Stop me if you’ve heard this one before: Xbox stepped on a rake again.
For the umpteenth time in the past decade, Microsoft has found itself on the wrong end of bad news. And as usual, it’s self-inflicted. Just as Team Green was starting to gather some positive momentum – Fallout is the biggest show on TV and boosting all of the Fallout games along with it, the launch of Senua’s Saga: Hellblade 2 is imminent and it may be the very kind of prestige single-player, narrative-driven third-person action-adventure the brand has long lacked, the next Xbox Showcase was announced for June 9, where we might finally see the long-anticipated next entry in the Gears of War series, the next Call of Duty: Black Ops game, and more – Xbox brass torched the morale of customers and quite possibly its own developers alike by announcing the closure of three studios (Tango Gameworks, Arkane Austin, and Alpha Dog) and the consolidation of a fourth (Roundhouse).
Fans were quick to point back to recent and now-hypocritical quotes from Xbox executives, such as marketing boss Aaron Greenberg saying last year that just-axed developer Tango Gameworks’ Hi-Fi Rush “was a breakout hit for us and our players in all key measurements and expectations. We couldn’t be happier with what the team at Tango Gameworks delivered with this surprise release.”
Hi-Fi RUSH was a break out hit for us and our players in all key measurements and expectations. We couldn’t be happier with what the team at Tango Gameworks delivered with this surprise release.
— Aaron Greenberg 🙅🏼♂️💚U (@aarongreenberg) April 21, 2023
In the 2021 Xbox documentary Power On, Sarah Bond said the leadership team asked themselves how to learn from and not repeat the mistake of acquiring a studio (in this case, original Fable developer Lionhead) only to later shut them down. And one year ago, in the wake of Redfall’s disastrous launch, Xbox boss Phil Spencer said, “One thing I won’t do is push against [the] creative aspirations of our teams. When a team like Rare wants to do Sea of Thieves, when a team like Obsidian wants to do Grounded, when Tango [Gameworks] wants to do Hi-Fi [Rush] when everyone thought they were probably doing The Evil Within 3…I want to give the teams the creative platform to go and push their ability, to push their aspirations.”
At best, those once-reassuring quotes ring hollow today. At worst, they’re outright lies. We’ve come a long way from Xbox fans once proudly decreeing, “In Phil we trust” and posting photoshopped Dark Knight-esque “I believe in Phil Spencer” buttons.
Awfully, Bloomberg reports that Microsoft might not be done making cuts. So this may very well get worse before it gets better. For developers, that would mean further job losses. And for gamers, that reportedly might mean a(nother) possible Xbox Game Pass Ultimate price increase. So how did we get here? Why can’t Xbox stop tripping over its own feet? And with the Xbox organization growing so massive over the past half-decade and its reach extending not just to consoles but to any device capable of playing video games, can the soul of Xbox even be saved?
I spoke to two former longtime Xbox employees, separately, and both lamented the current state of the business. One told me, prior to this week’s awful studio closures, “I had lengthy conversations with a bunch of Xbox founders, and we all came to the same conclusion: it’s no longer Xbox, but Microsoft Gaming.” Ouch.
The other chatted with me at length after the Bethesda bloodbath, and believes Xbox is now too big to quickly or easily get its house in order. “There is just too much surface area. You have, effectively, three huge companies at play and Microsoft never really finished [the] integration with Bethesda. [And] Activision is like three times the size Xbox was.” They added, “Xbox 360 launched with a few hundred people. Last I heard Xbox is now almost 30,000 people.”
And that growth has led to, in this Xbox veteran’s opinion, increased oversight and meddling from further up the Microsoft food chain. “The reason this seems so inconsistent with previous Xbox leadership team statements is that these decisions probably aren't being made by Phil. This is all getting dictated by [Microsoft CEO] Satya [Nadella] and [Microsoft CFO] Amy Hood, and it all stems from the Activision acquisition.”
The long-tenured ex-Xboxer continued: “The situation Xbox was in when they made this call was much different. [They] couldn't keep consoles in stock, making money hand-over-fist with Game Pass growth – [the Activision acquisition] seemed like a no-brainer.
"Now, console sales are down. Post-COVID recession. Game Pass slowing. The acquisition was more costly and time-consuming than anyone expected. And the focus on fighting the FTC probably cost them time they would have spent thinking through the people and studio implications.
“I had lengthy conversations with a bunch of Xbox founders, and we all came to the same conclusion: it’s no longer Xbox, but Microsoft Gaming.”
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“I 100% believe this is a board-level decision. Xbox was a huge profit center, so Satya approved a huge merger. Now, games are slowing, and Microsoft stock is skyrocketing and there is no way Satya is going to let Xbox drag it down.
“This is all my opinion, of course, but…I'm fairly certain these are not decisions being made only by Xbox leadership.”
That’s not to absolve Spencer for his role in all of this (unlike the tone-deaf “Won’t someone think of the multi-millionaire executives?” response of former Xbox higher-up Mike Ybarra). He is, after all, the person in charge of the entire organization. The buck stops with him. The Bethesda and Activision-Blizzard acquisitions happened on his watch. As such, he is no more shielded from criticism for being, by most accounts (including my own), a nice guy than the star professional athlete is for underperforming on the field/court despite regularly signing autographs for kids before games.
But no matter who’s to blame for the weight of Activision-Blizzard seemingly tipping Xbox’s scales out of balance, it is now fair to wonder if and how Spencer can save Xbox’s soul. Is Xbox a gaming brand that means anything to gamers anymore? Can it stand toe-to-toe with Sony and Nintendo? And if the answer to those questions is yes, then what defines Xbox? Is it Xbox Game Pass? Is it big exclusive franchises like Halo, Forza, Gears of War, Fable, and (maybe, should they end up being exclusive) The Elder Scrolls, Fallout, and Doom? Is it gaming anywhere, seamlessly, through PC, mobile, cloud, and handheld support that’s invisible to the end user? Can it be all of these? Should it be all of these, or does Xbox then become a jack of all trades, master of none? After all, when you think of either PlayStation or Nintendo, you arguably think of one thing and one thing alone: consistently incredible exclusive games. That’s it.
The Activision-Blizzard-King acquisition may prove to be the very thing that unravels the Xbox brand.
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If the board is pushing Xbox in this direction, will Spencer push back? These decisions – no matter who’s making them – are costing Xbox an incredible amount of both talent and community trust. Spencer knows that, and it falls to him to fix it.
To this point, I would’ve argued that, up until this week, Spencer’s ten-year term as Head of Xbox could be summed as such: gamer-first initiatives like backwards compatibility, accessibility, cross-play, and Xbox Game Pass – but he has yet to deliver either the single breakthrough blockbuster game that captures the zeitgeist or the steady flow of high-quality exclusive games that breed loyalty to a platform. Now, though, he will likely be remembered primarily by how he handles this moment: can he organize a five-company monolith (Xbox, Bethesda, Activision, Blizzard, and King) into a single entity that makes both gamers and shareholders happy? Is that even possible?
If he can’t, the Activision-Blizzard-King acquisition may ultimately prove to have been more trouble than it's worth.
