The Xbox console business is in (the beginnings of) a death spiral

I want to be clear from the outset that I’m not talking about Microsoft’s involvement in games being under threat. Xbox owns Minecraft and Call of Duty. It spent almost $100 billion buying game makers over the past decade. The gaming division is now bigger than Windows. Microsoft isn’t leaving gaming, or if it does it will be by spinning off the gaming division into its own company or possibly selling it off, not by shutting it down.

But the Xbox console business is in big trouble. You can argue it always has been. Xbox launched with the expectation of losing money the first generation, which it did, and then making money during the second generation, which it may have, a little bit, but was definitely hampered from by the red ring of death, which cost the division billions.

The first half of the 360 generation was still successful in terms of selling consoles and building the brand, but the Kinect era was another massive misstep and killed a lot of that momentum, allowing Sony to catch up. Microsoft stopped investing in internal development and what it did make was for its disastrous peripheral that only worked well with a very limited number of games.

We all know the disaster that was the Xbox One launch, and while the generation as a whole wasn’t a total failure and Xbox might have been slightly profitable, the Xbox Series X was the opportunity for Microsoft to right the ship. They came out with a fine piece of hardware (The PS5 performs better at least some of the time and has the better controller, but there’s nothing wrong with the Series X) and the Series S was an interesting idea that has caused some issues but also created some opportunities. Of course the launch of the PS5 and XS consoles was thrown completely off by the pandemic, but even out of the gate the PS5 was seen as more desirable and now, probably halfway through the generation or a bit more, it has an even bigger lead over XS consoles than the PS4 did over the Xbox One. Microsoft likes to blame this on path dependency and digital libraries with backwards compatibility; if you bought a PS4 you bought a PS5 because your games would all transfer over. There’s something to that, of course, but it doesn’t really explain why Xbox has lost even more ground. People enter and exit the console market all the time, and people are willing to buy multiple consoles. If Microsoft was doing well then maybe they could move from 50% of the sales of the PS4 to 75% the next generation before catching up, even with library carry over. Instead they’re losing ground.

Why? There are a number of reasons. In addition to personal path dependency there’s friend group dependency. You might own an Xbox but you want to play games with your buddies who own PS5s so you get one of those. Xbox has also never performed well outside North America, and as the US economy’s share of the global economy continues to shrink that continues to be a bigger and bigger issue (though it’s worth noting that Japan, the region where Xbox does the worst, barely buys consoles anymore, so this is not as big an issue as it might have been.) Xbox’s decision to put all its games on PC certainly hurt console adoption, though Sony has followed suit (albeit less aggressively) so that’s a smaller factor than it once was.

I think the real issue, underlying everything, is that Microsoft can’t make hit games, and it can’t get games out in time.

I bought an Xbox Series X at launch and do you know what I played with it that first couple months? Dirt 5, Immortals: Fenyx Rising, Watch_Dogs Legion and Cyberpunk 2077. I actually like all those games, but they’re also all available on PlayStation and none are made by Microsoft. The Xbox Sereis launched with almost nothing by Microsoft. There was a new version of Forza Horizon 4, an all-time great game that was years old already. There were a couple of timed third party console exclusives of middling quality in The Medium and The Falconeer, and that was it. Everything else was a multi-plat third party game or old. Mostly both. When I got my PlayStation 5 a couple months later it came in a bundle with Demon’s Souls and Miles Morales (also available on PS4, but that hasn’t seemed to matter) and with Astro’s Playroom included. I played my Xbox Series X because it was the most advanced console I had, but I played my PS5 because it had a bunch of stuff on it that I couldn’t get elsewhere. The Xbox Series X was supposed to have Halo soon after launch and other things, but we gave it a pass because of the pandemic.

Since then Microsoft has continued to underperform in terms of getting games out on time and in good quality. When they bought Bethesda a lot of Xbox fans were excited because they thought it was only a matter of time before those games came online and changed things. That was half a decade ago and since then Bethesda’s output has been slow and anemic. Starfield was very late and disappointing. High Fi Rush was great, but failed to set the world on fire. We don’t need to talk about Redfall. We all know about Ghostwire: Tokyo and Deathloop being timed PS5 exclusives, but other than some decent remasters of old games it’s been kind of pathetic.

And Microsoft’s own studios are in many ways worse. Halo Infinite wasn’t terrible but it was incredibly late and they couldn’t keep up with the live service side. Gears 5 seemed okay but was also 5 years ago. Getting one okay game every 6-7 years is not exciting. Forza Motorsport has been spinning its wheels (pun intended) for a long time. The seeming one bright spot is Playground Games, which Microsoft bought and left alone. And even there it’s not clear that Fable is going particularly well. There have been a number of Minecraft spinoff games, which should print money but instead seem to revel in mediocrity and be quickly forgotten.

Microsoft is bad at making games. They haven’t created a hit new franchise since Forza Horizon and haven’t been able to sustain their old ones, while PlayStation’s stable of software is seen as top tier. Talking about Nintendo would just be cruel.

On the smaller game side there have been some critical bright spots like Pentiment and the aforementioned Hi-Fi Rush and even Grounded, which was in Early Access for eternity but is now out and seems well liked. Rare has done a good job of maintaining Sea of Thieves. Minecraft continues to truck along. It’s not that there’s nothing, but it’s not what you expect from a platform holder. This isn’t about exclusivity it’s about identity and core experiences that drive people to your platform. Instead Microsoft has tried to do that with Game Pass, but you can get that on PC and it’s clear that people won’t buy a system to get into that service. When the games you’re putting on Game Pass are either old, throwaways, or small titles people just aren’t that excited by it. The premise of Game Pass was always big games on day 1, and the games aren’t there.

Ultimately this comes down to Phil Spencer. Whether it’s his personal fault, or the fault of the people he hired, or his inability to handle interference from above, none of that matters. He’s been head of Microsoft for a decade and while he says all the right things and I truly believe he is passionate about games and is smart about the industry and has good ideas for services and new ways to sell games, he can’t manage game production. He has failed to do so. For a decade. He’s taken over huge publishers and built his own studios, and poured billions of dollars into making games and the games that have gotten made aren’t good enough. That’s the core of the Microsoft problem.

And now Daikatana’s biggest fan, Jeff Grubb, the news guy who has been thoroughly bitchified by John Romero for hours on end, reports that Perfect Dark is a mess. Of course it is. All Microsoft games are messes. Some of them get fixed and come out. Some don’t.

And because of that, and the recent cuts and closures, Xbox, the console business, now has the death stink on it. For a decade Xbox hasn’t been the cool place to go for games, and everyone knows it. Nobody thinks they have to get an Xbox to play anything, and people are now worried about the console and the longevity of the business. People are nervous about buying into a platform that may not last. This is how a spiral happens. You fail, people see you as a failure and don’t want to support you, you make less money and have to cut back so you fail some more, and it feeds on itself. People won’t want to go to work for Microsoft because they don’t make cool games (and they fire all their developers!) It all just weighs the business down. And eventually Microsoft will decide that the Xbox console is too expensive to invest in and while they might not discontinue it outright they will allow it to atrophy. We see this on a much smaller scale with the Atari VCS. It came out, flopped, people stopped putting games on it, and while it’s still for sale it’s not a real product anymore. I’m not saying Xbox is in anywhere near the same position now, and it’s a totally different situation, but it’s hard to get the stink off you, and Xbox has the stink.

Is it possible to turn this around? Of course. For one thing Microsoft has endlessly deep pockets and can maintain Xbox as long as it wants. The brand isn’t totally dead and other brands have recovered from worse. The death spiral gets tighter as you go but Xbox isn’t towards the center yet. It has millions of users and pulls in a lot of revenue. And it’s attached to a division that still makes money. But it needs to change and relatively soon. It needs to be desirable again.

I can see two roads forward. The first is to open up the platform. Let people put Windows on their Xboxes and thus have access to Steam and Itch.io. I don’t know how much Microsoft makes from their cut of third party software on the system, but I can’t imagine it’s a huge part of the revenue. Yes this will create piracy issues and the box will get hacked within weeks (probably a large part why they don’t do it) but if you turn the Xbox into more or less a Steam machine that might make it intriguing to a lot of people who want the best of both worlds, a console and an open platform.

The second is to make some hit games. Not just one, unless it’s a monster megahit, but a series. If the next 5 big games Microsoft puts out are huge hits people will take notice. If they can put out something at the level of a Bloodborne or The Last of Us it will draw attention. And if they can do it repeatedly it will draw sales.

I just don’t think they can. At least not under Spencer. I used to like the guy, before this year’s bloodletting, but while I think he does ‘get’ games he has a track record of not being able to get them made on time or at high quality.

But I’m not a fortune teller or even a games business guy. Maybe they’ll turn it around. Maybe consoles will die in general and it will all go PC and cloud and this won’t matter. Maybe there’s some other brilliant move I don’t even see coming that will change the industry. The Xbox Series has sold more than the Wii U and the Switch may be the biggest selling console in history. It’s not impossible to turn things around with the right series of moves. But the Switch sold on the one two punch of Zelda and Mario, not just its hardware. And Microsoft sure isn’t going to sell a bunch of Xbox Series Zs with the lineup it has now.

343i reliance on the revolving door of 18 month contractors has been an issue since its inception and has only gotten worse as more and more people are required to develop games, it's effected nearly every studio first party and partners within Xbox.

Contraband, Everwild, Fable, Perfect Dark, South of Midnight and State of Decay 3. Where are they? 5-6 years+ without any meaningful updates. Xbox has had this problem all throught the XB1.

First, Fanatec (3rd Party Sim Racing peripheral brand) goes bankrupt, then Xbox is in trouble, oh dear...

I love Xbox and PlayStation console brands equally as I grew up with both.

This is mainly the reasons Nintendo is still doing so well, despite having an underperforming console compared to the rest this generation. They still make excellent first party games you don't get anywhere else. The reason the Xbox360 was so successful for Microsoft, was one, Sony's hubris causing them to make foolish decisions with the PS3, and Microsoft having a great number of exclusives, and more importantly, them being able to keep it up throughout the generation.

The Series X is not outputting enough great games for people to care. In fact, most people who own a Series X/S, say the number one benefit is having access to Microsoft's full library of game thanks to Game Pass. But there is also PC Game Pass, and while you don't get the full Xbox library of games like on the console version, for most people, it's good enough. And now, thanks to these recent studio closings, the benefit of Game Pass is being put into doubt.

Sadly, I predict when Hell Blade 2 comes out, its not going to matter how well it does. It's still going to result in some negative outcome from Microsoft, and I believe at this point, they will slowly begin to go the way of Sega. They may still put out a console, but it will be more like a gaming PC, and none of their games will be exclusives anymore. Yes, Starfield and even Halo, Gears, and so on will become multiplatform.

Interesting read!

I think it entirely depends on the strength of your exclusive games.

I own both consoles. I play my PS5 the most - but I think I legit dont like the console. I dont like the controller. However I cant really think of a single Xbox exclusive thats launched this generation (or last) that was an absolute must play for me. And the games that I thought I was excited for (Starfield, Halo) ended up being mediocre at best.

I get as many games as I can for my Xbox because I prefer playing on it, its my third party machine.

360 era Xbox had INSANE games. Amazing IPs. Some I still play or wish for sequels too to this very day. Where is the next Fable game? They also had a lot of great exclusives back then that eventually became multi-platform such as Mass Effect.

Its just been flops since or when they did make a sequel it was too derivative and I think when you're playing with IPs as robust as those and you've produced nothing you can safely assume there is some serious management issues going on behind the scenes.

Look at Halo Infinite. Like seriously what the hell happened to that game? I thought the campaign was terrible but the game had some fantastic bones and they toted it as being this big platform for all of the adventures to come... where are the adventures? New levels to play? Not even cheap knock off content. Like nothing the game is just abandonware after years and that's just one of their IPs.

None of their acquisitions have paid off and these companies had been producing absolute bangers before so what changed?

Anyway - its interesting. I'd be sad to see the Xbox Console no longer exist as I think its a fantastic piece of tech and Id choose it over the PS3 in that generation and hardware wise I'd pick it over the PS5 in this generation. I skipped it entirely during the PS4 generation because.... there wasn't a single game other then I think a gear of war?

*Edit - Psychonauts 2. Forgot about that one. So theres one!

Passionate people don't work for Microsoft. They can buy teams that sued to be passionate, but that is a company where people go to make money for as long they keep getting paid. I don't know if it's a big company versus a small company dynamic because clearly Sony keeps getting good output from their studios.

I'm not here to defend Spencer but let's be clear, the problem is Microsoft itself, and replacing Spencer likely wouldn't turn things around when it's Nadella and the shareholders that keep running things. I do think that Phil has a least tried to do the right things at times. Halo Infinite wasn't ready for the Xbox Series S/X launch despite being in production for a decade or so, that must have hurt them tremendously but he gave them more time to finish it. Redfall should have been cancelled a long time ago but he probably thought that they could still make it work. There are undoubtedly major problems with leadership at Microsoft, but you can also clearly see that some studios keep letting them down.

Buying studios is not the answer because nobody sells when they're at the top. Bethesda was sold to Microsoft because they were coming off of numerous underperforming games: Fallout 76, Rage 2, Doom Eternal, Wolfenstein Youngblood. None of these games hit for Bethesda, the signs were there that they were slowing down and that's why they sold out. How Microsoft though that Starfield was going to be a big hit when all of their other games kept failing is one of those things that is just hard to understand.

The same thing is happening with Activision. Call of Duty is selling for now, but at least I haven't seen much enthusiasm for the recent entries. There's going to be a point where people will say "I've bought every CoD game for the past 15 years, maybe it's time to move on", and new players aren't interested in it because it's not Fortnite. And don't get me started on the sad story that is modern-day Blizzard.

I don't have the answers. I'm glad that they did the backwards compatibility thing, and hopefully they'll go back to add more titles to it, so that regardless of their future output I can at least play Crimson Skies, Blinx the Time Sweeper, Red Dead Redemption, Banjo Kazooie Nuts and Bolts and Fables 1-3 on it.

@apewins: Well said.

@junkerman: The next Fable is supposedly in development at Playground Games, the one studio they have that has consistently put out games that have performed well (the Forza Horizon series, widely considered the best arcade racing franchise around these days.)

Psychonauts 2 shouldn't really be considered a Microsoft game. It wasn't an exclusive but it was mostly, or at least significantly, developed prior to purchase. Double Fine sold the studio so it could finish the game, but while they needed money they had the staff and plan in place prior to selling. All Microsoft had to do with that one was not completely screw it up.

@apewins: There are passionate people everywhere, and Microsoft has put out some clear passion projects, like Pentiment and Hi-Fi Rush. I would guess even the people who make Gears and Halo are passionate about it. Playground Games and Turn 10 are passionate about racing. I don't think it's a lack of passion in the developers that's the problem.

You say that the studios have let Microsoft down, or Spencer down, but when one studio or person lets you down that's their fault, and if everyone keeps doing it eventually you need to look at yourself. What are you doing that's either causing people to let you down or causing you to surround yourself with people who let you down? It's not just a run of bad luck, it's mismanagement. I don't know how much blame directly lies with Spencer, clearly some of it because he's the head of gaming, but there's something very wrong with Microsoft's whole approach because it has a lot of studios and they all turn out the same middling-to-bad results. Generally late and overbudget. What's the last big game they launched that wasn't a Forza Horizon title that was an unqualified success? I honestly don't know. The latest Gears games were...fine...but that's not what I mean. I mean a Spider-Man 2 or Ghost of Tsushima level banger.

I love backwards compatibility but it's not a business model. The market doesn't care about older games, at least not without a fresh coat of paint.

Microsoft bought Double Fine when it was making Psychonauts 2, arguably their greatest game ever. Since then it has been radio silence. They've also tried to build numerous studios from the ground up and none of them have become consistent performers. Again, Playground Games (which they bought) has been the exception and we'll see for how long.

Gamepass is something of a problem. It's not going anywhere because Microsoft are all about services but is it actually making money for developers? Something like Hi-Fi Rush failed to meet expectations despite reaching 2 million players. If you have Gamepass, you don't need to buy Hi-Fi Rush and I can't imagine any release of that size surviving that model.

Ninja Theory must be shitting themselves. Take a month of gamepass, play Senhua's Sacrifice 2 and bounce.

@shindig: Call of Duty Gulf War is the big one before next years trainwreck. Bethesda's games landed on GP two months after the deal went through, six months later only Diablo 4 so far, feels like something gonna change.

Inside Microsoft’s Xbox turmoil

Microsoft has also had internal debates about whether to put new releases of Call of Duty into Game Pass. I understand this is a debate that has been ongoing internally for quite some time, with concerns from some that the revenue that Call of Duty typically generates for Activision Blizzard will be undermined by Game Pass.

@shindig: It's made a lot of money for outside developers. In theory it shouldn't HAVE to make money for internal developers because they are being paid in part to feed that beast.

The real question is how they assign that revenue internally. How do they "credit" a developer for someone playing their game on Game Pass. Clearly it's not one to one played vs sold but they must have some metrics.

Regardless that doesn't seem to be what doomed Tango. From what's been said Microsoft made the insane decision to close down studios who don't currently have a game in development regardless of how good those studios are. If true it's such a mind boggling decision it has to have been made above Phil's head.

Apparently playtime which kinda screws shorter smaller games, former Microsoft PR manager Brad Hilderbrand.

@bigsocrates: I've never understood the economics of Gamepass. Compensating developers versus raw sales data doesn't add up to me. If subscriptions gained matters, how can that balance the books when a $20-$40 game brings in $1 from a new sub.

It's a self-sabotaging approach I cannot wrap my head around. At least with the old model of actual sales, you can map it a lot easier. Hell, the developer is theoretically getting a better metric for success. Being compensated at the outset seems like your money pile is starting at a deficit and no amount of $1 subs will recapture that.

@thepanzini: Have they also conditioned a set of players that simply don't pay (aside from the subscription fee) for the games they play? I wonder.

@shindig: It's insincere to claim that these are a bunch of $1 subs. The $1 subs clearly work to keep people subscribed or they would have stopped offering them. Additionally they've stopped giving discounts for longer term subscription, which suggests that people are, in fact, sticking around. The problem does not appear to be retention so much as growth.

You might as well ask "How can you replace a bunch of DVD sales with streaming?" And yet nobody buys DVDs anymore. Or CDs for that matter. There's no problem in selling media via subscription. It works for movies and music and it will work for games. The problem with Game Pass is not in its conception it is apparently in its execution. I think a big part of it is that it is tied (in part) to Xbox and they can't get people to buy Xboxes, and people won't buy Xboxes just for Game Pass so you have that vicious circle again.

If they had enough great games to drive Xbox sales they might be getting more Game Pass subscribers and thus be able to sustain the games they need. Instead all the growth is on PC, but it's not even that great there.

@shindig: Absolutely, but its not necessarily a bad thing people are still spending just in a different way. Game Pass the concept isn't the problem the higher tiers of PS Plus are structurally the same just with a lot more frequent day one releases, which requires far more revenue.

Game Pass average revenue per sub $9, Jan 2023 GP 25.9m - Console/PC 21.9/4.

@bigsocrates: I wouldn't consider TV/Movies/Music as good comparison against gaming. It's a different world.

Netflix has 270 million people on the hook worldwide. Spotify has 230 million subscribers and 650m active users. These are the numbers that make streaming services work.

Gaming is not that ubiquitous. It's fractured and always has been.

@shindig: All the game companies disagree with you. In addition to Game Pass Sony has PS+, EA and Ubisoft and Rockstar all have subscription services, Apple has Apple Arcade etc... Now that's probably too many services for sure and they don't all work but all the major players in gaming seem to see subscriptions as at least part of the future.

The problem with Game Pass is that it's the most ambitious and expensive (for Microsoft at least; PS+ highest tier is about the same) and while it has been the market leader it's not the market leader enough.

And I think it still makes money overall, but not enough money to support the dumb Activision purchase, which Xbox was mildly profitable before.

@junkerman: I *also* play my ps5 the most (out of it, my aging pc, and my switch) and I *also* think I hate it (and its stupid heavy, awkward controller with it’s irrelevant fancy bs that prevents the superior DualShock being used on ps5 games).

I was strongly considering picking up an Xbox to play multiplatform games instead of the ps5, but I ended up deciding to save that money for the switch 2 instead since it was really hard to convince myself there is enough value in doing so. So here I am, potential convert ready to jump ship, deciding to hold off because they’re just not offering enough.

i can recall setting a mental reminder to purchase some version of an Xbox once Hellblade 2 was announced. going into this past holiday season, i still thought that was going to happen. i thought for sure by the time that game dropped the current gen library of Xbox exclusives would be robust and differentiated enough to justify Hellblade 2 as the thing that got me in the door, and then i'd catch up on everything i'd missed. but honestly, despite wanting to support Ninja Theory on day 1- i think the only reasonable move is to wait and see how this all shakes out. i'm not fully confident Ninja Theory itself survives the year- and i don't think any amount of purchases prevents that. what an utterly depressing thought.

-

to armchair quarterback the present situation a bit- Xbox has no farm system, and it drives me fucking crazy. i know it's reductive and an oversimplification- but it really feels like they're utterly unwilling to burn cash attracting, developing, and retaining talent- and would much rather buy their way out of problems. i don't think Sony are saints in this regard (they've been trending towards shutting down many of their homegrown studios), and Nintendo are inert (for better or worse)- but the Xbox brand just can't get it together with farming and fully supporting their in-house projects.

i don't know if that's a function of poor leadership, or being attached to Microsoft (a company with too much money that doesn't need its games to be good to survive)- but it really feels like this is a hard one to come back from.

@mellotronrules: Xbox setup The Initiative head hunting top talent from around the industry for AAAA games, its been an unmitigated disaster they're burning a lot more cash with the protracted development.

Have you seen how often Xbox games go 5-6 years without anything meaningful to show? Contraband, Everwild, Fable, Perfect Dark, South of Midnight and State of Decay 3.

Microsoft’s The Initiative studio hires top talent from Bungie, Crystal Dynamics, 2020

The Initiative, a mysterious, self-described “AAAA” gaming studio announced at E3 2018, has yet to produce a single game. That hasn’t stopped it from continuing to gobble up top developer talent from all over the gaming world.

According to studio head Darrell Gallagher on LinkedIn, the studio recently hired 16 new people to the company. Those include hiring Remi Lacoste, the director of Shadow of the Tomb Raider and Marvel’s Avengers, and Christine Thompson, the narrative lead writer for Destiny 2, to a lead writer position.

Francisco Aisa García, a former programmer at Naughty Dog and Rockstar Games, was brought on as a senior gameplay engineer, and Richard Burns, a UI artist formerly of Playground Games, was hired as a UI/UX lead.

Insiders describe ‘fast and furious’ exits from Xbox’s Perfect Dark studio, 2022

As much as half of the core development team known to be working on the upcoming Perfect Dark reboot quit the company during the last year, or around 36 people, analysis of employee LinkedIn profiles has revealed.

I've been thinking about Microsoft's lineup from their 2014 E3 press conference a lot lately. Where they showcased:

Fable Legends, which was cancelled

Scalebound, which was cancelled

Phantom Dust, which was cancelled

Project Spark, which they gave up on about a year in

Crackdown 3, which was delayed for years and was not very good

The Master Chef Collection, which was a disaster at launch

and Sunset Overdrive, which was maybe their most successful game they showed that year but didn't exactly set the world on fire.

Sure, this was all about six or seven months after the Xbox One launched, where they had to do a shit ton of course correction, but it didn't seem like Microsoft had their shit together then, and now a decade later, it seems like once again, they don't have their shit together. And maybe they never did? I don't know.

I honestly think that Microsoft is just reaching this point a little ahead of Sony. The current state of gaming isn't sustainable anymore, and nearly company has made any course corrections. Every game released is required to sell to 80 or 90% of the consoles out there otherwise it's considered a failure. Budgets have ballooned and I get why, but these companies need to get back to developing mid tier games with expectations that are more realisitc..

Maybe our games don't need perfectly reflective puddles, or sweat tech.. What I'm saying is bring back second sight for the xbox.

@imunbeatable80: What point is that? I think that Microsoft is in fact signaling that it's learned the opposite lesson. Double down on the biggest projects and let the smaller ones fall by the wayside. I know that they just made an internal statement saying they needed more small and critically acclaimed games but their investments don't show that.

I agree that the console business is broken and I think everyone knows it. The one who had figured it out was Nintendo, with weaker hardware allowing for more reasonable budgets, and according to @thepanzini they're about to go down the bigger budget path with the rest of the industry.

Software isn't really the problem, I don't like the middle basically disappearing and feast or famine nature of the business, but the elephant in the room which keeps getting overlooked is the hardware is getting prohibitively much more expensive to produce develop and much much harder to reduce costs for.

Half of Playstation revenue was hardware, Xbox spent $2b subsidising the Series. Pricing has been far more sticky this gen with rises for everything games, services and hardware, at this point last generation consoles alone were half the price. The Switch pretty much held is price throughout, the Switch 2 is looking slightly higher $399.

A lot of consumer spending is being spent on the box not on the games, the higher pricing is slowing growth particularly for the more casual folks.

@thepanzini: I don't think that's really it. Xbox launched with the Series S and that thing has been available for peanuts. Less than $200. Casual gamers don't care so much about framerate and resolution or even necessarily understand it. Both Xbox and PlayStation have had some pretty good bundles and decent discounts at times. And of course PS5 has only been widely available for a couple years after absolutely astronomical demand that Sony couldn't meet.

$299 in 2017 is worth $380 today and more by the time the Switch 2 launches. The Switch 2 is launching at essentially the same price as the Switch, if it's $399.

Microsoft's internal hardware costs may be damaging Xbox's finances, but Microsoft has made deeper offers than Sony in an effort to move boxes and it just hasn't worked.

@bigsocrates: Playstation selling the first 50m was never going to be a problem its the next 50m, the core are far less price sensitive. The Series S is just less desirable regardless of price and Xbox has fewer core customers after its problems last gen they hit the wall sooner. If margins weren't being eaten by hardware so much we'd have fewer cuts elsewhere.

On the subject of Game Pass i've seen that Shawn Layden quote bouncing around again suggesting in order to cover costs for a $120 million game on a subscription service you'd need 500 million subscribers, at the time in 2021 Sony had 34 million subs and there's only 250 million console owners in the world so it's actually impossible.

That was 3 years ago and it feels like an even worse idea now, budgets are higher requiring an even higher number of subs, maybe the sharp rise of mtx offsets it, but there's also free to play games that people are playing for years instead of paying for subscriptions, if what Layden said is true it couldn't ever be a feasible idea.

On the consumer side it works as a "cheaper" option for people who need it but on the business side it relies entirely on MS and Sony throwing money at companies to put their games on the services and that's not smart. It reminds me of Epic throwing money at studios for store exclusives which after 5 years translated to over $300 million in losses, people still prefer Steam and on the consoles not enough people exist who want subscription services.

I think whoever is best poised for long-term gains isn't going to be the company that has the best games or the best studios, but who has the best and easiest engines and tech with which to develop games. I honestly don't know who that is at this point - that's not something I'm familiar with - but it seems obvious thatthere has to be some kind of great technical shift in getting AAA games to market, or at least a prioritization of marketing smaller-scale games to an audience that has generally been fed the idea that the biggest and shiniest games are the best ones.

Again, I'm not sure if that's Micorsoft or not. But it is a lot more complex than "who has the best studios."

@sparky_buzzsaw:

I think whoever is best poised for long-term gains isn't going to be the company that has the best games or the best studios, but who has the best and easiest engines and tech with which to develop games.

What does best mean? The person answering would radically change the answer.

@thepanzini: I'd say whatever can best shorten the length of development time while making the most minimal cuts to visual quality. That's a statement that's obviously up for interpretation but as games get more and more complex, I think the engines behind them need to get more simplified. Or maybe not simplified, but... manageable? I'm not in tech, which is probably readily apparent, so I'm talking out of my ass here. I should also note that this may sound like I'm advocating for AI, which isn't the case, or at least not AI that replaces people. Never going to be a fan of that.

@sparky_buzzsaw: Proprietary engines have become the exception not the norm, Unreal Engine ubiquity has increased as the games have gotten more complex, Nintendo has even started using it, the tools are pretty much standardize we see less bespoke tech largely down to cost. Its cheaper to use UE than staff and build yourself.

The biggest cost in gaming is people specifically you need a lot of artists creating high quality 3d assets takes a long time, which increases with better hardware cause you need to create even higher quality artwork and takes longer.

Yeah, the issue isn't the tech. The tech today is easier than it has ever been for developers to use. The issue is publishers they work for wanting bigger and bolder games to compete in the AAA space, which cost too much money, and the sales after the game is released don't turn a profit. Spider-Man 2 supposedly cost 300 million dollars to make, and despite it already being a big seller, it still hasn't gotten close to making back 300 million dollars. This is why Sony keeps whining about their games, despite them also selling millions. The latest one being Final Fantasy VII Rebirth, which I personally got day one, and I'm sure many people here did too. Like someone in this thread already said, the answer might be to scale back, but these major companies are not going to do that. It's like how Elon Musk is losing money with Tesla for all kind of reasons, but he is still pushing the company full speed ahead. The only thing those people know how to do is go forward, and if things good bad, the ordinary people suffer, hence all the layoffs.

Nintendo seemed to have avoided this for the most part. A console with low tech, but with talented artist who still know how to make their first party games look pretty. And a dedicated fanbase who will buy anything Nintendo puts out, even if it's a Pokemon game with PS2 quality graphics. But we'll see what happens with the Switch 2.

The sad reality, is that gaming has become just like any other major institution and all the corruption that it details.

@av_gamer: Spider-Man 2 needed to sell 7m copies to break even, it was profitable in a few months.

Insomniac’s Spider-Man 2 Swings Past 10 Million Sold

Spider-Man 2 went on to sell five million after just 11 days on sale. And now, Sony has confirmed it’s sold 10 million after 107 days on sale.

Edit,

450 development team for Spider-Man 2 and cost $285m over 4 years.

300 Breath of the Wild over 4 years

300 Tears of the Kingdom over 6 years

Zelda in the ~$200m ballpark only lower because of the location, then imagine 4k assests and DLSS Switch 2.

@thepanzini: Glad it worked out for them, but I also noticed how the article ends with Insomiac pretty much saying "whoa we need to slow down some. No major releases anytime soon". Hope 2025 is another good year for them. I can certainly go on another adventure with Rivet and crew.

@av_gamer: Hasn't every developer publisher worrying about costs since the HD era, with such high figures you'd be crazy not to.

Using napkin math Tears of the Kingdom cost ~180m using a ton of assets from the previous game. Nintendo already said it expects longer more complex dev on Switch 2, wouldn't they naturally be worried.

$115k Average Nintendo developer salary - 100,000 x 300 people over 6 years 180m

Insomniac are working on dlc probably stand-alone so not major, but Miles Morales was largely created using existing assets thus having much lower cost of goods, its why it had such a high return on investment on the leaked docs.

The model for Insomniac spend big money on the game then smaller spin off title. That $300m will go a long way covering two games.