The Future of Xbox is looking bold

A plethora of rumours, leaks, and news from Xbox point toward some big changes.

I´m not an Xbox gamer, I have to say that right off the bat. When I look at the Xbox ecosystem, the consoles, the games, the community, there´s just nothing there that interests me. A platform that focuses on multiplayer and making the console a 'multi-media' box while I'm a single player guy that's only really interested in my console providing me with a good way to play video games. They have no exclusive games that I like except the odd duck here and there.

It is, however, the platform that has been the most aggressive player in the last few years. Multiple multi-billion dollar acquisitions chief amongst them but also smaller stuff like Xbox putting in more of an effort to attract Japanese developers and attract established IP for exclusives games, like Indiana Jones. Stuff they've been doing for the last couple of years, of which I've even written some posts about, but it's the combination of leaks, rumours, layoffs and that Xbox business event/podcast that is the catalyst for me to talk about Xbox yet again.

From what I've seen in the last few years and from what those leaks, rumours’, layoffs, and the bombshell that was that 'change of strategy' tell me, Xbox is prepping itself to go full-digital and reposition itself more as a service provider of video games than a console.

Let’s dive in what, I have to admit, has turned into quite a long read.

Xbox games going multi-platform, sort of

First and foremost: Xbox is releasing four of its games on “other platforms” AKA PlayStation and Switch. All those rumours about multi-platform 1st party games have turned out to be true! Well, sort of. Let me explain.

The lead-up to this started a few weeks ago with speculation of Hi-Fi Rush coming to the Nintendo Switch, and over the weeks, this rumour grew and grew some more. It came to the point that all kinds of games were, at that point supposedly, coming to PS and Switch. From Sea of Thieves to Starfield, to even games that aren't out yet such as Indiana Jonesand the Great Circle. Multiple news outlets and gaming journalists investigated the matter and came with all kinds of juicy details.

Yeah, when there’s so many reports by news outlets, you know something is going to happen. And happen it did. After a flood of discussion erupted online and so many people were talking about it, and toxic Xbox fans were raging about it, Microsoft felt they needed to put out a statement. They would share their "vision for the future of Xbox” in the week of February 12^th in the form of a special episode of their official Xbox Podcast.

Said podcast was a ‘nothing burger’ to me. It lasted 23 minutes and broached the subjects of exclusivity, hardware, backwards compatibility, and Game Pass yet Phil Spencer and his colleagues managed to say practically nothing of real value. The only concrete details we got that is important for this discussion right now is that four Xbox games are coming to other platforms in the near future, without actually naming those four.

We do, however, have a solid idea of what these four games are thanks to what Phil said, what journalists have corroborated through their sources and even some cheeky hints from Xbox developers themselves.

Phil talked about two “smaller games”, which turned out to be Hi-Fi Rush and Pentiment, and two “service-based games”, likely Sea of Thieves and Grounded. Hi-Fi Rush and Sea of Thieves were already in the conversation and have tangible evidence for going multiplatform to boot.

Dataminers found recently added shirt texturesin Hi-Fi Rush that heavily allude to rival platforms. A red one that says “Rock Out Everywhere”, a blue one that says “I’m Here Baby”, a green one that states “Shadowdropped” and a white one that says “This Is Simply Unreal Epic!. The colours match the generally agreed upon colours of the 3 platform holders and PC (red = Nintendo, blue = PlayStation,  green = Xbox, with = PC) with text that talk about the Switch’ hybrid nature, the shadowdrop on Xbox and just flat out namedropping the Epic games store.   

Those new T-shirt images, datamined by random-cattai.

On Valentines Day the official Sea of Thievesaccount tweeted a poem based on the popular Valentines poem of “Roses are red…”. It says “Rowboats are red, And sometimes they're blue, Other times they're green, Occasionally they can be white... Wait, where were we going with this?” A very cheeky poem that once again has the platform colour coding. 

Xbox and exclusivity

Toxic Xbox fans have been in a frenzy about all of this. About some of 'their' exclusives going multi-platform and thus no longer being exclusive to their ecosystem. They feel 'betrayed' or that it'll devalue the console itself. I think their reaction is overblown. It's no secret that the Xbox hardware is selling pretty poorly. It's dead-last, with the PS5 outselling it around 3-1 in 2023, and there's no indication that its momentum will pick up. It's Game Pass that has been holding the ship afloat, Microsoft's focus, and the subscription numbers there have pretty much plateaued. Yes, they’ve now risen to 34 million but only because they’ve folded Xbox Gold into Game Pass as the new, low tier Game Pass Core.

With how expensive and intensive game development has become and with a two billion dollar acquisitions in the rearview mirror, Xbox has got to make some money. With Xbox sales so much lowerthan they no doubt want it to be and Game Pass hitting what could very well be its ceiling, releasing their games on the other more successful platforms is something they might feel they can no longer not do. It seems to be as simple as that.

And this isn’t even a problem Xbox is having. Sony is outselling Xbox and the PS5 is trailing the PS4 sales numbers but their recent financial report doesn’t paint a picture full of sunshine. While their net income was at an all time high for the quarter, their profit dropped by 25% compared to the same quarter last financial year. Sony themselves say that this is because of high resource costs and the PS4 selling below expectations. As such, they lowered their own forecast for the year from 25 to 21 million consoles. I’m also certain that the high development time and costs of modern big budget, large-scale AAA-games contribute to lower amount of profit here.

Sony president and PlayStation chairman HirokiTotoki has stated that he wants the company to be “aggressive” in improving the profit margins. In light of this he talked about that “In the past, we wanted to popularise consoles, and a first-party title’s main purpose was to make the console popular […}] This is true, but there’s a synergy to it, so if you have strong first-party content – not only on our console but also other platforms, like computers – a first-party [game] can be grown with multi-platform, and that can help operating profit to improve, so that’s another one we want to proactively work on.”

In other words, he’s looking outside the established console ecosystem which hasn’t really grown in its audience the last couple of generations. Thanks to a tweet from Gameindustry.biz’s Christopher Dring I learned that the install-bases of Xbox and PlayStation have remained pretty consistent since the PS3 and Xbox 330 days. 170-180 million, depending on the generation. There just doesn’t seem to be any audience growth in console market.

Just like Xbox, Sony is choosing to grow the reach of the brand by releasing their games on more platforms instead of charging their current audience more for their products. The healthier options I’d say. And this is something PlayStation has already been doing, albeit rather cautiously. Big games like Horizon Forbidden West now drop on PC about 2-years after release generally speaking and Helldivers II only recently released on both PS5 an Steam day-and-date. The latter has been quite successful for them and as such I expect they’ll be experimenting with more close/day-and-date PC releases.  

The success of Helldivers II on steam, courtesy of Kami on the platform formerly known as Twitter.

How these four multi-platform releases affects the Xbox is something we'll have to wait and see. I can see it doing them harm though. Phil Spencer stated that these four games coming to other platforms don’t represent “a change to our fundamental exclusivity strategy”. He’s quite clear that for now, its only these four titles. Later on, however, he also shares his view on exclusives as a whole: “I do have a fundamental belief that over the next five or ten years exclusive games, games that are exclusive to one piece of hardware, are going to be a smaller and smaller part of the game industry”.

The strategy isn't 'we're putting all of our games out on other platforms day one'. No, they first launch on Xbox, PC, and Game Pass and all that and only come to other platforms later. Phil Spencer even said so himself. When deciding which four games would go multiplatform one of the criteria was that “[…]are over a year old. So they’ve been on Xbox and PC for a while.” AAA games' sales are very front-loaded these days so the expectation is that a strong amount of sales would happen on Xbox in that 1^st year.

All of that sounds like there will be more multiplatform games are coming in the future, albeit not in 2024. Phil Spencer specifically said that Starfield and Indiana Jones aren’t among these four games but they could still be going multi-platform in the future after that 1 year period is over and if they think the return is there. He even said that last point so in a follow-up interview with the Verge when asked about the potential of more multiplatform games in the future.

If enough 1st party games come to PlayStation over the next few years, I don't see many people buy an Xbox to play game X. Why bother with that investment if I’ll likely be able to play game X on my PS5 in a year or so?

For now though, based on what they’ve said and from what I myself have researched beforehand, the strategy seems to be that multi-platform releases of these four games is to make more money, improve the “long term health of Xbox” by growing the brand. For example, build up Hi-Fi Rush after it came out of nowhere and pleasantly surprised everyone to the point that it was in the Game of the Year conversation and potentially turn it into a franchise. Get more butts in the Xbox seats for when/if sequels come out exclusive (for the time being) to the platform and hope gamers liked it enough to buy an Xbox. Use the four games to test the waters for all this stuff. 

Adorably all-digital; a logical but worrisome step

With all of this, talk about Xbox dropping the console itself had popped up quite a bit as a natural extension. I don't see Xbox cutting out the hardware entirely yet though. First of all, Xbox president Sara Bond went as far as to say on that podcast that the next Xbox would be “the largest technical leap you will have ever seen in a hardware generation” and “There’s some exciting stuff coming out in hardware that we’re going to share this holiday”.

Getting rid entirely of consoles thus isn’t in the cards. They might be last in the console space at the moment but that 170-180 million people market is too good to just leave behind. During the podcast they also made clear that console Game Pass will only be on Xbox hardware and that said hardware is something for their developers to shoot for when making games. Provides them with a groundwork, if you will.

As a result of documents leaking in the FTC v Microsoft case in regards to the Activision Blizzard acquisition, Microsoft's plans at the time for the back half of this console generation and a bit beyond were revealed. This included an "adorably all-digital" Xbox Series refresh. An upgraded Xbox Series X that is all-digital. With this refresh, Xbox would do away with physical games altogether. If it’s this hardware they’re alluding to for this holiday, or perhaps something else such as a handheld, we’ll see.

Said all-digital console is disappointing but it makes sense. My own experience has always been that there were fewer Xbox games on the shelves at retailers and just the general sense that Xbox gamers preferred digital. Not only that but Xbox simply pushed digital a lot harder. From digital-only/focused backwards compatibility to its Game Pass initiative. Looking at some numbers, analysts say they see certain AAA titles have an 80/20 digital/physical split. That is quite the discrepancy and one that retailers note as well. Just today (as of writing) GameIndustry.Biz broke the story that several European retailers are doing away with physical Xbox games because of how poorly they sell.

From all this, it’s clear that in Microsoft's eyes producing and selling physical games isn't a very profitable branch of the business. They could cut out the manufacturing, shipping, etc. without much influence on their bottom line. Even with this console not released, if it ever will since Microsoft has stated plans could change, they have put yet another step towards a digital only feature with their latest developer direct.

Hellblade 2 follows in Alan Wake II's footsteps as a digital only AAA-title. No physical release is currently planned nor will it ever release as far as we currently know. Hellblade is a smaller scale title that can be explained as an Indie game with AAA production values so in that sense I understand why Xbox picked it as their first digital only 1st party title in light of everything I just said. Still it's a disappointing development to someone who prefers having the choice between physical and digital.

Alan Wake II is the 1st big AAA title that is all-digital and by the looks of it, the title has done well in that environment.

With physical games, I own these titles. As long as the disc and the consoles are in good state, I can pop them in and start playing. I can lend it to a friend, sell it, gift it, and more. I can choose where to buy it and make use of store sales and discounts. Of competition between retailers to get the best deal instead of the single, closed-off digital stores of the platform holders where they can, in theory, charge whatever they want.

I don't need an internet connection to verify my 'ownership.' And now that we're on the subject: I am the owner. With digital games and other such goods, you don't really own your purchases. You buy a license to use the product, which means that, on paper, these companies can revoke these licenses from you.

This almost even happened recently with PlayStation. Due to expiring licenses, people who bought Discovery movies through their PS Store were at risk of losing these movies. It wasn't just a case of 'these movies won't be purchasable anymore' but these movies would actively be removed from their library without any compensation. The same is technically true for the physical versions, but do you see Microsoft or Sony barging into your house to repossess your games? No, you don't. 

And no, I don't find Matt Booty's comments in the now much linked Xbox podcast about keeping once digital library all that reassuring. It sounded too much like a marketing speel for that. 

Weirdly enough, there is a good chance that some Xbox 1st party games will only get physical releases on PlayStation and/or Switch. For example, Hi-Fi Rush doesn’t have a physical version on Xbox but they might give it one on Switch and PlayStation. That would be quite something, no?

Final Thoughts

The future for Xbox is looking both clear and uncertain. While their move to put some of their 1st party outings on rival platforms and moving to an all-digital ecosystem makes sense, they're bold moves that put them in uncharted waters.

Both will allow Microsoft's games to reach a wider audience and cut certain costs, quite necessary to keep their business sustainable and profitable. They will add another revenue stream to make money off their billion-dollar purchases of Bethesda and Activision Blizzard and the high cost of modern AAA games. Putting some of their 1st party developed titles on rival consoles will also allow these IPs to reach a wider audience after their initial Xbox launch. For Microsoft to grow their brand further in their bid to expand beyond the typical console ecosystem.

It's a move that, while controversial, makes sense. Add in the likelihood that Xbox will go full digital with that 'adorably all-digital' leaked console and the poor sales of physical Xbox games, and we might very well be looking at a very different Xbox in a year or two.