Death of the Xbox (But Not Really)
If you grew up as a Gen Z gamer, there’s a near 100% chance that you were sucked into the proverbial console wars at some point.
The PlayStation vs Xbox rivalry permeated middle school cafeterias worldwide. Many would vehemently defend their allegiances, if for no other reason than to justify to themselves that they chose the right side. I personally planted my flag in the PlayStation camp when I was twelve and never looked back.
Every so often, one of Xbox’s latest escapades will show up in my newsfeed, and I’ll usually scroll past with little more than a cursory glance. But sometimes, the green team will drop something that—for better or worse—really gets my gears turning.
Thank you, Microsoft, for clarifying that lunch kits do not, in fact, support Xbox technology.
Microsoft has been a gaming powerhouse since they entered the market with the launch of the first Xbox in November 2001. While the console wouldn’t manage to come close to Sony’s market-leading PlayStation 2, it boasted an excellent lineup of exclusive games like Halo, Fable and Star Wars: Knights of the Old Republic that helped it outsell the third-place Nintendo GameCube and firmly establish Microsoft as a legitimate competitor in the industry. Twenty-three years of ups and downs later, the company—struggling mightily to maintain its foothold alongside its competitors—would take a dramatic step towards redefining the Xbox with the announcement of their brand new This is an Xbox marketing campaign. Per senior marketing director Craig McNary, it reflects the brand’s aim to build “a future defined by player choice—where people can play their favorite games, discover new adventures, and connect with friends, wherever and however they love to play.” The campaign is the latest step in Microsoft’s effort to reset the direction of the brand and move towards Xbox as a gaming platform, not just a line of consoles; Xbox CEO Phil Spencer discussed how “Xbox isn’t just one device, Xbox is on your smart TV, Xbox is on your PC, Xbox is on your phone, and we’re in the middle of that transition.”
Visionary or not, the change might be necessary, especially in the wake of their poor performance in the console market—Xbox has been routinely outdone by both the PlayStation and Nintendo’s various consoles for much of recent history. The last time they led the pack was at the beginning of the seventh console generation, which saw the arrival of Microsoft’s Xbox 360, Sony’s PlayStation 3, and the Nintendo Wii in the mid-2000s. Most crucial to this success was that the Xbox 360 had an excellent lineup of exclusive games at the start of its lifecycle; the Wii was aimed at a more casual audience, and the PS3’s chip architecture made it notoriously difficult for third-party developers to port their games to the platform. Microsoft’s luck would run out in around 2010, when they inexplicably decided to switch gears and position the Xbox as a multimedia platform for browsing the web and watching Netflix. To make matters worse, their exclusive titles from the beginning of the generation had become yesterday’s news, and so they put an inordinate amount of resources into marketing Kinect motion control games in response to the success of the Wii. Huge swing and miss—the Kinect was a middling product with pitiful return on investment. Sony, meanwhile, steadily churned out a stream of excellent first-party exclusives to grab the lead and outsell the Xbox 360 by the end of the seventh generation.
The tailspin continued in the eighth console generation as Microsoft dug itself into an even deeper hole. Before the Xbox One even launched, a series of PR gaffes—specifically around the console’s requirement to be permanently connected to the Internet, an incredibly convoluted used-game-sharing protocol, and lack of backwards compatibility—tanked any pre-release excitement.
The Xbox One announce event will end up in PR classes as an example of what not to do.
And Sony made sure to kick their competitor while they were down, with ads like this viral 22-second spot that won them the eighth generation before a single console hit shelves.
Microsoft would walk back a few of these statements, and the actual console had a decent game lineup, but the damage was done. The Xbox One was thrashed not just by the PlayStation 4, which more than doubled its sales, but also the Nintendo Switch, which launched three whole years after the Xbox One. That momentum has carried over into the ninth and most recent generation, where sales for Microsoft’s Xbox Series S and X have continued to lag significantly behind their counterpart in Sony’s PlayStation 5.
Throughout these “console wars,” the primary factor in why customers would choose one console or another were the games exclusive to each. Halo sold Xboxes, Uncharted sold PlayStations, and Mario sold Nintendo consoles. I myself ended up squarely in the Sony camp because the MLB game I wanted for my twelfth birthday was a PlayStation exclusive. But earlier this year, as a precursor to the ubiquity that This is an Xbox now attempts to convey, Microsoft decided to throw a wrench in that race by making four exclusive games available on rival consoles. The decision encapsulates their strategic shift—decentralizing the Xbox console and instead prioritizing putting their games and IPs into as many hands as possible. Spencer declared, “I do have a fundamental belief that over the next five or ten years, games that are exclusive to one piece of hardware will be a smaller and smaller piece of the industry.”
His perspective is debatable, given that Sony and Nintendo continue to have blistering success with high-quality exclusive titles. But in any case, Microsoft has been investing heavily in this new direction since the launch of the Game Pass subscription service in 2017. Game Pass currently allows subscribers to play a large catalog of games on Xbox and Xbox-enabled PCs for a monthly fee, and with the new cloud-streaming technology that the This is an Xbox campaign highlights, users would be able to access this catalog on almost any smart device. The service grows more and more central to the Xbox business every day; as of 2024, it boasts 34 million active paying subscribers and is predicted to generate $5.5B in revenue in 2025. Its success is indicative of a growing demand for platform-agnostic experiences—something Microsoft wants to get ahead of. As Spencer explains, “the thing that should really have longevity are the games, characters and world—and the platforms should enable us to experience those games where we want to play.”
Platform-agnostic gaming has been growing steadily for years, even outside of the Microsoft ecosystem, as players increasingly desire access to their preferred games and gaming platforms across various devices. This growth in demand can be attributed to the coalescence of various different factors, chief among them the rise of live service games. Live service titles, also known as GaaS (i.e. games-as-a-service) titles, operate fundamentally differently from single-release games in that they are characterized by an ongoing content model; they receive an indefinite stream of new content over time and tend to center social multiplayer experiences of both small and large scale.
Both aforementioned aspects of live-service games lend themselves innately to platform-agnostic play in a way that single-release games do not. Frequent content releases or “drops” drive players’ desire to continuously return to the game to keep up with what’s new, wherever and whenever they can. Multiplayer offerings introduce the pull of social inclusion; players will be drawn to a game that their friends are playing and want to participate in that community independent of their platform of choice. The affordances of cloud-based gaming services like Game Pass are uniquely suited to power these tenets, specifically insofar as they enable crossplay (the ability for players to play together using different devices) and crossprogression (the ability for players to maintain their progress in a game and pick up exactly where they left off on a different device), features that were popularized by Fortnite in 2017/18 and are now the expected industry standard.
Destiny 2’s social menu shows you which of your friends are online, and on what platform
Microsoft’s idea for the future of the Xbox brand is promising for a myriad of reasons, primarily the significant increase in accessibility that it will bring about. Gaming is an expensive hobby; most popular games require you to either own a gaming console or sufficiently powerful gaming computer, which cost at least $500, and then every individual game can run the customer another $50 or more each. Xbox Game Pass, which charges a $20/month fee, and facilitates the arrival of popular games to cell phones, non-gaming laptops, and similar devices that are more commonplace among the general public, has prospects of drawing in millions of new customers—a transformation akin to what streaming has done for music and film via Spotify and Netflix respectively. But Xbox isn’t the only brand leaning towards cloud streaming; Sony has begun a foray into the space with their revamped PlayStation Plus subscription service, and Nintendo, while more reluctant to establish the vertical, has also continued to expand ever so slowly on their Nintendo Switch Online service that allows players to play remastered versions of Nintendo games from the 80s and 90s. This model makes perfect sense financially; since the beginning of the console wars, all three companies have lost about $100-200 on the sale of every individual console but patched it up with the sales of the actual games, where profit margins are drastically higher. If the companies could essentially sell their games without having to sell their consoles, they could see astronomical rises on their bottom line, and Microsoft in particular is especially well-suited to pivot to a cloud-centric model. Sony and Nintendo run rings around them in terms of retail distribution infrastructure, which is an important factor in why the two have routinely stolen Microsoft’s lunch in physical console sales. Microsoft, however, has an equal or larger advantage over the other two in their cloud computing infrastructure; the tech giant owns dozens of data centers, competing with even Google and Amazon on that front.
The most crucial factor driving Xbox towards this transition, however, is one that has also raised the most concern within the industry—the actual game catalog. Microsoft has amassed a massive library of games and IPs to feature on their Game Pass service, and new releases are increasingly becoming available on the service immediately at launch. But for as much potential as Microsoft’s initiatives have to expand the gaming industry in novel ways, their business practices have been less than ideal. Game Pass’ excellent catalog isn’t the result of a sudden uptick in the quantity and quality of games that Microsoft has churned out in recent years. Instead, the company has spent the better part of the last decade spending an unfathomable amount of money to acquire game studio after game studio, only to eventually shut them down while still retaining the rights to their IPs. They spent $2.5B for Minecraft developer Mojang in 2014, $7.5B for Fallout developer Zenimax in 2021, and seventy five billion dollars for Call of Duty and World of Warcraft developer Activision Blizzard in 2023.
Xbox now owns more game studios than I have remaining brain cells
The last of these deals in particular faced significant pushback from the Federal Trade Commission on the grounds of antitrust violations, since Microsoft would have had the power to restrict the massively popular Call of Duty franchise from being available on PlayStation, outside of the Xbox or Game Pass ecosystems. The deal was eventually allowed to go through since Microsoft argued that it would be unprofitable for them to restrict access to the series by not offering it on rival consoles; such a strategy would only be practical if Call of Duty (or any game) were able to draw such a high number of players to Game Pass that it offset the lost sales on rival console storefronts. Although the FTC complaint was specific to the Call of Duty case, this concern theoretically still applies to any franchise Microsoft purchased—if and when they deem it advantageous, they can choose to make those games exclusive to their ecosystem on a whim. In any case, it hasn’t been smooth sailing for Microsoft post-merger, as they’ve needed to hike the subscription fee for Game Pass and cut costs by closing even more studios to begin recouping that $75 billion. Only time will tell if it works out for them.
Evidently, Microsoft has struck a bold bet insofar as the future of their gaming division is concerned. The early returns to that end have left much to be desired; the “This is an Xbox” campaign, creative as it was, left some fans confused about whether Microsoft plans to shutter the traditional Xbox console entirely (they do not). Elsewhere, their reckless approach to shoring up their Game Pass library has given rise to predatory business tactics that have caused mass layoffs for the incredibly passionate and talented developers that have crafted some excellent games. Top Xbox brass seems genuinely passionate about accessibility, but it’s a cruel reflection of capitalist society that they keep their obscenely high-paying executive salaries while creatives get axed to save a few zeroes on the balance sheet.
That said, the idea on a fundamental level is simple yet brilliant, and might have saved them their current plight if they’d realized it fifteen years ago. Consoles can boast this new tech and that new feature, but as gaming commentator NakeyJakey so eloquently describes, the reason players continue to throw money at these companies is because of the funny moving pictures that you control with your hands. Nintendo, for example, routinely puts out underpowered consoles (the Switch has less processing power than an iPhone) and refuses to provide persistent digital libraries, and yet they print money because people want their fix of Mario and Zelda and are willing to make any market concession to get it.
And despite how fun it is for us PlayStation loyalists to continually dunk on Xbox, I do hope they get it right this time.
For a change.
To see more of what I've been playing, check out my Playlist account.
