[fidotron]

What is extraordinary about the Microsoft games unit and Xbox is how immune their senior staff are to the repercussions of their bad decisions. They're certainly not taking responsibility for the failed gamepass experiment, trashing the Xbox brand, or the acquisitions they now regret since successfully closing Activision.

Failing upwards has never been so conspicuously obvious as it is in modern corporate America thanks to the pervasive use of social media.

[ajmurmann]

In what regard has gamepass failed? I keep hearing nothing but excitement about it? Does it lose a lot of money?

Similarly, how did they trash the Xbox brand? I've always been a PlayStation or Nintendo user so my view is quite tainted here.

[fidotron]

I refer to my other answer about gamepass.

For the Xbox brand they have failed to release quality versions of every major Xbox franchise bar Forza Horizon (Halo Infinite, for example), and this mismanagement has been ongoing for so long the sales figures of the Series consoles are dire. (And the Series X is not bad by any stretch). Now they are having to release their games on their major competitor, the PS5, making the point of buying into the Xbox ecosystem . . . what exactly?

And to emphasise here Sony are not exactly doing stupidly well with PS5 software and support, they just aren't actively screwing it up completely.

[falcor84]

> For the Xbox brand they have failed to release quality versions of every major Xbox franchise bar Forza Horizon

They did also release Microsoft Flight Simulator in 2020, which while also available on PC was in my opinion a massive win for Xbox

[magnetowasright]

Give them some credit - Forza Horizon 5 was extremely buggy on release and for months after! Many non-race goals/activities, a significant part of gameplay were totally broken. I don't know if it ever got better? It could have been a quality game but I gave up.

You're spot on. It's just funny to me that the lone quality release was also botched imo.

[mynameisvlad]

They’ve already expressly said they’re shifting from a hardware-focused business to a software-focused one. Did you miss that and think they’re just bad at business?

Hardware has always been a loss leader used to sell games, nothing more. If they can sell the games just as well on their “competitiors platforms” then why bother spending time and exorbitant amounts of money building your own hardware?

Exiting the hardware space looks like a loss only if you don’t understand the dynamics of the game industry.

[fidotron]

I've actually worked at a high enough level in the games industry to know about the non-public dynamics, and that includes working with some of the people involved in this story.

> Hardware has always been a loss leader used to sell games, nothing more. If they can sell the games just as well on their “competitiors platforms” then why bother spending time and exorbitant amounts of money building your own hardware?

By this logic Sony and Nintendo are completely wasting their time making hardware, yet they persist in doing so. Does this make them bad at business?

[mynameisvlad]

> Does this make them bad at business?

No, and nobody said as much either.

It just means they get enough out of other sales (including an increase from hardware) that they have decided hardware is still worth it. Microsoft has decided otherwise. They’re both perfectly fine decisions.

> I've actually worked at a high enough level in the games industry to know about the non-public dynamics, and that includes working with some of the people involved in this story.

Then you should very well know how hardware has always been a loss leader intended to drive people to exclusives and first party services. It shouldn’t be a surprise that once a company finds just as successful ways of driving the same engagement, they no longer need hardware.

[fidotron]

> Then you should very well know how hardware has always been a loss leader intended to drive people to exclusives and first party services.

Just like the number one console, the Switch? Sold at a loss? To drive people to play the exclusives?

TBH I won't engage further in this line.

[guipsp]

Both Sony and Nintendo have expanded outside their traditional exclusive hardware. I don't think the parent is saying that doing hardware is useless, but rather that the writing is on the wall to some extent for pure console exclusivity.

[kaibee]

It ain't the PS3 era where consoles are some radically different hardware stack. The latest gen, except for nintendo, are basically just x86-64 gaming PCs.

[hibikir]

The hardware might be a loss leader, but the manufacturer controls access to the hardware, so every game developer for the hardware is giving them a portion of the sale price. They were Steam before Steam existed. Sony didn't make most of their money on first party games, but on third party fees. The first party games, along with the loss leaders, were there to bootstrap getting consumers to buy the console.

The reason to abandon hardware is when you aren't going to get many third party sales regardless, because you are getting destroyed: In large part because your first party games and the console experience aren't attracting enough players. Microsoft hasn't whiffed with every game they released in the last 5 years, but their batting average has been very low.

If your games aren't selling, it makes sense to abandon hardware, but it's even more important to downsize your studios that are releasing underperforming games.

[bogwog]

That's not true. Hardware gives them the ability to create a monopoly on game publishing/distribution, which is why console games have always been so expensive. The platform holder can charge high fees to developers and demand high prices from consumers. That's nothing unique to the game industry.

Microsoft has said they're trying to focus more on software, but that focus is on gamepass not games themselves. They want that monopolized platform without the burden of having to sell Xboxes (which consumers have rejected time and time again), which obviously would be very lucrative for them. It's why they've been throwing so much money at devs to entice them to put their games on gamepass, and why they spent such a ludicrous amount of money on Activision despite the Xbox business being such a dud. They believe games are destined to become like video streaming industry, and want to be the Netflix for games.

Now I'm talking out of my ass here, but I think there might be some kind of internal metric at Microsoft that rewards execs that chase monopolization. It's either that, or they're really so incompetent over there that nobody has noticed how bad Xbox leadership is at their jobs. The peak of Xbox success was the 360, and I think that was mostly because Sony got the pricing completely wrong for the PS3 at launch (and even then, lifetime sales of PS3 surpassed the 360)

[jarsin]

360 + Gears of War was the best time in gaming.

Look what they have done to Gears as well. Nobody even knows or hears anything about it anymore.

[bogwog]

Gears 5 came out around 5 years ago. Considering the series has consistently rated very well, I doubt they killed it. They're probably just doing the modern AAA thing of spending a decade and a half working on a bloated game with unlimited budget. I bet we'll see one of those logo drops for Gears 6 soon (next showcase is in June), the game will release in a buggy/broken state with a flawless in-game store, the studio will get shut down, and then they'll announce the new Elder Scrolls game while everyone is pissed.

[Xirgil]

Microsoft didn't kill Gears of War out of ineptitude or malice. It's just that consumers don't want to play cover shooters anymore. There's no market for the game's core identity. People's tastes have swung hard in the opposite direction, they want movement shooters.

[kipchak]

Hardware is not always a loss leader, with Nintendo hardware (generally, Wii U was an exception) being the largest example. Estimates were about $250[1] for production for a $300 unit at launch if I remember right, so maybe $10 profit.

Selling on someone else's hardware means they take your 30% or so storefront fee. For example selling your studio's Elder Scrolls title on Steam or PlayStation nets you $42 instead of $60.

[1]https://xtech-nikkei-com.translate.goog/dm/atcl/column/15/36...

[monetus]

RIP SEGA - can't say that sticking with their arcade minded strategy paid off more than if they had stuck with hardware, but I am skeptical.

[johnnyanmac]

>Did you miss that and think they’re just bad at business?

A software shop closing up its software devs to focus more on a few golden geese doesn't inspire confidence for me. But it's not like shareholders actually look that intimately into the industry.

if you only offer software and can't get a 30% cut on all software you sell on a hardware platform, I'd hope you make up for that with more and better games. So this seems backwards to that strategy as a long term move (I know, a relic of the past).

[etempleton]

I think it is popular but not growing as fast as Microsoft would have hoped. When I talk to some of my friends about it they don't seem to realize how deep the catalog is and just buy games that they could have played on GamePass, but most of those games are third party games that happen to be on GamePass.

The Xbox brand issue at this point is a lack of quality first party games. They can never seem to nail a release. Even when a game is pretty good there is a caveat.

- Halo Infinite was pretty good, but buggy and they struggled to release new content. - Starfield is Bethesda's most ambitious game yet with the best combat, graphics and polish from the studio to date, but the exploration loop that defines their games is broken by interplanetary travel. It is still pretty good, but just not what it should have been. - Forza Motorsport launched buggy and while technically proficient is perhaps of the most joyless games I have ever played. - Redfall was hyped as a first party release and is absolutely mid

I do think that both the Xbox and PlayStation brands have put themselves in strange positions strategically. People buy consoles to play certain games and if you know that you can play those games on PC (eventually) why would you ever buy a PlayStation or Xbox?

[bombcar]

From what I understand gamepass has heavily undercut actual game sales (why buy a game for $70 when it'll probably be on gamepass at some point, and most games are a month of play or so).

[anbotero]

With games costing $70 now, I'm thinking it several times now before shelling out the money, specially for those AAA-valued bad/low-quality games, Game Pass or not.

Argument is still valid, since I’ve not bought AAA games for more than two years now, only indies or AA, even if I already beat them with Game Pass.

[hypertexthero]

I don’t think it failed yet, but I’m not renewing my subscription, gifted to me by a friend, for the following reasons:

1. Too many game choices without having to think about spending money for each one is very expensive when the currency is time.

2. Video games will never be Microsoft’s primary business, while video game players and makers are Valve’s. This is why Steam is so much better than Xbox/PC Game Pass.

3. It’s bloody difficult to take screenshots!

[ErneX]

Xbox was at their prime on the 360 era, they sold almost as many consoles as Sony did PS3. Ever since then they are selling half of PlayStation and their current consoles are tracking behind the previous generation in sales launch-aligned. Even with GamePass which is undeniably great value for gamers.

Seems they are now seriously considering becoming a third party publisher and release all their games or at least most on PlayStation and Switch, which honestly makes sense considering the amount of new development studios they acquired that used to release their games for every platform available, there are not enough Xbox consoles with paying customer to sustain all those studios I think.

[CSMastermind]

I don't play games at all so I'm very out of the loop but gamepass was a failure?

I have friends at Microsoft who worked on it and they all seemed to think it was going well last I checked (about a year ago).

[fidotron]

> gamepass was a failure?

I'm amazed that this is a question. Gamepass is essentially so low cost as to be an incredibly costly giveaway, only it has proven that this devalues everything that touches it.

For context, Hifi Rush had 3 million players on Gamepass last August, and today they shut the studio. So even when they get a break out hit they cannot justify keeping the studios around to try and do another; that's not a success.

[coffeeindex]

Until I see actual numbers on Gamepass I won’t believe that it was a failure. It isn’t a direct comparison of “gamers are spending $10 instead of $70”. People who would not buy a game that just came out will willingly pay for Gamepass every month. Gamepass also exists on PC, so Xbox is dipping into a user base which otherwise might not buy many products from them. Yes they almost definitely make less money from some people, but they might make that back and more from people who otherwise would not be buying their games. It’s hard to use your intuition here without some numbers

[johnnyanmac]

It's way too soon to call it a failure, but I'd be very surprised if GP isn't a loss leader strategy for Microsoft to capture the game subscription market.

The problem is that this is a very 2010's strategy and money is no longer free. So this approach is a lot riskier than it was than in the netflix days. I don't know if Microsoft, given this news, wants to keep playing the long game.

[rrix2]

And yet here we are where a fantastically successful mid budget game published on to gamepass by a first party studio leading to huge excitement in gamepass is not enough to justify the continued existence of the studio which produced it.

[wredue]

Game pass was an obvious piece of gamer bait.

It is current high value for consumers, but that’s all it is, and in cases where MA is just a third party vendor to the publishers, high value for consumers is bad for the publishers. If it is ever deemed a success, that value will diminish extremely fast.

[whoknowsidont]

>they all seemed to think it was going well last I checked

...based on what?

[BlueTemplar]

'member Games For Windows ~~Live~~ Dead ?