Xbox trying to bounce back decade of struggle
There's a battle cry among Xbox players: “Hold the line.”
The Xbox brand has taken significant hits to its reputation over the last 10 years. The Xbox One launched in 2013 with catastrophic marketing selling it as a box for streaming TV shows, a strategy that didn't factor in that every device in our lives would be a TV streaming machine. The Xbox Series, marketed in its 2020 release as “the world's most powerful games console,” promised a stronger start, but the company's biggest game releases, such as “Halo Infinite,” have stumbled.
Now, after the recent summer showcase outlining the Xbox games release schedule for 2023 and 2024, Microsoft's investment into game studios seems finally about to produce results. But the company still has many challenges, including its legal battle to acquire Activision-Blizzard.
This year's marquee Xbox title is “Starfield,” a game in production for the last eight years by Bethesda Game Studios, which Microsoft bought in 2021 for $7.5 billion. Set to release Sept. 6, “Starfield” promises to be a dream science fiction game, allowing players to explore more than a 1,000 planets in a custom-made spaceship. A 45-minute gameplay demonstration recently electrified the Xbox community after it showed impressive simulation features such as space flight, advanced physics systems and a feature to recruit your ship's crewmates.
“Hold the line? The Xbox strategy is to advance the line,” said Sarah Bond, Microsoft's corporate vice president for game creator experience and ecosystem, in an interview Sunday evening. She said annual revenue is double that of the Xbox 360 era of 2005 through 2013, the brand's most successful stretch, when it threatened Sony's PlayStation's market share. Xbox also reports having more than 150 million monthly active users from its studio titles, including pirate game “Sea of Thieves” and survival title “Grounded.” This is up from December's figure of 120 million active users.
That recent showcase also teased a number of titles arriving in 2024, such as “Avowed,” a new fantasy game from acclaimed narrative studio Obsidian Entertainment. It will be part of Xbox's strategy to publish its own games four times a year, once a quarter. It's all in service of the Xbox Game Pass subscriptions strategy. Launched in 2017, Game Pass is Xbox's play for Netflix-like loyalty, offering hundreds of video games to download (both Xbox-created games and outside titles) for an affordable monthly price.
If Xbox wants to advance the line, though, it's not ready to demonstrate it through the number of Game Pass subscriptions, which was last reported in January 2022 at 25 million. Xbox executives this week declined to release an updated figure.
The Xbox brand suffered a bruising this year when one of its exclusive titles, “Redfall,” released to poor critical and fan reception. It's also struggling to win government approval for its $69 billion acquisition of games publishing giant Activision-Blizzard.
Last week, the Federal Trade Commission filed a lawsuit seeking a temporary restraining order and injunction against the purchase. Microsoft Vice Chair and President Brad Smith said in a statement that the company welcomes the injunction and that “accelerating the legal process in the U.S. will ultimately bring more choice and competition to the market.”
Xbox CEO Phil Spencer has called the acquisition merely an “accelerant” to the company's strategy. If the dates announced in the showcase hold true, Xbox wouldn't need Activision's games to meet its game-per-quarter release hopes.
It's taken years for Xbox to arrive at a confident release schedule. Matt Booty, Microsoft's head of game studios, said the pandemic played a factor, but there are others. Big-budget games that used to take two years to produce now typically take half a decade.
“The expectations of fidelity and complexity have increased, as well as expectations of shipping and running well across multiple platforms,” Booty said, adding that the company's games must be programmed for two Xbox consoles plus PC and sometimes PlayStation and Nintendo machines. “It just adds up. I do think there's an expectation reset going on now.”
Even though Xbox studios are meant to feed the Game Pass strategy, Booty emphasized that there is no mandate to “design around” a subscription service. This is key messaging, as many game studios are tempted to chase the wildly successful “Fortnite” by introducing game elements meant to lure in monthly engagement.
“I always tell our teams, do not go designing a game trying to reverse engineer Game Pass,” Booty said. “‘Sea of Thieves' has been consistently one of the top played games every month, and it was designed many years before Game Pass existed. Just go build a good game, and that will help our strategy.”
The showcase also had a surprising number of announcements from accomplished Japanese game publishers, such as new games in the popular Persona series from Atlus, a new Capcom action game “Kunitsu-Gami: Path of the Goddess” and the 8th entry in the Yakuza series from Sega. Since its inception, Xbox has struggled to win a Japanese audience, and big Japanese publishers historically skip the platform altogether, including Square Enix and its popular Final Fantasy games.
It's been a meme that Xbox fans are always told to “wait next year” for the brand's turnaround. But Booty said it begins this year with “Starfield,” a game that's sucked up Microsoft resources, as its internal teams are helping Bethesda optimize the game's performance.
“I was joking that I think we have 75 percent of the capacity on the planet working on it, and that may or may not be a joke,” Booty said of the quality assurance process on “Starfield.” “I'll say we got a whole lot of people internally playing it, we've gone out and had a number of people in the industry look at it and give us feedback. Based on what we see today, it's in really good shape in terms of just how stable and bug free it is.”
Booty said that throughout the recent tough news cycles, he's had to hold himself back on giving assurances that the games players want are in the oven.
“All our teams read the press, the feedback, see stuff on Twitter,” Booty said. “I would love to just jump on social media and say, ‘Hey I saw the build today, it looks great, everybody calm down.' But that's not going to do any good. It's just keeping a commitment to the long game, being ready that when we do a show, we've got confidence on what we're able to deliver.”