The last ten years have seen Xbox whether substantial blows to its reputation, especially following the launch of Xbox One in 2013. Marketed primarily as a streaming machine for TV shows, the Xbox One seemed poorly strategized in a world swiftly filling with devices equipped for streaming. The 2020 release of the Xbox Series was promoted as “the world’s most powerful games console.” Despite this promising start, major game releases such as “Halo Infinite” have had their share of stumbling blocks. Now, Xbox is aiming to reverse its fortunes, and a recent summer showcase revealing the game’s release schedule for 2023 and 2024 suggests that the brand’s substantial investments into game studios are beginning to bear fruit.
Turning Tides: Microsoft’s Strategy and Upcoming Releases
Microsoft’s corporate vice president for game creator experience and ecosystem, Sarah Bond, indicated in a recent interview that the Xbox strategy is to “advance the line.” She reported that the annual revenue now is double that of the Xbox 360 era from 2005 through 2013, marking the brand’s most successful period. Notably, this was when Xbox posed a significant threat to Sony’s PlayStation’s market share. Bond further noted that Xbox currently has over 150 million monthly active users for its studio titles, including popular games like “Sea of Thieves” and “Grounded.” This figure marks a significant increase from the 120 million active users reported in December. This year’s high-profile Xbox title is “Starfield,” a long-anticipated game by Bethesda Game Studios, which Microsoft purchased in 2021 for $7.5 billion. After eight years in development, “Starfield” is set to launch on September 6, promising players an immersive science fiction experience. The recent Sunday showcase also unveiled several titles set to release in 2024, such as “Avowed,” a fantasy game from the acclaimed narrative studio Obsidian Entertainment. The Xbox’s strategy includes publishing its own games once every quarter, aiming to boost subscriptions to its Xbox Game Pass, a service likened to Netflix for its expansive library of video games offered at an affordable monthly rate. Despite the optimistic outlook, Xbox executives have not yet provided an update on the number of Game Pass subscriptions since the last reported figure of 25 million in January 2022.
Legal Battles and Future Outlook
Xbox’s path forward, however, is not without obstacles. Recent issues include a poor reception for its exclusive title, “Redfall,” and legal challenges to its $69 billion acquisition of games publishing giant Activision-Blizzard. In response to a lawsuit filed by the Federal Trade Commission seeking a temporary restraining order and injunction against the purchase, Microsoft Vice Chair and President Brad Smith expressed that the company welcomed the injunction, believing it would ultimately lead to more market choice and competition. Despite these setbacks, Xbox CEO Phil Spencer maintains that the acquisition of Activision-Blizzard is merely an “accelerant” to the company’s strategy. If the announced release dates in Sunday’s showcase are accurate, Xbox should be able to maintain its game-per-quarter release goal even without Activision’s games.
Longer Development Cycles and Inter-Studio Collaboration
The updated strategy for game development also involves longer creation periods for high-end games, which can now extend between four and six years. These longer cycles are attributed to the heightened complexity of modern games, the need to achieve top-tier technical standards, and the demand for 4K-compatible graphics and advanced lighting systems. Microsoft’s approach to managing its game studios strikes a balance between centralized decision-making and creative autonomy. The company encourages inter-studio collaboration, which has been particularly beneficial in the era of remote work. For instance, Microsoft’s Coalition studio has been sharing its expertise using Epic’s Unreal Engine 5 game development tech with other teams.
Looking Ahead
Despite some previous missteps, Microsoft’s latest game showcase indicates a positive trend for its game studios. However, the real test lies in the future, as the company needs to maintain and enhance its development productivity. Even though the emphasis for Xbox studios is to support the Game Pass strategy, Booty stressed that there is no mandate to “design around” a subscription service. This is a significant point, as many game studios can be tempted to replicate the immense success of “Fortnite” by incorporating game elements aimed at drawing in monthly engagement. All in all, Xbox is pushing ahead to restore its reputation and fortify its market position, leveraging its significant investments in game studios and strategic game releases. It remains to be seen how the company navigates its upcoming challenges, but one thing is clear – Xbox is not merely “holding the line” but striving to advance it.