor of Asha saying that the corporate management are to blame and letting studios go back to being independent where possible.
Phil Spencer really messed up. Everyone in the industry knew Microsoft were making bad calls trying to dig themselves a hole with gamepass and simultaneously digging a hole with their acquisition spree. I’m glad that Asha is laying this bare even though it sucks to be brought in as the hatchet person.
This is an example of the glass cliff and I’m hoping she can help right the ship. I think they need to split to a wholly owned subsidiary rather than be in Microsoft proper, and I expect that to be announced at the Q1 investor meetings.
Phil really dug their hole deep. Microsoft themselves encouraged it. It’s been a decade of sheer incompetence at the highest level so I’m hoping they can right this without taking out half the industry in their wake.
I don’t think Phil had any other options while existing under Satya and a relentless push to services revenue. If Windows can’t make a case for itself without moving heavily to services (advertising and pushing 365, primarily), how could Xbox?
I’m not really sure how the C-suite is escaping blame here.
Anyone who's been paying attention to Halo for the past 15 years knew there was bad management the entire time. (Halo used to be the game that everyone wanted to have and to be; now it's an also-ran due to self-sabotage.) The first step is admitting you have a problem, so good job there, keep following through.
Halo Infinite was the moment I knew Xbox was gone. The core game engine was the best Halo has ever felt, but everything around it reeked of incompetent management.
Giving a player a reward for putting in effort is one of the fundamental principles of game design. If you remove all the rewards, what incentive do they have to play?
Their response to player backlash which was essentially “deny, defer, gaslight and ignore” killed the online community for it within a couple of months, and I think they dropped what little content support it had within two years as well, after initially marketing it as a long-term “live service game”.
Blatant incompetence, how Microsoft ever let itself get in this state I’ll never understand.
Also I can’t even remember the campaign story. Was there an angel or something? It was a cliffhanger about some new enemy, as if they’ll ever make another game?
I just remembered the monstrosity that is the Halo TV series as well now, ah god… it’s been a rough decade.
I disagree, it wasn’t Phil that dug a hole but Asha who pushed Phil out with no plan. Why is Asha finally revealing her plan years later if she was such a good fit? She came in trying to automate away peoples jobs with AI for the last year or so and that is obviously failing. It wasn’t Phil that invested the entire company’s well being on stochastic parrots.
She has done everything but focus on delivering games (product).
Just looking at Sharma’s history, she rejoined MS in 2024. Xbox was struggling long before that, so I don’t see how anyone can blame Sharma for the past 10 years…
Xbox has been profitable almost continuously since a few years into the Xbox 360. It's fascinating how "profitable but low margins" equates to "struggling" to so many.
Xbox makes an enormous amount of money from a few long running properties (the letter in question mentions Mojang and King), but basically every big move and acquisition they have made for the past 10 years has been catastrophic.
It’s potentially a gross misallocation of capital.
Right now, the 5 and 10 year US treasury rates are 4.2% and 4.47%. The 30 year is 4.99%.
A business with a return on invested capital less than that is in fact operating at a loss. Unless there is reason to believe the situation will change in the near-to-mid future, such a business would literally be better off liquidating everything and just investing in treasuries.
You would need access to internal data to figure out their ROIC, but a 3% margin is not promising.
If you shut down the things that bring in $5 billion revenue, you no longer have $5 billion revenue, you have a gamble that some other industry can ramp up to that quickly. $5 billion has never been "quick money". (Inflation would have to get a whole lot worse for that to happen and that point the company has too many other problems.) That's "Opportunity Cost" among other bits of what used to be past corporate wisdom that companies have seemed to have forgotten.
Yeah, and I'm pointing out the opportunity cost of that is just silly. It's not a practical exercise in any way. Suppose there was some way for Microsoft to stop exactly on a dime, magically collect all $5bn in gross revenue for a year and managed to put that all into US treasury bonds without tanking the interest rate/market value of those by entirely eliminating their products and goods that generate that $5bn revenue. Microsoft does what next? Wait 30 years for the bonds to mature and collect $5bn + ~4% compounded? 30 years that they could use $5bn/year gross revenue to all sorts of advantages, but they only have $5bn/year if they sell similar products and goods?
The time value of money suggests money invested today is more powerful than money returned tomorrow, even if you magically get the highest possible rate of return.
The opportunity costs say that if you jump ship on an entire industry don't expect to have the same revenue next year.
I love this weird short term thinking with long term mistakes that treasury bonds are the right benchmark for something like Microsoft's margins and net revenue. It's really fun to watch all the armchair capitalists come out to play that seem to follow quarterly reports like hawks but presumably never took an actual economics course.
>It's fascinating how "profitable but low margins" equates to "struggling" to so many.
If one bank pays 4.25% on your savings and the other pays 3.25%, which one are you going to chose to put your money in all else being equal? Why is the 3.25% one not a good choice despite you still making money?
People inherently understand business, they use the same principles in their daily life, but they just get confused on making the connections.
A bank offering 3.25% isn't "struggling" either. Real struggling for a bank looks like bank runs and depression.
But you are talking the "consumer perspective". Right now the median interest on consumer savings accounts is less than 1%. [1] Someone getting 3.25% from their bank isn't "struggling" compared to their luckier neighbor that found a 4.25%. They are probably closer to the top 10% or top 1% and have a larger savings deposit and/or high credit/sustainably low debt. Most Americans can just envy that, not qualify for it.
There are opportunity costs in moving your money from a stable bank that you have an existing relationship and shopping it around to get that perfect 4.25% highest margin that you can find. Transfers are usually free for consumers, but a bank may give you a lower APR on your credit cards and a cheaper checking account if you keep your accounts all in the same place with that bank. Trying to move all of that at once for a similar deal at the 4.25% bank can risk hard credit checks and account closure notices that consequently drop your credit rating, including possibly enough to make the bank at 4.25% question your stability and change their mind on the deal.
I think consumers actually today have a better idea of the risks of these kinds of "small improvement" things than large companies. Wall Street is a much worse "Credit Rating Bureau" than the three (truly terrible) consumer Bureaus. Businesses have grown so large they no longer understand Opportunity Cost at any real level. If you shut down the things that bring in $5 billion revenue, you no longer have $5 billion revenue, you have a gamble that some other industry can ramp up to that quickly. $5 billion has never been "quick money". (Inflation would have to get a whole lot worse for that to happen and that point the company has too many other problems.)
So you would chose the 3.25% bank or the 4.25% bank? Because it's a fictional illustrative example of "people always prefer more money", not a case study on banking lol
Microsoft's ownership wants to put their money into the 4.25% bank, not the 3.25% one. Don't lose your mind overthinking it.
you think you have some amazing analogy but it's utterly nonsensical. where is microsoft putting this money that is going to earn it more? are they low on cash on hand? why are they not investing every dollar they have on these magical free returns that just need more cash?
Right? It seems intuitive that markets can eventually saturate, and that there's a floor for how low you can get costs, so growth can't be infinite. Maybe you could make an argument that you want to grow in scale with inflation so that your profit doesn't eventually become meaningless, but you don't need to "reset" your multi-billion dollar revenue business to achieve that; you can get that by just bumping prices in line with inflation every few years.
Ratio of consoles sold Xbox vs PS5 was 1:3 before that, after that it fell in the 1:10 territories (december 2025)
Using Phil as a scapegoat and Sharma as the savior is disingenuous.. and is honestly pretty consistent with how i view Microslop: opportunists, tasteless, and visionless executives, shareholders and fanboys
The fall of Xbox started before the launch of thier current gen:
- HW: they announced 2 SKUs, with polar opposite performance profiles
- SW: their system sellers got delayed to couple years
The reset needs to happen at the highest executive order, not at the lowest, workers implement whatever project was greenlit
People chose PS5/Switch over Xbox (it now sells 3x less than Switch 1, wich is a previous gen console), people see through the lies of the media
I need to be clear that I’m not presenting Sharma as a saviour. Honestly, I don’t know if her decisions are correct or if Xbox can even be saved at this point.
You said it yourself, Xbox was being outsold 3:1 by PS5 which is still shocking numbers given the investment, and the fact that PS5 was having trouble selling units at the same rate as they’d been selling PS4s.
You can blame her for the last 10 years because she's CEO _now_. That's what you do. You blame the head of the organization for the organization's problems.
Because they decided to be the figurehead and take on that responsibility. It's like a king who takes on their predecessor's war when they assume power. No one looks to the previous king when the current one has all the agency.
Because it’s their job to fix it. If they don’t, the axe falls again.
Humans often think in terms of deontological ethics. Corporations operate in terms of consequentialist ethics, and the only consequence that matters is that the numbers go up.
I still think "blame" works here since we're assigning responsibility to her. The fault or wrong was caused by someone else, perhaps, but she is now responsible for that fault.
> Blame: assign responsibility for a fault or wrong.
No, I’m not. I’m explicitly differentiating between those two perspectives and which corporations care about. “Blame” doesn’t exist in most corporate vocabularies.
I don't think a long time executive leaves, and the expected successor (Sarah Bond) refuses to suceed because of some intimate backstabbing behind the scnes. Especially not by an executive who was previously running the AI division during an AI gold rush.
Occam's razor: Spencer and Bond jumped off a sinking ship, Asha wasn't doing enough in AI. Push her to be the fall gal for the sinking ship and put in whoever will milk AI more in her place. Win-win. Asha will be gone in a few years with her job done and a cushy parachute, and Xbox will be a shadow of its former self. But that's not a failure; that's the goal.
By making big arguments to C-suite that were invested in the company’s direction. Same thing that happens in meetings where some dumbass says something like “we could build a cookie banner ourselves or pay Y company $12k/yr to run our cookie banner”. C-suite is full of these types of people that just make baseless arguments. Most management is not knowledgeable in their domain.
It is neither possible nor desirable to own every great independent studio. We have also learned that we are not the best home for every type of studio
Yes, but only because the bar is so low. "We can't commodotize innovation" is not an especially subtle insight, and pretty much everyone other than executives at companies like this understand it without having to spend billions to try it out.
They say that only after they buy up like half of the IP in the entire gaming industry without a plan and it doesn't end up being a fast enough money printer. Activisions back catalog is the result of hundreds of acquisitions and IP purchases.
It also means they must have started with the assumption that they were the best home for every type of studio, which, when you say it out loud, sounds very stupid.
Second, how can a studio be "independent" anymore when owned by MS? Doesn't make sense. It's all just corpo speak for "we fucked up but we're still getting paid to fire you".
also board and man. that approved all acq. got lots of 8-9 figure bonuses in total, so they say that after all TOC and years. They will never say these acq. made our man. teams and some board members great ROI and personal wealth, lmao. Corp. games are sometimes flat for corp and amazing for the groups that decide them.
Good read. A studio can be both good and not good enough for Microsoft. They’ve never made a secret of the fact that they are in it for huge numbers. A studio can do well and still make little enough that it’s a management headache for Microsoft.
But they've already spent the money. They spent about 70 billion on activision blizzard. That was and still is an outrageous amount of money that will take fever to break even let alone turn a profit.
Call of Duty absolutely prints money, fwiw. King are weird because they basically have been doing the same game in different skins for like 15 years now.
It does print money, but it is also extraordinarily expensive to keep the money-printer fed. Current estimates place the production + marketing costs of a Call of Duty north of a billion dollars.
At that kind of spend, it only really takes 1 or 2 botched releases to make the financial equation look a whole lot less rosy...
Just because they already spent the money yesterday, it does not follow that the best decision today is to just carry on as if was still the correct decision. Yes they cannot get that 70B back, but if they have to choose between:
1. a long dragged out distraction over decades trying to make it work
2. a painful but quick 40B write down and the ability to refocus the company on better projects tomorrow
.. then they are, quite rightly imo, going to pick #2. In fact I would assume this going to be the next announcment.
They can't afford to buy every other successful studio, which means that their anticompetitive moat has to be competitive. Otherwise, they could have made the whole thing profitable the usual Microsoft (monopolist) way.
Maybe Microsoft is spending so much on AI that it is being forced to re-evaluating short term strategy in other business areas as financial have changed.
So perhaps in long term all these studio's making exclusives and getting people hooked on the Game Pass at a short term low price would have worked if they had dominated market share over playstation. But AI Data Warehouse & Power Plants funding and taking large stakes in multiple AI companies has depleted the cash.
And harder to raise money now hype is clearing and expectations of what AI can actually deliver are lowering, as per OpenAI's struggle to IPO.
Reading this made me remember why I stopped playing my Xbox One: never-ending updates. I never played it very frequently so I disabled the sleep mode so it wouldn’t just stay on in my media cabinet heating my house. But of course that meant any time I spontaneously felt like using it there were 10 minutes of updates to download, so I would get annoyed and just do something else. Oh it can also play movies? Sorry movie night is ruined thanks to 30 minutes of downloading and installing updates. Eventually I just never turned it on again because all it did was download and install updates.
It really just killed all my interest in it because I couldn’t just turn it on and play a game unless I let it stay on all the time wasting energy and downloading constant updates in the background.
> Reading this made me remember why I stopped playing my Xbox One: never-ending updates.
My experience with Steam is very similar (I don't have it run on startup because I like my PC to do other things from playing games).
Online updates really have ruined gaming for a lot of people.
Just like vinyl, humans seem to prefer a physical "thing" they pick up - put in the machine - and instantly have access to the "thing". It's simple, predictable, fixable (generally) and swapable. The digital revolution is not what we had hoped for...
I've been replaying a lot of Gamecube (emulated) games recently and its kindof shocking just how quick you can get into the game.
From hitting run Run to first Player Input is seconds in most cases. No console bootup, no system updates, no game patches, no agreeing to game EULA version 5.129912342, no denying the game access to online content on every third screen, etc.
I'm sure its loading slightly faster emulated, but 90% of it is just not having the junk that has accumulated over the last 20 years.
Pretty much the Switch experience. It sometimes downloads updates, but system updates are like 10 seconds, and games are updated in the background seamlessly. I don't play Fortnite, but it's also always updated in the library.
Yes, if you don't keep it powered, it won't do that, but why wouldn't you if it just stays in the dock dark and quiet?
Nintendo finally implemented a modern update system that installs the new version in a new volume, reboots you into that volume, and deletes the old one once booted.
It's why it's so fast. The work happened before you pressed update.
Maybe I am being naive but doesn't that seem like a basic and effective approach that others should have been able to implement too? Why doesn't Xbox or Microsoft do it? Optimistically download updates so that if the user wants, it is ready to go. If low on space, sacrifice those cached updates because they can be downloaded again.
I had a Gamecube back in the day and I remember its optical drive was quite fast and loading times were short, but other machines were nowhere as fast, the PS1 and PS2 were notorious for long loading times.
It's a combination of two things that never should have been normalized:
- Steam forces game updates, even for single player games.
- terrible delta updates. Baldurs Gate 3 had 8 patches in 3 Years. That's 800GB of updates.
If a patch drops on the afternoon you planned with your friends, you're not playing that night (actually happened to us). Both decisions should have caused outcries, but I guess people would rather overpay for fast internet contracts.
I check for game and system updates on my Deck before and after a session and it just takes a few minutes at most. I get excited to read changelogs if a game has a big update. These updates are not automatic/forced if you don't want them to be, and for singleplayer stuff at least you can just go play the old version if you're in a hurry or have little to no Internet.
> I check for game and system updates on my Deck before and after a session and it just takes a few minutes at most.
Right, that makes sense if you have sessions often. But, the thread started with automatic updates being bad for occasional users because they either have to waste energy keeping the machine on all the time to get updates in the background or have their mood cooled when they want to play but are forced to wait 30 minutes for updates.
Personally, I use Steam often but even then I get annoyed at updates. If I quit Steam, I sometimes have to wait for it to download Steam updates. Sure, it's not 30 minutes, but they happen when I want to play. I keep Steam open on my always-on machine and it annoys me. There's a reason I run manual updates on my computer on Fridays... then I don't get interrupted. Apps that auto update suuuck if you value your time.
Steam update is FAST. Less than 10 seconds and their CDN saturates any pipe. And since it’s a PC you can do other things while waiting.
Xbox is a dedicated gaming device and while the game/device is updating I’ll have to sit there. Plus the updates for some reason slows down the longer it takes. They’ve lost my attention.
Video games, like all forms of art, are about stirring emotions. I don't own, nor have never owned an Xbox. But when I think of the device the first thing that comes to mind is "Microsoft" and "Windows". So I consider all the little beancounters and MBAs at Microsoft who are always optimizing for profit and that have made Windows nightmarish, and I imagine them with access to an "emotions machine" they can manipulate to make number go up, and can't help but think that the device is a pocket dimension of hell but more or less useless otherwise.
All said, in order for Microsoft to fix XBox, they will also need to fix the Windows desktop experience. Otherwise people will think "ouch, I don't want to buy a cousin of that creature. Better go for a Nintendo or Steam Deck or something..."
These days it’s probably all CI automated. So your Xbox updating probably means dependabot bumped some package automatically and it got built and deployed despite zero end user impact.
Same boat as you. It's wild that I can turn on the xbox, wait 20-30min for mandatory updates, then need to re-sign in or occasionally reset my wireless mac address due to some bug, then re-sign into my Xbox account even if I am fine playing offline but of course I forgot my password so now I'm on my phone doing 2FA to remember which email I used to reset the password.
Then I will need to update the game I want to play (somehow FIFA 23 still requires updates?), then re-sign in to EA whose password of course I also forgot so now I'm on my phone resetting my password for EA.
Now it's been 45minutes and I'm frustrated and realize I could have loaded up Steam or Switch and been playing this whole time. Not to mention that once the Xbox itself is working it will be running slower than the Nintendo Switch I own which is only about 2yr newer than it. just a bad system!
I legit got my old PlayStation 2 back up and running so I wouldn't deal with this. (sorry been needing to vent all this lmao)
My gaming machine is isolated and well protected through firewalls in and out. I don't store any sensitive information like payment information on them. Why can't I choose when to update them? Let me use my thread model to keep myself secure. Respect my time. Let me manually update when I want.
This is what drove me to get a PS5. My xbox one would have 30 minute updates nearly every single night, and it doesn't allow you to access anything on the internet unless you let it do the updates. It was always inevitably at 7 or 8pm, when I'm trying to wind down after a day of work and just watch a show or a movie or something. It was a constant interruption to my daily routine - I like my shows before bed.
And then sometime in the last year and a half or so it became nearly unusable, constant crashes, poor performance, it was just such a constant pain in my ass. Feels like Microsoft just don't give a shit.
I've had the same experience with my PS5. It wouldn't even let me play 007 First Light a few weeks ago because it needed to update the system. Starting to wonder if I should/could just keep it offline to stop it from updating incessantly.
It surprises me that there isn't simply an option to postpone the update for up to 12 hours until shutdown. I'd much rather let my system take 10 minutes to shutdown when I'm done than have to wait 10 minutes on startup before I can use it.
How often could they realistically have updates that seriously need to be installed ASAP? Especially if you're not even doing anything that requires going online.
> We will reduce management layers to no more than 5, and where possible, 3. We will deliver success through a flatter organization that is built around makers (individual contributors focused on building), player-coaches (leaders who remain deeply involved in the work while developing their teams), and directly responsible individuals (DRIs) who own key decisions and outcomes.
This does sound quite reasonable actually.
Also, I think I didn't read "AI" anywhere, which is refreshing.
The great thing about not making any money in a department is that all the money-hungry people flee the org, and people who are more invested in "doing things right" stick around. The bad news, of course, is that you're not making any money, which is bad for your long-term survival.
Game Pass has caused a lot of direct sales losses to game developers in favor of Microsoft trying to find a Netflix-like cash cow for itself. The numbers never added up, but it is not a surprise everyone nodded and went along with it. I wonder what the career repercussions would be for speaking up - but it doesn’t matter because they are getting fired anyway.
I was always very skeptical of the $300 million figure. It sounded like the same math that the movie industry used for pirating. If I was subscribed to Game Pass I might have downloaded CoD to see what it's about. That doesn't mean I would have paid full price for it.
> Last year, Bloomberg reported that Microsoft estimated it had lost $300 million in direct sales of Call of Duty games due to the title’s inclusion in Game Pass, according to an anonymous employee.
Yeah, that's a bullshit number. It's like when people provide piracy counts as lost direct sales, a lot of people will download something for free, those same people won't always pay full price if they can't download it for free.
I downloaded a TON of games from Game Pass, played <1hr, and uninstalled. Without GP I would have just never bought the game.
Gamepass devalued games in my opinion. If you “train” your user base to get used to not buy games they will. It also did not help they were almost giving Gamepass away for nothing. You could chain multiple offers and get like 3 years or more of the best tier for the price of less than 2 games.
They never had the user base to sustain so many studios making AAA games under a subscription model.
Game Pass' finances ignored the one true thing about streaming services: they weren't going after the people buying DVDs, they were going after the people paying for cable.
Cable subscribers did not exist in gaming, and so Game Pass is stuck stealing Xbox's own customers. It just doesn't add up.
> We will deliver success through a flatter organization that is built around makers (individual contributors focused on building), player-coaches (leaders who remain deeply involved in the work while developing their teams), and directly responsible individuals (DRIs) who own key decisions and outcomes.
This is the new trendy management style - a few executive owners and then everyone else are expendable ICs, with almost no movement opportunity upwards. Only those on the Peter Thiel list or the equivilent among your private equity owners will be considered for key executive positions.
Paying people less and replacing them with AI is the literal explicit strategy; I get that this was supposed to be a cynical comment but it's basically just factual.
Sounds like an awful model for making a game if I understand the model correctly . Forget tight-knit, multidisplinary teams. Everyone's just a special cog to switch in and out from project to project, and laid off when we need a little bit better of an earnings call. Add in micromanagers and directors who need to have their fingers and every project (instead of focusing on the individual needs of a team and game), and you truly embrace the Microslop.
I'm sceptical of Hacker New's fascination with all managers being worthless, but I don't follow your logic here.
Why is "lets have more people who do things" a move away from multidisplinary teams? Unless you count being a middle manager a valuable discipline in game making?
>Why is "lets have more people who do things" a move away from multidisplinary teams?
It's not even because all management is bad (I'm skeptical of management, but not necessarily a "flat hierarchy" guy). But this move here sounds like homogenization of development. Having managers that need to manage a dozen projects at once will mean that development will fall into one style. Having all your IC's potentially needing to be shuffled around in projects both ruins team cohesion (because you're not focused on one project) and drives the design to be towards specific types of games. Ditto for directors on projects.
I won't say it's an unprofitable means of management, but it sure is a way to suck all the creative juices out of the room. Because you're spending more time appeasing a committee who wants to feel like they are "doing something" than finding the fun. And then kicked out when the project is done, because a revolving door is more profitable than fostering a team who's proven they can ship a success.
This can be an uncharitable interpretation of that statement. But that's simply a foregone conclusion when you have a 13 year long track record of decisions that end up harming creatives at the end of the day.
The only benefit is, long-term, hopefulyy, the people ejected from this model can often end up forming their own indie teams and creating their own games.
Indie games are at an incredible place right now (I am aware it's crazy cut-throat, though). It would be nice to see what quality comes out in response to this disaster.
"I deal with the goddamn customers so the engineers don't have to. I have people skills, can't you understand that?? What the hell is wrong with you people!?"
Give me a break. How many times has an IC complained about all the management layers to get something done? You can't have it both ways -- plenty of upward mobility, but no layers to the org.
Not much to do with xbox unless their execs attends Thiels thing. Should be worried that Thiel doesn't believe we should have democracy and we should replace the government with tech CEO god kings instead.
You must not have ever worked for a company owned by one. The statement is not what I’ve heard, it’s what I’ve experienced, and it matches the experience of others in my large developer network.
It’s great for concentrating ownership and mass applying ruthless management tactics at scale, and for using IP as leverage to hollow out a company.
I think some of these game studios got so content with Microsoft constantly paying that they forgot to make games that would actually sell.
South of Midnight took 7 years to make and cost $100 million to make... yet sold hardly any copies and I'm not even sure who they were trying to make it for.
Meanwhile you have studios like Sandfall and Warhorse pumping out games on a fraction of the budget that ship millions (and imho, make better games).
Compulsion Games was also a strange acquisition / team to decide to put $100M + 7 years of trust into. They had two games by that point, neither with amazing reviews.
At least from what I saw the game had a huge amount of hype leading up to its launch and the thing that kept people from buying it was just playing enough of it on Game Pass. For some players it was too short and everything they wanted to accomplish was easily done with Game Pass shortly after its launch. For other players like me we bounced off of its tone while playing it. The stop motion animated intro felt like a bait and switch going into its game play, and I had a bunch of uncomfortable feelings about cultural appropriation from a Montreal studio trying to capture a "deep South bayou" aesthetic and failing at some of the subtleties, from what I saw.
> I think some of these game studios got so content with Microsoft constantly paying that they forgot to make games that would actually sell.
I mean, if you're assuming that Microsoft had a fully hands-off approach to managing these companies after buying them, then sure. It's not clear to me that you can make a compelling claim about whether the issues were from the bottom or the top just by looking at the final outputs.
Plus there's plenty of evidence that Microsoft hasn't been hands off across that time period. At the very least we've seen them cancel a Rare game and layoff a bunch of Rare staff because of it, The Initiative shut down for not meeting game development goals, 343 Industries stripped apart for low results versus expectations with Halo Infinite and the "new" Halo Studios is basically just a shell and an outsourcing venture in direct line with ActiVision's old Call of Duty tactics.
Microsoft's executives lacked time to be hands-on with every acquisition. They were very involved in the decision process at the big studios, and the favoured children, but left the smaller studios without enough input.
I agree; I mostly just didn't want to spend time trying to cite a bunch of evidence of the alternate interpretation when it seemed sufficient to point out that they didn't really provide enough to form a conclusion one way or another.
> We will deliver success through a flatter organization that is built around makers (individual contributors focused on building), player-coaches (leaders who remain deeply involved in the work while developing their teams), and directly responsible individuals (DRIs) who own key decisions and outcomes.
xbox-specific issues aside, this proposes an interesting view of the future of work.
I also notice the growing trend to have EM carry individual contributor duties, I thought it was mostly a consequence of using coding agents but perhaps it's not: the EM figure as we know might just be a consequence of the golden zirp times (do you remember the endless technical EM vs non-technical EM debates?)
I think non-technical EMs are fine, but they need to manage an appropriate headcount. I see EMs who manage 2-3 ICs and have no other responsibilities, those EMs need to either take on more ICs or start coding.
As someone who works in big tech with a partner at a similar big tech company _but with player coaches, DRIs, etc_ it is basically the same thing except messier.
Your manager who used to just focus on motivating and unblocking their people? Now they have to ship code too since they’re a player coaches! You’re a DRI who needs management to get your project unblocked? Too bad your player coach who has to ship code now also has 20 direct reports because the hierarchy was flattened so you can’t get time with them until next week and are blocked until at least then.
It is the hot new trend from the “thought leaders” who have all consistently copied each other’s bad ideas for the past 10 years.
> I've seen comments like "the MS layoffs weren't so bad".
> re: id software.
> Reports are that 50% (95ish of 200) of the studio was laid off. Here are some quotes on other details:
> “Tools, programming (except a couple), Quake Champions team, testing team. All gone.”
> “Yeah seems like all they left was leadership and art/design. I think Xbox forgot quakecon is next month.”
> It really does sound as if id is now a support team for Bethesda/others. Rip idTech, which was amazing. Maybe Machine Games will carry it on or maybe it will be dropped for future games?
> But the read is that id is essentially dead. At least for the time being. Yes, the studio wasn't closed and half still have their jobs. That's great.
> re: the studios set free by MS to be sold or mgmt returned. One view is this is great. For MS they get decent PR for being "good guys". But the truth is that in at least one case (and maybe others), retaining the IP in such a case was written into the original contract when MS purchased them. Second, these studios now are out of the MS lifeboat, on their own, and will have short time to find new deals or funding and they will make it or not. Never mind they sold to MS originally to avoid this grind and be 'safe'. Yes they have a second chance but more layoffs may simply be deferred and outside the current umbrella of today's layoff round, so MS doesn't really get the bad PR of simply shutting studios down. This means continual worry by the employees and stress for mgmt.
> re: Arkane. Same as the above but timing and process is different due to French labor laws, etc.
> The layoffs are still happening. A substantial portion of Obsidian was let go today (near 1/3). Worries that they now don't have the staff to complete current projects. Deep layoffs at Zenimax Online. Even Bethesda or Activision studios were hit (with a minor round and numbers that are small enough that it reads more like "everyone has to take a hit, even the star studios"). More details will emerge, but it's a lot of people.
> So it's bad. Real bad. Good luck to all affected.
Damn, not ID. Some of the best engineers in the industry and they are all nearly gone?
Not to mention the legacy. Some of those people may have been there for over 25 years, in times where the idea of programming for a dedicated GPU was cutting edge. Absolutely crazy how little respect the industry has for these golden geese.
Tim S. has this doohickey for Unreal where you tell the AI what game to make and it makes the game! Totally out soon and to be beloved by everyone around /s
Impacted non-studio dev here. It's a bloodbath like some of the leaks in the past few weeks have said. Many important platform/infra teams getting gutted, even in areas where there's supposedly a ton of future investment.
Microsoft, as always, has no taste. And they think they can MBA their way into making fun games.
The Xbox was my main gaming platform from around 2005 to 2018, and the experience got worse and worse as time went on. At this point in time, I really don't know why you would choose an Xbox over another console or just PC gaming.
They can try to "reset" but from the outside it just looks hopeless as long as Microsoft is involved.
I'll stick with Steam and Nintendo consoles. At least Nintendo still recognizes the importance of a fun gameplay loop, even if they struggle at other things like good online services.
They will just continue smash thru exactly what is killing them because they do not know how to reset. More micro transactions, Halo 14-39, games launching before they're ready, price increases, etc. All of that looks good on paper, so they will take no action against. The XBOX is hitting icebergs, and instead of slowing down, they will just call for more speed.
Microsoft laid off most of its Halo talent in a previous lay off cycle, stripping 343 Industries of most of its staff and rebooting it as Halo Studios as a shell to mostly outsource development to other companies in the way that Call of Duty was built on the game development equivalent of sweat shops. They've already shown that they don't have the guts to make Halo 14-39, they seem to be only doing yet another remake of Halos 1-3 and maybe Reach, this time in Unreal and with "AI" to help "upscale" everything. Just four Halo games endlessly remade until people forget why they were ever originally popular.
>They will just continue smash thru exactly what is killing them
Well, not exactly. Maybe partially, but definitely not entirely. They got a shit return on a lot of money they spent which drove down margins now they are cutting that. They lost 64 cents per 1 dollar invested so they are investing less.
Ha! The new boss of Xbox surely has innovative ideas! Layoffs, how nobody had thought about this before?
In every single case layoffs degrade the company’s core product. Unless they plan to completely change the XBox business (for example to one that sells hotdogs), this move will make XBox worse.
I agree with your sentiment, but not your conclusion. The new boss is being paid millions to explain that 14 layers of management is a bad idea... I'm sure there are thousands working in the xbox division that could have told you that one for free.
Can you share more information? I just looked at their Wikipedia entry and they spent 2018- basically doing acquisitions. What were they layoffs you were thinking of? It's hard to find historical data from 2016. And what's their new focus? It looks like they still have the same huge roster of apps.
Xbox has an interesting opportunity going forward, that I expect they'll fumble.
Interest in physical media has actually been on the upswing, and, with Sony announcing their plans to abandon physical media, it feels like MS has a chance be the "good guys" like what Sony did to MS when MS threatened to ruin physical media prior to the Xbox One release.
However, I'm expecting Microsoft to simply follow Sony's path, because I think they are already going down a path that favors digital-only, and I also think they just don't care to distinguish themselves. It seems like Xbox's claim to fame for the past few years is "It has game pass, and it can play a lot of the same games PlayStation can."
> Interest in physical media has actually been on the upswing, and, with Sony announcing their plans to abandon physical media, it feels like MS has a chance be the "good guys" like what Sony did to MS when MS threatened to ruin physical media prior to the l One release.
Not only that, but RAM/GPU/SSD prices going up so much recently (which is especially jarring for SSDs, which for like a decade had been getting more affordable; I bought a 120 GB SATA SSD in 2012 for around $100, and I was able to buy a 1 TB m.2 one for around the same price a few years ago) is starting to equalize pricing for PC gaming. In 2022, the initial Steam Deck launched for just $400, and it continued to be offered at that price for a few years, which made it cheaper than the Switch 2 launch price.
I feel like if I were a console manufacturer, I would be trying to figure out a way to take advantage of that. Other than price (previously), the other obvious selling point of PC gaming is more control over your system, so there could be an opening to try to lure away wayward PC gamers with some changes that give them a bit more control on the console. I agree with you that I can't really imagine Microsoft doing this though.
The problem with the physical media for today's consoles is that it is the game in name only. The version on the disc is quickly outdated by launch day patches, follow-up patches, add-on content, etc.
I do think there is a market for a return to an XBox 360 model where the tech behind the games is artificially constrained to allow for games to be published solely on DVDs again. No installation required, no patches required, smaller budgets, quicker release time lines. But Microsoft is not the company to pursue that approach
You know sorta feels to me like some new physical tech would be warranted here. Something with a good amount of storage, very quick I/O, and read/writable. More like a fancy thumb drive than a disk. Let the version on it be updated by the system to stay current, gain add on content, etc.
anyone who has the disk can download the patches and extra content. there is no way to block a specific copy or prevent transfers like with a digital purchase. the point of physical media is sharing and resale, not the piece of plastic sitting on your shelf.
i agree that mandatory downloads are a big problem (thats why willitplay is a thing) but offline installs from disk are the biggest change that made ps5 games load so much faster than ps4 and opened up a lot of new options for devs. reading data from ssd will always be faster than a blu ray. the only downside is you have to manage space a bit more but its worth it. if you want straight from disk get ready for slower uglier harder to develop games.
You’re certainly right, especially for the AAA games coming off the presses, but it’s not always true with certain indie games, especially if they’re doing a physical print run long after publishing.
You can occasionally get one where a very final version copies straight off a PS5 disc.
> I doubt that they will go back to where Sony are now.
I agree. However, I do think they would get some positive attention (and some accompanying sales) if they were to backtrack and announce a console more like the 360.
It feels doable if they care to do it. Physical media should still be viable for holding all the game data for a while longer. Blurays can manage up to 128 GB, and I think the average game install size is ~60GB right now, giving most games some room to grow.
The biggest issue with a strategy like that is that they're, like you said, pushing digital-only hard already, and they're also trying to save money, so the idea of spending more money to make future consoles with disk drives, and to make disks, is unlikely to appeal to them.
It is a shame, though, because it seems like the Xbox 360 will have been widely viewed as peak Xbox until the end of Xbox.
If you want to see it outside the context of tech forums, you can look up the industry reports and see the numbers yourself. There are some media types that are dropping, obviously, but there are multiple types of physical media that have seen notable growth recently.
Can't say I'm surprised. I can't see a reasonable path for Xbox to do anything but just stay alive other than as MS's overarching gaming brand.
Xbox is on the losing side of the consoles, with no distinguishing features to speak of. You buy a console to play games and for it to be convenient. Xbox is no more or less convenient than a Playstation, and what few exclusives there are left are on Sony's side of the fence. Game Pass, while good, isn't really making money. What more is there to Xbox then (beyond the studios and such, which aren't Xbox themselves)?
The people I know that like Xbox like Game Pass and Buy Once Play Anywhere. Xbox is the value proposition for people that want to play on Console + {PC/Handheld}.
> Xbox is the value proposition for people that want to play on Console + {PC/Handheld}
Okay. Then who is that? Most of the people who play games who I know are either A.) Console gamers who only use PCs for work, 2.) PC gamers who don't see the point in a console, or III.) The top 1% who just go where the games are and are willing to spend to get there, and that group isn't generally a fan of not actually owning their games, nor are they very price conscious (they don't like higher prices, but they'll drop 400 USD to buy a PS4 and Bloodborne, since that's the only way to play that game).
I'm yet to see someone using Game Pass on a handheld.
So if that's the intended market, no wonder it isn't doing too hot.
I can't see this happening without either Windows getting in the way, negating much of the advantage of a console (have a look at the Windows handhelds and how they're not selling and how they're not a great experience), or Microsoft swallowing a massive part of their pride. Valve started directing work towards Linux literally because of Microsoft trying to close down the Windows ecosystem,[1] and Valve wanted an escape route if Microsoft decided to actually do that.
MS crawling on their knees to Valve to get them to cooporate on something (and Valve saying yes!), or MS figuratively doing the same by undoing all the problems MS have made for themselves with Windows and making a decent 10-foot UI so you'd actually want to use Steam on your Xbox, both seem incredibly unlikely.
Not to mention that this is more or less just admitting defeat for MS, leaving every single penny of profit in PC and Xbox gaming to Valve, other than what's directly tied to the hardware, which isn't where any of the profit actually lies.
They immediately benefit from cutting things that hemorrhage money. The consumer's opinion can worsen and it's still a good move. When you lose 64 cents for every dollar invested you can simply stop spending - it's that simple.
That messaging is for investors. To a dev's ears, it's a meaningless thing to say.
It reminds me when Elon took over twitter and made a comment to the effect of "we need to rethink the entire tech stack from the ground up". Someone asked Elon what was wrong with the tech stack, and he called them a jackass.
My experience has always been that the more you're trying to do, the messier the codebase is.
But that to clean up a codebase requires even more people.
So, at first blush, it looks like "more people = more problems," but if you actually give yourself some breathing room, the code can get cleaner with effort.
This likely represents increased freedom and faster decision making for Mojang and King.
Moving up the org reporting chain lets you do more, because you have fewer people to convince.
It’s not as good as being fully independent, but that will never be an option for Minecraft again. Actually being spun off might even be worse, because any new owner will be even more fixated on just the numbers.
They depict how Microsoft bought double fine at the end of the psychonauts 2 documentary. If you watch the documentary it's hard not to think it may not have been a genius financial decision.
I feel like the way Asha talks about Xbox owning game studios could also be applied to Microsoft Xbox. Pc gaming and console gaming has never been closer. Is it advantageous to own two essentially competing platforms?
Is console gaming really a core pillar for Microsoft? Should they kill Xbox, fall back to the (I imagine) hyper profitable platforms of Mojang and King, and focus on making windows gaming as good as it can be, which I think would tie in with the overall improving windows strategy.
They aren’t Sony, they aren’t Nintendo, they aren’t Steam, and I feel like the only unique thing they have is the Windows + PC gaming (that Valve are working hard to erode). If they have any chance of making a viable platform, for me, it needs to be in this space.
This reads like corporate death rattle. Microsoft never had any clue what it takes to make a console - a console. Now it seems they've also completely lost the plot on what makes a business - a business. They should've been Steam, instead they ran out of it.
> We will deliver success through a flatter organization that is built around makers (individual contributors focused on building), player-coaches (leaders who remain deeply involved in the work while developing their teams), and directly responsible individuals (DRIs) who own key decisions and outcomes
Fascinating. The death of management is happening all throughout software.
What's fascinating to me are the Valve comparables here.
<500 employees vs 18k at Xbox
17B ARR vs 20B ARR
At the end of the day there are two strong differences here. Valve has always been lead by people who were game devs, and have always conveyed a message that the gaming experience matters most. Xbox was led by Phil Spencer, who at least was known as being an avid gamer, but in his tenure pushed for things like xbox game pass to drive continual revenue and windows integrations that affected performance of games. Now it's being led by an industry outsider.
It boils down to trust in the end, and willingness to place profit over brand. If you look at the responses to this in r/xbox or other communities, it's overwhelmingly a stance of zero surprise. Xbox has always placed the business first, and this is the natural end of that mission - you get a bloated org with a platform that people don't end up trusting.
I do think resetting is the correct thing to do; there's no reason for Xbox to have 10k+ employees. Still it's another black mark against the brand. Also look at the framing of this message - it's about how their structure has affected the business. In this entire 47 sentence post, there is a single sentence that talks about the affect on the players:
> That complexity has slowed decisions, blurred accountability, and made it harder to deliver for players.
It says a lot when the players are the secondary consideration.
A non-trivial amount of their ARR is still from Valve-made games. Counterstrike still nets a bit over 1b per year from just case unboxings, and Dota is in the hundreds of millions. I wouldn't call 8-10% a margin of error.
While it can be disregarded just as major update CS2 is formally 2023.
Dota is live service game, getting major patches each year. Patch notes for version released 3 months ago: https://liquipedia.net/dota2/Version_7.41
I don't think there's any reason for Dota 3, ever. Any change could be just a patch.
As an occasional gamer I hate modern big budget games as it takes me 15minutes to get gaming between launcher, updates, loaders and other distractions. It then takes me another 15minutes to get back to speed on which mission I was working on. By then I have 30 minutes left to game. Due to this, I frequently pick up older snackable games and skip AAA games altogether.
It becomes a problem for consumers when Xbox lays off large numbers of employees and closes studios, leading to fewer games and poorer support for them.
The velocity up or down of { the rate of growth of profit } is the profit-linked factor that drives stock prices go up or down. Not the simple velocity of profits. The market demands corporations compete with cumulative interest to increase share prices, and that’s never a sustainable path.
Ah wow of course, I think you just made something click for me.
It's strange how we take interest on cash as a law of nature, when the original intention might have been nothing more than compensation for the risk the lender was taking on.
Now the risk (on bank deposits, govt bonds etc at least) has effectively been removed so the interest rate is the baseline expectation.
So compound interest is underpinning the infinite growth forever delusion...
Yeah, modern stock-market capitalism is, at its core, the layering of a 'second derivative' layer — growth in rate of growth of profit year-over-year — on top of the 'first derivative' — growth in profit year-over-year — that most non-financiers consider it to be. If you've read/seen "The Big Short" it helps immensely to consider how the layering of bets, tranches, and insurance is not the first time the financial industry has implemented widespread layering, it's just the first widely recognized time they've done so.
This is also why the market tolerates destructive private equity firms: their sole purpose is to create growth in the second derivate; that they 'pull up the ladder behind them', so to speak, by killing the business and terminating investment gains for investors in the first-derivative tier (market stockholders) and zeroth-derivative tier (capital investors), and that they kill great products in a market so that buyers are forced to buy shitty products, are recursively beneficial to more efficient cycles of vampirism.
Xbox is a sideshow at Microsoft at this point--and arguably has been one for a very long time. Yes, it brings in non-trivial revenue but not a lot of profit. I don't really expect that you'll see new Xbox-related development in a few years.
On one hand, the idea of using Microsoft’s crazy amounts of money to try to build a subscription gaming business feels like it should have been more successful than it has been. On the other, I think gaming has some distinct qualities vs TV/Movies/Music or other types of software that makes the idea seem way less appealing. Curious to see what the new direction looks like
For that kind of announcement, I found it surprisingly open and detailed (at least if everything in there is true).
Still, some points are telling.
> Our business today is not healthy. We are operating at margins that are 3-10x lower than comparable platform and publishing businesses.
So the layoffs are not because they're operating at a loss and had to cut costs urgently. The margins are there, they aren't even thin, they're just not thick enough...
> In addition, Mojang and King will now report directly to me. These two studios have increasingly become platforms and are our largest by monthly active players. They bring critical geographic, demographic, and differentiation to XBOX.
Was a bit surprised that Minecraft got such a special status, but not at all surprised by King. All the studios getting nerfed, except the engagement maximizing mobile games...
Minecraft is an enormous game and the success of the movie among Gen Z/Alpha (a demographic that is fading from the silver screen) shows the potential of a multimedia franchise. It was by far their best purchase (and in some ways runs counter to the idea that "Not every studio fits with us".
But yeah, on the other end: 15 year old Skinner box experiment continues to Skinner box and remind us that war truly never changes.
> It is neither possible nor desirable to own every great independent studio.
The sheer hubris. Yes, the monopoly is not desirable for gamers because the games end up all being the same MS-dictated corporate crap. Microsoft imploding is good for everybody in the long run and we can't wait for that day.
Of course we have to see how it plays out in reality, but giving back all IP and a runway to complete planned games to game studios as they are "released" from Microsoft is a really nice gesture, not just for the studios but also for the fans.
Most companies would just shut it down and keep the IP.
In this economy, if you're playing catchup to competitors you really can't have growth AND large profit margins. Why is that not obvious?
XBOX brought in 5 billion, and after all development costs, marketing, operating expenses, investment in research, etc., they are STILL left with 200 million dollars.
What's the problem here? Shareholder value? (as in the mythical/speculative value of MSFT, because OF COURSE they don't want/care for part of the profits/dividends)
If the money being invested in research has a good return - i.e. a great product/service is created - then you will grow.
Chopping down the employees here is a horrible move. Besides crashing employee morale into the ground, losing hard-to-replace developers/staff, it also generally gives off shitty vibes to consumers.
People will think why invest more into a failing entity? I can see people worried about the future of their "purchases" (if you can call them that these days).
This announcement so soon after XBOX had to start yelling "we are not shutting down" from the roof tops doesn't look good.
Don't know if it is just me, but seems like a weird thing to read on their official website. I could see it as an email sent out in crisis and maybe it would get leaked, but putting it up there yourself? I mean it has "Our business today is not healthy", "we have 14 management layers" and such. To me this comes across as a manager's "See mee, see me, I want the whole world to see me" more than actually trying to fix a problem
Any details about the studio spin-outs? The rumors were that Double Fine etc. would be closed, but all we know now is that some of them are being sold to management and others are being sold to other investors. Nothing about any commensurate restructurings.
> Compulsion Games and Double Fine Productions will return to management and transition to independent studios with their IP, catalog, and runway for their next games. Ninja Theory and Undead Labs have entered terms to join new ownership with funding to complete and grow Senua and State of Decay 3. In France, Arkane’s management is beginning required consultation with its Works Council to review potential strategic options.
Yeah, that is what I was referring to about the lack of detail on restructuring. I want to know if people are losing their jobs and/or titles are being cancelled as part of these sales.
Senua and State of Decay 3 are the only currently announced titles of the studios in question and it does say that those games will be completed by their studios under their new owner. It's still an interesting mystery who the new owner will be, though.
The hardware side doesn’t make sense as much anymore. I mean if we have these massive cloud datacenters for AI and people can’t even have disc copies then why
I think now a console like the Ouya could really be successful, I find when they tried this 10 years ago it was the worst moment possible as game hardware was cheap and competition strong. Now with the AI boom eating all hardware capacity and indie game development going up like crazy it seems like a perfect moment to build a new hardware platform on affordable last gen hardware that runs indie titles.
I want XBOX to be one of the few companies that entertains more than a billion people each day
"more than a billion"? What are we doing here? Do you have any idea what your target market is? Surely someone in your organization can provide you with a good stretch goal ... >10% of all humans using an XBox daily is not that.
Seriously, I cannot fathom why you would say this. Innumeracy? Narcissistic delusion? Stealth launch for a new industrial human cloning project?
You need the right products and services. If you know what those are, then you need employees to build them. Until you figure out what those are, you are (sadly) better off with fewer people.
Yeah this lightweight startup could really use some guidance on how to make products with global reach it's a pity they don't have any experience with that.
If I am unable to play Minecraft any longer because I have to buy a shit ass XBOX, I will never buy another piece of software (or hardware) from them. My $5 in 2009 came with a guarantee I would have access (and free updates) to Minecraft forever. Microsoft not honoring that agreement, which they said they would, is a step too far. I already signed up for a shit ass Microsoft account to keep access, and I said to myself that was the last hoop I would jump through.
> Microsoft not honoring that agreement, which they said they would, is a step too far.
They already took that step too far - they broke ToS and closed all MC accounts that weren't linked to a MS account within the timeframe.
I'm obviously not saying I'd like them to make everything an Xbox exclusive, but it's the only play that makes sense after throwing $75B to buy Activision.
I've got an original xbox, a PS2 and a PS1 all softmodded or mod-chipped with all the games I could never afford 20-25 years ago. I even have wireless controllers. I never worry about the console being connected to the Internet or maintaining a subscription.
This is purely greed on Microsoft's point. They absolutely have a profitable business with some great games, and they are sad that their management decisions led to this outcome.
But it's the rank and file who will pay the price for these poor management decisions. Like it always is.
To hear that the new boss wants to increase capitalization on Minecraft, to make it more like a Roblox, is horrifying and truly goes to show Xbox has leadership with near zero understanding of what they have or how to run it.
I wish good landings for all those affected, I hope for the best for all the studios whose future is uncertain now.
Their margins are 3% and they lost 64 cents per 1 dollar invested. It's just the reality-facing move. Everything you want from XBOX becomes more possible (not necessarily likely, but possible) when they stop lighting money on fire.
GamePass has awful choices of game, save or one two. Nobody wants to pay $35 a month for games (that sporadically disappear) which can be purchased outright at full retail price for $70.
I mean, no one except the 30 million or so people who are paying for it. I'm quite happy with the GamePass selection, and I consider it an excellent value for me.
there is only so much attention/time human beings have
games are competing with netflix competing with tiktok competing with sleep
Johnny Mnemonic: Yeah, the Black Shakes. What causes it?
Spider: What causes it?
[points to various pieces of equipment throughout the room]
Spider: This causes it! This causes it! This causes it! Information overload! All the electronics around you poisoning the airwaves. Technological fucking civilization. But we still have all this shit, because we can't live without it. Let me do my work.
Honestly, they could try building an interface that doesn’t suck. I have no idea why Valve seems to be the only one doing this.
I’ve found a lot of things just from browsing the Steam store page. I don’t think I’ve ever done this with any of the others, console or otherwise. They are painful to use.
The manager ratio still sounds too high even after the changes as well. Too many managers can really slow down and demoralize a creative workplace.
I think the Xbox Series X will be my last Xbox after owning Xbox, Xbox 360, Xbox One, and the Xbox Series X. I was all-in on their platform and I even paid for Game Pass for many years.
But they kept increasing the cost of Game Pass with no new features, the platform has seemed stagnant, and honestly I can't tell you why my Series X is better than my Xbox One. Literally I don't see a difference. I'm sure there is one but as a user I really didn't feel like it was a big step up. I bought it because I had every other Xbox and it seemed like the next logical step.
That coupled with most games feeling like lootboxes wrapped in just enough of a game to justify calling it one, at higher and higher price points, all while trying to get more money after they've taken your $70/$80 for the base game. Oh wait, you bought the poor-person $70 version? You really need to the Ultra Collectors Edition Gold Special Release Version for $120. Oh also, make sure you are buying the season pass...
Meanwhile I buy games on my steam deck and/or from indie developers for a max of $30 and get way more gameplay/fun that the "AAA" games (which have largely sucked IMHO).
I'm over here playing Mass Effect 1-3, Skyrim, Fallout 4, and other games OVER A DECADE AGO. They are the only games not completely ruined by lootboxes, always-online BS, or trying to sell you a shell of a game with extras you have to buy [0]. I was excited for Starfield (Skyrim in space!!) but it was a complete bust. After spending, quite literally, 1000's of hours in Skyrim (and buying and rebuying the Anniversary/Special/Collector's edition enough times to be embarrassing) I could not get excited about Starfield and stopped playing after a few hours. The new Halo was meh, I played through it and the open world was somewhat cool but I guess they wanted to do seasons of new content and I have zero interest in that. Give me a solid single player game, that's all I want. I cancelled Game Pass after realizing I was paying an absurd amount of money to play a single game (Deep Rock Galactic).
I think I'll stick to my Steam Deck which I enjoy way more than my Series X.
[0] Yes, Skyrim/Fallout had expansion content but it's tame compared to most games today.
I cancelled Game Pass when the recent price hikes quit.
Then realised just how few games I'd actually bought this generation. Game Pass was a mistake, or at least putting big AAA releases on there on day one was.
I think I've bought like 1-2 games this whole generation and even with Game Pass I might have bought 1-2 more max. Yes, I dabbled in a handful of games but never more than a hour or two before I lost interest (and I never had the interest to pay $60 for it).
Mostly I was playing indie/older games that could have been playing on the Xbox One.
The crazy thing about Xbox games, or any game today, is that they require infrastructure, they require maintenance and subscriptions, and they require a constant release cycle, and moreover, a thriving community of humans who are playing the same exact game at the same exact real time as others. It seems like the primary lost art of gaming is single-player, offline, solitary modes.
Anyone could literally pick up an Atari 2600 from 1977, plug in a cartridge from 1978, plug it into a TV from 1981, and play the same exact video games with no problems. Now who will be playing the same Xbox games in the year 2076?
Yes, this is part of why I lost interest in video games (probably mostly just getting older if I'm honest).
However at the risk of sounding basic, RDR2 (2018) and Cyberpunk (~2022, once they fixed all the bugs) are both really good single player games that are a lot more fun to play than anything from 1980.
> I’ve made the difficult decision to reduce our team by approximately 3,200 ... This will include approximately 1,600 role eliminations today
> we are establishing a Chief Operating Officer with end-to-end P&L responsibility across content, hardware, platform, and services. Helen Chiang has been promoted to this role and will report directly to me
Seems tone deaf to do both of these messages at the same time.
Go back in history, why did Microsoft create xbox at all?
It was Bill Gates fear of being overtaken by some "living room PC" or set top box that never materialized. It was an industry wild goose chase basically, with echos of past efforts (remember Philips CD-i ?)
Is this a concern Microsoft has today? xbox was a money sink from the beginning.
The sad part is they bought a bunch of very good game studios.
The writing was on the wall for Windows two decades ago; I am more impressed they dragged it out this long.
It was probably decisions around 2010 in the lead up to the Xbox One that have now eventually killed them.
They don't realized that it is their business decisions that ruined the experience of the console gaming and they probably still double down on that.
Before, you would buy and play a console to be able to play in a minute, eventually with buddy around. Playing time duration was a key metric in game reviews.
Now, as they want to milk us the maximum it is a nightmare, game are mandatory online, you wait minutes and even dozen of minutes to be able to play like 3 minutes rounds, you are constantly nagged with restrictions, hours updates in the middle of game that prevents you to play, they force you to subscribe, register, give up on your data and all, consent screens everywhere, upsell barriers everywhere, and little opportunity to play with your friends...
So, after a few months, everyone will lose interest in buying games and even play. It's not fun, lot of lost time and frustration.
> Today, in some parts of the company, work passes through as many as 14 layers of management.
> We will reduce management layers to no more than 5, and where possible, 3
I don’t understand why they need to make a big announcement when what they’re doing is cutting the stupid management structure. Everybody hates cuts, except those that cut middle management.
They should have titled this “xbox cuts middle management:
Less burocracy, faster delivery, more original games, more money for everyone involved, yay!”
My son setup Gamepass a few years ago. It was the biggest rip off I've ever seen. So many things about Microsoft are out of kilter. I'm about to migrate my daughter away from a 3 year old Lenovo Yoga to a Macbook Air M5 - it's just too hard to administer, its now sluggish and the AI is completely in the way. She doesn't need it, and despite a few business practices of Apple I don't really like if I have to choose between them and Microsoft, then I choose Apple.
I was not like this as a teenager. I went through DOS, Windows 3.1x, Window 95, Windows 98, Windows 2000/XP and then all the way to Windows 7. I have completely changed my mind now, it's really only Apple I want to use. Everything about Apple is easier.
Microsoft just never sorted out their exclusivity problem, tried to acquire their way to it, only to then be stymied by regulators, all the while having second-best hardware compared to the PS5.
Unfortunately, the 14 layers of management are also responsible for deciding how the 14 layers will get cut. It's likely that all or most all of the middle management will survive but the ICs doing the real work will be the ones that take the hit.
I saw the same thing happen at Amazon. They claimed to be reducing layers of management in 2024/25, yet all that happened was a shuffling of the boxes on the org chart a bit and cuts to the ICs. Managers that had too many reports were forced to give some up for managers with too few, but most managers stayed in place.
"Today, in some parts of the company, work passes through as many as 14 layers of management. Our platform teams are 40% larger than they were at the start of this generation, even as our player base and playtime have declined. "
This feels less like an AI story and more like a "subscription strategy met reality" story. Xbox spent years buying studios and subsidizing Game Pass to chase a Netflix-for-games future. When subscriber growth slowed, the economics stopped working. The layoffs are unfortunate, but they seem more like the consequence of executive-level strategic bets than anything individual studios or developers did. It's a reminder that distribution models are often much harder to reinvent than they look on paper.
It’s wild that we’re still unraveling the effects of COVID-19. It really feels like every video game exec convinced themselves the pandemic boom was permanent, and that we were all going to be stuck at home forever playing games.
as a player this feels like the confirmation of what we suspect since years, the gamepass math never closed. the sad part is the 3200 people paying the price for decisions they never took
This is a total mess IMHO.
- The make around 5 billion in revenue per quarter - The problem according to them is profit margin - around 150-160 million
So first of all, they are big! Secondly they are not at a loss. They just have a "thin, non-growing margin". So to fix all this they are trimming down, so they can "return to growth" (which I think is ridiculous).
Some points -
- They are huge business even now - 5 billion per quarter revenue is no joke
- They did not have to buy all those studios
- They looked at Netflix, and wanted the sweet monthly subscription cash stream
- Then they did not have to give away popular games day one on Game Pass
- And finally, they did not have to raise Game Pass prices to improve the profit margins. Of course, consumers pulled out.
- Once again, short term vision, crazy decisions, bad spending spree and a constant need to "make numbers go up" and who has to pay for all this?
150M at 5B revenue is not great: that's 3% margin!
The bigger issue is that console manufacturer revenue is highly cyclical. This is hard to see in e.g. Xbox and Sony since they are both part of a larger conglomerate, but really obvious for nintendo.
You generally have a cycle of - "Launch": high marketing costs, low/negative HW margins - "Mid-cycle": lowering manufacturing costs, large game sales, high margin DLCs - "end-of-cycle": falling HW sales, fewer exclusives (-> preparation for next gen), fewer consumers (-> waiting for next gen). Here you usually have maximum profits since you don't subsidize HW and marketing is minimal (platforms are already locked in)
Generally you have to establish a big userbase during the mid-cycle such that you can levarage it during the late-cycle to be able to afford next-gen. Xbox has the big issue that their mid-cycle was catastrophic, which means they now don't have the console base to get into the next generation: If they have 3% margin _right now_ in the end-of-cycle where marketing and development costs are at their lowest, this does not bode well for the overall health of the business.
>150M at 5B revenue is not great: that's 3% margin!
Oy vey maybe this kind of money grubbery is not good for our society.
> Oy vey maybe this kind of money grubbery is not good for our society.
No, it's a signal from the market that the product being sold is not wanted by the market.
They've mismanaged all their IP pursuing that yummy subscription revenue. Turns out gamers really don't like to buy subscriptions. As a poster downthread pointed out, the games that are not always-on and subscription-based are doing fine. It's the recent AAA model of subscription that is bleeding money.
Oh yeah I forgot 5 BILLION dollar in revenue is a signal that the market does not want your product
> Oh yeah I forgot 5 BILLION dollar in revenue is a signal that the market does not want your product
Doesn't matter how big the revenue is if the market is not interested at the price you are selling.
I mean, by your logic, if I sell a dollar for 64c, and do $5b revenue, that's an indication that the market does indeed want the product, but not an indication that the market wants the product at the price you need to sell at to stay in business.
They are not selling at a loss though. The real issue here is that businesses such as Microsoft do not exist to serve a market or make enough money to survive and pay their employees. They exist to increase the value of their owner's shares. This is predicated on an unsustainable model of continual growth, with the expectation that every market they operate in can produce high margins and endless expansion. But demand is not infinite and persistent high margins are the exception, not the norm.
Maybe it isn't a loss, but as an investor (never directly in them), I consider 3% profit margin a bad sign - at that return I'd prefer a savings account: FDIC insurance means that after accounting for risks the savings account is better. I know stock returns don't directly track profit margin, but that is one input into the complex consideration of stocks.
You are right, and this is why not everything should be a stock. Whatever they will cut to avoid emitting "a bad sign", may involve:
* firing people * making services worse * sacrificing their own future
Whether it actually does involve those things is effectively arbitrary, because the consideration of the "bad sign" is also arbitrary. If there is no objective value judgement of their operation there is no objective value judgement in their streamlining either, so all bets are off.
no percentage no good
"complex consideration"
Overall they are not selling at a loss, but parts of what they're selling are being sold at a loss. The market is telling them to slim the f- down and get rid of those money-losing parts.
This is all normal and justifiable. Where is the logic that corporations need to preserve dysfunctional parts of their operations?
Corporations don’t need to, no. But they are systems, and it’s a beginner mistake to assume changing one part is going to affect the whole in some simple, predictable, logical way.
That sounds like an extremely lame excuse to preserve money losing activities.
I'll counter by saying that pruning off failing things is not only good, it's the core of capitalism. Creative destruction, as Schumpeter called it. You get efficiency by hunting down and eliminating inefficiency, redeploying the resources elsewhere.
> pruning off failing things is not only good, it's the core of capitalism
It's quite serious that you see "being good" as something inferior to "the core of capitalism".
Also, the core of capitalism is making money for private individuals, nothing more, nothing less. Whether that's done with or without "failing things", is really beside the point.
> You get efficiency by hunting down and eliminating inefficiency, redeploying the resources elsewhere
Plants do this. What’s it got to do with capitalism?
No? By that logic you sell a dollar for 103c and that's not enough to quench your greed.
Obviously both statements are gross oversimplifications. But I could not help myself and let that slide just like that.
Just to add to your comment, people do sell dollars for $1.07, they are called mortgages. I've heard it's a pretty big business.
What they do is they sell a dollar for 1.07$ future dollars (and, realistically, less than that because of defaults but whatever).
It's a lot more than $1.07 future money, a mortgage is more like $2 or these days $5
If you're offering even 25 year 75% LTV mortgages at such a low interest rate it's $1.07 future money you're going bankrupt. And these days people are taking 30 year, 95% LTV or even asking for 40 year 100% LTV which is fully batshit.
Why is it that every person who tries to make these dumb arguments in favor of destructive capitalistic greed always attempts to make it look like the multi-billion dollar profitable business is somehow self-sacrificing or a force of good? "If I sell a dollar for 64 cents!", yea, as if that's even close to what's happening.
> No, it's a signal from the market that the product being sold is not wanted by the market.
to me, it is really a signal that the cost of production is high - ala, they're inefficient, rather than the market not wanting the product.
It ultimately depends on what sort of Skinnerbox you're running tbh.
Players purchased roughly $6.8 billion worth of the Roblox in-game currency Robux in 2025, a massive 55% year-over-year increase.
What's not to understand that when you're having to spend 4.85B in order to get 5B in revenue makes your business quite risky. You want to be operating on larger margins than that
Pretty normal margin in some kinds of businesses, like supermarkets. Then again, supermarkets aren’t likely to see all their customers leave at the drop of a hat.
The scale is also very different. Costco earned $70.53 billion in a recent quarter (not 5B here). Their operating margin is 3.93%, which is also healthier.
Yes very different business models. Supermarkets have the benefits of frequent repeat customers
The awareness of a poor return on investment is a good thing for society. We want to do more with fewer resources.
Making terrible decisions, such as investing in distractions for your company and consumers, and then letting your workforce pay the tab.. is the thing that is not great for society.
>We want to do more with fewer resources.
Who is the "we" here? Because the profit margin not being high enough is certainly not a problem for consumers. The only people who should care about that are the company's shareholders and "shareholders" certainly isn't synonymous with "society".
Of course it is a problem for consumers if it bankrupts the company. Healthy company is better than no company. And I mean healthy, not greedy.
It's pretty difficult to go bankrupt turning a profit.
Making a thin 3% profit that can go negative when the wind blows
Making crazy changes like squeezing out every last dollar out of your existing, loyal customers (looking at any PE firm ever) certainly affects the wind I'd wager.
Absolutely, and plenty of companies have made that mistake.
But the point is locking up money in a 3% margin business doesn’t impress investors.
So you either need to improve the margin with lower costs or higher price (or both). Or bail from the market entirely and put your money in something that makes more money.
What makes more money? The investment is all in AI because TINA - There Is No Alternative. There's too much money in the system to cover all reasonable investments, so it fills up all reasonable investments and many unreasonable ones too.
Making less doesn't equal to going bankrupt.
It absolutely became a problem for consumers.
Is a low profit margin a problem for consumers or is it the company's "money grubbery" of not being satisfied with that profit margin that is causing the problem?
When XBOX fires a bunch of people and shutters studios leading to fewer games with worse support, that's a problem for consumers.
I think people often forget that in a society we rely on companies making and serving things. They make our food and our medicine and build our homes and make our games. It's a good thing when their finances are healthy. It's a bad thing when they form monopolies and rent-seek.
Once again, what is the actual problem here? The company was making a profit at their current employment level. They are laying people off and shuttering studios because that profit isn't enough for them. This entire argument keeps coming back to "money grubbery".
Would you accept 3% return on your money, especially if the investment was risky?
How is making more and more every fiscal year "healthy"?
This is madness and it doesn't make any sense besides the one case where you pursue a monopoly.
All of this has nothing to do with the consumer of the product besides the fact that he'll get a worse and worse product while simultaneously being forced to pay more and more. Enshitification is aresult of this "healthy" business culture.
I agree. The numbers need to go up every year without thinking about the health of the economy, and the Average Joe is delusional.
Our society has a finite capacity to do projects and to run industrial processes. We want that finite capacity to provide as much quality of life as possible (and as much expansion of our capacity to do projects and run processes as possible), and achieving that is a thorny intellectual problem, which for many centuries in our society has been solved mostly by lawyers and judges knowledgeable about corporate law, stock markets, corporate managers, accountants and investors. This entire ecosystem is predicated on the assumption that investor will try to maximize their return of investment, which is strongly correlated with profit margin.
I think a lot of people in the gaming community would agree that Microsoft has ruined, or hindered (instead of helping) many studios they bought.
The mistake isn't shutting stuff down, it was overpaying for the stuff in the first place. This most recent action is unwinding the earlier mistake.
One of those terrible decisions was probably hiring too many developers, how do you suggest they fix that issue, besides changing leadership?
Many of those developers may not have the job elsewhere, or job paying much less. They now have the experience working in a proper software engineering environment.
3% is lower than buying US Treasury bonds? Effectively zero risk zero effort return vs running a business.
https://home.treasury.gov/resource-center/data-chart-center/...
5B revenue is not the same as 5B in the bank collecting interest.
Indeed, I had a brain fart. Thank you.
But doesn't that make situation even worse? They likely would be 100B+ market cap/total asset value if spun off into independent company, but not able to generate even 1B in annual profit? Activision Blizzard managed 1.5B income/20% margin by themselves before being bought by Xbox -- and somehow whole of Xbox now earns less?
Blizzard managed to so thoroughly destroy itself that I'm not sure the comparison is fair. It's a ghost of what it once was in gaming.
It didn't destroy itself, it was intentionally harvested and the husk was sold to the highest bidder. The original leadership is long gone, the shareholders got their money back long ago, and the staff has turned over significantly. The Blizzard of yore is long gone, and that's ok.
Margins that low are dangerous because businesses can often see year to year margin variance higher than that.
So? Why is it impossible for businesses to do long-term accounting?
> Why is it impossible for businesses to do long-term accounting?
3% is pretty close to 0% which is very close to -1%. Think of it as a 3% margin for error.
They have been doing long term accounting, and that's why they're resetting their business
Many reasons:
- Investors bail - You run out of cash
Not exactly - stocks are already sold, you don't run out of cash from the stock price going down. You only run out of cash if you want to sell more stock to raise more cash (this happens, but it is somewhat rare).
However the owners are still going to be mad because their cash is down and they will demand changes to fix that.
I would be afraid that the size of the revenue versus the margin would make small fluctuations in revenue create large fluctuations in margin.
Our society uses return on investment (which is correlated with profit margin) to decide what projects and what processes our society's workers will focus on.
So for example, if I can make twice as much money as a software developer as I can as a musician, that is strong evidence that my doing the former kind of work will benefit society about twice as much as my doing the latter kind of work.
I disagree. "Benefit society" means something that can't be defined or tracked so easily. And consumer behavior is heavily biased by things that aren't optimized to benefit society. I have in mind this book, Hooked by Nir Eyal: https://www.nirandfar.com/hooked/
We should try our best to improve our society. Sometimes that will mean doing things that are economically inefficient. Your example of Stanford professor Nir Eyal is an excellent illustration: by advising corporate managers and product designers how to fulfill their role in our economic system more efficiently, Nir Eyal made our society worse.
We should expect more from our elite professors. Nir Eyal should've known better than to make a career out of studying how deliberately to addict users. But we should also expect our professors, politicians and policymakers to understand the basics of our economic system and to understand when a proposed change to our society sounds good or feels good, but has severe adverse effects on economic efficiency that outweigh the societal benefits. Those aren't the only proposed changes we should avoid, but they form an important class of them.
is it somehow lost on you that you're commenting on a vc's website
> "Mid-cycle": lowering manufacturing costs,
That was true historically but is no longer the case. Even last gen manufacturing costs didn't go down as much as they used to. This current gen they actually increased multiple times.
And they have hiked the prices of the current gen very late in the cycle to reflect component costs.
The cheapest xbox should cost 129. Instead it is $399. That is how consoles work. It gets cheaper, the back catalog grows and now you have a mass market item that ideally could source games from anywhere.
Consoles losing physical media and not allowing 3rd party app stores, or gasp, the ability to run user programs is going to kill the consoles. Expensive and marginal future utility.
Exactly, it seems their only way to make money is charging for online play which used to be $5/m and now $10/m for Game Pass Essential. Now that their high console prices aren't getting new players, the only play is to squeeze the existing ones and increasing the cost to play online.
They actually tried this a few months back when Game Pass Ultimate went from $20/m to $30/m. I cancelled my sub and went to essential. Then Asha backtracks and reduces it to $22/m and people are like wow, she will save Xbox. No, it just shows me they probably saw so much churn, especially from long-time subs, that they backtracked.
I've always thought it was borderline crazy that Xbox charged a monthly fee and I never had an Xbox for that reason. It always made me wonder how many people they failed to bring into their ecosystem for that reason.
As far as I understand - that fee is not mandatory.
To play online, you do need to pay them. But for local games, no fees after buying the game.
Cheapest will be 499 dollars from August 1st.
Reads to me like multiplayer and server-side games incur a hefty infrastructure cost that eats into their profits, subscriptions notwithstanding. Maybe XBox should focus more on single-player exclusives. They certainly have enough studios to do it.
- A company which has undertaken a concerted, long-term effort to consolidate the industry under its umbrella (something they themselves call out as a problem in this post), reducing consumer choice
- A company which has captured a significant chunk of the console market. They're one of the big three (alongside Sony and Nintendo), and have been since the early 2000s, arguably, for crying out loud.
At a certain size (typically as measured by market capture) the expectation for growth needs to be reality checked. This is still $150M of pure gravy every single year. Sure, this is going to a corporation, but that's more money than most people could possibly dream of earning in ten lifetimes.
Every year. For a company that's already putting money towards opex in the form of developing new games and new content for existing ones, for a ridiculously broad portfolio.
To be clear: it is Microsoft's and Xbox's prerogative to pursue more profit, but I reserve the right to call this out as absurd under the circumstances.
If you want to make the argument that Xbox has suffered from a lack of focus in the past decade (... or even longer), or that there's been mismanagement (I would say since around the time 343 got created), then those are fair arguments, though I don't think those are justifications, on their own, for cutting thousands in headcount.
Allowing this org to balloon to fourteen levels of management on any vertical is a joke. Allowing the absorption of so much of the game dev industry and still being unhappy with $150M in annual profit after being such an active participant in the oligolpolization of console gaming is just a bit unserious.
> This is still $150M of pure gravy every single year. Sure, this is going to a corporation, but that's more money than most people could possibly dream of earning in ten lifetimes.
That actually seems... tiny? Xbox is nearly 17,000 employees. That's like $8k in profit per employee. That's worse than big box retailers and like 1/100th of what is common in big tech and (to the letter's point) far worse than their biggest competitor.
Like sure at least you can say they aren't losing money, but Nadella can't be looking at that after just spending 75 billion on Activision Blizzard and be happy with it as the status quo.
EDIT: BTW these numbers you quoted from OP are quarterly, not annual
At some point you end up hitting the law of diminishing returns. I think this is a case of that.
I agree that at some point you do, but again I think the fact that Sony Playstation is doing this with larger annual revenue, less studios, AND better margins is an indicator that it isn't the problem here.
> This is still $150M of pure gravy every single year.
The issue is rate of return. They are evidently spending $4.85bn on Xbox per year. The US federal interest rate is 3.5% so if you just put that money in US bonds you would get about $175M per year of much purer simpler gravy.
Russ: "Anyway, next thing you know, we IPO, stock triples in a day and AOL gobbles us up. All of a sudden, I'm 22 years young and I'm worth 1.2 billion. Now a couple decades later, I'm worth 1.4. You do the math."
Richard: "Okay. Well, that's a gain of $200 million over 20 years. Um, 16.66 repeating. That's less than 1% return. Inflation is, like, 1.7. I think CDs are 2%. So that's less than a CD."
I know this is a TV show reference and a point about investment strategy but...
If I had 1.2 billion dollars I wouldn't care what investment strategy I had. I've got enough to spend $30k a day for 100 years. At any age, that'll do.
In generally spending increases to cover income. 30k per day sounds like a lot, but it isn't hard to spend that once you get used to having that much to spend. Your mansion with the heated indoor pool is expensive to maintain. Plus you probably have a vacation mansion someplace. Then you see a nice yacht and think "why not" - more costs. You aren't flying coach to get to all those things - and one day you realize your bills are more than the 30k/day you have to spend and you are broke despite being objectively rich.
It sounds like a nice problem to have, but it appears to be very stressful from what I can tell. (I'd still like to have it, and like most I think that I personally wouldn't get that far over my head)
> but it appears to be very stressful from what I can tell.
sounds like there is a win-win in there somewhere. I wonder what that would look like.
for real though, what are we talking about here? 30k a day is not enough because ... habits? plus, it's incredibly hard to spend that much. that's exactly why, after a certain point, it's basically impossible to get rid of wealth.
What does enough mean? That's why I didn't use that word. Beans and rice is enough, but I'm glad I can afford nicer food. I don't need as large a house as I have and yet my house is modest by modern standards, and I would like larger.
I'm not arguing your idea that there is a point where you no longer can find anything to spend money on. However that point is different for different wealthy people and I don't know and you don't likely don't know either where your limit is or my limit would be. It would not surprise me if I personally had the money and decided to buy a yacht and then later sold it when I realized that while it sounds good I wasn't actually using it. But I don't know. Maybe if I had the money to afford a nice yacht I would use it all the time. Similar for those mansions. Would I live in a mansion or would I buy one first test symbol and then realize I didn't actually care and downgrade? I know someone who has made a lot of money remodeling the mansions of rich people who have decided downsize. For them downsize includes a master bedroom that is bigger than my entire house. And there were other bedrooms in that mansion, but it is still a down size.
I liked your reference.
And if Russ is blowing $100M a year on lifestyle and still has those numbers then he’s winning at life.
> winning at life
What a take. Of a character that is, albeit incredibly entertaining to watch, not displayed in a good light at all.
Alternatively, he's everything that's wrong with the system. He's certainly not generating any value to society.
But yeah, in a purely individualistic take, he's certainly winning at life. While making everyone else's a bit worse.
Exactly. The inflation rate is about 3%, so the people at Xbox worked very hard all year to have about the same value they put into it.
All the people were paid a salary for the work they did. And there was still money leftover .
That is an ideal way of seeing this. As a for-profit company their priority is shareholder value, so the focus isn't "people paid and games were made", it's the money left-over, and even more importantly that the number must grow.
Only if you count the value of the games produced as $0
Wouldn't a fair way to count the value be all of the money selling them produced minus all of the money you spent producing them?
No, because the customers bought the games. That means the customers valued the games at some value higher than the purchase price. There's a ton of surplus value for society produced as part of this process that doesn't end up on a company's balance sheet.
It's a question of "value created" vs "value captured". They captured about as much value as the risk-free rate of return.
Value that is created but not captured (e.g. the value of consumers enjoying games and consoles above and beyond the price that those consumers paid) is typically not considered when making business decisions.
So, even worse than 0, if we’re saying the value of games is not measurable but substantial?
That's pretty accurate when you consider the unfiltered slop produced by studios like Bethesda, Blizzard, Activision, King and most other Microsoft XBox studios.
But the revenue is coming out of the same org. That $5bn revenue only exists because of the $4.85bn expense. That money doesn't exist to put into bonds unless it's coming out of the games org. They can only make their margin percent look better by making their absolute margin $150mm worse.
Another point of view is that your people are so good that their division turns a profit under mismanagement. It costs MS negative hundred mil to keep the whole thing spun up on a bad day.
You’re saying that they should take the money people pay to buy Xboxes and put it in T-bills instead of delivering Xboxes? What happens when people ask where the Xbox they ordered is?
Remind me never to come to HN for business advice, this is dire reasoning.
It seems like you're agreeing with the article then? Seems new Xbox boss is cutting a lot of this fat and trying to undo these strategic missteps.
I thought it was 150M per quarter?
> This is still $150M of pure gravy every single year
You're neglecting to consider that any time they acquire a studio or have a flop or two -- poof goes that $150M and probably more. It's not a risk-free venture. Entertainment is all about hits, and misses hurt.
Would you put up $5K to win $150 on a hypothetical roulette wheel that hits 90% of the time? The math's not perfect obviously but Xbox is a somewhat similar situation. Microsoft is putting up nearly $5B a year to make $150M. They'd be better off stuffing the $5B into bonds or something. There is a point where the returns aren't high enough to justify the expenses when risk is taken into consideration.
If they shut down their gaming operation and instead decide to stuff money into bonds, where would that $5B even come from?
As said elsewhere in the thread:
> You’re saying that they should take the money people pay to buy Xboxes and put it in T-bills instead of delivering Xboxes?
ROI lags. If they laid off 90% of the Xbox division and left only enough to keep the lights on (they don't run their own factories I guess), then they'd still get nearly the same amount of income the next year with far lower costs. Of course revenue would start to sharply decline as the number of games produced was much lower, as the tech became obsolete. But it's not like revenue would evaporate instantly.
So they could do that and invest the income they still get into bonds, and then that would be where the returns come from.
They don't want to do that obviously, hence why Xbox needs reform.
The money they’re not spending on the Xbox every year!
> If they shut down their gaming operation and instead decide to stuff money into bonds, where would that $5B even come from?
Wherever it comes from now! They're spending about $4.85B to bring in $5B.
Sure, 3% is terrible. But the point is you spent a fortune buying all these studios-- aka key strategic intellectual properties-- and then you manage them badly. Then you just sell or shut them down at their absolute bottom and you end up just destroying value.
Older forms of media understand this. WB loses money and its still really valuable because people see the potential of Batman, Harry Potter etc.
IP studios are really valuable because they can drive attention to your platforms. Try starting a premium streaming service or a console without IP. But you can't manage it like tech. It's not going to grow all the time and returns are uncertain.
MSFT could be in the XBox as a platform business. They could have a few in house studios to prime the platform pump. Once it started being a content business they got lost.
Depends, Tesco (the UKs largest supermarket chain - one of the largest in the world) on average net about 2.5-3% profit on a given year and they have to do a lot more than pump out a game or two every few years.
The thing to understand here is the risk premium. Tesco is less risky on many levels. It also does not live inside a tech company that has really high gross margins.
I just don’t know how great the IPs at Xbox game studios are. They have a few staples but most studios they bought have struggled to put out any major successes in the last 5+ years. There’s only a few Pokémon’s and Harry potters out there. They even ran Halo to the ground ffs
I assume a bunch of them print pretty reliably, like Call of Duty, when you're not using them as a loss leader on an expensive subscription that nobody wants.
That would be King
They own Minecraft, Call of Duty, Elder Scrolls, Fallout, Doom, Diablo...
The mismanagement here was actually Microsoft giving studios free reign and they flopped with projects like Starfield. This needs to be understood really within the larger industry trend of quality decline of AAA, which I suspect has to do with changes in overall dev culture and discourse than corporate decisions. There hasn't been a time when developers have been more disconnected from their audience than now.
> There hasn't been a time when developers have been more disconnected from their audience than now.
There are studios that routinely put out games that people love. For example, my wife and I will happily pre-order the next co-op game from Hazelight Studios. FromSoftware, Ghost Ship Games, and others fall into the same boat for many people.
The difference, in my opinion, is that games from these studios don't focus on creating an "always on" service, microtransactions, day-1 DLC, MRR, etc. Those things that blight games made by corporate studios are evidence of corporate executives putting their thumb on the scale.
There's only so much you can do, as a developer, to polish a turd.
With the obvious exception of Elden Ring, most of the games from these studios are quite modest small to medium sized projects.
I wish devs would stop trying to make every game an uber-game. They need all the monetization because they've already blown the budget before work even started.
Nintendo figured this out. When will the other big players?
For games like Starfield, monetization isn't even the main issue but rather political ideology. You can only do so much ESG-approved preaching before customers go elsewhere.
For games like Starfield, the problem is the game is bad, it has nothing to do with politics or ESG.
At one point you could have said the same thing about Blizzard, that everything they did was gold. It’s hard to pinpoint where they went wrong, but it’s not clear to me that it was business model or game format related. Like, WoW was a fabulous success from day 1 and it was a live service game.
It was when the amount of lattes overtook the amount of Mountain Dew
Free rein is bad management by definition. You don’t need a manager to have free rein.
I’d be curious what you think the changes in dev culture are. I have worked for or with a lot of these studios and to me they have different cultures. But I could be missing the forest for the trees. MSFT has one culture that imo lacks a creative vision.
> There hasn't been a time when developers have been more disconnected from their audience than now.
I'm curious what you mean by this. It seems like gamers have never been more vocal and there have never been more avenues (social media, short form video platforms, etc.) for them to voice their opinions than we have now.
How exactly do you know that developers have never been more disconnected from their audience? And how would that be relevant to declining AAA game quality when it's the responsibility of management and leadership to ensure the quality of the final product?
The squeaking [spare] wheel got the grease.
I think developers = studio in this case, management included. It’s the same issue as Hollywood really, making content for a loud minority will not generate revenue. Compare how Marvel Rival performs to any Marvel Hollywood content after Endgame.
One way is developers making game for far left silicon valley ideologes when their audience is full of horny young males. I.e. the game is primarily designed to push an agenda rather than be fun.
> The bigger issue is that console manufacturer revenue is highly cyclical. This is hard to see in e.g. Xbox and Sony since they are both part of a larger conglomerate, but really obvious for nintendo.
There is absolutely no reason to be in sync with Sony on their console release date. They could have effectively released consoles bit more frequently. But they choose not to do so. Their acquisition has been questionable - Activision/Blizzard.
At the end of the day, the employee pay the price for bad management decision which they keep on making.
As a Blizzard and Overwatch fan, the acquisition has not been ideal. Activision nearly ended competitive professional Overwatch and significantly scaled back their big esports events to look more profitable. Lately, they seem to be chasing Marvel Rivals for no good reason, but at least in the younger competitive leagues, Rivals is picking up steam and Overwatch no longer looks like a contender, despite being significantly more balanced competitive play.
It’s possible stadium sized esports wasn’t directly profitable or was break-even, but seems like it could have had the potential to catapult the idea into the mainstream when there are 7 figure prize pots, and the games are accurate to anyone with equipment.
Overwatch released in 2016, but the merger took place in 2008. I feel like overwatch was always more of an Activision game than a Blizzard game. Or at least, pre-World of Warcraft Blizzard would never have entered that genre of gaming.
I was referring to the Microsoft acquisition. That’s Blizzard canceled a bunch of their esports work.
There’s definitely some Blizzard DNA in the characters and lore. I like to think it’s as close to what StarCraft Ghost could have even been.
nah, overwatch current situation is stemming from horrendous blizzard decision of OW2 release
sure Rivals is strong competition but remember time where Marvel Rivals didn't exist, OW is already dying by then
> nah, overwatch current situation is stemming > from horrendous blizzard decision of OW2 release
If you played enough overwatch, you'd know that it was messed up from when Jeff started doing his silent fireplace streaming.
This was a silent protest by Jeff.
You do need to be somewhat in sync. Too early and you get Dreamcast effect where the customer isn’t ready for a new console. Too late and your customers bought the competition (I’ll call this the PS3 effect).
Nintendo get a pass because Switch is a very different console, closer to Game Boy.
Development costs are far from their lowest at end-of-cycle.
That's exactly when the prototype development kits come out of small scale testing (maybe tens of units, all incredibly expensive bespoke units, probably hand soldered and assembled), production ramped up a little and the evaluation kits are produced and distributed to first party studios and large third party studios, with thousands of consoles produced with the expectation that their lifespan is likely only going to be 3-6 months. These are then extensively tested by developers, both to see what needs to be done to get their launch titles actually working on the machine, but often very serious hardware bugs are found in this period that may require fixes to the chips themselves or software workarounds that affect performance. For some of the recent console launches there have been 2 or 3 rounds of evaluation kits in a year, and the previous evaluation kits are effectively bricked.
After the evaluation kits seem to have converged on a final product, the development kits are produced to ideally match the final version of the evaluation kits, but again these are tested before production is ramped up because some things do change (most trivially the case, even if the board is fine). At this point tens of thousands of dev kits are produced, each different enough to retail kits (more memory, maybe extra ports, etc), usually at least 6 months to a year before console launch so studios can make a final push on the launch day or first quarter titles, and in the background the same evaluation process for retail kits (usually just stripped down from the development kits, but usually different cases etc) starts, and eventually a final design for the retail product is produced that's good enough for manufacture.
This time is definitely not just when the console manufacturers kick back and rake in their profits, this is when they're already spending big on the final push to get to the point where they even have a new console to start a new cycle with.
Separate to the console manufacturing side, the years before release are when big money is spent getting studios on board to produce launch titles, because without those, the console will be dead on arrival.
TLDR: revenues at the end of the console cycle aren't funding the next generation, because it's probably already been in development since the launch of the current console, rather those end-of-cycle revenues are hopefully paying off the gamble they took funding development for the current generation.
>> 150M at 5B revenue is not great: that's 3% margin!
and yet everybody - including Microsoft - is in a big rush to sell us AI services, which could look an awful lot like a historical utility business. 3% will be a dream return in that scenario!
AWS is essentially a utility and gets way better than 3%.
AWS isn't a utility because utilities sell commodities for which you can switch to a competitor easily, as you're buying the same thing. There are companies selling similar products to AWS but none that sell AWS itself.
Early utilities tend to not be built on standards. See how early electric utilities within a country or even a city couldn't agree on voltage, frequency, phase, or even AC vs DC.
The fact that electricity was quickly commoditized does not guarantee that AWS will commoditize.
Still, there is a difference of degree. The engineering cost of making one city's electrical grid compatible with the consumers of a different city's grid were much lower (even if one grid was AC and the other DC) than the engineering cost of moving from AWS to a competitor because electricity is not that complicated.
Also, I doubt anyone was referring to electricity as a commodity in the early days before the industry developed standards.
Aws is closer to monopoly than to utility
A monopoly with at least 3 major competitors and which exists because it created a new thing, not because it controls a fixed shared resources.
Most utilities are monopolies.
most utilities are natural monopolies. The cost to run wires/pipes to my house are a significant portion of the cost to serving me, so you wouldn't run wires to my house in hopes that I buy from you later.
With due fairness, these are two different sets of leaders and two different strategies.
A lot of the strategy you outlined -- buying all these studios, replicating netflix, giving away day one games, raising game pass -- was a strategy put in place by Phil Spencer. Phil pushed for this investment with the promise it would pay off later for MS. He's talked publicly about having to convince Nadella to put up ungodly amounts of cash for these investments and about how the bar for expected return was very very high. It seems like it clearly hasn't worked out to Microsoft's expectations or they've lost patience for waiting, and Phil has now "retired to spend more time with his family" (i.e. been fired).
Now Asha is here and presumably has a mandate to fix this and get back the profit margins that were expected from xbox. Sarah Bond, the xbox president, has resigned, and with this letter it seems the previous Xbox COO is out too. There is clearly a huge shift in Xbox leadership happening and it shouldn't be surprising that Asha -- who is known as a business-driven executive and not a 'gamer' -- is going to be reverting a lot of previous strategy decisions.
My 2c is that Phil's strategy made sense on paper, but I don't think they were able to manage this many studios in practice: nearly all the studios they bought have failed to produce the number of games expected on time or on budget. It also turned out that overly cheap gamepass would cannibalize their business and overly expensive gamepass turned away subscribers. I think the netflix model isn't something you can speedrun and execution of it turned out to be very hard and expensive. Maybe it would've worked out with more time but it seems Nadella didn't think so anymore.
I never understood the esteem Phil Spencer was held in, seemingly both by fans and industry insiders. I never understood Phil’s strategy.
Buy a plethora of studios. Pay an order of magnitude over the odds for the big ones - just to be sure you get them! ‘Rescue’ smaller ones of questionable financial value - as part of Xbox they’d somehow be successful enough to justify the price paid. Heavily manage the studio heads - but, uh, also give them total creative freedom - and allow them to make niche games. Sell hardware at a loss - but also make the games available on all platforms. Don’t allow any software that takes advantage of your most powerful hardware, because it also has to run on the other, less powerful console you are also selling. Also, the future is streaming! But, uh, maybe not!
Not just the strategy, but almost every aspect of the ‘strategy’, was incoherent - as current management is very close to outright saying.
> I never understood the esteem Phil Spencer was held in
He headed things during the Xbox 360 era, which was a golden era of gaming, one of the best console generations and also peak Xbox.
Just look at this video to get an idea of how high the density of great games was at that time: https://youtu.be/w5u8jyPIrIY?is=NsTee0620BmmVbcB
I’ll admit to being ‘out of gaming’ for that era (I’m a pandemic gaming-returner), but I wasn’t aware of that. Was his reach bigger than his official title?
Wikipedia doesn’t show him in an ‘overall leader’ role until 2014, a year into the relatively disastrous Xbox One era.
https://en.wikipedia.org/wiki/Phil_Spencer_(business_executi...
> Buy a plethora of studios
IIRC Xbox had been criticized for quite a while at that point for having very few exclusive/first-party games worth buying an Xbox for. I always assumed this move was to try and fix that problem.
The (an?) incoherency with that is that this was happening at the same time as the ‘everything’s an Xbox’ strategy that saw them produce games for other platforms too.
Concerns about competition regulators stopping the acquisition? so they said for next x years we guarantee won't be exclusive?
That was a side effect from ABK acquisition, they bought studios that traditionally were cross platform, the year long acquisition discussion always promised not to touch them in that regard.
So you end up with this schizophrenic way that XBox became more of a publisher than a console brand, with a leadership used to cross platform (Sarah Bond), thus ‘everything’s an Xbox’ pivot for the "curve must always go up".
Having to promise to make titles available on Playstation to satisfy regulators kinda blows that strategy up.
Wasn't it a strategy to have exclusives on xBox and take games away from Playstation?
Which games of their output were Xbox exclusive? They were basically transitioning into a publishing house with no real hardware impact. In fact what did Phil in finally was trying to sabotage the hardware brand itself with the 'This is an Xbox' campaign. I said out loud when I saw the first ad, 'Phil will get shitcanned for this.'
> Buy a plethora of studios.
To be fair to Phil Spencer, this was the strategy across the industry right after COVID. Remember the shopping spree Embracer Group went on between 2020 and 2022? I think we were in an e-sports & live service bubble that has now popped.
Yeah, but most of them weren't platform owners, thus did not had the issue of exclusives vs cross-platform.
Acquiring a game studio only makes sense if you see a way to make it grow either by providing capital or better management. E.g. Activision acquired Treyarch in 2001 for $20M, which was probably 4-5x of its annual profit at the time. Seeing that very few people played (or even heard of) Die By The Sword or Draconus you could imagine that there was still a room to grow so there was a good chance you break even on your investment even sooner than 5 years and start making profit for yourself. Treyarch, who did not need to do the sports games contracts anymore and could hire more people, proceeded to making Spiderman and, later, CoD. I believe Spiderman alone made way more than $20M spent in the acquisition.
Buying Activision for 20x of its annual profit, on the other hand, makes zero sense. ABK was not lacking capital, had the same MBA management Microsoft has and did not have much room to grow, Blizzard alone had 5K employees. Their IPs had long time since plateaued or had been in decline already. What was Microsoft plan to increase profit? Switch everyone to Teams? Put more people to work on CoD and release 2-3 CoDs per year, hoping they all will sell as well as the annual CoD? The more realistic path to return of the investment could come from increasing Xbox's share of the market by making their newly acquired IPs Xbox exclusive. But they did not do even that.
> What was Microsoft plan to increase profit?
IMO, at the time, it was to buy ABK and make CoD an Xbox exclusive. That clearly didn't play out when everyone screamed about it being (rightly!) anticompetitive, and so they had to resign themselves to accepting that day 1 gamepass exclusive was going to be their way to get people to switch over from PS. That also didn't work.
The 'K' part of ABK was also probably going to be their way to drive mobile into Xbox as well with their 'everything is an Xbox' push at the time.
Even if they had made it exclusive, $70B is too much for this. CoD sales would fall - not everyone buying it would go out and buy an Xbox, Xbox hardware sales would raise. Let's be optimistic and say every CoD player (including ones who already bought Xbox ) goes out and buys another Xbox and then buys 2 xboxes in the next generation. So it's ~20M more Xboxes sold. To break even on this investment in 10 years MS has to make ~$2400 from each console sold over lifetime ($68B - 10*$2B annual profit = $48B over 20M extra units). Of course, if each sold Xbox made that much money they would not sell them for $400, they'd pay you to get one.
I already thought the deal was bad to begin with, but if you look at the numbers like this it feels even more catastrophically bad, damn.
This is not even considering they basically bought all the PR issues that came with Blizzard.
CoD is just one title though, the deal included WoW and Candy Crush and the rest of the Activision IP.
Yes. How many consoles would WoW and Candy Crash move?
Yeah, they could have spent the money on founding new studios. With that sheer amount of money you could pretty much poach any talent you wanted too, but it wouldn't be as obviously anticompetitive.
Instead, they paid way over the odds for IPs that seem past their prime.
IMHO, there is no room for a 70B investment in games at this time. The industry is mature and won't be growing any time soon, at least in the West. There had been a rush of investors founding new studios and propping old ones in the past decade but the vast majority of those had already been wiped out. And all of those were probably just a fraction of what Microsoft had spent just in this acquisition.
Another crazy deal like this is the EA's buyout, I wonder if it will come through or the investors will eventually realize that they are not going to see their money ever again.
Phil and the likes were too hands-off on these studios post-acquisition. They got too complacent enjoying steady paychecks over years of delays while working on their niche games that only highlight their artistic vision over generally fun gameplay. That's where they failed. The Activision/Blizzard acquisition and GamePass fumble were just a nail on the coffin
Yes, I agree. I empathize with Phil in spirit on it. He's a real gamer and tried to create a space for the developers to do their own thing and create what they want. But it doesn't seem to have been great business.
I remember the glowing praise at the time for the policy of being hands off and allowing studios to cook. Gamers all over the world were very happy about that approach. Unfortunately it looks like many studios do in fact require hands-on management to make tough calls and keep things moving. I'll remember this next time studios complain about management interference.
We already saw this during the Kickstarter era where all the temporarily confused AAA studios sold themselves as having been held back by unreasonable publishers all this time only to produce the most bland and still unfinished games now that they were funded directly by fans.
Also, Chris Roberts should never be allowed to manage anything bigger than a shoebox.
Sometimes, adults minding the financial shop focuses creativity.
You need two different types of management. You need the creative type who understands what customers want and ensures that is what you deliver. You need the financial type that understands profit margins.
If the company lacks either, or either gets too much power they are in trouble. Creative types will spend too much money on things that are nice but won't deliver enough value and so the company goes bankrupt. Financial types don't understand what customers want and optimize away all the expensive creative value the customers buy.
Note that the above applies to every type of company. Exactly what "creative" means is different for different industries, and some need it more than other (how much innovation do you need in soap?...). It always applies though so you need to ensure you get both types in leadership positions even though they don't like or understand each other.
Yeah, cool, but right now they're axing idsoft, which was anything but "artistic vision over fun gameplay". What they did also pretty much kills idtech as a viable engine.
It's also really hard to buy studios and hope to catch future lightning in the proverbial bottle.
Past performance is no guarantee of future success.
Now with all these layoffs, most likely the numbers will change, but how many are aware that Microsoft actually owns a big chunck of well known studios?
One reason is that from the public eyes they kept their names and independence from Microsoft/XBox branding.
Over the last 8 years
Undead Labs has shipped nothing Compulsion shipped South of Midnight topping at ~1600 players on Steam Ninja Theory has shipped Bleeding Edge and Hellblade 2 and Double Fine shipped Keeper and Kiln.
It's a net positive that these studios and this culture is gone. I am sure that food was amazing.
It's on the publisher and owner to guide studios in a direction that makes money. That's literally their purpose. If these studios aren't releasing anything and they aren't making money, that's on Microsoft. So things aren't better if these studios are gone. The same people who managed this mess for ten years are still there. If you're not going to do anything to ensure these studios actually do what you need them to, I don't understand what the point was of acquisitions.
> Phil's strategy made sense on paper
It was a risky bet that became even higher risk when MSFT spent ~$80 billion dollars rolling up game studios near the peak of the historic COVID gaming bubble. They bet it would greatly increase Game Pass sub growth. Instead, Game Pass sub growth slowed down. At the time I thought it was a reasonable plan - but not at the prices MSFT was paying for content. Then the DRAM drought killed hardware sales to gamers forcing the issue.
I needed a new DVD player and I pretty much splurged on an Xbox. But I haven't really used it for gaming.
I remember that was my calculus in the PS2 era. At one point near launch, they weren't much more expensive than a dedicated DVD player.
They were the cheapest DVD player you could buy for a while, and they were also the most available DVD player. That changed fairly quick, but at launch they were your best value. (though dedicated DVD players generally had better controls)
It's good for emulation too and it'll run GTA6, so I'll get mine out of storage.
So, Phil gets a golden parachute, and all the studios that got bough up because of him will be "set free" if they're lucky and disbanded if they're not. Yay for capitalism...
I certainly enjoyed gaming their rewards system for years on a series S. $300 for the box, maybe spent $40 over roughly 4 years for gamepass. It was nice while it lasted!
Asha sounds like the kind of person you bring in to shut down a division cleanly. "Headshot!" as we gamers might say.
> - The make around 5 billion in revenue per quarter - The problem according to them is profit margin - around 150-160 million
> So first of all, they are big! Secondly they are not at a loss. They just have a "thin, non-growing margin". So to fix all this they are trimming down, so they can "return to growth" (which I think is ridiculous).
How is that profit margin distributed though? King (Candy Crush etc) and Mojang (Minecraft) are specifically called out as money-makers, it's possible that they're carrying the majority of profits while everything else is a dud:
> We have also learned that we are not the best home for every type of studio; in a typical year, we lost 64 cents for every dollar we invested.
As an example, Double Fine (one of the studios being chopped) has released 2 games since 2021, Keeper (191 peak player count on steam) and Kiln (163 peak players); these would be flops even for a normal indie game, for a studio getting Microsoft salaries those are enormous flops.
On the margins, that's crazy thin for the size of the org... One bad quarter could turn from a few million in profits to hundreds of millions in losses. It's too close, and there's no way to build/store funds for any kind of storm at that level.
Now, I think the vast majority of the pain is more than self-inflicted... I think actual business, marketing and focus need to start taking priority over idealistic political PoV. Let the games target their natural audiences and have the broadest appeal... at a certain point, trying to gain 1% of audience means alienating 25% or more.
This is the industry in general though, and why you see so many historical AAA studios go bankrupt after one bad game.
The problem was that if you kept a studio small and lean, you were often at the mercy of predatory publishers who controlled the distribution channels (pre-network, physical media).
So most studios tried to vertically and horizontally integrate into conglomerates: own their own publishing + have a diversified enough pipeline of games that one flop wouldn't take down the entire works.
Unfortunately, that works at Activision (pre-Blizzard) and EA (00s) scale, but not Microsoft scale (where you essentially own a large chunk of all studios).
This was a reckoning long in coming, as MS XBOX leadership, after some initially brilliant ideas, got high on their own supply and forgot they couldn't endlessly acquire more studio with their parents' cash.
Tbh, they probably should have lured away one of Berkshire Hathaway's acquisition people and put them in a go / no-go decision role.
It's the acquisition price, product, and financials that make something a good deal or not, but XBOX spent the last 10 years valuing potential acquisitions on intangibles (synergy, strategy, if we don't they will, etc).
Billion USD grocery chains operate on 2-3% margins just fine...
If you're a grocery chain you know exactly how much an item costs and exactly how much you sell it for. You also simply order more or less stock of the item depending on how it's selling.
If you're a video game company, you invest millions of dollars in a project up front, for years, and you don't know until after release whether you:
- Make back all the money you spent plus a healthy profit on top.
- Just break even, but you lost the opportunity cost of all the other things that money could have been spent on with better utility.
- Your game flops and you wasted all the money you spent developing it.
It's also highly uneven. Extremely likely that King (Candy Crush) and Mojang (Minecraft) are making a ton of money, and everything else is a money pit where you pour in millions of dollars and you don't even make your money back.
Food prices can change significantly depending on natural disasters, diseases, supply chain issues. There's more uncertainty than you acknowledge.
People have to eat. They dont need to play games, especially bad games.
Or they play some indie game like Among Us and not some big studio expensive game.
food demand is pretty inelastic their margins are low but they're fairly consistent. modern games can have budgets of a few hundred million dollars with absolutely no guarantee of sales. at those margins 1 failed triple ai have could wipe out several years of profits.
Yeah, because video games are as essential to the home as groceries.
Groceries are important, but the choice of store isn't.
Keeper needs an optimization pass so badly. Once I finished the first zone the framerate dropped to the floor on my Steam Deck. Presumably it runs okay on the current XBox, but it sure feels like Double Fine's attention has moved on and will never return.
Absolutely drop-dead gorgeous but I don't think I am going to ever finish it until I get a Deck 3/4 in like 5-7 years.
Really 191 players or 191k players?
No missing "k", really just 191 players. https://steamdb.info/app/3043580/
Could this be due to the games being available on Game Pass? Why would anyone buy them on Steam if they can play them on Game Pass for "free"?
You can easily compare to the figures for other games that are also on GamePass. Another Crab's Treasure, for example, had 4.7k Steam players on launch, of a similar nicheness stratum.
You've got that backwards. It's free and STILL has no players.
Would they be counted as active players on steam if they're being played on game pass though?
The split is usually not a multiple. There are people with computers, and people with xboxes. If there are that few people on steam, there are probably a similar number on Xbox. Not 10x or 100x, and at least 100X would be what you need for that game to be worth further investment.
They wouldn’t.
Only people without GamePass subscription and no desire to get it for even a month or two would buy the game on Steam.
> Only people without GamePass subscription and no desire to get it for even a month or two would buy the game on Steam
So the majority of people?
I jest, but I honestly don't know anyone who consults the GamePass offerings before making a decision on whether or not to buy a game. It's Steam or pirate.
Completely anecdotal (which i think both of us are guilty of) but i generally keep my PC game pass subscription active, and will check if games are on there before getting them elsewhere. I don’t really know how to measure how many people are doing that though.
by this logic, no one would buy E33 at steam because its day one gamepass title
>Double Fine (one of the studios being chopped) has released 2 games since 2021, Keeper (191 peak player count on steam) and Kiln (163 peak players); these would be flops even for a normal indie game, for a studio getting Microsoft salaries those are enormous flops.
Hard to really say. Kiln and Keeper can easily be made up for by the sales of Psychonauts 2. I'm sure an indie Double Fine would not have been able to make those kinds of games.
This takes me back to Pertinent, another small game from a reputable studio, had its main writer saying that "this kind of game would not be possible without Gamepass". Which I 100% believe. Microsoft definitely didn't buy Double Fine trying to make the next Fortnite, but that arthouse strategy clearly isn't a factor these days.
Psychonauts 2 was funded we-got-kickstarter-at-home and already well into development before MS acquired DF. If anything this exemplifies that DF did not function under MS if they couldn't replicate that post-acquisition.
did you mean Pentiment, led by Josh Sawyer at Obsidian?
Yes, apologies for the misspelling. Very likely another game that wouldn't "succeed" in a traditional release, but would potentially get people into a subscription service.
Despite that loss leading strategy, Obsidian has had quite a few other releases that did to make up for that side project. So the studio would overall be in the green despite that.
I loved Pentiment, but it was soooo much reading.
Xbox around 2021 had around a 12% profit margin and the gaming industry as a whole was around 17-22% . In 2023 the target for the division was put to 30% . We see this new restructuring because the target was put this high. Microsoft really wanted Game Pass to be a steam competitor which is pretty much what everyone in the industry tries to do and fails. The push for Game Pass prices to be higher was to get the 30% margin and that didn't work out. They aren't operating at a loss they are operating at a goal and they failed the goal. From other child comments many studios they bought probably were below average. We can see this restructuring basically is that they failed the target, the old guard went out as the new guard came in.
https://www.bloomberg.com/news/articles/2025-10-23/microsoft...
Being a Steam competitor involves making a store that's actually good. All the other major stores/platforms don't really seem to give a shit, to be frank. Steam has like 20x their feature set, and the gap appears to be still growing.
If anything, it should be easier to make cool new features when you own the hardware side of the platform experience too, but no, it's Steam that has stuff like remote play together, not PSN or Xbox.
I don't know if I care about the features, what I do care about is the games and a lean-back experience which is not sweaty. I play games to escape the drudgery of software development and the last thing I want to do is mess with an .INI file.
I love the Steam Deck because it feels like a consumer electronics device: it has the reliability of Linux but not the sweat. The Steam Deck is the only device I've seen that works 100% perfectly with Airpods, for instance, including Apple devices.
I was at Best Buy the other day and saw an ASUS device that looked pretty cool until I picked it up and saw a Windows desktop with fonts not scaled appropriately for the size of the device. Like, wazzup? Steam Big Picture turns my big Windows machine at home into a game console and does the same for my Mac Mini. How is it you can have the back of frickin' Microsoft and not be able to do the same?
Not to say that Steam isn't packed with features that are valuable to many gamers, but just having a great selection of games that "just work" and knowing I can enjoy my investment on the devices I have now and devices I get in the future is worth a lot.
I think it's one of those things where people only care about a small percentage of the features, but which small percentage varies.
For example, I used the example of remote play together, which is very neat and a lot of people love it, but I personally don't use it.
On the other hand, I make extensive use of Steam's gifting feature, including its ability to handle multiple gifts to multiple people in a single transaction, and to schedule exactly when those gifts will land. And this is something that the other major stores don't seem to support at all, a big advantage for Steam for me, but I'm sure there's many people who don't care at all about gifting.
It used to be that you could get gift keys/links that worked just like any steam key you can buy outside Steam and you could gift those to people in whatever manner and on whatever schedule you wanted. I liked that a lot more than a gifting feature built into the store no matter how well designed it is.
Yeah, that's how it usually works.
yeah like i assume this is better by now, but when gamepass was relatively new i got a free month with my laptop but just installing games would frequently fail, same with updating them. same with epic games for that matter, though not that bad. also at the time the xbox app would install everything in this readonly directory that you couldnt even access with admin rights, which ofc made modding impossible and also after reinstalling windows left me with an external harddrive where i wasnt allowed to delete a huge folder of games... fixed this by mounting it in linux.....
> The Steam Deck is the only device I've seen that works 100% perfectly with Airpods, for instance, including Apple devices.
Oh weird, mine have always made weird clicks and dropped audio here and there and shit like that when using them with my Deck.
They don’t do that when I use them with my Franken-PC bazzite machine. Instead, that one disconnects my BT mouse a couple times an hour and sometimes seems to stop processing BT keyboard input and “queue up” my presses instead, to be processed at random intervals over the next minute or so. Both of which are fun when playing games.
Microsoft is focused on AI and enterprise sales. I don't think they're institutionally capable of making a good end-user experience. You might just as well ask why SAP makes bad UIs - it's because the executives just don't really care.
Azure is laughably bad. I'm genuinely at a loss to name a good recent Microsoft product.
I still love developing for the .NET Framework using C#. However, the number of reasons to keep using anything made by Microsoft continues to dwindle with each passing year.
As you already said, Azure is awful and only in second place behind AWS because of how much worse Google Cloud Platform is. Windows is back to sucking again, this time so hard that I'm seriously considering learning Linux and/or switching to macOS on my home system, & playing games on SteamOS instead. I almost never use Microsoft Office anymore, outside of household budgeting spreadsheets that I could easily work with LibreOffice instead.
> As you already said, Azure is awful and only in second place behind AWS because of how much worse Google Cloud Platform is.
I expect Azure is in second place because Windows-only shops use it because of the Official Microsoft Active Directory integration (which might be called Entra now?).
For basic "Create a VM, attach disks and networking, and use it as a computer." tasks, it is my professional experience that Azure is the worst of the Big Three US "cloud" providers by far. Their "control plane" is flaky and unreliable, so it's something that you'll probably only notice if you create, destroy, or modify VMs a lot. [0]
If you have a support contract, Azure makes it much easier to talk to a human than GCP does, but I never encountered an issue that they were able to solve. "File a ticket, but don't expect support to be able to help because they won't understand the problem, and it will eventually go away." was the lesson I eventually learned.
[0] And the word on the street is that a huge chunk of Github's reliability problems are caused because of the move from AWS to Azure. Having used all three pretty extensively, I believe the rumors.
> Steam Big Picture turns my big Windows machine at home into a game console and does the same for my Mac Mini.
Well it turned mine into a 2000s linux/wine debugfest flashback when I wanted to play GTA IV: Ballad of Gay Tony... Also don't get me started on having to keep the poweroff button pushed on the xbox controller for mouse emulation for games not having controller support in the menus. It is far from the polished experience you had, but possibly I just held it wrong.
GTA IV: Ballad of Gay Tony is listed as silver on protondb, meaning 'works with tweaks', so that sounds about right. Things obviously aren't perfect. That last 10% of games is a massive pain, since every game is different (all the ones that are well behaved are in the first 90% that already work).
GTA IV even on regular old Windows is a shitshow to get working to be fair, so I'm not too surprised that it's not great on the deck
The Xbox can't even reliably play video trailers of the games MS in theory want to sell you. They don't even require every game to have a video. They don't even require every game to have a screenshot, as I've encountered some that don't even do that! Fundamentally unserious about making a good experience.
If they want to be Steam competitor, then at least they should have more clear branding. Currently they put xbox to anything game related, but it's not cross platform. At least when I had xbox, they had separate gamepass subscription for different platforms with different set of games. Games that you buy on xbox store on console in most cases also are not shared with your PC. And all their first party games are available on steam, while a lot of indie games probably are not in their store.
They really should make a choice between xbox as separate platform and xbox as windows pc. I has been like 10 years where they were kept advertising it as some kind of single ecosystem, while it was not
Yeah, there's lots of stuff in Steam that I never use and don't even understand. Like the Steam Points and the Trading Cards and Steam Level and so on.
But the purchasing experience is top notch and they even have a generous refund policy. It's just lightyears ahead of the competition.
I can share nearly my entire steam library (~23 years worth) with my kids. There is no way in hell Sony or Microsoft will ever allow that. In fact, I've had to re-buy Minecraft because their account migration was such a shit show. They cannot and will not ever come anywhere close to competing with Steam on this feature. For that alone, I will never buy a console. Just glad I built PCs for my kids before the AI boom...
No it means making a store that is barely acceptable. Steam itself is far from good - the competition is just even worse.
The biggest problem however is network effects. Most people simply don't want to juggle multiple stores and the communities attached to them.
Steam is competent at what it does and has been for decades. No other online game store is as good as what it does: Nintendo, Epic, Microsoft, & Sony have all failed to do well what Steam has gotten better at over the course of 2+ decades.
People would likely juggle the use of two stores if the value proposition was great enough. But it isn't, which is why Steam dominates and all their competitors operate in comparatively tiny fiefdoms.
Xbox used to have remote play together, via mixer. You could allow any viewer to play along side you, from the browser.
Microsoft killed it
the latency on this can't be good
A lot of games are less latency-constrained than you'd expect. FPSes are obviously rough with input lag, but stuff that's turn based and even many platformers feel "good enough" up to like 150ms
Play anywhere is a killer feature for me (that's a game license that works on multiple platforms). Before steam deck came out it meant I could swap between PC and TV seamlessly. Should've been on every game they sold.
>Microsoft really wanted Game Pass to be a steam competitor which is pretty much what everyone in the industry tries to do and fails.
Gamepass is quite literally the most anti-steam strategy ever. It's a massive loss leading (or rather, low margin leading) service relying on a pseudo-rental service to provide value. Steam got to where it is by keeping all its costs lean and developing a service around taking a cut from premium digital goods.
>From other child comments many studios they bought probably were below average.
In revenue, maybe. That's the fault of Microsoft in two fronts. One for purchasing game studios who always operated at low margins, and two for directing them to focus on quality over budget. Double Fine and Ninja Theory aren't studios you buy with an expectation of 30% ROI in 6 years (ignoring the pandemic in the middle of that). Let alone when you explicitly tell them not to worry about finances.
On an artistic level, Hellblade was an insutry darling and about as close as you can get to an "oscar-bait" of a game. It's something you buy for prestige. Double Fine is a very seasoned indie studio who delivered several cult classics. You buy that for a brand that gives you variety from the current "online FPS juggernaut". Those strategies changed dramatically over the decade.
I wrote a while ago about how companies seem to have gotten the idea into their head that subscriptions are unconditionally good, rather than a contingent good based on the exact circumstances of the subscription: https://jerf.org/iri/post/2023/streampocalypse-and-first-pri...
Gamepass as a subscription to make sure you always have something to play, that has a lot of old games or indie games and other games that have no commercial value makes sense to me. The back catalog for any of the current consoles is plenty deep with games that have lost their ability to move units independently but still have a lot of value and can also give that perception of value. Such a plan is picking up pennies, but it's a lot of pennies.
I've never understood putting your new releases out on gamepass and bragging about that as your primary value proposition. Many new games are, say, 20-30 hour experiences, assuming you play them from start to finish once. One does not need to spend too much time with "this % of other players got this achievement" to see how many players tend to drop off of a game even that long. So if you put your new game that you would have sold for $60-80 dollars to me directly and it translates to three weeks of engagement on your $15-ish/month (depending on level) subscription, it's hard to see how that is an economic win. Put that game on Gamepass in a year or two, sure, that can make sense, but on release? And that not as a mistake, but a deliberate strategy? I can not fathom the mindset that leads to that.
As a deal for customers it seems to have been pretty good but I've never understood how Microsoft expected to make money on that plan. The streaming-video proposition of making a high-budget release to keep your subscribers makes quite a bit more sense, you could never have counted on getting $70 out of a customer for those anyhow, and even that economic proposition I think has proved more complicated than the streaming companies expected. The Gamepass model has just seemed insane.
I expect it to move to more like what I described at the beginning. As a way to turn a lot of old and hard-to-monetize content into a subscription stream it's brilliant. As a way of releasing new AAA titles it's crazy. Movie studios played with that model and I don't think they liked it at all.
> So if you put your new game that you would have sold for $60-80 dollars to me directly and it translates to three weeks of engagement on your $15-ish/month (depending on level) subscription, it's hard to see how that is an economic win. Put that game on Gamepass in a year or two, sure, that can make sense, but on release?
I think that's what I thought it would be, too. XboX has a really good track record of backwards compatibility. I can (and do, occasionally) play 360 games on my series X.
A model where people can buy the latest games, can not only keep them but play them forever on future consoles, and can have access to an increasingly vast back catalogue of older games, seems like a huge win. And maybe each full price new game gets them a bit of a discount on their next month's game pass, to make it slightly better value than the playstation equivalent full priced game.
But they didn't seem to want to do anything like that.
> and can have access to an increasingly vast back catalogue of older games
By this I meant via a subscription.
The logic of day 1 releases, at least how it seemed to me, was that a % of those people who get gamepass just to play the game for cheaper would stick around. That’s potentially worth way more than 1x $60 (now $70-$80) sale. That didn’t happen I guess
It’s funny how a strategy like this would work on me, but I am a busy adult who doesn’t really game.
Compare that to my nephews who have a lot of time for gaming, but they’re always fighting to scrounge up the money for another month of Nintendo online or Xbox online and go without it for at least half the year
> it's hard to see how that is an economic win
I _think_ the thinking is that not everyone is going to buy more than a couple full priced new releases per year (in general). $80 or whatever is just too much for most people to drop on a game they "might" like. On the other hand, most people would have few reservations being perpetually subscribed to a service that lets them play every new game "for free" (so long as they keep rolling in on a monthly basis). Theoretically, the subscription money would exceed what they'd normally collect from the average person buying the usual 2 or 3 full priced games per year.
Where I think it breaks down is quite a number of gamers are hopelessly addicted to playing all the latest games, all day every day. MS is surely losing money when those guys substitute buying physical games for a subscription.
I agree that's what they seem to have been thinking.
I don't entirely understand... well... from a rational perspective anyhow, of course companies are not entirely rational... why it didn't become clear that this was a silly idea and not working. It's easy to make Gamepass stop cannibalizing your main game sales. You don't need a big announcement, you don't need to advertise your plans. You don't need a huge internal political fight. You just... stop. You just stop putting your brand new AAA games on your cheap subscription service plan. You don't even have to remove the old ones, they turn into your old AAA games naturally in the fullness of time. Nobody has to lose face. It's easy. It's like falling off a log.
Game Pass was never a sustainable business model. People liked it because when a new game came out, they could buy a month of game pass for like $15, play through the game in a couple weeks, and cancel. It was a really good deal because Microsoft has spent the past decade+ trying to recover from their terrible fumble of the Xbox One launch, so they were subsidizing gamers to come back to their platform.
With the money being spent on AAA titles these days, they are not going to make any money without increasing the price of Game Pass majorly. The big price bump they quickly backtracked on was an attempt to make Game Pass somewhere closer to being profitable.
Traditionally if you're going to play through a game in a couple weeks and then not own it anymore, that means you sell it and someone else buys it for their own couple weeks, and the company should be happy if they make $15 per person in the chain.
Also this is part of why I'm really worried about how weak the concept of game ownership is getting.
See also how anyone buying GTA6 near launch will be unable to resell it.
> near launch
How can you say that? No credible reporting has proven that there ever will be a version of GTA 6 on a disc. The physical versions that are announced will all consist of a one-time code.
The vast majority of people buy a game, play it a few weeks, and then it sits forever - even if they could trade it in for a few bucks.
Lamepass should have been much closer to "buy a new release, get a month of gamepass games for free" or something.
The kind of person that actually cancels gamepass within a month is the kind of person to actually trade in the game. And with an efficient trading market they'd get more than a few bucks so early on.
Not necessarily. I was never the type to trade in physical games, but recently for Forza 6 I could either pay $99AUD to "own" the game, or buy one month of the PC game pass for $15AUD. An obvious choice.
The friend I played the game with did the same. Honestly, if they didn't include Forza 6 in Game Pass we both would've purchased it full price.
True, they set themselves up for "the only people who subscribe are those who use/abuse the subscription" - which is a recipe for failure.
by that logic then every subscription is a dud since they could just use heavily in few months and cancel for the rest of the year
but that's not happen in reality, people forgot to cancel
I see what you mean, but I think gamers on a budget will cancel. Other gamers would've paid full price for 12 games and instead paid $15 each for 12 games.
Not budget constrained gamers, which there are a lot of.
The writing's been on the wall about physical games going away for quite some time now.
You can tell the PS5 was designed to be a digital-first system by the disc drive slapped on the side like a tumour hanging off the otherwise symmetrical body.
I don't mind physical copies dropping in importance, and all else equal I even like the move to digital, but we desperately need to fix ownership of digital copies and stop having loopholes around "it's just a license".
This model is going away expect piracy to increase accordingly
I very much doubt a typical AAA game is bought new then resold 3 times on average. Very much doubt. And even if the used game market does cannibalise new games, they also generate a demand. Some gamers will pay full price knowing they can recoup some of it on the used market. Some of those gamers may not have made the purchase otherwise. Game Pass does not perform the same function.
Those metrics are hugely misleading because they account for current fiscal year revenue and margins.
For Xbox being what it is today, which is mostly about the subscription and not the hardware console or the exclusives, you have to compound their acquisition frenzy of 2018-2020 or so, which totals about 75 billion+.
They didn't want the developers nor the catalog. What Microsoft wanted is to change the economics and dynamics of the entire games industry, to make it Netflix-like (play what's in the catalog today, pay monthly even if you don't play anything) vs. what Steam offers (purchase once, own "forever", even if it's de-listed).
But that didn't play out. Optimistic estimates put total revenue for Xbox since then in the 20B ballpark. At a ~5% margin (as other commenters have pointed out) the profit is about 1B dollars.
It means that after almost a decade, the entirety of Xbox is in the red for about 74 billion dollars, which is 74 billion away from breaking even.
Steam still dominates PC gaming. Xbox consoles can't be more irrelevant today.
This isn't about over-hiring or AI. It was a bet at the executive level that went horribly wrong. They can still do things like selling IPs at a bargain to compensate, but still. Horribly wrong.
Note: Microsoft doesn't publish hard factual data so the numbers above are somewhat speculative (e.g. "analysts data")
It seems really odd to have a Netflix consumption model for games. Generally people want to play a few favourite games for a long time and get very skilled at them. You just don't need to churn through content like movies.
I don’t think that’s really true.
Both exist. I would say single player games tend to content in the range of 10+ hours. Think First Light, Ghost of Yotei in recent years.
Competitive and multiplayer games will tend more towards what you are thinking. CSGO, FIFA, and of course many others.
But I feel like even that doesn’t really capture the full range of everything.
You see 10 hours for indies and art games maybe. For big budget full price games people expect at least 60+ hours, which is why they tend to be full of padding.
Yes that is exactly why they want to switch to a Netflix model.
The vast majority of "gamers" play freemium "games" on their phone. The next largest likely buy a console for one or two games, and maybe pick up another now and then (back in college one person's lamecube was permanently playing smash bros; another was on golden-eye - the two xboxes were for halo and madden respectively).
> Then they did not have to give away popular games day one on Game Pass
A company that sells consoles complaining about not having enough games after 25 years in business and acquiring most popular game studios is hilarious.
They keep cutting game studios, killing games and then set ambitious profit margins. At some point you have to question, do the people in charge understand their own business at all?
They just gutted bungee and basically killed Destiny 2, not because the game won’t sell, but because it won’t generate the profits they unrealistically set.
Point of clarification:
While Bungie had historically been tied to Xbox / Microsoft during the Halo era, Bungie spun out to be its own company in 2007, and then was bought by Sony in 2022. It was Sony, not Microsoft, driving the most recent layoffs at Bungie.
Edit: even though i inaccurately associated Bungee with MS, they are not. However, the comment stands when you replace it with any of the other successful studios like Bethesda, Id software, Blizzard etc. A bunch of studios and their ips were gutted not because their games sucked, but because they didn’t meet the profits Microsoft expected, which is ridiculous.
Bungie is not a MS studio since 2007.
This attitude seemed prevelant at Blizzard too based on a book I read (Play Nice)they wouldn't fund anything that wasn't a billionaire dollar idea.
Never ending growth and profits just seem to ruin everything
It seems like a simple fact is often overlooked: you can't just throw money at art and expect it to be good, no matter the form. Netflix tried it and ended up with a lot of weak stuff, Microsoft did the same with similar results. Most games these days are just copies or rehashes of others, not original, full of clichés or old-fashioned mechanics. Acquired studios tried to mash up different ideas, hoping it would stick, often with really bad results, like Redfall. It's like the E.T. game disaster, but forty years later and spanned across the whole company. Hardware is great, GamePass is great, but Microsoft can't produce games.
One thing money can do is enable polish - you might not be able to directly force the next great game, but you can make your games excellently coded and polished.
Polish and Microsoft is a funny pairing over the last few years. More and more things are coming apart at the seams as the vibe-coded duct tape is failing.
Sadly, the only real remnant of the old Microsoft polish seems to be "we'll extensively document how our code fails, and do nothing about it."
That’s because the risk of making novel games is large.
Which is a problem for smaller studios but something that should average out at microsofts scale if they kept individual games reasonably small.
No amount of averaging makes upfront dev investment + massive marketing + targeting faddish and trendy consumers into a risk free business.
Another way to think about risk is opportunity cost. What other investments would give me the same return?
The result is that everything in the american economy is getting squeezed.
Completely agree. Their problem is that corporate wants more money to funnel back into AI and it is really inconvenient that Xbox provides only a couple billion dollars per month whereas Office and Cloud provide many more billions. What a complete joke.
It comes across to me as a really honest letter. At least they are talking about spinning out studios instead of shutting them down, I think that plays better than previous announcements. (e.g. make a hit game like Hi-Fi Rush and get shut down!)
Fair, but who told them to buy up everything? That part annoys me to no end.
And the bad plays are management-related, so they’re firing a bunch of people…
Well it was Phil Spencer, who got fired. They basically cleaned house in management already.
> - Then they did not have to give away popular games day one on Game Pass > - And finally, they did not have to raise Game Pass prices to improve the profit margins. Of course, consumers pulled out.
I saw this coming from day one. The instant they did Netflix for Games, it was going to gut their margins. And then the inevitable pullback, either holding new games for months or raising the price, was going to kill the value proposition.
They said "This will make us a mint" and celebrated the victory years too early.
Another thing that is crazy to me (and maybe this is a premonition) is that if you play MS games online on Xbox, you have to have a subscription, but if you play on other platforms you can play for free. They are literally punishing their own users with additional fees. I thought this was just Minecraft, which is why my kids and I always play Minecraft on our iPads instead of on the Xbox, but when I recently bought Forza Horizon 6 I was amazed to see that I could play online with other players for free, whereas on Xbox I had to pay to play online in Forza Horizon 4 and 5. So they are basically saying "you gave us a bunch of money for hardware? Cool, now give us more money every month to use it online!" It's absurd, and it's one of the things that drove me away from Xbox. I also have friends who have been lifelong Xbox fans who have had enough and are leaving for Steam.
I think they changed it not long ago so you can play free to play games without the online subscription. Just like on PlayStation network.
But paid online games you need to be subbed yes.
The times when companies only restructured when they were actually making losses are long gone. Today, if they "underperform" (i.e. they're not as profitable as the stock market thinks they should be), investors want to see blood today rather that tomorrow.
3% profit margin means you're better off selling the business and investing the cash into US bonds at current rates.
If everyone thinks like that, no jobs are created. Xbox hires a ton of people and creates genuine value for consumers. Okay, that last part you can question, but I’m an original Xbox-er so I believe in it.
3% profit should be totally fine for any business. The planet is cooked, I think we can live with the shareholders making a bit less.
a couple are symptoms of their problems and the others are causes. They lack the understanding to know which ones. They tried (and failed) to build a subscription model out of game renting while cannibalizing the very studios they purchased. There was no saying no. They were going to take you over whether you wanted them to or not. They would also scheme to half-ass your marketing partnership so you wouldn't make targets so you would be vulnerable to a take over. It's Microsoft at it's finest. A lesson in Greed Above All Else.
https://wccftech.com/xbox-layoffs-gut-id-obsidian-zenimax-on...
> - The make around 5 billion in revenue per quarter - The problem according to them is profit margin - around 150-160 million
How are they still doing 5 billions in revenue per quarter? Are Xbox and games still sold? In my area they seem to have disappeared from the physical stores alley. I realized that a few weeks ago there were Playstation and Nintendo products in the video game area but no Xbox anything.
Revenue is just not a useful concept to understand the state of a company. I can easily generate revenue by simply exploding costs. Blockbuster had huge revenue.
If we talked about costs as much as we talk about revenue (which carries roughly the same amount of information) people would judge theses reports very differently.
xbox is not a startup and neither m$ a vc. the board is not in love with gaming to continue sponsoring it. but if the solution is to make it even worse to game in their platform, then i hope this crashes and burns for good.
You have to leave your local maximum to find the global maximum.
That's a 3% margin which is unsustainable. It's less return than you can get from buying treasuries, which means that if they don't improve it they will go out of business.
This is the frustrating thing reading these comments, where people seem to assume that any profit margin is good enough to sustain a business.
People see a 3% return and think, "Well, they aren't losing money so there is no reason they can't just keep doing business as usual." What this idea is missing is that the investors in a company aren't choosing between "keep my money in this company" and "sit on the cash", they are choosing between "keep my money in this company" and "invest my money somewhere else"
In other words, you aren't just looking at direct returns on an investment, you also have to think of the OPPORTUNITY COST of the investment. By keeping their money invested in a business making 3% returns, they can't invest that money somewhere else.
So basically: The stock market is cancer.
It's more like evolution through natural selection. If you can buy a treasury that returns 3.6%, you will NOT invest money in a business that has more risk, is only returning 3%, and has no believable growth story. Even worse, if you own shares in that company, you will sell them and shift the investment dollars to something with better returns or better chance for growth.
It's this competition that leads to prosperity, the alternative is central planning which leads to poverty.
Talk about frustration reading these comments. People knee-deep in Kool-aid, thinking this is the only and god-given way things should be.
>The make around 5 billion in revenue per quarter
I wonder how are they taking in 5 billion per quarter when their latest console barely outsold the first Xbox. I doubt it was making a bit less than 5 billion per quarter with quotes like "Ultimately, Microsoft lost an accumulative total of $4 billion from the Xbox, only managing to turn a profit at the end of 2004." on wikipedia.
So how are two consoles with roughly the same sales numbers so far apart in revenue?
These companies are discovering that selling products to consumers is no longer the thing they need to do in order to earn money.
Might work if you don’t: out-price your hardware, get rid of disc trays, make GamePass expensive, force Microsoft accounts and online mandates, buy up every studio and force them to out out crappy updates,… ahm, no it’s the users, they’re getting old and cranky.
Yikes, I bought every Xbox console and plenty of day-1 releases, but skipped the last gen when it became clear that the platform isn’t about gamers anymore.
Triple-As are also getting tiresome, so I think plenty of people are happy to get a cheaper title on Steam that feels like better value.
You also missed the part where they positioned themselves as the value offering. That's gonna be hard to beat whilst still achieving "return to growth".
I agree with the mess part. I also feel like a reset is necessary and they are messing it up more right from the start. Fourteen layers of management? That's insane. But 3200 layoffs is a hell of a lot more than middle management cruft. Asha certainly has her hands full over there and the honeymoon period - if there even was one - is definitely over.
Fully spot on, I really don't get late capitalism, it feels pretty much back to a feudal society, with big tech replacing the lords up in the castle.
> And finally, they did not have to raise Game Pass prices to improve the profit margins. Of course, consumers pulled out.
Myself and 2 of my friends stopped our subscriptions the day that happened and never went back. I know it’s anecdotal but I’m happy to see others did the same.
> So first of all, they are big! Secondly they are not at a loss. They just have a "thin, non-growing margin".
At a roughly 3% profit, they are barely breaking even and have no money to invest in staying current. It's not a sustainable business.
Why is any of this surprising? This is just MBA fundamentals.
Tell me you know nothing about business without telling me you know nothing about business.
Compulsively chasing only the highest margins has been toxic for the country as a whole.
"Chasing the highest margins" is almost the entire point of a market based economy, and is the main selling point for capitalism. I get your complaint, but if you reframe it I think it isn't the real problem here.
The whole point of a market-based economy is to allocate resources to making things people actually want. How does the market figure out what people want more of? Well, profit margin. If someone is making a lot of profit selling something, that is a really good sign that people want more of that thing. Other people see the high profit margin, and move to get into that business. More of that thing is created, and people's demand is satisfied.
The high profit margin is the signal (and the incentive) to get more of that thing.
In other words "Compulsively chasing only the highest margins" can be rephrased as "investing in things that people want more of"
>"Chasing the highest margins" is almost the entire point of a market based economy, and is the main selling point for capitalism
That's news to the ALDI brothers and Henry Ford. Capitalism used to be about the exact opposite. We moved from low volume - high margin, extractive feudal-like economics to consumer capitalism, high volume low margin. You create wealth by churning out commodities at low margins that the average worker could buy.
The tech industry is trying to exactly reverse this, as Varoufakis appropriately points out, by returning to techno-feudalism where you're not a consumer but a sort of platform serf. High volume commodity markets is exactly what these people try to eliminate to return to a kind of direct resource extraction.
What else do you expect from publicly listed companies?
Mix that with the increasingly higher concentration of wealth, and things are just going to get worse.
50 years ago, publicly listed companies understood that chasing short-term growth targets undermined long-term sustainability. The current failure mode is not an inherent property of being a publicly listed company, it's a consequence of incompetent leadership and bad regulatory policy.
Well this is the new Xbox boss, Aska Sharma trying to course correct her own actions after pushing out Phil Spencer (and team). Phil had a deep understanding of the game world about profit margins and how the Xbox is essentially a stake in keeping Microsoft in the minds of consumers, a place in the home. Aska has a shallow understanding and sees only the financials and wanted to increase profits. Now she is burning it all down to try and “reset” and replace people with LLMs to increase profit margins. I imagine she will be pushed out herself end of year or next Spring (2027) once her naïve plan back fires.
I don't really have an opinion on Sharma since she's very green, but Phil Spencer's tenure was an unmitigated disaster. The strategy of rolling up studios and trying to grow through GamePass both completely backfired, with the studios producing few and generally unsuccessful games, and GamePass failing to convert casual players while demolishing your take from your hardcore players.
Was definitely time for major change at XBOX. Is this the right direction? I have no idea.
Just out of curiosity, I checked her Wikipedia page and this caught my eye:
> Sharma posted in 2026 that she had recently begun playing video games under the gamertag AMRAHSAHSA to "learn and understand" the games industry
Imagine running the Xbox division and only just now picking up a controller.
A part of me wants to be generous in interpreting that and say, OK, maybe it's the first time she's playing games semi-seriously in order to understand the capital G Gamer. Surely she's played games before, like say, the Sims, Bejeweled, Mario Kart, or picked up a Nintendo DS or Switch in her lifetime. Heck, even Wii Sports should count here in some capacity. Most people have played games casually in their lifetime by this point.
The other part of me though says that, no, it is in fact pretty possible that she hasn't played any video games of note, other than Wii Sports that one time. And even if she has played games casually, is it really too much to ask to have the person leading the Xbox brand be someone who can press the X button on their controller and not be confused by that?
It's a publicly listed company. They needed someone without the emotional attachment to 'Gaming', but with business nous, to make the decisions needed to meet her mandate, which is to ultimately increase shareholder value.
A 'Gamer' would have found that more difficult to do.
Would we say that about any other industry? Can you run a film studio if you have never watched a film in your life? Can you run a publishing house if you’ve never read a novel?
Press Q to doubt. There are plenty of biz savvy folks out there who at least gamed in high school or college.
There's this little concept of "cultural sensitivity". Given the size of the King thing it would even be fair to have somebody who had a serious Candy Crush habit.
At least they didn't create a fake profile for her the way Elon Musk made one.
I think the "glass cliff" is going to claim another victim.
Are you conflating Asha Sharma with Satya Nadella? Asha just joined Xbox, she had no role in any prior decision making.
Asha came from the AI division of Microsoft, she didn’t pop out of nowhere. She is strongly tied to the Microsoft LLM plays.
IMO Phil was very clearly pushed out by “AI will cut costs talk”. No one makes huge investments into acquiring companies and then suddenly retires (after running the division successfully for decades) and none of his underlings were promoted into the role, they all left when he did.
I think Phil was pushed out by the complete failure of his strategic vision when confronted with reality. He had a vision of growth and prestige, and money would follow. I loved his vision in its grandiose and lofty goals, but he completely failed to capture any of the "how to make it happen". It stays a fantasy.
She’s been in her position for less than 6 months. All of the problems were under Phil, so I don’t understand what you mean by course correcting her own actions
Don’t know why this is being downvoted because it’s absolutely on the money. She’s a very green exec that is doing the classic “change everything to make it look like I’m doing something” while also not really achieving anything.
The rebrand to ‘XBOX’ is a good example of how they’re already out of ideas
Maybe they should try pivoting the Xbox into being a TV platform /s
And they should make an accessory that is an always on camera! Wait a second.... I think I've seen this one before.....
We’re going in circles
Different eras of Xbox, and tech as a whole.
Spencer's strategy for Xbox was very 2010 coded: rely on the billion/trillion dollar company to undercut the competition and gather market share and leverage. Classic embrace, extend, extinguish. That's why they bought a bunch of arthouse studios who don't immediately make money, invested hard in a subscription service that was wildly unprofitable (a strategy that even TV services couldn't make profitable, mind you), and focus on moving software more than hardware.
That strategy shifted dramatically between rising interest rates, a cooling consumer market, business uncertainties, and companies simply wanted to throw any excess fat into the AI rat race. So those art house studios were removed, Gamepass needs to enshittify pre-maturely,production needs to slow from a variety of offerings to the usual safe and sure releases. And of course, the biggest expense needs to be trimmed down on: because no one is stopping them from doing it in the US.
The number will still go up, but in different ways. They aren't doing this because they are in the red, they are doing it because they want all the money instead of a lot of it.
seems like you don't understand business
I don't usually take HN audience seriously when talking about economics
It was pretty rich seeing armchair video game industry analysts act like the new CEO was gonna usher in a new age for Microsoft's gaming division because she got to announce the updated logo and some games that would have obviously been in development long before she became CEO.
Microsoft is never going to figure out gaming. It's more art than engineering and they can barely manage the engineering with all the intervention from marketing and HR in their products.
To me it's mostly unfortunate that this has left PlayStation with no direct competition because they've noticed and leaned into the not-giving-a-shit attitude after they had such a great console generation with the PS4. It's kinda crazy that we're already almost due for a new console generation and there's very little appetite for new consoles after this generation where it feels like it barely got started. And between graphics almost certainly at the point of diminishing returns, and hardware prices like they are right now, I can't imagine there's a market to sell something more capable than current gen consoles. The industry is in a very strange state.
To me, the graphics abilities have been there for a decade... what we need are better games and gameplay. More fun games without gotcha, pay to win, loot box efforts. Too much effort is going for dazzling graphics at the expense of overall gameplay. How many people are still playing CoD, WoW and so many other games from over a decade ago? How many refreshes of Final Fantasy have we seen?
The graphics can only carry you so far. There's indy adventure games with SNES level graphics that have millions of daily users.
> Too much effort is going for dazzling graphics at the expense of overall gameplay.
Yes, 100%. I love good graphics, but game play is the most important thing. If you don't have good gameplay the graphics mean nothing. A game with great game play and great graphics is something to behold.
I recently finished Split Fiction and they really nailed it. I hope studios take notice!
Split Fiction is fantastic. My wife, about 0% gamer when rounded down, is still talking about it months later. I had a blast too - the game manages to be extremely fun and a decent challenge for both gamers and non-gamers alike. We'll be replaying it, but swapping characters next time.
When we played it, we had just finished It Takes Two, which was also great, but Split Fiction immediately dethroned it. I can't wait to see what Hazelight comes up with next.
Is Split Fiction easier? While I thought the platforming in It Takes Two was fairly pedestrian, it was challenging enough that I was unable to get the other half to tough it out to the end.
Split Fiction has a couple of mechanisms that make it accessible for people who are not experienced gamers. There is a general "reduce damage done by enemies" setting that make dodging attacks unnecessary. If you get stuck on something, there is a "skip to next checkpoint" button. This is very helpfully for the one or two really oboxiously hard parts. This is an improvement in accessibility over the developer's previous game It Takes Two.
I'd highly recommend Split Fiction, both for its game play and story. It is also superior to It Takes Two in that there is no part where the games "to continue playing, press X to dismember your daughter's anthropomorphic stuffed animal to make her cry". That was a jarring and unpleasant shift in tone for an otherwise mostly light-hearted game.
This has been a recurring theme since the dawn of video games: Everyone talks about graphics (devs and gamers), but ultimately the good and beloved games are the ones with great gameplay.
Also dazzling graphics has been mostly visual instead of experiential, that is, with the advances in GPU capabilities, we do get beautiful effects, but the intractability with the said infra is seems to be stagnant (and in some cases regressed)
The way things interact in the game world peaked around mid 2000s, just in time when CPUs started to not follow moors law.
As of now, interactive environments are still almost as good as half life 2 from 2004. Gaming is all about the feel of it, which also includes the visual component.
I think graphics peaked ~2015. But interaction still leaves a lot to be desired; we still have slipping and characters who can't walk stairs in AAA games to this day. Making characters more physically grounded and present seems like the obvious thing to improve to me.
This is something audiences are clearly desperate for today. I think it's obvious when looking at the huge success of Helldivers, Bodycam, Ready Or Not, Arc Raiders, (none of which are particularly innovative) players appreciate high quality, tactile and grounded world interaction.
Counterpoint is Roblox, which had one of the most innovative game engines ever. It could multiplayer simulate thousands of blocks of destructible terrain in 2006.
This feature was mostly ignored by the playerbase because developers found it easier to create static setups and focus on iterating on other parts of their gameplay.
The technological innovation still needs to be fun, though. Red Faction: Guerilla (2009) had destructible buildings to the point that they were constructed by laying down blocks in a physically correct way and letting the physics engine handle the rest, and blasting the hell out of them in the middle of open combat was incredibly fun.
It was very fun. Brick Battle, Galleons, the game with many towers. The explodey terrain put Roblox on the map initially.
The problem is the opportunity cost of destructible terrain was too high. Developers could get fun for lower effort by creating linear levels with better design/graphics/etc as destructible terrain makes everything "blocky" without significant developer work.
This is something 'The Last Guardian' absolutely nailed! Everything was just so grounded.
Yes, as a game it had a lot of flaws that many other games also had, but the things it excelled at were absolutely unique.
What did it excel at that hit the right notes for you?
Still occasionally fire up Red Faction Guerilla just to see the promised future we never got.
This is where Nintendo is at. It’s hilarious how much fun me and my kids are having playing games like Animal Crossing, Super Smash Bros, Mario Party, Pokemon Pokopia, and the surprise smash hit has been Tomodachi Life: Living the Dream. My kids make all the neighbors and have them get married and laugh about it and it’s just such a goofy concept. The graphics are good enough that you no longer notice there’s graphics, just the art.
Switch 2 is a fantastic console with an astonishingly fun first party library, and Nintendo just over there doing their own thing like they’ve always done.
Nintendo are basically the only people who held out against in game spending, for which I salute them.
I spent a few years in and around the industry and there was so much insanity around the need for in game monetization that it just made things much worse.
And because the game studios didn't care about it, none of the money stuff worked, making executives even more upset.
All to catch some vision of F2P money which is an entirely different business that these companies couldn't possibly support.
It's very sad for the industry overall (this particular decision is MS killing stuff off because the margins aren't good enough to funnel more cash into GPU gods).
Nintendp dabbled briefly with it. But they know their audience and very much did not want to risk any PR hit by associating too closely with the typical gacha/lootbox model. They saw the Roblox/Fortnite smoke long before most of the industry and turned off very quickly.
But there's one specific statistic to why Nintendo can keep doing what it does in a way no one else can: 98% retention rate. You get into Nintendo and you basically never leave. Even for Japan, that's well above the 70% retention rate you'd expect. Keeping that kind of institutional knowledge for an entire career makes them really good at what they do, and the unfortunate decades of Japan's economy meant they were less tempted by amassing huge loans or risks on experimental stuff.
Maybe they didn't become trillionaires, but it means they amassed a huge war chest and can weather storms that US companies are currently in the middle of.
Apple has similar retention. Almost all the senior leaders were ICs or low level managers there 20 to 30 years ago.
There's a lot I don't like about Nintendo, but the one thing I admire about them is they understand that fancy cinematic graphics aren't what make a great game.
There are many great quotes by Nintendo folks about this approach. One of my favorites:
> I like to think of it like buying a car. Admit it. Your left brain looks at a vehicle in terms of the numbers. What's the horsepower? The towing capacity? The 0-60? That's our competitor's approach. But your right brain is different. There's only one question out there: sitting behind the wheel, where will this baby take me? In other words, do you want to go just a little bit faster, down the same streets you've always driven, or down a new road, to places you've never seen before? That's the difference with Nintendo DS.
Absolutely... They've been able to make a lot of games just fun even if the graphics aren't stellar. To this day, I wish they'd have released a Wii Sports Golf as a separate title with several courses.
Tomodachi Life sounds like The Sims but with rounded corners.
There's a bit of Mad Libs in there as well, you can for example add your own conversation topics or draw your own food items or pets which the characters will then talk to each other about.
Nintendo is great for children, yes. I wish there were something like them for a more mature audience.
What does this mean exactly? Because Mature games are designed to appeal to 14 year old boys.
Are you referring to some kind of David Lynch of gaming?
Yeah, I don't mean "mature" in the sense of the rating system, which does in fact mean "made for 14-year-old boys."
I don't like or understand David Lynch, but you get what I'm trying to say. There is no one in the video game landscape doing something similar to what Welles or Kurosawa did in cinema, or what Yorgos Lanthimos and Ari Aster are doing now (or Matt Reeves and Guillermo del Toro, if you're not into arthouse stuff).
Every time someone argues about this, they cite the same old examples (Disco Elysium, Outer Wilds, some narrative indie game)... but those examples usually lack in gameplay, which is, in my opinion, the most important part of what makes a video game its own medium.
I hope to see in my lifetime someone do to video games what the French did to cinema in the 50s and the Americans did in the 60s: graduating the medium from a disposable entertainment artifact into an art form for the ages. The medium is still young, it's not impossible.
like story driven games that Sony is famous for. Imagine a Spiderman, a last of us, or Uncharted. Large story driven games largely for older 30-40 year old market
Sex, Drugs and Rock and Roll... not quite 14 but close.
> gotcha
Gacha?
https://en.wikipedia.org/wiki/Gacha_game
They're the same picture
Cutting edge graphics can even be actively detrimental to a game by lowering performance and limiting game design.
> limiting game design
It's what RPG players have been saying all this time about voice-overs.
It is sold as an accomplishment, but it limits the scope and writing of a game.
It's... odd that while Steam is the biggest PC gaming platform and the biggest platform for new, unique, interesting games ever, Microsoft isn't investing more in the people developing games for it. Microsoft can use it to filter out the slop, make offers to the best games, offer help with porting to consoles, and (probably most importantly) offer to put them into the xbox live program, because the xbox live subscription is xbox's biggest source of recurring revenue.
Access to Steam's library for a fixed monthly price would be huge. Actually I'm surprised Steam/Valve isn't offering that yet, it'd be huge, and for their new consoles it would be a perfect fit.
> Access to Steam's library for a fixed monthly price would be huge. Actually I'm surprised Steam/Valve isn't offering that yet, it'd be huge, and for their new consoles it would be a perfect fit.
As a consumer, I really hope they never do that. I hate subscriptions and strongly prefer to just buy games. Once there's a subscription option, I would imagine the great sales would get significanty watered down. If you're a game seller and you can get that sweet sweet recurring revenue, it's too strong a temptation. We've seen that story play out time and time again in SaaS (and even some desktop applications now).
> Too much effort is going for dazzling graphics
Could have fooled me. I haven't seen a meaningful improvement in game graphics for at least a decade.
There's improvement in tech - check out the Unreal Engine's tech demos for example - but that doesn't really translate into visible end results because one, modern hardware can't handle all the bells and whistles, and two, when you're playing it all just blends into the background, and composition/art direction trumps details and fidelity every day of the week.
That said, the tech isn't wasted, it's also used in film graphics and animations and the like. And photo mode, where games can open up all the registers because framerate isn't as important then.
But yeah. Unreal tech demos, or if you have a PS5, there's a free tech demo called The Matrix Awakens that showcases advancements from a few years ago (heck it's been 4 years already).
We are well into the diminishing returns era now. It not done via better art designs, now you have to push significantly significantly harder to get improved results via brute forcing it.
I am very cautiously optimistic about this. It seems there has been a lot of tooling change over to integrate ray/path tracing into systems.
Once this becomes a little more ubiquitous we might start to see some decent stuff but so far it has been 7-8 years since the first ray tracing hardware came along and it is still far from implemented consistently.
you don't get the insane profit margins they want without those predatory practices, not in this industry and if you do it's a one-off and not something you can do every fiscal year
I’ve been saying this for 20 years. I care much less if the game is visually stunning than if the core game is fun. It could be a paintball themed FPS for all I care as long as the core mechanics are fun and the story is engaging, I care very little. Also, good graphics don’t have to be hardware intensive—not everything needs to seem photorealistic.
I do still play a good bit of Black Ops II Zombies... which came out in 2012. Treyarch took notice, and the last CoD was a crappy attempt to cash in on the fact that the last good CoD game was over a decade ago.
A few great games I've played in the last 8 years, about the span of a generation, a mix of AAA and indie:
- Red Dead Redemption 2 https://store.steampowered.com/app/1174180/Red_Dead_Redempti...
- Cyberpunk 2077 https://www.gog.com/en/game/cyberpunk_2077
- Supraworld https://store.steampowered.com/app/1869290/Supraworld/
- Outer Wilds https://store.steampowered.com/app/753640/Outer_Wilds/
- Mini the Hollower https://www.gog.com/en/game/mina_the_hollower
- Pipistrello and the Cursed Yoyo https://store.steampowered.com/app/2870350/Pipistrello_and_t...
- Shadows over Loathing https://store.steampowered.com/app/1939160/Shadows_Over_Loat...
- Animal Well https://store.steampowered.com/app/813230/ANIMAL_WELL/
- Dwarf Fortress https://store.steampowered.com/app/975370/Dwarf_Fortress/
- EMUUROM https://store.steampowered.com/app/1634360/EMUUROM/
- Dispatch https://store.steampowered.com/app/2592160/Dispatch/
- MOUSE: P.I. For Hire https://store.steampowered.com/app/2416450/MOUSE_PI_For_Hire...
- Split Fiction https://store.steampowered.com/app/2001120/Split_Fiction/
- Final Fantasy Tactics - The Ivalice Chronicles https://store.steampowered.com/app/1004640/FINAL_FANTASY_TAC...
If you want to see what modern AAA gaming should be and haven't already played it, I highly recommend Cyberpunk 2077. It's not perfect, mostly due to time constraints, but it excels in most categories, and it looks and plays great. No microtransactions, no DRM and the one DLC is very good. It's on sale for $18 on GOG. No DRM should be enough reason to signal to the market to produce more games like this. Also, the developer owns the GOG storefront and so 100% of your profits go directly to them.
I also cannot recommend Supraworld enough to anyone who likes classic 3D platforming and puzzle games such as Portal or Antichamber. Supraworld has ruined other platformers for me. The developer, David Munich, is a puzzle maestro who has already put out other successful games such as notpron https://notpron.com/ and Supraland. His philosophy for puzzle design is going to influence the genre for decades to come.
And of course, if you haven't played Red Dead Redemption 2 already, it's a bonafide masterpiece, deserving of 10/10. The game is an absolute behemoth in terms of development/marketing costs and profit, and is just a sight to behold. I know it borders on last-gen because it came out in 2018, but the ninth-generation of consoles was where it found its home, since the eight generation could barely handle it. Dan Houser left Rockstar after finishing this game due to being a 50-year-old man completely exhausted from inflated development cycles, so this might be the best game Rockstar will ever make.
Of course I could go on to recommend dozens of other memorable recent indie games, but I definitely think AAA has mostly stagnated. Cyberpunk 2077 initially released 6 years ago. Red Dead Redemption 2, the modern gold standard, released 8 years ago. I have heard great things about Clair Obscur, but I haven't given it a chance. There are some worthwhile remasters, like the Shadowman remaster and upcoming Thief Gold remaster done by the Kick brothers at Nightdive Studios, or the recent Final Fantasy Tactics remaster.
Game production could stop today and I'd probably be good for the rest of my life. There's still such a vast back catalogue even after playing all of the classics. With development cycles for groundbreaking AAA titles closing in on a decade and production costs surpassing half a billion, I get a sense that a mature ecosystem of AI-augmented tooling is what might end up bringing some sanity back to this business.
I'll also point out that in the 80s, AAA video games have been $40-70 since the 80's. If the price of games had gone up with inflation, we'd be paying $100-150 per AAA game, there would be more money in the industry and ideally better salaries and working conditions across the board. As consumers, we need to stop and analyze the perverse incentives driving this market and figure out how to have better dialogue with developers so that we can come to an agreement on more realistic prices but less anti-consumer bullshit.
> Microsoft is never going to figure out gaming.
That's the thing -- for a while they had figured out gaming. The xbox and 360 were solid consoles with lots of great internal and external games. Halo was incredible.
Then the company did the thing that Amazon did, Blizzard is doing, and all the big tech companies do -- they thought their big war chest meant they should make bigger games. Budgets ballooned, game timelines extended. Now they are stuck with games and studios with 10 year dev cycles trying to create the biggest, the most incredible, the most expensive games.
There's SO many devs out there making incredible games for fractions of the cost. It's a shame Microsoft (and others) keep thinking that reaching for bigger means better outcomes. No one wants "the game only Microsoft can make", everyone wants another great Zelda. Or Gears of War. Or Satisfactory. Or Mina the Hollower. Or UFO 50. Or Animal Well.
Hell, people want a game about shelving 3000 books in an Arcane library. Let games be smaller, more exploratory, more creative experiences. Let your studios get weird with it. Let them explore spaces and take risks. Stop sinking tens of billions into games. Start sinking tens of millions into them.
> No one wants "the game only Microsoft can make", everyone wants another great Zelda. Or Gears of War. Or Satisfactory. Or Mina the Hollower. Or UFO 50. Or Animal Well.
This IMO is a display of what is wrong with a lot of online gaming discourse — it is dominated by people who spend more time playing and critiquing games than 99% of the population and has a tendency to overemphasize indie darlings and ignore the massive commercial success of mainstream titles. Forza 6 released in May and is wildly popular among normie gamers. So is your yearly call of duty instalment which is now a Microsoft property. Go ask people coming out of a Walmart if they know what is Animal Well and they will probably think you are soliciting donations for a local animal shelter.
I'm not saying you can't criticize mainstream AAA games. I get they are boring, formulaic and increasingly rely on predatory business models. But if you want to talk about business and what kind of games companies should invest into, you can't just ignore the massive commercial success AAA already enjoys or the fact that most indie games flop anyway.
And yes, people will play games that can only be made in an established franchise by a major company. Forza is able to license real world car models from companies like Porsche because it is a well known and safe brand backed by a big company. Not to mention games like Microsoft flight simulator or GTA.
Sure, I love a Forza Horizons (I'm not much for mainline Forza), but those games aren't really experiencing the same scope creep as the the rest of the industry.
Call of Duty is, but it's also noteworthy that sales of CoD are slumping. Hard. Like down-by-60% hard. And the gamepass numbers aren't really boosting it back up.
Also, I think you'll find my list absolutely included big games. Gears of War? Zelda? These are not "indie darlings".
Sales is one thing, recurring revenue is another. Their mobile titles are also huge.
AKA "we just passed the 8th anniversary of the Elder Scrolls 6 announcement trailer"
Also worth noting Skyrim first came out on the 360; an honor shared by GTA5, but at least they have an imminent release.
I think another big issue they have is their insistence that most (ideally all?) of the people working on their games should be temporary employees. When your most valuable studios get out of the business of providing secure and sustainable employment, you lose the ability to build institutional expertise. When you treat your creatives like a commodity, you'll get generic assets and writing regardless of budget. When you focus on everything but the games themselves, it shouldn't come as a surprise that your big franchises degenerate into undifferentiated revenuemaxxing slop and unique new projects that might get people excited die on the vine.
Overall I think western AAA game development is dead. The executive class killed it with their greed and incompetence, and as long as these huge corporations are allowed to keep buying smaller studios/publishers and shutting them down a few years later, nothing is going to change.
It was once the Wii with anemic hardware and waggle ended up outselling the 360 that MS changed. They went from pushing forwards to chasing trends.
I agree, they need to be focusing on smaller projects that take risks. Maximum 24 month dev times but with modern tooling could do some special things. Maybe if after 6-12 months they see something that is gold, they can give it more resources but that would be on a case by case basis.
I felt like the Kinect was pushing forward, and not chasing the Wii. Never owned one, but the tech sounded cool
It was 100% chasing the Wii. It didn't chase all that hard, either.
I might be looking at the Kinect with rose-tinted glasses, but bringing depth and camera-based pose tracking to the masses in 2010 is pretty impressive.
Sure they were chasing the Wii, but they did try to innovate on the hardware and capability front, and back then VR was nascent, but investing in this area for gaming made sense then (it was very easy to imagine VR games being the 'next big thing').
Unlike Nintendo, Microsoft couldn't really figure out good and fun gameplay for Kinect. Basically only dancing games took advantage of it well IMO?
> Microsoft is never going to figure out gaming.
I feel they kind of did in the Xbox 360 era. Maybe it was just down to luck because Sony dropped the ball in the early years of the PS3 and Microsoft got the jump on them a bit.
The 360 was amazing looking back on it, Xbox Live, trying out innovative ideas like 1vs100, attracting lots of publishers to the platform for games, Xbox Summer of Arcade.
I was a big OG Xbox fan but even then I knew deep down it was never going to catch up to Sony with the PS2. Then the 360 came out and it was brilliant.
Sadly they threw it all away with the Xbox One and while recovered some credibility somewhat with the Series X, it's definitely not the same as those golden years of the 360.
Maybe the 360 was an aberration in Microsoft's history and the years since then have just been a regression
Xbox Live Arcade, and the accessibility it bought for smaller studios and indie developers was massive.
You could say it's just a response to Steam and the PC gaming indie scene, sure, but the 360 era is definitely one where Microsoft hit all their strides. Then they ruined it with the Xbox One.
> Microsoft is never going to figure out gaming. It's more art than engineering and they can barely manage the engineering with all the intervention from marketing and HR in their products.
Gaming is like cuisine. Can it be art? Sure. But most people will never visit a Michelin starred restaurant in their whole lives. They go to McDonald's and their local equivalent. Mainstream games have been like McDonald's for a long time. It's not about being a thought provoking artistic expression. It's about engineering a predictable entertainment experience that the average Joe can enjoy while being half checked out after a day of work the same way he enjoys a Budweiser or a Big Mac.
Of course, no critic will ever be caught praising McDonald's for its culinary artistry. But it doesn't matter. People will keep spending money on it, and the business continues. Same deal for gaming.
i don't know, it's hard to generalize about audiences this big.
Thus the yearly Call of duty titles.
> And between graphics almost certainly at the point of diminishing returns, and hardware prices like they are right now, I can't imagine there's a market to sell something more capable than current gen consoles.
I haven't bought a console since the Xbox360 and Wii. But I have a friend who still games pretty heavily and is low income. He can not afford the latest PS5 and is still on a PS4. We were talking the other day and he said "I love consoles because they are simpler and cheaper than a PC but now I can't afford either. The graphics aren't getting much better so what am I paying for? What happened to $400-$500 consoles? Remember when consoles were 200-300?" Of course those last few prices were 90/00's but I agree, the cost of a new console is quite insane for not much gain.
> Of course those last few prices were 90/00's
Two years ago, you could get an XBOX/Switch for 300, or a PS/Steam Deck for 400. Granted, the PS and XBOX were digital only. But now the cheapest XBOX is 500, the Switch 2 will soon also be 500, the PS5 starts at 600, and the Steam Deck is 789. Things have been going up slowly, but the last year has been absolutely killer.
$200 in 1985 (NES launch price/date), adjusted for inflation is just shy of $600 in 2026. RAM and GPU prices are really hurting the consoles right now, but compared to inflation benchmarks up until about 2020 they were considerably below inflation.
If there are next gen consoles, they will likely be over $1k with current memory prices.
At those prices consoles would no longer make sense. I don't think there would be enough people who could afford them to have a good enough install base for AAA games. And non-AAA games don't need any more hardware than what we already had last gen.
They are talking about purchase plans like Klarna etc. and like people have for their iPhone. Because it's going to cost as much as an iPhone.
I read that when they designed the Xbox Series S and X they knew it was going to be difficult to lower prices down the road because wafer costs were increasing every year. Which is why they launched with 2 models from the get go, one cheaper than the other. And even so they were losing between 100 and 200 dollars per console.
Now things are even worse with the RAM and SSD components crisis. The Series S has now the price of the Series X when it launched.
I'm in software and I do alright, but I'm still on a PS4 too. Just can't justify the upgrade when there's still so many great old games available. Maybe when the next Horizon Zero Dawn comes out, I'll be forced to upgrade, but I'm taking my time about it.
Same here. At no point has the PS5 held more than 3 total exclusives I wanted. Mostly by virtue of them constantly de-exclusivating them. Right now, only Astrobot and Demon's Souls (which was there since the start) could even convince me.
I don't think I'll need a PS6 honestly, I am okay with waiting or going without titles sony is releasing.
The pandemic and scalpers really destroyed peoples apetite for the "new thing" when this generation came out, and with that boost missing studios saw little point in going exclusive perpetuating the vicious cycle, it's just in the past few years that there's really been exclusives for this generation that didn't also support older consoles.
And even then, already the PS4/XbOne generation added stratification making it more "PC-like" with the XbOne-X having heftier hardware (not to mention it being PC-like compared to PS1/PS2/PS3/Xbox360), that then continued with the Xbox-series-X and Xbox-series-S.
Consoles aren't specialized hardware for "magic experiences" and everyone knows this, it's just another "device" that happens to be connected to a TV with a controller where people are gatekeeping software availability.
Microsoft also didn't do themselves any favor with that naming scheme. In the current generation (I think?), you have: - Xbox X - Xbox S - Xbox Series X - Xbox Series S
Compared to: - PlayStation 5 - PlayStation 5 Pro
or: - Nintendo Switch - Nintendo Switch OLED - Nintendo Switch Lite
Anyone who's literate in English (and knows that OLED means "nicer screen") can immediately rank the PlayStations and Switches into "good, better, best". But with the Xbox, how is anyone supposed to know which one is which? Is the Series version better or worse? Is it a whole new generation, with whatever backwards-compatability implications that a new generation brings? I need a chart and I probably still won't be able to tell you if you ask me in a month.
Slight correction. Last generation was the Xbox One (already a confusing name because some people thought that was referring to the original first Xbox)
A few years into the generation they updated the Xbox One, putting it into a smaller form factor called the Xbox One S, and at the same time released a spec bump model called the Xbox One X. I don't believe any of these are still available for purchase.
The new generation has the smaller/lower-powered Xbox Series S, and the higher-specced Xbox Series X. Leaving the overall generation with seemingly no name, other than "Xbox Series" I guess?
But yes, the names are terrible because S and X both refer to consoles from last gen and current gen.
As an anecdote of how bad the naming is, I own one of these, but couldn’t tell you which one.
You could hardly come up with a worse naming scheme if you tried.
AMD's Ryzen AI MAX+ 395 would like to have a word with you.
This is absolutely correct, I game on Xbox pretty much every day or every other day, I have been with Xbox since 360 or whatever the first one was called. I am still constantly confused by the naming. There also was another revision to the top of the line Xbox series X and the Xbox series X digital edition. I can’t imagine someone looking at the naming scheme pre-release and saying yes, let’s go with that.
I mean, the first one was just called Xbox.
(Tiny rant - and even THAT name sucked. Internally, since it ran on DirectX (already a name that only a mother could love), it was called the DirectX Box. And rather than come up with a real name, they got attached to their lazy idea and shortened it to Xbox. They have made miserable naming choices for this thing since day one. Since BEFORE day one.)
Is Xbox really worse than Play-Station?
It's a pretty good name actually because it's unique, easy to Google, and is never ambiguous in conversation. It's all the suffixes that made a mess of it.
I've had an Xbox I got from a friend and I legitimately don't know which Xbox it is lol
I’m sorry but Nintendo don’t get a free pass in naming. Switch v switch Oled is as clear as Xbox series vs Xbox ones
Nintendo, the company who released the Wii, wiiU, gameboy color, game boy advance, DS, 2DS, 3DS; all of which are similar but vaguely incompatible?
Switch vs Switch OLED is fine, comparatively, because you are forgetting about the worst (non-Microsoft) naming choice of all consoles: the New 3DS.
This lead to situations where you could have a new 3DS that wasn’t a new New 3DS, and didn’t play the games you bought with it. You could also, somehow, have an old New 3DS, a logical impossibility.
Anyone in charge of naming anything that just calls it the “new” thing should be fired for not taking their job seriously.
The OLED Switch has the same specs and is the same gen, just a different screen. Like the Vita 1000 vs Vita 2000, they play the same games. Xbox One and Series are different gens.
Why is switch oled ok but Xbox One X vs Xbox Series X not ok?
just like the person you responded to already said: cos there is like basically no difference between the two. unless you care a lot about screens (in which case you will know what oled means) just get the cheaper one.
Good Ol' New Nintendo 2DS XL naming scheme.
Don’t forget the “New 3DS”.
Wow how did I manage that.
> Consoles aren't specialized hardware for "magic experiences" and everyone knows this, it's just another "device" that happens to be connected to a TV with a controller where people are gatekeeping software availability.
Arguably; Sony and Microsoft have both played it safe for a long time, with their consoles mostly being "just for video games", but it wasn't always like this. Current-gen has VR additions, but the previous generations had things like Kinect, the PS camera addon, things like that. But they seem to have given up on fun things like that, they were innovative but probably not a sweeping commercial success like idk, subscription services.
Nintendo still makes their stuff unique though. The Switch is great, portable, detachable controllers for multiplayer and wiimote-like interaction, etc.
Console generations are a cultural construct. And just like the bit wars of the 90s, they are cultural constructs that cannot explain the current situation.
We have not left the PS4 era. Both Sony and Microsoft use modern CPU and GPU in the PS5/Xbox Series that can 100% replicate the previous console. They use the exact same online store, ushering in a modern era where old devices will lose access to the store, but the store's never gonna close. All of this makes the use of generations to describe console gaming obsolete. We don't talk about generations in phones, or laptops. Same thing with gaming.
I had the sinking feeling from the start, that a total stranger was brought in to do a butcher's job.
Microsoft is not an engineering company any more. Just look at their products. They placed ads in the start menu and file explorer. Azure is one of the worst clouds when it comes to features and reliability.
Microsoft is a dying company, and they are trying not to end up like IBM, but their fate is inevitable.
> It's more art than engineering
I'd say games can be either art or hype. Call of Duty is not art, really, it's hype. In the same way that no one thinks Marvel films are moving film forward, but they are hugely popular. GTA is somewhere in the middle, being mostly hype driven, but based on solid "art" in good gameplay. Indie games tend to be art over hype.
Microsoft can't do the art because it's too big, too safe, and it can't do the hype because it's not cool.
It can be art even if you don't consider it artistic. CoD is an example of military art. Marvel is American blockbuster art translating American comic book art to the screen. They are their own kind of artistic expression and achievement, even if you personally don't consider them art.
Mass culture isn't the same thing as art.
This is reductionist to the point of making the term useless.
> Microsoft is never going to figure out gaming.
They had it figured out perfectly in the Xbox360 generation (and for PC games by the late 90s), but I guess that the MS Games and Xbox divisions had a lot more freedom and were more decoupled from the Microsoft org chart back then.
The gaming world also evolved a lot during that time period
More capable than current gen consoles is going to be local AI. Calling it now. It won't be as much about graphics as it is about selling some notion of human like NPCs and smarter enemies and some other use case they can sell to the masses.
~Turing-test-passing NPC AI already exists in lots of multiplayer games to hide queue lengths or dwindling player counts.
It's not just appetite. The market is crazy right now and people don't have money to drop $600-800 on a new console.
When she was announced it was broadly assumed that she was being brought in to kill the division.
But then she did some minor, pandering actions and suddenly everyone was "oh boy! A new era of xbox!" Only it was all a ruse to ensure people didn't jump ship too quickly and make the bleeding too heavy. They want people to keep pumping money into a platform heading to the graveyard.
> Only it was all a ruse to ensure people didn't jump ship too quickly and make the bleeding too heavy
You go when we tell you to go! Not before!
>It's more art than engineering and they can barely manage the engineering with all the intervention from marketing and HR in their products.
truth. far too many MBAs in that company. "Let's monetize Solitaire!!!!" Only an idiot would even come up with that idea, never mind follow through on it.
huh, I'm not sure where you saw that reaction, the reaction I saw was universal condemnation of the appointment of Asha Sharma.
she had already choosen the coo as a scapegoat :)
Don't forget gifting of translucent Xbox.
I mean, here you are too declaring a XBOX defeat. You are no better than those armchair industry analysts. The 10th gen hasn's even properly started, we don't even have rumors of WHEN it will be.
Not saying that I disagree. I absolutely agree. I think Xbox is downright moronic to buy Bethesday on a promise of Starfield being a massive hit, and after it hilariously fails, they throw out a bunch of studios just so they can focus on their next thing even more.
It's just, come one. You have to see how ironic and conceited your opening paragraph was.
At some point, the games industry decided it wanted to be interactive Hollywood, and the consequences are entirely predictable. Meanwhile, Nintendo just quietly shipped 3.8 million units of Tomodachi Life in two weeks, and 4 million of Pokopia in five. They're making actual games. Sony's obsession with prestige cinematic bloat, like Xbox, has also put them in a slow-motion death spiral that's going to become painfully obvious in a few years.
My kids begged for me to buy Tomodachi Life and Pokemon Pokopia and they’ve been absolute smash hits in the house. Pokemon got me hooked for a month or two until I mostly beat it, and the kids play Tomodachi Life every day and have funny little stories to tell. So many modern games just aren’t fun, it doesn’t matter what the graphics look like if the game is boring.
Sandboxes. Minecraft was one. Now it’s getting called a platform, at least in the submitted article. That’s good for engagement and monetization I guess, but sounds way less fun.
Minecraft, Roblox, Fortnite, MMOs, Second Life, there's heaps of sandbox games where people can just hang out and do their own thing. It's the metaverse that Facebook / zucc just completely misunderstood.
They could've just bought any one of these titles and they'd have a better metaverse than whatever it was they pumped billions into.
Pokopia and Tomodatchi only look like sandboxes at first glance. They are far more directed. They're not a perfect square with you in the middle. They're a star shape with you in the middle.
I genuinely don't understand the relevance of the square vs. star map layout - does that matter or is there an analogy I don't understand?
To some extent - but you can't get away with Hollywood Accounting Practices in the same way.
Also one must consider the likes of Hideo Kojima who can sell ~7 million copies of a new IP that is effectively a cinematic Walking Simulator as an Auteur acrimoniously splitting from the traditional studio system.
Clair Obscur: Expedition 33 also shipped over 5.4 million copies as a AA, in what is also arguably an interactive cinematic on-rails RPG.
Nah, expedition has enough of a game in it. Parry mechanic is pretty addictive, and gameplay is kinda fun. Exploration, too, is strictly gaming aspect, not cinematic.
God of war is plainly movie on rails compared to E33
A walking simulator that has you fighting between multiple dimensions and is one of the best looking games of its generation.
> acrimoniously splitting from the traditional studio system.
Yeah, he split from the traditional studio system to create... his own traditional studio system.
Kojima is precisely what happens when you stop thinking of games as actual an interactive entertainment format and start thinking of it as a "cinematic experience" instead.
Death Stranding is only a game by the narrowest of margins. What it is is a movie with Kojima's Spotify 'favourites' list as the soundtrack that so happens to have one interactive element or two thrown in there for good measure.
It's pretty telling that all he's done after splitting away from Konami and surrounding himself with his own sycophantic group of developers is Death Stranding. Kojima is the direct result and pretty much the face of a lot that is wrong with the games industry right now.
> Death Stranding is only a game by the narrowest of margins
I strongly disagree. I'd say that Death Stranding has an incredible open world "sandbox", rivaling the ones of GTA. I can spend dozens of hours there without worrying about the campaign - it's not a Hollywood movie.
I'm not sure if you've played these games but that's not at all what they are like. They have great gaming mechanics, combat and complex world setups.
Perhaps you are mistaking them with Ubisoft's open world games? or describing another installment of Life is Strange?
> Death Stranding is only a game by the narrowest of margins.
I can't even entertain this notion, never mind agree with it. Death Stranding and its sequel are among the best games I've ever played, and I've played several hundred, maybe thousands of games spanning every decade and genre.
death stranding made just moving through the game world engaging and challenging. and on top of that it has very satisfying combat mechanics and async multiplayer gameplay elements. yeah the game has long cinematic cutscenes, but i do not see how that detracts from the actual gameplay
> ...on top of that it has very satisfying combat mechanics...
Man, the sequel made the combat totally trivial. I'm at the sequel's "Episode 10", and I've the opinion that DS2 took nearly everything that anyone ever complained about in Death Stranding and made it effectively optional. I don't like the decision, but I'm still enjoying the game.
> yeah the game has long cinematic cutscenes...
It really wouldn't be a Kojima game without them!
> Kojima is precisely what happens when you stop thinking of games as actual an interactive entertainment format and start thinking of it as a "cinematic experience" instead.
And for Western devs, we have Rockstar doing that. RDR2 is a wonderful movie, but a pretty poor game. Unfortunately, they forgot what medium they were working with.
> RDR2 is a wonderful movie...
It's a decent movie, yeah.
> ... but a pretty poor game.
I disagree.
> Unfortunately, they forgot what medium they were working with.
I strongly disagree.
You didn't like what RDR2 was doing, and that's fine. I had a blast with it, but I'm the kind of psycho that loves games whose big thing is traversing gorgeous terrain. Similarly, there are games that people absolutely adore that I absolutely cannot see the point of.
Agreed, I was shocked to see a second person saying that RDR2 is movie not a game and the gameplays the weakest part, which was confusing to me as someone who spent a LOT more time enjoying the game than touching the main story and cinematics, and know people personally in the same boat, but then I realized I was about to just reply to the same guy with the same take under another post about gaming and not a super common reoccuring opinion haha
Things are not that black and white.
Nintendo also shipped Metroid Prime 4, with massive delays and unsatisfied customers, following the same "interactive Hollywood" philosophy which disappointed Metroid fans.
Same thing goes for Star Fox, a remake of a remake of a remake, with poor visual and dialogue choices.
And meanwhile, the same silent push for digital-only, forced upgrades and the like...
> Nintendo also shipped Metroid Prime 4, with massive delays and unsatisfied customers, following the same "interactive Hollywood" philosophy which disappointed Metroid fans.
I'm not convinced that Metroid at least really is a great data point for "Nintendo is ruining things in-house". From Wikipedia[1]:
> Nintendo announced Metroid Prime 4 with a teaser trailer during the Nintendo Direct presentation at E3 2017, and announced that Retro Studios, who developed the previous main Prime games, would not be involved.[15][16] In February 2018, Eurogamer reported that Prime 4 was being developed by Bandai Namco Studios in Japan and Singapore.
> In January 2019, the Nintendo EPD manager Shinya Takahashi announced that development had restarted under Retro with Tanabe remaining as producer. Takahashi said the previous studio had not met Nintendo's standards and that the decision to restart was not taken lightly.[21] Shortly after, Nintendo reevaluated Prime 4 after noticing changing attitudes towards open-world games, but maintained the direction as the development was already taking longer than planned. The team ignored new developments in action and shooting games to prioritize the adventure elements.
There's a perspective where this is almost the exact opposite of the problem being discussed about Microsoft. They chose to let it get developed externally, suffered delays, and by the time they moved it back in-house, the ecosystem had moved from under them. They probably could have chosen to rethink everything and delay it further, but they also arguably could have avoided having to make that call by keeping it in-house and letting the studio who made the previous entries work on it from the start and landing it in time that the original vision still fit what people wanted.
[1]: https://en.wikipedia.org/wiki/Metroid_Prime_4:_Beyond#Develo...
My point wasn't about Nintendo ruining things in-house rather than them following the exact same trends than Sony & Microsoft, only a few years late.
MP4 is what OP was talking about, an "interactive Hollywood" experience that betrays previous Metroids, adds discutable open-world design cues, and locks features behind $30 figures.
Metroid has always been a very (very) small series in the grand scheme of Nintendo. If they screw up the next Zelda or Mario they might be in trouble. But they also seem to have actual magicians work on those games.
Metroid is a secondary or tertiary IP, and the Metroid Prime subseries has always had more smoke online than its sale figures would ever suggest, with only the original on Gamecube selling north of 2 million, and it was a pack-in title.
Metroid Prime wasn't a pack-in title. In fact, the bundles that did offer it bundled were short-lived.
That’s what a pack-in title is. I had one of those GameCubes, and I ended up trading in the packed-in Metroid Prime to EB Games for like $5 in store credit cuz I didn’t like the game.
Prime 4 was a fine game, except for the MacKenzie character who would never shut the hell up. It was like having a redditor in your ear for 10 hours. Absolutely insufferable. If they would have just removed him and worked on the desert hub world a bit more, it probably would have been 2025's game of the year.
This isn't the first time Nintendo has outsourced a disappointing Metroid game, if Other M is any indication. Remains to be seen if this is part of a larger trend for that company.
Metroid has more duds than hits. Metroid Prime 4 is par for the course for the franchise.
But Dread was wonderful, so if this outsourcing produced even one such a game, it was worth it after all.
I’ll concede that Metroid Prime 4 has been sitting on my shelf.
But Star Fox? Phenomenal. Such a fun game. Luckily I have the pro controller so I could map A to the back paddle or else my poor old tendons couldn’t handle the rapid fire shooting required at the high levels, but I’ve had an absolute BLAST playing the remake.
I'm curious about the Star Fox comment. Tell me if I got this wrong:
A remake (1) of a remake (2) of a remake (3)
(1) A remake (Switch 2 Starfox, a remake of StarFox 64)
(2) StarFox 64 (A remake of Super Nintendo's StarFox)
(3) ??? I don't know what the 3rd level of remake you mention is, but I'm curious!
Star Fox (SNES), Star Fox 2 (SNES mini), Star Fox 64, Star Fox 64 3D, Star Fox Zero and Star Fox (Switch 2), while having minor gameplay differences, are all retellings of the same in-game story (the eponymous Lylat Wars).
Moreover, Star Fox was kind of... programmed by teenagers. Miyamoto is credited as both the producer and designer, but both Cuthbert and Goddard were 18 or 19, and Wombell (artist and designer) was maybe in his mid-20s.
Star Fox's development is an incredibly wild story where British teenagers argued what the SNES could do with bespoke hardware, and they ended up being shipped out to produce it because Nintendo felt they couldn't ever do it themselves. It all started with Argonaut's demo of what would eventually be released in Japan as "X". Entirely software-based 3D, on the original Game Boy.
There's actually a very humble quote by Miyamoto where he learned that someone can't just get better as a function of age and experience, after he clearly realized that these teenagers could produce something no one else in Nintendo ever had a hope of. Perhaps it's why the franchise has done so little -- Nintendo's just not in a remotely similar headspace the Argonaut lads were.
-----
Fun videos on the subject:
"The Teenagers Who Taught Nintendo How to Make Star Fox" - People Make Games, https://www.youtube.com/watch?v=to4Ekb0kXiE
"The Making of Star Fox" - Strafefox, https://www.youtube.com/watch?v=GDhNT2Qv-Mo
The previously unreleased Starfox 2 is not a retelling, it is a proper story sequel. That is the one game where you're wrong, every single other game is a remake, with Starfox Zero the most tenuous one, but still a reimagining. They've remade the same story five times.
Between 1 and 2 was the 3DS remake which added levels and cleaned up the story some. The Switch Starfox includes those parts, too, from what I've heard.
Nope. There are no new levels on 3DS.
Starfox 64 (N64) -> Starfox 64 (3DS) -> Starfox (Switch 2)
I assumed that's what OP meant, all of those are the exact same game with the same story and dialog, remade in 3 different game engines.
That makes sense to me, and fits in better than SNES > 64 starfox, which is more of a spiritual remake than an explicit one.
Star fox zero is in there somewhere
I can understand complaints about Metroid but Star Fox fans were probably expecting jack squat from the start of the year. Putting it in the last movie is a pretty strong indicator for more content.
A lot of Nintendo's remakes end up being training exercises for the real deal, such as Metroid 2 remake to Dread. Meanwhile, some of the laid off devs here might have never seen a properly produced title with zero crunch and anomalies. Not every title should be an auteur title, but we have too many auteurs and we want more auteurs.
Metroid 2 Remake, for all its warts (many), is at least a full-on reimagined remake. Star Fox 64's latest remake, is mostly a carbon-copy of the original, which already had an "HD" remake on the 3DS.
There is absolutely nothing wrong with remaking a 30 year old game if it’s done correctly, and Nintendo usually does it right.
What I mean by "interactive Hollywood" is a game with a $200M+ budget that relies entirely on high-fidelity graphics and cinematic stories to differentiate itself, while offering almost zero new gameplay innovation.
Neither of your examples fit that description. Metroid Prime 4 wasn't chasing Hollywood cinematic design; it was a highly targeted attempt by producer Kensuke Tanabe to make a tight, isolated first-person exploration formula resonate (especially in Japan where it has consistently failed). Its goals are mechanical, not cinematic. Meanwhile, Star Fox is a classic arcade rail-shooter remake with modernized cutscenes, not a prestige movie-game. Early sales data shows it's actually working well, too, having just debuted at #1 on the physical charts in Japan and nearly doubling Star Fox Zero's launch week in the UK.
Ultimately, Nintendo operates like a Consumer Packaged Goods company. They treat their library of IPs like a diversified product portfolio rather than betting the farm on individual interactive movies. They use massive, high-margin, mechanics-first games like Tomodachi Life and Pokopia to generate enormous cash reserves. They then use those profits to subsidize legacy IPs like Metroid or Star Fox to keep core fans happy and feed their broader brand ecosystem. Because Nintendo spreads its risk across a wide spectrum of lower-budget games, they can easily absorb a minor product flop. Sony's interactive Hollywood model sinks $300M into a single basket, meaning one bad miss can completely wreck a studio.
Ah, my bad. I agree with your analysis.
Although Nintendo is still following the path of "gaming enshittification" with lesser budgets; and I would argue that Star Fox mostly sells because there's barely anything to play on that 500$ thing...
> Sony's obsession with prestige cinematic bloat
Sony has been pretty successful with that though, and there was a time where they pushed many fan favourites in the cinematic genre. They aren’t arcadey games like Nintendo ones of course, but something like The Last of Us has its own value and audience. It sells too.
They have. Which makes this hard skew towards live service all the more baffling. Having your premier studio basically miss the generation trying to make a multiplayer version of one of these games then cancelling it really shows how much they overextended.
And it's not like it had to be Naughty Dog: They had some dozen titles published or in house being prepared (including one that sunk what could have been an amazing remaster/remake studio). And in the end they really had one come out as the dark horse, with one megaflop, and 2-3 stragglers that don't seem long for this world (one of which seems to be taken down the existing, safe life service Sony spent billions on).
Gen 9 will be a huge blemish carried by their very smart acquisitions of Insomniac and Housemarque, with some decent support coming from Santa Monica and Guerilla. But at what cost?
Sony's had to bet the house on those types of blockbuster, crowd-pleasing experiences. The PS5 has yet to crest the cinematic peaks of the PS4 (PT, Bloodborne, Uncharted, etc), so people are rightfully getting a little worried that this gamble won't pan out. The bestselling PS5 exclusive is currently Ghost of Yōtei, behind eight better-selling crossplatform titles.
Nintendo's exclusives outsell Sony's by a significant margin, and they're usually simpler games that are broadly accessible. They leaned the right lessons from the indie gaming boom, and didn't try to resist it by pumping billions into making the next Overwatch killer or whatever.
I played TLoU and while the story was interesting, the feeling of being steered, forcefully and constantly, was very frustrating.
"Press this button exactly when the game tells you" and "as soon as you cross this exact point, this exact enemy will appear" - that's year-2000-ish (or worse) gaming tech.
The final confrontation was essentially ruined because the designers apparently never thought you'd use a sniper rifle, so you can set off a deafening shot that kills an enemy and the other enemies don't even notice the shot because it apparently happened outside their detection range.
I'll personally take spirals, ups and downs of the whole industry over Nintendo selling yet another Mario, Zelda and Pokemon for 40 years straight.
I'm glad Nintendo does a bit of everything. Taking the time to try out new IPs, give older ones a chance to rise, and go truly off in the weeds with series no one else can really do (the Fit series and Labo being some of the biggest examples). It really feels like there's something for you there, no matter what kind of games you like (unless you only play the GTAs/CODs/Maddens of the industry). Even if you're not actually someone who games. My mom loves the Fit games.
Nintendo does family-friendly games. Which have their place.
However if for example movie industry had its crisis, and someone were to point out how Pixar is doing great, and latest Toy Story is a big hit (it is btw), I'd say "And what if I want to watch anything that is not a family-friendly movie?".
Could Nintendo ever make Baldur's Gate 3? Not in a million years. Doesn't fall into children-friendly bucket and so would completely run against Nintendo brand image.
If the game industry managed to come even close to the top writing and cinematography from Hollywood then it would already be much better than it is now. Instead the part of Hollywood they are chasing seems to be the big budget wide appeal movies that will be forgotten in a decade.
That is encouraging, but my stock portfolio paints a different picture. Nintendo is unfortunately doing terribly this year. I still believe in their core mission, even if some of their litigiousness and anti consumer practices have put me off
Nintendo is also a Japanese company and japanese stocks aren't doing great due to their economy and the weak yen. Also, stock price does not correlate with good games or a healthy business.
Weak yen should be great for Nintendo, most of their costs are Japanese staff which are now cheaper. Maybe the local Japanese market is softer. More likely the trouble is the increasing memory pricing is eating their margins
Nintendo is also much older than Sony and Microsoft. They don't really chase short term gains to appease shareholders.
Basing an art form on your stock portfolio is a good half of everything wrong with the industry.
And it's not surprising Nintendo isn't doing well in this clown market. They are taking a hit because they resisted pressures from shareholders who wanted them to raise prices on its new system. Nintendo eventually gave in, but with a much smaller price increase and a delayed effect from announcement to implementation (~4 months forewarning). And on top of all that they are not hyping AI to the moon.
And I haven't even gotten to the overall economic climate of Japan yet. Nintendo's stock falls would happen regardless of if they followed the above.
These are good, pro-consumer moves. It shows that more companies need to think past next quarter and resist the whims of people who don't have your company's long term interests in mind. You're the expert here, not them.
Nintendo survives on a few banger licenses. Innovation left the house a long time ago.
I find it really sad that the GameCube and N64 were where they were the most innovative and also happens to be where they floundered the most in sales.
I don't know how you can say that when some of their most recent well received games include Tomodachi life and Rhythm Heaven. Those aren't the kinds of games made from those maximizing bean counters.
Rhythm Heaven is a 18 year old and Tomodachi life is a 13 year old license.
17 years, if you include the Japan-only Tomodachi Collection for the DS.
Yes. And an environment like Microsoft wouldn't think a dormant, niche franchise like that would be able to achieve an overwhelming success after 2 generation.
But sure, if you want the last new IP, Nintendo has played it safe with Arms and focused more on bolstering dormant IP's on the switch. With Animal Crossing and Zelda in particular finding new winds. Splatoon was their last huge success as a new IP in 2015.
Labo came in 2018, but I have no idea how to evaluate the success of that.
Microsoft is sitting on a bunch of these they will probably never use. Wish we would get another Viva Piñata game.
Huh? They are trying a lot of things and when they want to establish a new franchise they are often successful, see e.g. Splatoon. Innovation also does not correlate with new IPs.
Yeah, I kind of loathe the cinematic direction Sony and others have taken. Their games aren't really innovative or fun but people lap them up for being B tier movies. It makes no sense to me. They don't bother making Bloodborne anymore, just more open world cinematic slop like Horizon.
Sony - having cinematic bloat makes sense for them. They've nailed the story driven games such as Last of Us.
however for Xbox they were not really good at story driven games, but good at Live Games such as Halo.
with Live Games - you iterate on game play, maps, skins - live events i.e community building without alienating people by dabbing in social justice.
End of day - these are all marketing problems & lack of capable leadership who knows their core audience.
Elden Ring sold 30 million copies. Even Bloodborne, a PS4 exclusive, sold over 9 million copies.
sony's cinematic games sold well and are well regarded, but when was the last time they released any such game or even just a single player game? when they rerereleased the last of us?
This is incredibly sad for a lot of my friends who are finding themselves out of work despite delivering well received products.
But at the same time I appreciate the candor of Asha saying that the corporate management are to blame and letting studios go back to being independent where possible.
Phil Spencer really messed up. Everyone in the industry knew Microsoft were making bad calls trying to dig themselves a hole with gamepass and simultaneously digging a hole with their acquisition spree. I’m glad that Asha is laying this bare even though it sucks to be brought in as the hatchet person.
This is an example of the glass cliff and I’m hoping she can help right the ship. I think they need to split to a wholly owned subsidiary rather than be in Microsoft proper, and I expect that to be announced at the Q1 investor meetings.
Phil really dug their hole deep. Microsoft themselves encouraged it. It’s been a decade of sheer incompetence at the highest level so I’m hoping they can right this without taking out half the industry in their wake.
I don’t think Phil had any other options while existing under Satya and a relentless push to services revenue. If Windows can’t make a case for itself without moving heavily to services (advertising and pushing 365, primarily), how could Xbox?
I’m not really sure how the C-suite is escaping blame here.
Buying Activision was a Phil decision. Not spending 67 billion dollars puts you in a different place
Oh I definitely agree the C-suite at Microsoft needs blame. Microsoft need everything to be framed as avenue into services.
But Phil was the one who dug two incompatible holes and kept digging hoping they’d meet in the middle with buried treasure.
Microsoft: Moves AI exec to Xbox exec.
Xbox exec: Deletes AI from games.
Color me surprised.
Anyone who's been paying attention to Halo for the past 15 years knew there was bad management the entire time. (Halo used to be the game that everyone wanted to have and to be; now it's an also-ran due to self-sabotage.) The first step is admitting you have a problem, so good job there, keep following through.
Halo Infinite was the moment I knew Xbox was gone. The core game engine was the best Halo has ever felt, but everything around it reeked of incompetent management.
Giving a player a reward for putting in effort is one of the fundamental principles of game design. If you remove all the rewards, what incentive do they have to play?
Their response to player backlash which was essentially “deny, defer, gaslight and ignore” killed the online community for it within a couple of months, and I think they dropped what little content support it had within two years as well, after initially marketing it as a long-term “live service game”.
Blatant incompetence, how Microsoft ever let itself get in this state I’ll never understand.
Also I can’t even remember the campaign story. Was there an angel or something? It was a cliffhanger about some new enemy, as if they’ll ever make another game?
I just remembered the monstrosity that is the Halo TV series as well now, ah god… it’s been a rough decade.
I disagree, it wasn’t Phil that dug a hole but Asha who pushed Phil out with no plan. Why is Asha finally revealing her plan years later if she was such a good fit? She came in trying to automate away peoples jobs with AI for the last year or so and that is obviously failing. It wasn’t Phil that invested the entire company’s well being on stochastic parrots.
She has done everything but focus on delivering games (product).
Just looking at Sharma’s history, she rejoined MS in 2024. Xbox was struggling long before that, so I don’t see how anyone can blame Sharma for the past 10 years…
Xbox has been profitable almost continuously since a few years into the Xbox 360. It's fascinating how "profitable but low margins" equates to "struggling" to so many.
Xbox makes an enormous amount of money from a few long running properties (the letter in question mentions Mojang and King), but basically every big move and acquisition they have made for the past 10 years has been catastrophic.
It’s potentially a gross misallocation of capital.
Right now, the 5 and 10 year US treasury rates are 4.2% and 4.47%. The 30 year is 4.99%.
A business with a return on invested capital less than that is in fact operating at a loss. Unless there is reason to believe the situation will change in the near-to-mid future, such a business would literally be better off liquidating everything and just investing in treasuries.
You would need access to internal data to figure out their ROIC, but a 3% margin is not promising.
Who needs goods and services when you can just buy infinity US treasuries?~
This is exactly how the Fed influences the business cycle.
> It's fascinating how "profitable but low margins" equates to "struggling" to so many.
A high revenue but low margin business is a lost opportunity to invest that same revenue in a different area with better margins.
If you shut down the things that bring in $5 billion revenue, you no longer have $5 billion revenue, you have a gamble that some other industry can ramp up to that quickly. $5 billion has never been "quick money". (Inflation would have to get a whole lot worse for that to happen and that point the company has too many other problems.) That's "Opportunity Cost" among other bits of what used to be past corporate wisdom that companies have seemed to have forgotten.
People are pointing to treasury bonds that would give a similar rate of return with no risk at all.
Yeah, and I'm pointing out the opportunity cost of that is just silly. It's not a practical exercise in any way. Suppose there was some way for Microsoft to stop exactly on a dime, magically collect all $5bn in gross revenue for a year and managed to put that all into US treasury bonds without tanking the interest rate/market value of those by entirely eliminating their products and goods that generate that $5bn revenue. Microsoft does what next? Wait 30 years for the bonds to mature and collect $5bn + ~4% compounded? 30 years that they could use $5bn/year gross revenue to all sorts of advantages, but they only have $5bn/year if they sell similar products and goods?
The time value of money suggests money invested today is more powerful than money returned tomorrow, even if you magically get the highest possible rate of return.
The opportunity costs say that if you jump ship on an entire industry don't expect to have the same revenue next year.
I love this weird short term thinking with long term mistakes that treasury bonds are the right benchmark for something like Microsoft's margins and net revenue. It's really fun to watch all the armchair capitalists come out to play that seem to follow quarterly reports like hawks but presumably never took an actual economics course.
>It's fascinating how "profitable but low margins" equates to "struggling" to so many.
If one bank pays 4.25% on your savings and the other pays 3.25%, which one are you going to chose to put your money in all else being equal? Why is the 3.25% one not a good choice despite you still making money?
People inherently understand business, they use the same principles in their daily life, but they just get confused on making the connections.
A bank offering 3.25% isn't "struggling" either. Real struggling for a bank looks like bank runs and depression.
But you are talking the "consumer perspective". Right now the median interest on consumer savings accounts is less than 1%. [1] Someone getting 3.25% from their bank isn't "struggling" compared to their luckier neighbor that found a 4.25%. They are probably closer to the top 10% or top 1% and have a larger savings deposit and/or high credit/sustainably low debt. Most Americans can just envy that, not qualify for it.
There are opportunity costs in moving your money from a stable bank that you have an existing relationship and shopping it around to get that perfect 4.25% highest margin that you can find. Transfers are usually free for consumers, but a bank may give you a lower APR on your credit cards and a cheaper checking account if you keep your accounts all in the same place with that bank. Trying to move all of that at once for a similar deal at the 4.25% bank can risk hard credit checks and account closure notices that consequently drop your credit rating, including possibly enough to make the bank at 4.25% question your stability and change their mind on the deal.
I think consumers actually today have a better idea of the risks of these kinds of "small improvement" things than large companies. Wall Street is a much worse "Credit Rating Bureau" than the three (truly terrible) consumer Bureaus. Businesses have grown so large they no longer understand Opportunity Cost at any real level. If you shut down the things that bring in $5 billion revenue, you no longer have $5 billion revenue, you have a gamble that some other industry can ramp up to that quickly. $5 billion has never been "quick money". (Inflation would have to get a whole lot worse for that to happen and that point the company has too many other problems.)
[1] https://wallethub.com/edu/savings-account-statistics/143529
So you would chose the 3.25% bank or the 4.25% bank? Because it's a fictional illustrative example of "people always prefer more money", not a case study on banking lol
Microsoft's ownership wants to put their money into the 4.25% bank, not the 3.25% one. Don't lose your mind overthinking it.
you think you have some amazing analogy but it's utterly nonsensical. where is microsoft putting this money that is going to earn it more? are they low on cash on hand? why are they not investing every dollar they have on these magical free returns that just need more cash?
>where is microsoft putting this money that is going to earn it more?
Sure,
https://news.xbox.com/en-us/2026/07/06/resetting-xbox/
yeah good post, it does nothing to support your point or answer my question, thanks for sharing.
Microsoft funds xbox, fyi.
Right? It seems intuitive that markets can eventually saturate, and that there's a floor for how low you can get costs, so growth can't be infinite. Maybe you could make an argument that you want to grow in scale with inflation so that your profit doesn't eventually become meaningless, but you don't need to "reset" your multi-billion dollar revenue business to achieve that; you can get that by just bumping prices in line with inflation every few years.
64c lost for every dollar invested. What a massive waste. What a loss for both shareholders and the gaming community. Take it out back and shoot it.
Ratio of consoles sold Xbox vs PS5 was 1:3 before that, after that it fell in the 1:10 territories (december 2025)
Using Phil as a scapegoat and Sharma as the savior is disingenuous.. and is honestly pretty consistent with how i view Microslop: opportunists, tasteless, and visionless executives, shareholders and fanboys
The fall of Xbox started before the launch of thier current gen:
- HW: they announced 2 SKUs, with polar opposite performance profiles
- SW: their system sellers got delayed to couple years
The reset needs to happen at the highest executive order, not at the lowest, workers implement whatever project was greenlit
People chose PS5/Switch over Xbox (it now sells 3x less than Switch 1, wich is a previous gen console), people see through the lies of the media
I need to be clear that I’m not presenting Sharma as a saviour. Honestly, I don’t know if her decisions are correct or if Xbox can even be saved at this point.
You said it yourself, Xbox was being outsold 3:1 by PS5 which is still shocking numbers given the investment, and the fact that PS5 was having trouble selling units at the same rate as they’d been selling PS4s.
You can blame her for the last 10 years because she's CEO _now_. That's what you do. You blame the head of the organization for the organization's problems.
That doesn't make much sense to me. How can you blame someone for a problem they didn't cause?
Because they decided to be the figurehead and take on that responsibility. It's like a king who takes on their predecessor's war when they assume power. No one looks to the previous king when the current one has all the agency.
Because it’s their job to fix it. If they don’t, the axe falls again.
Humans often think in terms of deontological ethics. Corporations operate in terms of consequentialist ethics, and the only consequence that matters is that the numbers go up.
You’re mixing “blame” and “accountability.” Sharma isn’t to blame for the problems but she’s now accountable for fixing them.
I still think "blame" works here since we're assigning responsibility to her. The fault or wrong was caused by someone else, perhaps, but she is now responsible for that fault.
> Blame: assign responsibility for a fault or wrong.
You’re conflating the fault/wrong and the solution. Sharma is not responsible for the prior decisions but she is responsible for subsequent decisions.
No, I’m not. I’m explicitly differentiating between those two perspectives and which corporations care about. “Blame” doesn’t exist in most corporate vocabularies.
a) Asha didnt push Phil out.
b) She's been in the role for 4ish months, not years.
I can guarantee you Asha has been making this move for years.
Based on what? This just feels like baseless conjecture given she hasn’t been at Microsoft for that long.
"I can guarantee you" without any backing evidence is the very definition of "Source: trust me bro". I think at this point this is just trolling.
I don't think a long time executive leaves, and the expected successor (Sarah Bond) refuses to suceed because of some intimate backstabbing behind the scnes. Especially not by an executive who was previously running the AI division during an AI gold rush.
Occam's razor: Spencer and Bond jumped off a sinking ship, Asha wasn't doing enough in AI. Push her to be the fall gal for the sinking ship and put in whoever will milk AI more in her place. Win-win. Asha will be gone in a few years with her job done and a cushy parachute, and Xbox will be a shadow of its former self. But that's not a failure; that's the goal.
How would Asha pull him out? How do you think she even had that kind of authority or seniority?
By making big arguments to C-suite that were invested in the company’s direction. Same thing that happens in meetings where some dumbass says something like “we could build a cookie banner ourselves or pay Y company $12k/yr to run our cookie banner”. C-suite is full of these types of people that just make baseless arguments. Most management is not knowledgeable in their domain.
Okay so your entire argument hinges on her having the ear of Satya , and out arguing Phil?
But even then you wouldn’t be able to deny that Xbox was floundering under Phil.
And for all of this you’d still be left with conjecture?
Even if she did push him out, Phil only has himself to blame. After all he is the manager of Xbox. Xbox definitely did not do well.
Yes, but only because the bar is so low. "We can't commodotize innovation" is not an especially subtle insight, and pretty much everyone other than executives at companies like this understand it without having to spend billions to try it out.
They say that only after they buy up like half of the IP in the entire gaming industry without a plan and it doesn't end up being a fast enough money printer. Activisions back catalog is the result of hundreds of acquisitions and IP purchases.
It also means they must have started with the assumption that they were the best home for every type of studio, which, when you say it out loud, sounds very stupid. Second, how can a studio be "independent" anymore when owned by MS? Doesn't make sense. It's all just corpo speak for "we fucked up but we're still getting paid to fire you".
I have no idea why they didn’t realize that earlier, or if there is any insider dealing involved, from my cynical thoughts.
> I have no idea why they didn’t realize that earlier
14 layers of management :-P
also board and man. that approved all acq. got lots of 8-9 figure bonuses in total, so they say that after all TOC and years. They will never say these acq. made our man. teams and some board members great ROI and personal wealth, lmao. Corp. games are sometimes flat for corp and amazing for the groups that decide them.
Is it possible or desirable to own two competing gaming platforms?
No, no, you're misreading.
This is Microsoft politely saying that not all studios are good enough for them.
And by good enough they mean enough of a money printer.
Good read. A studio can be both good and not good enough for Microsoft. They’ve never made a secret of the fact that they are in it for huge numbers. A studio can do well and still make little enough that it’s a management headache for Microsoft.
...more like
> We can't afford it, and it's a bad investment anyway
>> We can't afford it
But they've already spent the money. They spent about 70 billion on activision blizzard. That was and still is an outrageous amount of money that will take fever to break even let alone turn a profit.
> They spent about 70 billion on activision blizzard
A cynic might say they spent most of that for King, which continues to be profitable. The rest of Activision Blizzard just came along for the ride
Call of Duty absolutely prints money, fwiw. King are weird because they basically have been doing the same game in different skins for like 15 years now.
> Call of Duty absolutely prints money, fwiw
It does print money, but it is also extraordinarily expensive to keep the money-printer fed. Current estimates place the production + marketing costs of a Call of Duty north of a billion dollars.
At that kind of spend, it only really takes 1 or 2 botched releases to make the financial equation look a whole lot less rosy...
Just because they already spent the money yesterday, it does not follow that the best decision today is to just carry on as if was still the correct decision. Yes they cannot get that 70B back, but if they have to choose between:
1. a long dragged out distraction over decades trying to make it work
2. a painful but quick 40B write down and the ability to refocus the company on better projects tomorrow
.. then they are, quite rightly imo, going to pick #2. In fact I would assume this going to be the next announcment.
They can't afford to buy every other successful studio, which means that their anticompetitive moat has to be competitive. Otherwise, they could have made the whole thing profitable the usual Microsoft (monopolist) way.
They bought a content competitor, now they get to "reset" their vision for it. Mission successful.
Elephant in the room?
Maybe Microsoft is spending so much on AI that it is being forced to re-evaluating short term strategy in other business areas as financial have changed.
So perhaps in long term all these studio's making exclusives and getting people hooked on the Game Pass at a short term low price would have worked if they had dominated market share over playstation. But AI Data Warehouse & Power Plants funding and taking large stakes in multiple AI companies has depleted the cash.
And harder to raise money now hype is clearing and expectations of what AI can actually deliver are lowering, as per OpenAI's struggle to IPO.
Reading this made me remember why I stopped playing my Xbox One: never-ending updates. I never played it very frequently so I disabled the sleep mode so it wouldn’t just stay on in my media cabinet heating my house. But of course that meant any time I spontaneously felt like using it there were 10 minutes of updates to download, so I would get annoyed and just do something else. Oh it can also play movies? Sorry movie night is ruined thanks to 30 minutes of downloading and installing updates. Eventually I just never turned it on again because all it did was download and install updates.
It really just killed all my interest in it because I couldn’t just turn it on and play a game unless I let it stay on all the time wasting energy and downloading constant updates in the background.
> Reading this made me remember why I stopped playing my Xbox One: never-ending updates.
My experience with Steam is very similar (I don't have it run on startup because I like my PC to do other things from playing games).
Online updates really have ruined gaming for a lot of people.
Just like vinyl, humans seem to prefer a physical "thing" they pick up - put in the machine - and instantly have access to the "thing". It's simple, predictable, fixable (generally) and swapable. The digital revolution is not what we had hoped for...
I've been replaying a lot of Gamecube (emulated) games recently and its kindof shocking just how quick you can get into the game.
From hitting run Run to first Player Input is seconds in most cases. No console bootup, no system updates, no game patches, no agreeing to game EULA version 5.129912342, no denying the game access to online content on every third screen, etc.
I'm sure its loading slightly faster emulated, but 90% of it is just not having the junk that has accumulated over the last 20 years.
Pretty much the Switch experience. It sometimes downloads updates, but system updates are like 10 seconds, and games are updated in the background seamlessly. I don't play Fortnite, but it's also always updated in the library.
Yes, if you don't keep it powered, it won't do that, but why wouldn't you if it just stays in the dock dark and quiet?
Nintendo finally implemented a modern update system that installs the new version in a new volume, reboots you into that volume, and deletes the old one once booted.
It's why it's so fast. The work happened before you pressed update.
Maybe I am being naive but doesn't that seem like a basic and effective approach that others should have been able to implement too? Why doesn't Xbox or Microsoft do it? Optimistically download updates so that if the user wants, it is ready to go. If low on space, sacrifice those cached updates because they can be downloaded again.
I had a Gamecube back in the day and I remember its optical drive was quite fast and loading times were short, but other machines were nowhere as fast, the PS1 and PS2 were notorious for long loading times.
It's a combination of two things that never should have been normalized:
- Steam forces game updates, even for single player games.
- terrible delta updates. Baldurs Gate 3 had 8 patches in 3 Years. That's 800GB of updates.
If a patch drops on the afternoon you planned with your friends, you're not playing that night (actually happened to us). Both decisions should have caused outcries, but I guess people would rather overpay for fast internet contracts.
I check for game and system updates on my Deck before and after a session and it just takes a few minutes at most. I get excited to read changelogs if a game has a big update. These updates are not automatic/forced if you don't want them to be, and for singleplayer stuff at least you can just go play the old version if you're in a hurry or have little to no Internet.
> I check for game and system updates on my Deck before and after a session and it just takes a few minutes at most.
Right, that makes sense if you have sessions often. But, the thread started with automatic updates being bad for occasional users because they either have to waste energy keeping the machine on all the time to get updates in the background or have their mood cooled when they want to play but are forced to wait 30 minutes for updates.
Personally, I use Steam often but even then I get annoyed at updates. If I quit Steam, I sometimes have to wait for it to download Steam updates. Sure, it's not 30 minutes, but they happen when I want to play. I keep Steam open on my always-on machine and it annoys me. There's a reason I run manual updates on my computer on Fridays... then I don't get interrupted. Apps that auto update suuuck if you value your time.
Steam update is FAST. Less than 10 seconds and their CDN saturates any pipe. And since it’s a PC you can do other things while waiting.
Xbox is a dedicated gaming device and while the game/device is updating I’ll have to sit there. Plus the updates for some reason slows down the longer it takes. They’ve lost my attention.
>Plus the updates for some reason slows down the longer it takes.
They're probably using the same technology as Windows Update.
I've never had a steam update take more than 30secs.
Game updates can take a lot longer if you need them (ie multiplayer) to play. idk
I don't think you could say humans prefer a physical thing, as for a majority of mediums, digital is the winner, by a significant margin.
Of my friends who own vinyl collections, they almost always use Spotify/Apple Music 90% of the time.
steam does not force you to update though. you can just start the game without updating. if it's multiplayer ofc it might require an update anyways
What are the updates for, I wonder?
Video games, like all forms of art, are about stirring emotions. I don't own, nor have never owned an Xbox. But when I think of the device the first thing that comes to mind is "Microsoft" and "Windows". So I consider all the little beancounters and MBAs at Microsoft who are always optimizing for profit and that have made Windows nightmarish, and I imagine them with access to an "emotions machine" they can manipulate to make number go up, and can't help but think that the device is a pocket dimension of hell but more or less useless otherwise.
All said, in order for Microsoft to fix XBox, they will also need to fix the Windows desktop experience. Otherwise people will think "ouch, I don't want to buy a cousin of that creature. Better go for a Nintendo or Steam Deck or something..."
These days it’s probably all CI automated. So your Xbox updating probably means dependabot bumped some package automatically and it got built and deployed despite zero end user impact.
Same boat as you. It's wild that I can turn on the xbox, wait 20-30min for mandatory updates, then need to re-sign in or occasionally reset my wireless mac address due to some bug, then re-sign into my Xbox account even if I am fine playing offline but of course I forgot my password so now I'm on my phone doing 2FA to remember which email I used to reset the password.
Then I will need to update the game I want to play (somehow FIFA 23 still requires updates?), then re-sign in to EA whose password of course I also forgot so now I'm on my phone resetting my password for EA.
Now it's been 45minutes and I'm frustrated and realize I could have loaded up Steam or Switch and been playing this whole time. Not to mention that once the Xbox itself is working it will be running slower than the Nintendo Switch I own which is only about 2yr newer than it. just a bad system!
I legit got my old PlayStation 2 back up and running so I wouldn't deal with this. (sorry been needing to vent all this lmao)
I wonder how many of these updates are security fixes. I wouldn't be surprised if a majority were.
My gaming machine is isolated and well protected through firewalls in and out. I don't store any sensitive information like payment information on them. Why can't I choose when to update them? Let me use my thread model to keep myself secure. Respect my time. Let me manually update when I want.
Ah, but you see Xbox security updates won't be for your security. They will be for protecting the console's security against jailbreaks etc.
This is what drove me to get a PS5. My xbox one would have 30 minute updates nearly every single night, and it doesn't allow you to access anything on the internet unless you let it do the updates. It was always inevitably at 7 or 8pm, when I'm trying to wind down after a day of work and just watch a show or a movie or something. It was a constant interruption to my daily routine - I like my shows before bed.
And then sometime in the last year and a half or so it became nearly unusable, constant crashes, poor performance, it was just such a constant pain in my ass. Feels like Microsoft just don't give a shit.
While there are plenty of online updates on the switch, I never remember not being able to play a game without first running an update.
I've had the same experience with my PS5. It wouldn't even let me play 007 First Light a few weeks ago because it needed to update the system. Starting to wonder if I should/could just keep it offline to stop it from updating incessantly.
It surprises me that there isn't simply an option to postpone the update for up to 12 hours until shutdown. I'd much rather let my system take 10 minutes to shutdown when I'm done than have to wait 10 minutes on startup before I can use it.
How often could they realistically have updates that seriously need to be installed ASAP? Especially if you're not even doing anything that requires going online.
> We will reduce management layers to no more than 5, and where possible, 3. We will deliver success through a flatter organization that is built around makers (individual contributors focused on building), player-coaches (leaders who remain deeply involved in the work while developing their teams), and directly responsible individuals (DRIs) who own key decisions and outcomes.
This does sound quite reasonable actually.
Also, I think I didn't read "AI" anywhere, which is refreshing.
The great thing about not making any money in a department is that all the money-hungry people flee the org, and people who are more invested in "doing things right" stick around. The bad news, of course, is that you're not making any money, which is bad for your long-term survival.
This is a very different take than I have. People who are good tend to leave sinking ships much faster.
I guess it becomes a problem when the money-hungry people still make money, but the larger organization doesn't.
Game Pass has caused a lot of direct sales losses to game developers in favor of Microsoft trying to find a Netflix-like cash cow for itself. The numbers never added up, but it is not a surprise everyone nodded and went along with it. I wonder what the career repercussions would be for speaking up - but it doesn’t matter because they are getting fired anyway.
Call of Duty alone lost $300 million: https://arstechnica.com/gaming/2026/04/microsofts-game-pass-...
I look forward to the source code leaks.
I was always very skeptical of the $300 million figure. It sounded like the same math that the movie industry used for pirating. If I was subscribed to Game Pass I might have downloaded CoD to see what it's about. That doesn't mean I would have paid full price for it.
> Last year, Bloomberg reported that Microsoft estimated it had lost $300 million in direct sales of Call of Duty games due to the title’s inclusion in Game Pass, according to an anonymous employee.
Yeah, that's a bullshit number. It's like when people provide piracy counts as lost direct sales, a lot of people will download something for free, those same people won't always pay full price if they can't download it for free.
I downloaded a TON of games from Game Pass, played <1hr, and uninstalled. Without GP I would have just never bought the game.
Gamepass devalued games in my opinion. If you “train” your user base to get used to not buy games they will. It also did not help they were almost giving Gamepass away for nothing. You could chain multiple offers and get like 3 years or more of the best tier for the price of less than 2 games.
They never had the user base to sustain so many studios making AAA games under a subscription model.
Maybe MS paid the publisher full price for your "see what it is about"? Wouldn't be anything but Uber or Moviepass.
CoD is by Activision. They are owned my Microsoft.
Game Pass' finances ignored the one true thing about streaming services: they weren't going after the people buying DVDs, they were going after the people paying for cable.
Cable subscribers did not exist in gaming, and so Game Pass is stuck stealing Xbox's own customers. It just doesn't add up.
> We will deliver success through a flatter organization that is built around makers (individual contributors focused on building), player-coaches (leaders who remain deeply involved in the work while developing their teams), and directly responsible individuals (DRIs) who own key decisions and outcomes.
This is the new trendy management style - a few executive owners and then everyone else are expendable ICs, with almost no movement opportunity upwards. Only those on the Peter Thiel list or the equivilent among your private equity owners will be considered for key executive positions.
Paying people less and replacing them with AI is the literal explicit strategy; I get that this was supposed to be a cynical comment but it's basically just factual.
Sounds like an awful model for making a game if I understand the model correctly . Forget tight-knit, multidisplinary teams. Everyone's just a special cog to switch in and out from project to project, and laid off when we need a little bit better of an earnings call. Add in micromanagers and directors who need to have their fingers and every project (instead of focusing on the individual needs of a team and game), and you truly embrace the Microslop.
I'm sceptical of Hacker New's fascination with all managers being worthless, but I don't follow your logic here.
Why is "lets have more people who do things" a move away from multidisplinary teams? Unless you count being a middle manager a valuable discipline in game making?
>Why is "lets have more people who do things" a move away from multidisplinary teams?
It's not even because all management is bad (I'm skeptical of management, but not necessarily a "flat hierarchy" guy). But this move here sounds like homogenization of development. Having managers that need to manage a dozen projects at once will mean that development will fall into one style. Having all your IC's potentially needing to be shuffled around in projects both ruins team cohesion (because you're not focused on one project) and drives the design to be towards specific types of games. Ditto for directors on projects.
I won't say it's an unprofitable means of management, but it sure is a way to suck all the creative juices out of the room. Because you're spending more time appeasing a committee who wants to feel like they are "doing something" than finding the fun. And then kicked out when the project is done, because a revolving door is more profitable than fostering a team who's proven they can ship a success.
This can be an uncharitable interpretation of that statement. But that's simply a foregone conclusion when you have a 13 year long track record of decisions that end up harming creatives at the end of the day.
The only benefit is, long-term, hopefulyy, the people ejected from this model can often end up forming their own indie teams and creating their own games.
Indie games are at an incredible place right now (I am aware it's crazy cut-throat, though). It would be nice to see what quality comes out in response to this disaster.
"I deal with the goddamn customers so the engineers don't have to. I have people skills, can't you understand that?? What the hell is wrong with you people!?"
Give me a break. How many times has an IC complained about all the management layers to get something done? You can't have it both ways -- plenty of upward mobility, but no layers to the org.
What does Peter Thiel have to do with Xbox? Are we just saying things we don’t like?
He's referring to this list of invited guests: https://www.theguardian.com/commentisfree/2026/jun/24/peter-...
What does it have to do with Xbox? Should I be worried that people are holding conferences?
Not much to do with xbox unless their execs attends Thiels thing. Should be worried that Thiel doesn't believe we should have democracy and we should replace the government with tech CEO god kings instead.
Private equity is great - most of the time it works out for most. Only the bad scenarios get reported in the press to act as a boogey man.
You must not have ever worked for a company owned by one. The statement is not what I’ve heard, it’s what I’ve experienced, and it matches the experience of others in my large developer network.
It’s great for concentrating ownership and mass applying ruthless management tactics at scale, and for using IP as leverage to hollow out a company.
Again, you don't hear about the ones that fail or cause issues. Because... they just turn out fine.
Source please?
I think some of these game studios got so content with Microsoft constantly paying that they forgot to make games that would actually sell.
South of Midnight took 7 years to make and cost $100 million to make... yet sold hardly any copies and I'm not even sure who they were trying to make it for.
Meanwhile you have studios like Sandfall and Warhorse pumping out games on a fraction of the budget that ship millions (and imho, make better games).
Compulsion Games was also a strange acquisition / team to decide to put $100M + 7 years of trust into. They had two games by that point, neither with amazing reviews.
Millions of people played South of Midnight even if sales didn't reflect it. Xbox Game Pass has done a lot to make Xbox sales figures hard to compare.
I find that extremely hard to believe given that South of Midnight peaked on Steam with only 1.5k players.
Let's be honest here.
How many people would have played if it wasn't on Game Pass though? I doubt many.
Expedition 33 was on game pass and still sold 8 million copies.
At least from what I saw the game had a huge amount of hype leading up to its launch and the thing that kept people from buying it was just playing enough of it on Game Pass. For some players it was too short and everything they wanted to accomplish was easily done with Game Pass shortly after its launch. For other players like me we bounced off of its tone while playing it. The stop motion animated intro felt like a bait and switch going into its game play, and I had a bunch of uncomfortable feelings about cultural appropriation from a Montreal studio trying to capture a "deep South bayou" aesthetic and failing at some of the subtleties, from what I saw.
Expedition 33 was released across multiple platforms simultaneously.
SoM was an Xbox/PC/Game Pass exclusive for a year.
It's not a perfect comparison.
There's no sourcing for that South of Midnight number. You should treat it as fictional.
Judging by the credits [1] it indeed looks very conservative.
1. https://www.mobygames.com/game/240054/south-of-midnight/cred...
> I think some of these game studios got so content with Microsoft constantly paying that they forgot to make games that would actually sell.
I mean, if you're assuming that Microsoft had a fully hands-off approach to managing these companies after buying them, then sure. It's not clear to me that you can make a compelling claim about whether the issues were from the bottom or the top just by looking at the final outputs.
Plus there's plenty of evidence that Microsoft hasn't been hands off across that time period. At the very least we've seen them cancel a Rare game and layoff a bunch of Rare staff because of it, The Initiative shut down for not meeting game development goals, 343 Industries stripped apart for low results versus expectations with Halo Infinite and the "new" Halo Studios is basically just a shell and an outsourcing venture in direct line with ActiVision's old Call of Duty tactics.
Microsoft's executives lacked time to be hands-on with every acquisition. They were very involved in the decision process at the big studios, and the favoured children, but left the smaller studios without enough input.
I agree; I mostly just didn't want to spend time trying to cite a bunch of evidence of the alternate interpretation when it seemed sufficient to point out that they didn't really provide enough to form a conclusion one way or another.
> We will deliver success through a flatter organization that is built around makers (individual contributors focused on building), player-coaches (leaders who remain deeply involved in the work while developing their teams), and directly responsible individuals (DRIs) who own key decisions and outcomes.
xbox-specific issues aside, this proposes an interesting view of the future of work.
I also notice the growing trend to have EM carry individual contributor duties, I thought it was mostly a consequence of using coding agents but perhaps it's not: the EM figure as we know might just be a consequence of the golden zirp times (do you remember the endless technical EM vs non-technical EM debates?)
I think non-technical EMs are fine, but they need to manage an appropriate headcount. I see EMs who manage 2-3 ICs and have no other responsibilities, those EMs need to either take on more ICs or start coding.
> 2-3 ICs
This is the real problem. If you don't have enough folks for a 4+ IC team then you don't have a team.
Isn't this basically the same structure they currently use i.e. individual contributors, managers, and producers?
As someone who works in big tech with a partner at a similar big tech company _but with player coaches, DRIs, etc_ it is basically the same thing except messier.
Your manager who used to just focus on motivating and unblocking their people? Now they have to ship code too since they’re a player coaches! You’re a DRI who needs management to get your project unblocked? Too bad your player coach who has to ship code now also has 20 direct reports because the hierarchy was flattened so you can’t get time with them until next week and are blocked until at least then.
It is the hot new trend from the “thought leaders” who have all consistently copied each other’s bad ideas for the past 10 years.
This is how well structured teams have worked for a long time.
It sounds pretty similar, for example, to team structure ideas proposed by Fred Brooks in The Mythical Man Month from 1975.
Scott Miller on X said that many, if not most of ID was also let go.
https://x.com/ScottApogee/status/2074198967550685268
Some specifics from George Broussard: https://x.com/georgebsocial/status/2074282537946386833
> I've seen comments like "the MS layoffs weren't so bad".
> re: id software.
> Reports are that 50% (95ish of 200) of the studio was laid off. Here are some quotes on other details:
> “Tools, programming (except a couple), Quake Champions team, testing team. All gone.”
> “Yeah seems like all they left was leadership and art/design. I think Xbox forgot quakecon is next month.”
> It really does sound as if id is now a support team for Bethesda/others. Rip idTech, which was amazing. Maybe Machine Games will carry it on or maybe it will be dropped for future games?
> But the read is that id is essentially dead. At least for the time being. Yes, the studio wasn't closed and half still have their jobs. That's great.
> re: the studios set free by MS to be sold or mgmt returned. One view is this is great. For MS they get decent PR for being "good guys". But the truth is that in at least one case (and maybe others), retaining the IP in such a case was written into the original contract when MS purchased them. Second, these studios now are out of the MS lifeboat, on their own, and will have short time to find new deals or funding and they will make it or not. Never mind they sold to MS originally to avoid this grind and be 'safe'. Yes they have a second chance but more layoffs may simply be deferred and outside the current umbrella of today's layoff round, so MS doesn't really get the bad PR of simply shutting studios down. This means continual worry by the employees and stress for mgmt.
> re: Arkane. Same as the above but timing and process is different due to French labor laws, etc.
> The layoffs are still happening. A substantial portion of Obsidian was let go today (near 1/3). Worries that they now don't have the staff to complete current projects. Deep layoffs at Zenimax Online. Even Bethesda or Activision studios were hit (with a minor round and numbers that are small enough that it reads more like "everyone has to take a hit, even the star studios"). More details will emerge, but it's a lot of people.
> So it's bad. Real bad. Good luck to all affected.
Entire post text:
> This post was about the insider news I got this morning that a majority of Id's studio is being laid off, including most (if not all) coders.
Damn, not ID. Some of the best engineers in the industry and they are all nearly gone?
Not to mention the legacy. Some of those people may have been there for over 25 years, in times where the idea of programming for a dedicated GPU was cutting edge. Absolutely crazy how little respect the industry has for these golden geese.
Even in the age of AI how the hell can you make a game without programmers?
Maybe they will just pump up remakes in other engines, like UE.
Tim S. has this doohickey for Unreal where you tell the AI what game to make and it makes the game! Totally out soon and to be beloved by everyone around /s
Impacted non-studio dev here. It's a bloodbath like some of the leaks in the past few weeks have said. Many important platform/infra teams getting gutted, even in areas where there's supposedly a ton of future investment.
Thanks for sharing. I heard that ID also got gutted, from Scott Miller on X: https://x.com/ScottApogee/status/2074198967550685268
Is it true?
Yes from what I can tell :/
I was in the console/platform dev org so not a ton of insight into studios, but I've seen a ton of ESO and Id folks posting on twitter
That's really sad.
“Resetting Xbox”
Gross and classless title. There was a time where people at least had the sense of shame to not do this kind of thing when firing people
Yeah, it feels like a terribly inappropriate moment for a pun.
Agreed, this is vile
Microsoft, as always, has no taste. And they think they can MBA their way into making fun games.
The Xbox was my main gaming platform from around 2005 to 2018, and the experience got worse and worse as time went on. At this point in time, I really don't know why you would choose an Xbox over another console or just PC gaming.
They can try to "reset" but from the outside it just looks hopeless as long as Microsoft is involved.
I'll stick with Steam and Nintendo consoles. At least Nintendo still recognizes the importance of a fun gameplay loop, even if they struggle at other things like good online services.
They will just continue smash thru exactly what is killing them because they do not know how to reset. More micro transactions, Halo 14-39, games launching before they're ready, price increases, etc. All of that looks good on paper, so they will take no action against. The XBOX is hitting icebergs, and instead of slowing down, they will just call for more speed.
Microsoft laid off most of its Halo talent in a previous lay off cycle, stripping 343 Industries of most of its staff and rebooting it as Halo Studios as a shell to mostly outsource development to other companies in the way that Call of Duty was built on the game development equivalent of sweat shops. They've already shown that they don't have the guts to make Halo 14-39, they seem to be only doing yet another remake of Halos 1-3 and maybe Reach, this time in Unreal and with "AI" to help "upscale" everything. Just four Halo games endlessly remade until people forget why they were ever originally popular.
What is Halo 14-39? Google wasn’t helpful for me.
Rapid release schedule
Also, this old idea called "sequels" back before "reboots" and "remakes" things used to keep going in numbered order~
I think they are just saying MS will rush out yet more Halo games, ie Halo 14, Halo 15, etc
Oh haha, kind of embarrassing on my part. Thank you!
>They will just continue smash thru exactly what is killing them
Well, not exactly. Maybe partially, but definitely not entirely. They got a shit return on a lot of money they spent which drove down margins now they are cutting that. They lost 64 cents per 1 dollar invested so they are investing less.
Ha! The new boss of Xbox surely has innovative ideas! Layoffs, how nobody had thought about this before?
In every single case layoffs degrade the company’s core product. Unless they plan to completely change the XBox business (for example to one that sells hotdogs), this move will make XBox worse.
I agree with your sentiment, but not your conclusion. The new boss is being paid millions to explain that 14 layers of management is a bad idea... I'm sure there are thousands working in the xbox division that could have told you that one for free.
Except in the many, many cases where layoffs help the company focus on a core product.
Name 1 case that we can evaluate 10 years after the layoffs.
Adobe
Can you share more information? I just looked at their Wikipedia entry and they spent 2018- basically doing acquisitions. What were they layoffs you were thinking of? It's hard to find historical data from 2016. And what's their new focus? It looks like they still have the same huge roster of apps.
Sure
https://www.sfgate.com/business/article/adobe-laying-off-600...
https://www.cnet.com/tech/tech-industry/adobe-to-cut-9-perce...
https://www.cnet.com/tech/tech-industry/adobes-transition-to...
They went through a heavy period of layoffs for a few years and now are killing it and it meets your criteria of about 10 years ago
Xbox has an interesting opportunity going forward, that I expect they'll fumble.
Interest in physical media has actually been on the upswing, and, with Sony announcing their plans to abandon physical media, it feels like MS has a chance be the "good guys" like what Sony did to MS when MS threatened to ruin physical media prior to the Xbox One release.
However, I'm expecting Microsoft to simply follow Sony's path, because I think they are already going down a path that favors digital-only, and I also think they just don't care to distinguish themselves. It seems like Xbox's claim to fame for the past few years is "It has game pass, and it can play a lot of the same games PlayStation can."
> Interest in physical media has actually been on the upswing, and, with Sony announcing their plans to abandon physical media, it feels like MS has a chance be the "good guys" like what Sony did to MS when MS threatened to ruin physical media prior to the l One release.
Not only that, but RAM/GPU/SSD prices going up so much recently (which is especially jarring for SSDs, which for like a decade had been getting more affordable; I bought a 120 GB SATA SSD in 2012 for around $100, and I was able to buy a 1 TB m.2 one for around the same price a few years ago) is starting to equalize pricing for PC gaming. In 2022, the initial Steam Deck launched for just $400, and it continued to be offered at that price for a few years, which made it cheaper than the Switch 2 launch price.
I feel like if I were a console manufacturer, I would be trying to figure out a way to take advantage of that. Other than price (previously), the other obvious selling point of PC gaming is more control over your system, so there could be an opening to try to lure away wayward PC gamers with some changes that give them a bit more control on the console. I agree with you that I can't really imagine Microsoft doing this though.
The problem with the physical media for today's consoles is that it is the game in name only. The version on the disc is quickly outdated by launch day patches, follow-up patches, add-on content, etc.
I do think there is a market for a return to an XBox 360 model where the tech behind the games is artificially constrained to allow for games to be published solely on DVDs again. No installation required, no patches required, smaller budgets, quicker release time lines. But Microsoft is not the company to pursue that approach
You know sorta feels to me like some new physical tech would be warranted here. Something with a good amount of storage, very quick I/O, and read/writable. More like a fancy thumb drive than a disk. Let the version on it be updated by the system to stay current, gain add on content, etc.
anyone who has the disk can download the patches and extra content. there is no way to block a specific copy or prevent transfers like with a digital purchase. the point of physical media is sharing and resale, not the piece of plastic sitting on your shelf.
i agree that mandatory downloads are a big problem (thats why willitplay is a thing) but offline installs from disk are the biggest change that made ps5 games load so much faster than ps4 and opened up a lot of new options for devs. reading data from ssd will always be faster than a blu ray. the only downside is you have to manage space a bit more but its worth it. if you want straight from disk get ready for slower uglier harder to develop games.
You’re certainly right, especially for the AAA games coming off the presses, but it’s not always true with certain indie games, especially if they’re doing a physical print run long after publishing.
You can occasionally get one where a very final version copies straight off a PS5 disc.
Keep in mind though that Sony is/was actually a manufacturer of physical media.
Xbox is ahead of Sony on this path. Their studios often, if not most of the time, release physical games that require a full download to play.
I doubt that they will go back to where Sony are now.
> I doubt that they will go back to where Sony are now.
I agree. However, I do think they would get some positive attention (and some accompanying sales) if they were to backtrack and announce a console more like the 360.
It feels doable if they care to do it. Physical media should still be viable for holding all the game data for a while longer. Blurays can manage up to 128 GB, and I think the average game install size is ~60GB right now, giving most games some room to grow.
The biggest issue with a strategy like that is that they're, like you said, pushing digital-only hard already, and they're also trying to save money, so the idea of spending more money to make future consoles with disk drives, and to make disks, is unlikely to appeal to them.
It is a shame, though, because it seems like the Xbox 360 will have been widely viewed as peak Xbox until the end of Xbox.
Another issue is that Xbox game discs this generation are 50GB while on PlayStation 5 they are 100GB.
I think the reason for going with 50GB for games on the MS side was to remain compatible with the previous generation of consoles.
> Interest in physical media has actually been on the upswing
Sure it has. Just like how demand SD card slots and 3.5mm jacks on phones is on the upswing. If you only read tech forums.
If you want to see it outside the context of tech forums, you can look up the industry reports and see the numbers yourself. There are some media types that are dropping, obviously, but there are multiple types of physical media that have seen notable growth recently.
Can't say I'm surprised. I can't see a reasonable path for Xbox to do anything but just stay alive other than as MS's overarching gaming brand.
Xbox is on the losing side of the consoles, with no distinguishing features to speak of. You buy a console to play games and for it to be convenient. Xbox is no more or less convenient than a Playstation, and what few exclusives there are left are on Sony's side of the fence. Game Pass, while good, isn't really making money. What more is there to Xbox then (beyond the studios and such, which aren't Xbox themselves)?
The Xbox series S is very convenient for me: it fits neatly in the TV stand which is quite slim.
The people I know that like Xbox like Game Pass and Buy Once Play Anywhere. Xbox is the value proposition for people that want to play on Console + {PC/Handheld}.
> Xbox is the value proposition for people that want to play on Console + {PC/Handheld}
Okay. Then who is that? Most of the people who play games who I know are either A.) Console gamers who only use PCs for work, 2.) PC gamers who don't see the point in a console, or III.) The top 1% who just go where the games are and are willing to spend to get there, and that group isn't generally a fan of not actually owning their games, nor are they very price conscious (they don't like higher prices, but they'll drop 400 USD to buy a PS4 and Bloodborne, since that's the only way to play that game).
I'm yet to see someone using Game Pass on a handheld.
So if that's the intended market, no wonder it isn't doing too hot.
It's not uncommon to have a PC at the desk and a console for the couch.
I like the idea of the next console supporting PC games. Xbox with steam and emulators right on my tv would be a dream.
I can't see this happening without either Windows getting in the way, negating much of the advantage of a console (have a look at the Windows handhelds and how they're not selling and how they're not a great experience), or Microsoft swallowing a massive part of their pride. Valve started directing work towards Linux literally because of Microsoft trying to close down the Windows ecosystem,[1] and Valve wanted an escape route if Microsoft decided to actually do that.
MS crawling on their knees to Valve to get them to cooporate on something (and Valve saying yes!), or MS figuratively doing the same by undoing all the problems MS have made for themselves with Windows and making a decent 10-foot UI so you'd actually want to use Steam on your Xbox, both seem incredibly unlikely.
Not to mention that this is more or less just admitting defeat for MS, leaving every single penny of profit in PC and Xbox gaming to Valve, other than what's directly tied to the hardware, which isn't where any of the profit actually lies.
[1] https://www.pcgamer.com/gabe-newell-i-think-windows-8-is-a-c...
> I can't see this happening without either Windows getting in the way
The intraorg combat that seems to be the default at microsoft is really going to be one of their persistent problems.
Oh, you were talking about the product not the business unit.
> We will reduce management layers to no more than 5, and where possible, 3.
This reads like something from The Office.
Michael begging Oscar to tell the shareholders how to save the company.
I can't believe he just left the building
Xbox lost their identity.
Xbox was a Live Games platform. they lost that identity trying to please everyone not their core audience.
compare to Nintendo - who stuck to their identity - as fun games first. graphics not necessary.
they can cut so many jobs - but unless they return to what makes Xbox great. the platform / ecosystem won't recover.
They immediately benefit from cutting things that hemorrhage money. The consumer's opinion can worsen and it's still a good move. When you lose 64 cents for every dollar invested you can simply stop spending - it's that simple.
This is a very long-winded demonstration that the shareholder-driven philosophy of "we must keep growing at all costs" is not sustainable.
When I bought my XBox i spent half a day setting up an account and payments.
Good old times. The last time I tried to buy something on Xbox it fails miserable with multiple cryptic error messages - mostly around my credit card.
No problem though to biy the game on my mac via browser and then after a few more settings actually showed up on my xbox.
"And we will streamline how we work across our tools, with a cleaner code base, shared services, and 50% reduced vendor spend."
How will they achieve cleaner code, with fewer workers? Seems like a well-intentioned platitude.
That messaging is for investors. To a dev's ears, it's a meaningless thing to say.
It reminds me when Elon took over twitter and made a comment to the effect of "we need to rethink the entire tech stack from the ground up". Someone asked Elon what was wrong with the tech stack, and he called them a jackass.
It's quite insane that twitter went from 7500 -> 1500 employees and the site didn't implode. 80% of the people gone.
Eh, depends on what you mean by "implode."
Before the buyout (2021), twitter made $5.1 billion in ad revenue ($6.22 billion inflation-adjusted).
In 2025, it made about $2 billion.
So Twitter is now about 1/3rd of what it was (revenue wise) when purchased.
Considering the trajectory of x then x.ai then SpaceX as the holding structure the Twitter purchase investors must’ve done well for themselves.
Shhhhh don’t mention this!
> How will they achieve cleaner code, with fewer workers?
What do you mean? My experience has always been that the more cooks there are in the kitchen, the messier the codebase is. Has yours been different?
My experience has always been that the more you're trying to do, the messier the codebase is.
But that to clean up a codebase requires even more people.
So, at first blush, it looks like "more people = more problems," but if you actually give yourself some breathing room, the code can get cleaner with effort.
They'll use a magic "Copilot for Game Dev" LLM genie that produces nothing but clean code.~
"Write a new Halo game. Make no mistakes."
Or... studio publishers may be encouraged to use a proprietary platform specific engine. Trying to dethrone UE5 would be silly. =3
I put her in the league of Marissa Mayer (Yahoo), Rometty (IBM) and Jane (Citi) - all came with a mandate to revamp the whole thing.
> In addition, Mojang and King will now report directly to me.
Darn it! The ONE studio that I really wanted them to set free and go back to how well things worked before, and they tighten their grip. Whyyyy?
This likely represents increased freedom and faster decision making for Mojang and King.
Moving up the org reporting chain lets you do more, because you have fewer people to convince.
It’s not as good as being fully independent, but that will never be an option for Minecraft again. Actually being spun off might even be worse, because any new owner will be even more fixated on just the numbers.
Probably because their game made the bucks?
They depict how Microsoft bought double fine at the end of the psychonauts 2 documentary. If you watch the documentary it's hard not to think it may not have been a genius financial decision.
I saw already lots of comments about Nintendo, but one interesting bit I didn't see yet in comments here is the fact Nintendo just raised base salary.
https://mynintendonews.com/2026/06/26/nintendo-has-raised-it...
>Today, in some parts of the company, work passes through as many as 14 layers of management.
Not even national security institutions operate like this
I feel like the way Asha talks about Xbox owning game studios could also be applied to Microsoft Xbox. Pc gaming and console gaming has never been closer. Is it advantageous to own two essentially competing platforms?
Is console gaming really a core pillar for Microsoft? Should they kill Xbox, fall back to the (I imagine) hyper profitable platforms of Mojang and King, and focus on making windows gaming as good as it can be, which I think would tie in with the overall improving windows strategy.
They aren’t Sony, they aren’t Nintendo, they aren’t Steam, and I feel like the only unique thing they have is the Windows + PC gaming (that Valve are working hard to erode). If they have any chance of making a viable platform, for me, it needs to be in this space.
This reads like corporate death rattle. Microsoft never had any clue what it takes to make a console - a console. Now it seems they've also completely lost the plot on what makes a business - a business. They should've been Steam, instead they ran out of it.
> Microsoft never had any clue what it takes to make a console - a console.
The 85 million people who've bought the Xbox 360 would disagree.
> We will deliver success through a flatter organization that is built around makers (individual contributors focused on building), player-coaches (leaders who remain deeply involved in the work while developing their teams), and directly responsible individuals (DRIs) who own key decisions and outcomes
Fascinating. The death of management is happening all throughout software.
What's fascinating to me are the Valve comparables here.
<500 employees vs 18k at Xbox
17B ARR vs 20B ARR
At the end of the day there are two strong differences here. Valve has always been lead by people who were game devs, and have always conveyed a message that the gaming experience matters most. Xbox was led by Phil Spencer, who at least was known as being an avid gamer, but in his tenure pushed for things like xbox game pass to drive continual revenue and windows integrations that affected performance of games. Now it's being led by an industry outsider.
It boils down to trust in the end, and willingness to place profit over brand. If you look at the responses to this in r/xbox or other communities, it's overwhelmingly a stance of zero surprise. Xbox has always placed the business first, and this is the natural end of that mission - you get a bloated org with a platform that people don't end up trusting.
I do think resetting is the correct thing to do; there's no reason for Xbox to have 10k+ employees. Still it's another black mark against the brand. Also look at the framing of this message - it's about how their structure has affected the business. In this entire 47 sentence post, there is a single sentence that talks about the affect on the players:
> That complexity has slowed decisions, blurred accountability, and made it harder to deliver for players.
It says a lot when the players are the secondary consideration.
Valve doesn't make games. (within the margin of error).
A non-trivial amount of their ARR is still from Valve-made games. Counterstrike still nets a bit over 1b per year from just case unboxings, and Dota is in the hundreds of millions. I wouldn't call 8-10% a margin of error.
Those are maintenance + loot box on existing games. Sure, it still takes art and craft, but not the same kind of development work.
Valve is still working on new things. See this section, specifically the bottom.
https://box2d.org/posts/2026/06/announcing-box3d/#valve-to-t...
Counter Strike 2 is a 14 year old game. DOTA2 is a 13 year old game.
Yes I know Valve makes money selling games. They don't make games.
Both of those games are live services games. They're not just getting some occasional bug fixes, they get big content updates.
While it can be disregarded just as major update CS2 is formally 2023.
Dota is live service game, getting major patches each year. Patch notes for version released 3 months ago: https://liquipedia.net/dota2/Version_7.41 I don't think there's any reason for Dota 3, ever. Any change could be just a patch.
"Valve rarely releases games" would be more accurate
As an occasional gamer I hate modern big budget games as it takes me 15minutes to get gaming between launcher, updates, loaders and other distractions. It then takes me another 15minutes to get back to speed on which mission I was working on. By then I have 30 minutes left to game. Due to this, I frequently pick up older snackable games and skip AAA games altogether.
Too little too late. Xbox is dying and PS won.
Try listening to your customers next time.
We don't want to be ripped off with paying for assets we don't own.
We don't want another monthly subscription.
We want the old games, remastered, with fully functioning multiplayer.
> We don't want to be ripped off with paying for assets we don't own.
You do know that PS is literally stopping physical games? You will not own anything.
> Too little too late. Xbox is dying and PS won.
Seems like currently PS is too determined to snatch defeat from the jaws of victory.
crazy second sentence which makes the rest of the comment not make any sense
It becomes a problem for consumers when Xbox lays off large numbers of employees and closes studios, leading to fewer games and poorer support for them.
> While those businesses have created meaningful value, they did not grow at the pace we expected.
That this is seen as a problem tells you everything about business today.
It has to be explosive growth or it’s pointless, according to execs and shareholders.
The velocity up or down of { the rate of growth of profit } is the profit-linked factor that drives stock prices go up or down. Not the simple velocity of profits. The market demands corporations compete with cumulative interest to increase share prices, and that’s never a sustainable path.
Ah wow of course, I think you just made something click for me.
It's strange how we take interest on cash as a law of nature, when the original intention might have been nothing more than compensation for the risk the lender was taking on.
Now the risk (on bank deposits, govt bonds etc at least) has effectively been removed so the interest rate is the baseline expectation.
So compound interest is underpinning the infinite growth forever delusion...
Yeah, modern stock-market capitalism is, at its core, the layering of a 'second derivative' layer — growth in rate of growth of profit year-over-year — on top of the 'first derivative' — growth in profit year-over-year — that most non-financiers consider it to be. If you've read/seen "The Big Short" it helps immensely to consider how the layering of bets, tranches, and insurance is not the first time the financial industry has implemented widespread layering, it's just the first widely recognized time they've done so.
This is also why the market tolerates destructive private equity firms: their sole purpose is to create growth in the second derivate; that they 'pull up the ladder behind them', so to speak, by killing the business and terminating investment gains for investors in the first-derivative tier (market stockholders) and zeroth-derivative tier (capital investors), and that they kill great products in a market so that buyers are forced to buy shitty products, are recursively beneficial to more efficient cycles of vampirism.
I expected an article about resetting an Xbox device.
Xbox is a sideshow at Microsoft at this point--and arguably has been one for a very long time. Yes, it brings in non-trivial revenue but not a lot of profit. I don't really expect that you'll see new Xbox-related development in a few years.
When all other revenue sources dry up, workforce cutting is the only thing that remains. Bosses and Wall Street loves it.
On one hand, the idea of using Microsoft’s crazy amounts of money to try to build a subscription gaming business feels like it should have been more successful than it has been. On the other, I think gaming has some distinct qualities vs TV/Movies/Music or other types of software that makes the idea seem way less appealing. Curious to see what the new direction looks like
> Our business today is not healthy. We are operating at margins that are 3-10x lower than comparable platform and publishing businesses. We
Oof. We're making money, but we want to make more. So we're firing people.
For that kind of announcement, I found it surprisingly open and detailed (at least if everything in there is true).
Still, some points are telling.
> Our business today is not healthy. We are operating at margins that are 3-10x lower than comparable platform and publishing businesses.
So the layoffs are not because they're operating at a loss and had to cut costs urgently. The margins are there, they aren't even thin, they're just not thick enough...
> In addition, Mojang and King will now report directly to me. These two studios have increasingly become platforms and are our largest by monthly active players. They bring critical geographic, demographic, and differentiation to XBOX.
Was a bit surprised that Minecraft got such a special status, but not at all surprised by King. All the studios getting nerfed, except the engagement maximizing mobile games...
Companies do not exist to pay employees. There is significant risk and opportunity cost to running this business.
Minecraft is an enormous game and the success of the movie among Gen Z/Alpha (a demographic that is fading from the silver screen) shows the potential of a multimedia franchise. It was by far their best purchase (and in some ways runs counter to the idea that "Not every studio fits with us".
But yeah, on the other end: 15 year old Skinner box experiment continues to Skinner box and remind us that war truly never changes.
> It is neither possible nor desirable to own every great independent studio.
The sheer hubris. Yes, the monopoly is not desirable for gamers because the games end up all being the same MS-dictated corporate crap. Microsoft imploding is good for everybody in the long run and we can't wait for that day.
Of course we have to see how it plays out in reality, but giving back all IP and a runway to complete planned games to game studios as they are "released" from Microsoft is a really nice gesture, not just for the studios but also for the fans.
Most companies would just shut it down and keep the IP.
Is anyone familiar with the history of Xbox? I'm wondering how their margins became so much worse than their competitors
In this economy, if you're playing catchup to competitors you really can't have growth AND large profit margins. Why is that not obvious?
XBOX brought in 5 billion, and after all development costs, marketing, operating expenses, investment in research, etc., they are STILL left with 200 million dollars.
What's the problem here? Shareholder value? (as in the mythical/speculative value of MSFT, because OF COURSE they don't want/care for part of the profits/dividends)
If the money being invested in research has a good return - i.e. a great product/service is created - then you will grow.
Chopping down the employees here is a horrible move. Besides crashing employee morale into the ground, losing hard-to-replace developers/staff, it also generally gives off shitty vibes to consumers.
People will think why invest more into a failing entity? I can see people worried about the future of their "purchases" (if you can call them that these days).
This announcement so soon after XBOX had to start yelling "we are not shutting down" from the roof tops doesn't look good.
if they fire everyone and stop spending money, only making money, their PnL ratio will be infinite!
Don't know if it is just me, but seems like a weird thing to read on their official website. I could see it as an email sent out in crisis and maybe it would get leaked, but putting it up there yourself? I mean it has "Our business today is not healthy", "we have 14 management layers" and such. To me this comes across as a manager's "See mee, see me, I want the whole world to see me" more than actually trying to fix a problem
Any details about the studio spin-outs? The rumors were that Double Fine etc. would be closed, but all we know now is that some of them are being sold to management and others are being sold to other investors. Nothing about any commensurate restructurings.
It's in the press release.
> Compulsion Games and Double Fine Productions will return to management and transition to independent studios with their IP, catalog, and runway for their next games. Ninja Theory and Undead Labs have entered terms to join new ownership with funding to complete and grow Senua and State of Decay 3. In France, Arkane’s management is beginning required consultation with its Works Council to review potential strategic options.
Yeah, that is what I was referring to about the lack of detail on restructuring. I want to know if people are losing their jobs and/or titles are being cancelled as part of these sales.
Senua and State of Decay 3 are the only currently announced titles of the studios in question and it does say that those games will be completed by their studios under their new owner. It's still an interesting mystery who the new owner will be, though.
I'm hopeful (but maybe not optimistic) that Arkane gets out of this with the ability to do what they're really good at again.
They had 20,100 employees at one stage.
( Xbox plus the Microsoft Gaming )
That is around the same size as Finland's military....
That’s the size of active duty but it’s a conscript army so in case of a war there would be a general mobilization of the 900k trained conscripts
How many employees would you have allowed them to have instead?
I wonder if Sony / Playatation is having the same issues or not
The hardware side doesn’t make sense as much anymore. I mean if we have these massive cloud datacenters for AI and people can’t even have disc copies then why
Missed chance to call this a "Red ring of death".
From the title alone, I thought it was going to be a howto on fixing the red ring. My Xbox and my 360 still need some lifesaving care.
I fear the core gaming demographic is too young to get this reference.
I think now a console like the Ouya could really be successful, I find when they tried this 10 years ago it was the worst moment possible as game hardware was cheap and competition strong. Now with the AI boom eating all hardware capacity and indie game development going up like crazy it seems like a perfect moment to build a new hardware platform on affordable last gen hardware that runs indie titles.
This is great news for gaming. Xbox, which has ruined Halo, Gears of War, Mass Effect, and countless other IPs, needs to be burnt to the ground.
The whole redfall thing was tragic. It was crazy watching Arkane become a laughing stock. Some of the most talented game devs ever. Prey, dishonored
This is an unusually candid public announcement
who is Asha?
not a part of Microsoft, I find it weird a company leader wouldn't sign their whole name even if an internal memo.
She's an AI businesswoman doesn't play games.
"I'm not a gamer"
receipt: watch?v=o0hMSekk4XE
We are one console cycle away from fully AI generated gaming worlds and systems.
Their best bet is to make everyone a developer, let anyone build and launch games from their own console, and take a cut as a walled garden/ecosystem.
Seriously, I cannot fathom why you would say this. Innumeracy? Narcissistic delusion? Stealth launch for a new industrial human cloning project?
Asha Sharma needs to keep her bosses happy.
Spinning fiascos as opportunity is standard practice.
XBOX here presumably refers to the entire division, so it's not limited to just people playing on the games console.
There are approx ~3 billion "gamers" worldwide, why shouldn't Xbox set a goal of 1/3 of them using their platform?
Yet the biggest selling console of all time, the PS2, sold 160 million units.
Because approximately most of them exclusively play mobile games
Which to be fair Xbox still owns King and thus Candy Crush.
You even felt the need to use quotes yourself.
I’m guessing 90% of them are mobile gamers exclusively, so no, that is not realistic
"Let's go from 1 in 15 gamers to 1 in 3 gamers" sounds nice, probably gonna need employees for that!
You need the right products and services. If you know what those are, then you need employees to build them. Until you figure out what those are, you are (sadly) better off with fewer people.
Yeah this lightweight startup could really use some guidance on how to make products with global reach it's a pity they don't have any experience with that.
Candy Crush is probably the majority of that.
You've changed, Microsoft. Saving the console is trivial, they're just afraid to do it.
"Minecraft and CoD are now Xbox exclusive".
If I am unable to play Minecraft any longer because I have to buy a shit ass XBOX, I will never buy another piece of software (or hardware) from them. My $5 in 2009 came with a guarantee I would have access (and free updates) to Minecraft forever. Microsoft not honoring that agreement, which they said they would, is a step too far. I already signed up for a shit ass Microsoft account to keep access, and I said to myself that was the last hoop I would jump through.
> Microsoft not honoring that agreement, which they said they would, is a step too far.
They already took that step too far - they broke ToS and closed all MC accounts that weren't linked to a MS account within the timeframe.
I'm obviously not saying I'd like them to make everything an Xbox exclusive, but it's the only play that makes sense after throwing $75B to buy Activision.
"Today, in some parts of the company, work passes through as many as 14 layers of management. "
Microsoft is today's IBM.
And elephants cannot dance...
I've got an original xbox, a PS2 and a PS1 all softmodded or mod-chipped with all the games I could never afford 20-25 years ago. I even have wireless controllers. I never worry about the console being connected to the Internet or maintaining a subscription.
I seriously don't get it.
A mass layoff without blaming AI? Are they that backwards?
I don’t know if it’s due to the subject matter but it seems there is a lot of confusion and low quality comments. Here are some reminders:
- businesses like Xbox try to make as much money as possible
- investments are judged on risk adjusted return. Net returns with high risk is failure.
- the risk free asset pays about 3%. So taking any risk better get you 6-10%
- you can lose your job at anytime for any reason. Any other expectation will lead to disappointment.
> you can lose your job at any time for any reason.
Depends on where you are.
I see no difference in this story between where studios are and the challenges facing their employees.
It’s the basic fact that you are in an organization which may change direction. And you do not control that organization.
Yes, you can lose your job at any time. Just not for any reason.
No “reset” can fix the Red Ring of Death.
This is purely greed on Microsoft's point. They absolutely have a profitable business with some great games, and they are sad that their management decisions led to this outcome.
But it's the rank and file who will pay the price for these poor management decisions. Like it always is.
To hear that the new boss wants to increase capitalization on Minecraft, to make it more like a Roblox, is horrifying and truly goes to show Xbox has leadership with near zero understanding of what they have or how to run it.
I wish good landings for all those affected, I hope for the best for all the studios whose future is uncertain now.
Their margins are 3% and they lost 64 cents per 1 dollar invested. It's just the reality-facing move. Everything you want from XBOX becomes more possible (not necessarily likely, but possible) when they stop lighting money on fire.
MSFT used to be flat. What happened?
GamePass has awful choices of game, save or one two. Nobody wants to pay $35 a month for games (that sporadically disappear) which can be purchased outright at full retail price for $70.
I mean, no one except the 30 million or so people who are paying for it. I'm quite happy with the GamePass selection, and I consider it an excellent value for me.
Right? Talk about losing the pulse here. Millions of people would rather pay monthly for thousands of games vs $70 for one?
weird how improving business always just seems to be labour cuts with sugar on top
"role eliminations".. So people losing jobs then :/
A bit of a tangent but I'm surprised with how many layoffs tech has had the last few years, we aren't seeing the laid off folks form new companies.
Related:
Microsoft cuts 4,800 Jobs, Half from Xbox division
https://news.ycombinator.com/item?id=48804401
Industry crash has been long overdue. Turns out making games for "modern audiences" mostly funded by ESG isn't economically viable yet.
there is only so much attention/time human beings have
games are competing with netflix competing with tiktok competing with sleep
They're just all in mobile and fsck you Diablo and Fallout fans. That's pretty much it.
That’s a rough reflection to the second half of Phil Spencer’s leadership.
How many of those 14 layers are getting cut?
Honestly, they could try building an interface that doesn’t suck. I have no idea why Valve seems to be the only one doing this.
I’ve found a lot of things just from browsing the Steam store page. I don’t think I’ve ever done this with any of the others, console or otherwise. They are painful to use.
The manager ratio still sounds too high even after the changes as well. Too many managers can really slow down and demoralize a creative workplace.
Sold my xbox and going back to ps5.
I think the Xbox Series X will be my last Xbox after owning Xbox, Xbox 360, Xbox One, and the Xbox Series X. I was all-in on their platform and I even paid for Game Pass for many years.
But they kept increasing the cost of Game Pass with no new features, the platform has seemed stagnant, and honestly I can't tell you why my Series X is better than my Xbox One. Literally I don't see a difference. I'm sure there is one but as a user I really didn't feel like it was a big step up. I bought it because I had every other Xbox and it seemed like the next logical step.
That coupled with most games feeling like lootboxes wrapped in just enough of a game to justify calling it one, at higher and higher price points, all while trying to get more money after they've taken your $70/$80 for the base game. Oh wait, you bought the poor-person $70 version? You really need to the Ultra Collectors Edition Gold Special Release Version for $120. Oh also, make sure you are buying the season pass...
Meanwhile I buy games on my steam deck and/or from indie developers for a max of $30 and get way more gameplay/fun that the "AAA" games (which have largely sucked IMHO).
I'm over here playing Mass Effect 1-3, Skyrim, Fallout 4, and other games OVER A DECADE AGO. They are the only games not completely ruined by lootboxes, always-online BS, or trying to sell you a shell of a game with extras you have to buy [0]. I was excited for Starfield (Skyrim in space!!) but it was a complete bust. After spending, quite literally, 1000's of hours in Skyrim (and buying and rebuying the Anniversary/Special/Collector's edition enough times to be embarrassing) I could not get excited about Starfield and stopped playing after a few hours. The new Halo was meh, I played through it and the open world was somewhat cool but I guess they wanted to do seasons of new content and I have zero interest in that. Give me a solid single player game, that's all I want. I cancelled Game Pass after realizing I was paying an absurd amount of money to play a single game (Deep Rock Galactic).
I think I'll stick to my Steam Deck which I enjoy way more than my Series X.
[0] Yes, Skyrim/Fallout had expansion content but it's tame compared to most games today.
I cancelled Game Pass when the recent price hikes quit.
Then realised just how few games I'd actually bought this generation. Game Pass was a mistake, or at least putting big AAA releases on there on day one was.
I think I've bought like 1-2 games this whole generation and even with Game Pass I might have bought 1-2 more max. Yes, I dabbled in a handful of games but never more than a hour or two before I lost interest (and I never had the interest to pay $60 for it).
Mostly I was playing indie/older games that could have been playing on the Xbox One.
It a pity. So many good studios gutted, for the only reason "margins too thin"
> Some of you May Die, But it's a Sacrifice I am Willing to Make
The crazy thing about Xbox games, or any game today, is that they require infrastructure, they require maintenance and subscriptions, and they require a constant release cycle, and moreover, a thriving community of humans who are playing the same exact game at the same exact real time as others. It seems like the primary lost art of gaming is single-player, offline, solitary modes.
Anyone could literally pick up an Atari 2600 from 1977, plug in a cartridge from 1978, plug it into a TV from 1981, and play the same exact video games with no problems. Now who will be playing the same Xbox games in the year 2076?
This reads as someone who only looks at AAA major titles. The smaller games are the better ones in my opinion.
Nintendo games generally do not require maintenance or infrastructure. The vast majority of indie games do not require maintenance or infrastructure.
Yes, this is part of why I lost interest in video games (probably mostly just getting older if I'm honest).
However at the risk of sounding basic, RDR2 (2018) and Cyberpunk (~2022, once they fixed all the bugs) are both really good single player games that are a lot more fun to play than anything from 1980.
How many more of those will we see? Not sure
> I’ve made the difficult decision to reduce our team by approximately 3,200 ... This will include approximately 1,600 role eliminations today
> we are establishing a Chief Operating Officer with end-to-end P&L responsibility across content, hardware, platform, and services. Helen Chiang has been promoted to this role and will report directly to me
Seems tone deaf to do both of these messages at the same time.
Go back in history, why did Microsoft create xbox at all?
It was Bill Gates fear of being overtaken by some "living room PC" or set top box that never materialized. It was an industry wild goose chase basically, with echos of past efforts (remember Philips CD-i ?)
Is this a concern Microsoft has today? xbox was a money sink from the beginning.
The sad part is they bought a bunch of very good game studios.
Shutting it down or selling it to Bytedance is probably next.
Microsoft has blown Windows and blown Xbox.
The writing was on the wall for Windows two decades ago; I am more impressed they dragged it out this long. It was probably decisions around 2010 in the lead up to the Xbox One that have now eventually killed them.
I wonder about the future of inExile and clockwork revolution
They don't realized that it is their business decisions that ruined the experience of the console gaming and they probably still double down on that.
Before, you would buy and play a console to be able to play in a minute, eventually with buddy around. Playing time duration was a key metric in game reviews.
Now, as they want to milk us the maximum it is a nightmare, game are mandatory online, you wait minutes and even dozen of minutes to be able to play like 3 minutes rounds, you are constantly nagged with restrictions, hours updates in the middle of game that prevents you to play, they force you to subscribe, register, give up on your data and all, consent screens everywhere, upsell barriers everywhere, and little opportunity to play with your friends...
So, after a few months, everyone will lose interest in buying games and even play. It's not fun, lot of lost time and frustration.
> Today, in some parts of the company, work passes through as many as 14 layers of management.
> We will reduce management layers to no more than 5, and where possible, 3
I don’t understand why they need to make a big announcement when what they’re doing is cutting the stupid management structure. Everybody hates cuts, except those that cut middle management.
They should have titled this “xbox cuts middle management: Less burocracy, faster delivery, more original games, more money for everyone involved, yay!”
Missed opportunity to put a red ring on the announcement. ⭕
At least they’re honest and not blaming AI.
This reads like pie in the sky MBA thinking
My son setup Gamepass a few years ago. It was the biggest rip off I've ever seen. So many things about Microsoft are out of kilter. I'm about to migrate my daughter away from a 3 year old Lenovo Yoga to a Macbook Air M5 - it's just too hard to administer, its now sluggish and the AI is completely in the way. She doesn't need it, and despite a few business practices of Apple I don't really like if I have to choose between them and Microsoft, then I choose Apple.
I was not like this as a teenager. I went through DOS, Windows 3.1x, Window 95, Windows 98, Windows 2000/XP and then all the way to Windows 7. I have completely changed my mind now, it's really only Apple I want to use. Everything about Apple is easier.
Why not linux?
Microsoft just never sorted out their exclusivity problem, tried to acquire their way to it, only to then be stymied by regulators, all the while having second-best hardware compared to the PS5.
Continuing the long trend of major tech companies making everything they touch worse.
Isn't this their attempt to fix it though?
No? They're fixing profits at best
A year-long restructure, where over 1000 people could lose their jobs is beyond disgusting. There's zero justification for it. Ever.
>we will help independent creators succeed by providing open development tools and audiences to realize their vision.
Bravo!
>Today, in some parts of the company, work passes through as many as 14 layers of management.
LMAO – reset approved.
Unfortunately, the 14 layers of management are also responsible for deciding how the 14 layers will get cut. It's likely that all or most all of the middle management will survive but the ICs doing the real work will be the ones that take the hit.
I saw the same thing happen at Amazon. They claimed to be reducing layers of management in 2024/25, yet all that happened was a shuffling of the boxes on the org chart a bit and cuts to the ICs. Managers that had too many reports were forced to give some up for managers with too few, but most managers stayed in place.
"Today, in some parts of the company, work passes through as many as 14 layers of management. Our platform teams are 40% larger than they were at the start of this generation, even as our player base and playtime have declined. "
14 layers of management is truly epic. I don't think I have ever been more than 5 levels down my entire 30 year career.
The layoffs will continue until morale improves.
- We are operating at margins that are 3-10x lower than comparable platform and publishing businesses
What comparable platform is there? Are they thinking netflix? God i hate corporate execs like this.
"Management fucked up, and now you all get to pay for it. Have a nice day :)"
This feels less like an AI story and more like a "subscription strategy met reality" story. Xbox spent years buying studios and subsidizing Game Pass to chase a Netflix-for-games future. When subscriber growth slowed, the economics stopped working. The layoffs are unfortunate, but they seem more like the consequence of executive-level strategic bets than anything individual studios or developers did. It's a reminder that distribution models are often much harder to reinvent than they look on paper.
It’s wild that we’re still unraveling the effects of COVID-19. It really feels like every video game exec convinced themselves the pandemic boom was permanent, and that we were all going to be stuck at home forever playing games.
as a player this feels like the confirmation of what we suspect since years, the gamepass math never closed. the sad part is the 3200 people paying the price for decisions they never took