Xbox Series X & Starfield failed

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A reader examines the recent sales results for Xbox and predicts that Microsoft will now refocus on PC gaming and trying to take on Valve.

As The Beatles have always maintained, money can’t buy you love. I don’t imagine they were thinking of trillion dollar corporations when they wrote those lyrics but the concept applies to a lot of things. Microsoft has spent over $75 billion on buying developers over the last few years, and I’m sure many times that overall on Xbox, but it’s done essentially nothing to improve their position in the games industry.

I’m not an Xbox hater, although I suppose I’ll be accused of being one anyway, and I have both a PlayStation 5 and Xbox Series S. The Series S was cheap enough that I don’t really care what Microsoft does, although I am upset Sony doesn’t seem to be making more effort right now, as that PlayStation 5 definitely wasn’t cheap.

However, I do want to talk about how nothing Microsoft is doing is working and yet they’ve made it very clear they’re not going to give up on gaming. Which creates the question of what they do next. And I find it very interesting to speculate on that.

I’ll just quickly recap where we are. Microsoft has spent a huge amount of money buying developers over the last few years and yet this has resulted in no improvement in Xbox Series X/S sales whatsoever. Starfield was supposed to be the start of the turnaround and yet console sales went down when it came out and in the UK the market share of Xbox shrunk.

Starfield was the big guns, and I really don’t see Fable or anything else they’ve announced so far doing any better. Their other main weapon is Game Pass but, while they tried not to talk about it in their recent financials, it seems it’s failed to make their targets for the third year in a row. Will that change once Call Of Duty is on there next year? I’m sure it’ll do better but I have trouble imagining it’ll be the game changer Microsoft expected.

It’s not even a Microsoft issue, PS Plus hasn’t done as well as Sony expected either and so far there’s no evidence that it makes any difference what you put on these subscriptions, it’s not going to bring in masses of people. I think because, to more casual gamers, they probably only buy two or three games a year anyway. And, more importantly, they’re probably not interested in any others, beyond FIFA and an online shooter or two.

The fact that subscriptions haven’t caught on more is a bit of a puzzle to me (maybe everyone’s already got too many TV ones?) but the end result is that Microsoft’s two big, and hugely costly, ideas haven’t worked. So what do they do next?

I think we’ve already had plenty of clues about that, in the way they’ve been talking so much about PC recently. It seems to me they think that’s a better outlet for their gaming plans than consoles, which I think they’ve realised just aren’t going to catch on. Not given that the longer things go on the more people get sucked into the PlayStation ecosystem – Phil Spencer has even spoken about this himself.

What I expect to see them do in the future is go all in on PC and probably try to create some kind of rival to Steam or buy Valve. I looked up how much Valve are worth and to my surprise it’s only $7.7 billion, which is almost exactly the same as Bethesda and far less than Activision Blizzard. I didn’t realise that, which makes me wonder why they didn’t do that all along, as it would’ve made far more difference than anything else they’ve bought. [Valve is a private company, so it would be very difficult to buy them – GC]

So, yeah, I think a move on PC gaming and a ramping up of mobile games is what’s next for Microsoft. They’ll basically try to move gaming into a direction they can control, having given up on ever being big in consoles.

This is a common approach for them. They did the same thing when first entering the games industry, doing everything they could to focus gaming away from Japan and onto, not only American developers but American development tools and processes. They knew they had no influence on Japanese publishers, so they tried to make Japanese publishers not matter – and it largely worked. I believe they’ll now try a similar approach for consoles.

Xbox will never be dominant in terms of consoles so Microsoft will now try to dominate in terms of PC, mobile, and streaming. They have a good head start on two of those (I feel they need more than just King to make an impact on mobile) and I think it could work out for them. Will that be a good or bad thing? I’m not really commenting on that, it’s just what I think will happen.

By Royston

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