What’s the future for Xbox?

It’s been one heck of a wild week for Xbox. Fans got their jimmies thoroughly rustled following rumours that Microsoft is looking to make their games multiplatform. Yes, that includes previously exclusive titles like Hi-Fi Rush and even Starfield (or maybe not Starfield depending on whom you ask). This caused quite a number of the green team faithful to pitch a fit the likes of which is… actually pretty typical for online drama queens. Destroying games, returning consoles, etc. The whole kerfuffle has caused Microsoft to push up a business update two weeks, to the middle of February, where they’ll map out the future of the Xbox brand. So far though, things aren’t looking to good. So is the entire Xbox brand about to RRoD?

Well, I’ve been speculating for a while now that Microsoft is looking to begin winding down their dedicated hardware division. All the signs are there. The company has already been putting greater focus on streaming and subscription based services, which promise access to a rotating library of games, along with day-one first party titles, across any internet connected device. Game Pass is currently the one thing Xbox has going for it that Sony and Valve has failed to match.

Meanwhile, news also came out this week that the PS5 is outselling the Xbox Series X/S by 2:1. Which has consistently been the case for quite some time now. Sales for the twin consoles have stagnates or are even declining in some markets. Now, 27 million units is certainly nothing to chuff at. It’s by no means a failed system. However, as AAA games get more expensive to make, a smaller install base makes it much more difficult to get a good return on investment. In order to break even, you have to count on a higher number of that install base buying the game, and increasingly, actively playing it as well. Generally speaking, active player counts for Xbox console exclusives haven’t been that great.

So what went wrong? Well, Microsoft’s problems with Xbox go back over a decade now, back to when the Xbox One was first unveiled. The console was a major misstep for what was a growing brand with a lot of consumer goodwill behind it. The focus on live television, lack of focus on games, high price, underperforming hardware, and draconian DRM meant to curb used game sales, did not resonate with consumers. Many threatened to jump ship to PlayStation, which proved to not to be hyperbole. At 117 million units sold, the PS4 is currently the fifth best selling console of all time. The PS5 meanwhile is likely to outsell the Xbox One’s entire lifetime sales sometime in the next couple of months. Which makes sense. A lot of people were already locked into the PlayStation ecosystem at the start of this generation. So why would they jump ship to a different team when they can just take all their old games with them? Meaning Xbox has a much smaller pool of potential customers, and with the games market as a whole saturating, few new customers are coming on board to make up the difference.

Microsoft has made some moves over the past few years to improve their brand image. Namely their subscription service, backwards compatibility program, getting Phil Spencer to take over the division, and Game Pass. However, these have proven too little, too late for the green team. Despite Sony’s blunders regarding their own lack of games, censorship, price hikes, and alienation of the Japanese market, the Xbox platform has still been relegated to a distant third place. So what’s next?

Xbox fanboys can cool their jets for starters. The platform is not in anywhere near as dire a situation as the Vita or Dreamcast were. So it’s very unlikely that Microsoft will abandon the Series X/S. The consoles will continue to get plenty of first and third party games for the foreseeable future. Whether those games appear on other plastic boxes is the real question. They are already obligated to port Activision titles over as part of the merger agreement. Honestly, doing so just makes financial sense anyway. Why would you wall off all those games to 27 million people when there’s a potential market of 217 million customers out there? Even Sony has begun porting their games over to PC after a timed exclusivity on the PS5. Which is the most likely route I can see Microsoft taking for their non-Activision lineup. Release them on Series X/S first, then have them come to PlayStation six months to a year down the road. This isn’t even entirely unprecedented for them, as they had quite a few such deals running with third parties back in the 360 era. Mass Effect 2 for example came out on PS3 a year after it did on Xbox. They may keep core franchises like Halo and Gears of War exclusive, but everything else is pretty much on the table.

Beyond this generation though, things get a lot murkier. As I said earlier, Xbox is moving towards making their services platform agnostic. The industry seems to think streaming is the inevitable final evolution of the games market. Out of the admittedly few streaming services I’ve tried, Game Pass seems to work pretty reliably, most of the time. I just don’t see Sony ever allowing it on their own box when they already have a competing service. More likely is that the Xbox consoles will just become a less crucial point in Microsoft’s gaming strategy over time, and they’ll likely bow out of the dedicated hardware market at some point. Though with further tales of a 10th gen console and a handheld also swirling around the ol’ rumour mill, who’s to say?