“This cannot continue”: Xbox leaders lay out “hard truths” behind sagging brand

Brutal self-assessment paints a picture of a Microsoft gaming division in crisis.

See full article...

 

[shadedmagus]

Damn, better commit more billions to "AI." That'll satisfy the shareholders.

but what in this article coverage mentions AI? it seems like an actual brutally honest assessment of MSFT's failures with gaming over the past some years

The article doesn't mention AI. But Microsoft has gone all-in - and I mean all-in - on AI as the future. It's therefore unlikely that they will take any of the AI budget away to give it to Xbox.

It's also unlikely that the solution they derive from this "brutally honest assessment" will not heavily involve AI.

 

[foofoo22]

Wild idea: maybe name your Xbox generations and models in a way that doesn’t require casual gamers to open a research paper just to figure out which one is which.

 

[yndoendo]

The reason indie studios do so well isn't because they're small and plucky. It's because indie studios are focused on the product first, the customer experience first, and are happy to make anything at all, not chasing maximum shareholder value.

Don't worry. Their next step will be buying up Indie studios and running them for profit like the AAA studios they bought.

Microsoft makes statements that they support the consumer but their actions keep proving they are following the Friedman doctrine and will continue doing so.

Until wealth flows out of the hands of the rich, there will be continue reduction in economic flow for all industries. How can there be economic flow when the bottom don't have the funds to spend?

 

[Dean0]

So they're admitting they don't adequately fund game development but then they're going to go and layoff more people? I understand that you don't need marketers for game development, but how does laying more people off after they've already endured multiple rounds of cuts help them actually get to focus on making games? Ugh, the entire game industry is in such dire straits lately

I think it's a matter of focus.

They were so scatter-brained they completely botched the launch of the Series X by missing a simultaneous Halo Infinite launch and then sat on their hands for years with mediocre Infinite support in tandem with mediocre first party releases from their buying spree.

I agree that they need more focus, but they seem to think they need layoffs to accomplish that. That sucks.

I hope they don't just go around closing studios like they (almost) did with Tango. At least try to sell them or spin them off. It will be a black mark on Xbox if Double Fine dies under Xbox stewardship.

 

[Static-XJ]

Damn, better commit more billions to "AI." That'll satisfy the shareholders.

Copilot button right on the controller.

 

[dEvErGEN]

I’m genuinely convinced that Xbox would be better spun off from MS as independent, or part of a larger media brand overall. Like Sony. The tech and software synergy with MS is no longer productive for either group.

 

[Jeff S]

Exclusivity does seem to matter highly. If you want to sale the hardware you have to have something only that hardware can run. I've been told this numerous times by my peers.

I personally find exclusives an abomination. If I have a perfectly good console, let me play XYZ on it, or my PC., I like the PC/Xbox thing Microsoft has got going on, as my machine smokes the Xbox in every way, but yeah... That doesn't make people go "oh by gosh I gotta buy the Xbox".

Yeah, this is one of those times where I think there is something of a corporate multiple-personality-disorder going on where different internal divisions are getting pitted against each other, perhaps?

From a high level standpoint, it makes sense to have games that are 'exclusive' to both your platforms, but then the PC/Windows platform starts to erode into what is the easily measurable "success" of the XBox division... but in ways that might not be counted as XBox success to the higher ups?

Then to complicate matters steam/proton are also making it so that increasingly, gamers might play Windows/XBox games on platforms for which Microsoft gets almost no revenue (I don't know, maybe they still end up getting an XBox 'royalty' from the game studios/publishers, on every sale, even if it's played on a steam machine or Ubuntu/Mint/Arch desktop running Steam?

For first party titles from Microsoft, of course they will definitely profit off those titles even if bought and played on a Linux-based Steam platform, but, I bet those numbers don't look as good for the XBox division internally.

 

[davijoh723]

Because you have venture capital and larger corporations/publisher consolidations that have taken the flexibility and end-user experience focus out of the game development process, replacing it with the same maximum profit-extraction methods AI and other media companies have been employing. (Commonly referred to as enshittification.)

The reason indie studios do so well isn't because they're small and plucky. It's because indie studios are focused on the product first, the customer experience first, and are happy to make anything at all, not chasing maximum shareholder value.

Microsoft Game Studios are hitting the same thing Ubisoft was. Example: When Red Storm Entertainment was Red Storm Entertainment proper? The games were good, novel, fun, engaging, and actually stood the test of time. When Ubi took over? It wasn't an instant jump to formulaic development, but by the time this most recent round of Red Storm layoffs happened? You have 5 games running on the same game engine, with almost the same gameplay loop, barely deviating from each others' basic story elements. Minimum effort in the attempt to extract maximum profit. Not because the developers themselves wanted that, and not because the writers got lazy. Because Ubi corporate began injecting more and more demands into tighter and tighter schedules.

Well said. And honestly, this is also a fairly accurate description of enshittification in general.

 

[Wheels Of Confusion]

On the hardware side, Microsoft is facing the same surge in storage and RAM pricing as the rest of the industry.

Microsoft, who is participating in the RAM-gobbling buying frenzy like a Hungry Hungry Hippo to keep up with the Joneses?

 

[Sifaka]

That's what she said she was sommitted to. Mass layoffs and budget cuts imply more of the same short-term decision making, though.

Layoffs and budget cuts are also what you do if the division no longer aligns with company goals and you are looking to spin it off.

If Microsoft wants to stay in hardware, they would be better off growing the family of Surface products rather than focusing on a console.

 

[Dark Jaguar]

The article doesn't mention AI. But Microsoft has gone all-in - and I mean all-in - on AI as the future. It's therefore unlikely that they will take any of the AI budget away to give it to Xbox.

It's also unlikely that the solution they derive from this "brutally honest assessment" will not heavily involve AI.

They claim they're "listening" and will be "scaling back" Copilot. Note that they didn't say AI, they said copilot. I've seen one example, Notepad. They removed all references to copilot, but it still has llm chatbot writing in it. They just changed the name of the feature to "writing tools", but it's easy to recognize the silly fairy sparkle they put on everything related to the chort bort. in the OS. This is what I expect. Microsoft will do the Microsoft thing and just change the name of Copilot into something they hope will be too generic to be recognized for what it is. PR crisis averted!

 

[Dark Jaguar]

Microsoft, who is participating in the RAM-gobbling buying frenzy like a Hungry Hungry Hippo to keep up with the Joneses?

View attachment 136866

The complete lack of context around this image is what gets me. I'm curious why everyone's mad at someone for being dressed as a hot dog.

 

[arsisloam]

Plants vs. Zombies. Cuphead. Factorio. AmongUs, Undertale. FNAF. Minecraft. Stardew Valley. Stanley Parable. Outer Wilds. Slay the Spire. And that's just in the last 15 years. If you want to expand that timeframe back to 1996, Valve themselves started as 2 dudes that left Microsoft.

Microsoft did not, at all, enhance Minecraft after they bought it. They ported the game from Java to C++. That's the entirety of MS' contribution to Minecraft. Oh and they raised the price.

 

[BrokenSymmetry]

For more than a year already, you can not buy an Xbox anywhere in my country (the Netherlands), not even from Microsoft itself. What's going on here?

 

[DCStone]

I can see them moving completely to game pass and just dumping the hardware altogether. They’ll just stream whatever they sell on game pass to whatever hardware they can get streaming software on.

I'm not sure that's going to work for them? There are many reasons why games as a streaming service haven't taken off as well as MS obviously hoped. One significant one is the % of people with dodgy internet who would have an even more frustrating experience playing games than they currently do. It's the same issue as with "always on-line" requirements even for single player games, but on steroids. Local streaming, sure. Remote streaming? Not so much.

 

[bignick243]

Interesting how the main justification for high management pay is that they shoulder so much responsibility. Yet nobody has ever managed to actually show this shouldered responsibility when things go south.

It's almost like the socio/psychopaths on top are full of it.

It's almost as if the worst people in world weaseled their way into management. Shirley this is just a one off and it hasn't happen at any other corporation.

 

[Sphex]

I do happen to like my Xboxes.

I hope they figure it out without killing it.

This was nearly my exact thought. I've been a relatively happy Xboxer since the original, and GamePass is amazing, IMO (owing in part to the fact that I don't care too much about day-of-release blockbusters). I hope they can turn it around.

 

[Wheels Of Confusion]

The complete lack of context around this image is what gets me. I'm curious why everyone's mad at someone for being dressed as a hot dog.

There's a great little skit attached to it.



You could watch it, but that would remove the intrigue forever. Dare you cross the threshold and learn what you cannot unlearn?

 

[matty429]

So...Hoarding everything, and doing nothing didn't work??
Awww..Poor babies...

 

[emag]

I think it's a matter of focus.

They were so scatter-brained they completely botched the launch of the Series X by missing a simultaneous Halo Infinite launch and then sat on their hands for years with mediocre Infinite support in tandem with mediocre first party releases from their buying spree.

I agree that they need more focus, but they seem to think they need layoffs to accomplish that. That sucks.

I hope they don't just go around closing studios like they (almost) did with Tango. At least try to sell them or spin them off. It will be a black mark on Xbox if Double Fine dies under Xbox stewardship.

I imagine Double Fine is on the chopping block, after a decade of nothing but flops: Psychonauts 2, Kiln, Keeper -- the very kinds of "indie"-style games other commenters seem to think would save the company. Maybe MS will sell them off instead of shutting them down and sitting on their IP.

IMO, the best case scenario for the industry and for consumers is that MS spins off the entire gaming division as a separate entity (it's IPO season!) so it can stand on its own two feet as a 3rd party gaming behemoth and make decisions on software publishing and development on its own. That does mean the end of Xbox both as hardware and as a platform (can't have Xbox OS or Game Pass without Windows and Microsoft's infrastructure), however, and MS doesn't appear to be open to that, unfortunately.

 

[arsisloam]

They claim they're "listening" and will be "scaling back" Copilot. Note that they didn't say AI, they said copilot. I've seen one example, Notepad. They removed all references to copilot, but it still has llm chatbot writing in it. They just changed the name of the feature to "writing tools", but it's easy to recognize the silly fairy sparkle they put on everything related to the chort bort. in the OS. This is what I expect. Microsoft will do the Microsoft thing and just change the name of Copilot into something they hope will be too generic to be recognized for what it is. PR crisis averted!

It's so annoying to have to delete the auto-text every time MS re-enables it. No, I have my own thoughts. I don't need a bot interjecting to distract me.

 

[MattGertz]

Microsoft employee here (albeit only for the next three weeks -- retirement looms).

The one thing I'd note is that the Xbox challenges go back farther than a half-decade, whatever the official word is. I was briefly in Xbox from 2011-2013, leading the modernization of its video service. While I'm sure much has changed over there since then, one challenge that Xbox has always faced that the rest of the company doesn't is that it is ultimately guided by one overriding date -- the Christmas holidays, which is the make-or-break point for revenue. All work focuses on completion by early October; everyone is then on red alert through January in case something goes wrong pre/post the holiday payload; everyone collapses in February and tries to sleep; the next cycle resumes in March. While being a bit exhilarating (honestly!), that pattern makes it really, really hard to do anything but think tactically about reaching the finish line without overspending, as opposed to a more strategic approach (except of course anything involving the actual hardware, which is multi-year). For example, I was unable to convince anyone in leadership to commit to an 18-month plan to modernize some of our engineering practices -- if it didn't help us cross the finish line in October, it wasn't happening. I'd always thought that we needed dedicated resources that were focused on the longer haul -- resources that would never be subject to being pulled into the tactical fray during emergencies. Alas, businesses on a committed ship cycle generally don't work that way, especially if they are competing in a rapidly evolving market.

I'm cautiously optimistic with Asha being there now. She was actually in my current division before she moved to Xbox, but only for a few months, so I really didn't get to see her leadership in practice to any extent. However, it's clear to me that Xbox needs outsider ideas -- someone driving it that isn't steeped in the older lore and who can question the established practices -- so I'm definitely rooting for her.

 

[BentMetal]

Well, Pssst on the ZX Spectrum - one of Rare's earliest hits (as Ultimate Play the Game) - was a weird gardening game!

Wow, thanks for the the nostalgia rush. I hadn't realised Ultimate Play the Game morphed into Rare; many, many long hours were spent years ago playing Underwurlde...

 

[DCStone]

For more than a year already, you can not buy an Xbox anywhere in my country (the Netherlands), not even from Microsoft itself. What's going on here?

Same thing as affecting Valve's new hardware - all the chips are going into AI data centres. With demand out-stripping supply, prices are way up for all the manufacturers.

 

[dogwitch]

even sony not doing to great atm. games are down in sells, they had to cut a deal with amd not to loss money on soc. close down multi studios

 

[tuna74]

Man, it's almost like overpaying for acquisitions is long term bad for business. . .

That said, those are sunk costs. It's especially dumb to spend a lot of money to acquire the likes of Mojang, Bethesda Softworks/Zenimax, and Activision, which acquisitions are largely a combination of brand and talent acquisitions - and then get rid of a lot of the talent you just paid for.

Mojang was a brilliant acquisition. Minecraft is still super popular and has made MS money every year since they bought the company.

 

[Kavinsky]

Honestly, I'll believe it when I see it. Looking at Asha's resume, I feel like her background is a mismatch for the Xbox division, given her lack of any gaming industry experience.

Incidentally, she was a COO very shortly after she finished college and has been an executive for nearly the entire time, which makes me wonder how she managed to leapfrog to that level so fast outside of just being at the right place at the right time.

One of the key strengths of Microsoft when it was dominant in the 90's was that all the executives had come up the ranks, they'd done the entry level jobs, and the assessments for promotions and all the rest of it, that the current crop of university -> MBA -> executive role have never done.

That's a lot of incredibly useful, real world knowledge that's just being ignored.

Apple and Google both have the same problem as well.

 

[brentrad]

I think the Kinect and Wii etc catered to customers that were occasional gamers, now both companies are just catering to the hard-core FPS crowd. Back in the days, people who otherwise never played any games bought consoles to do different gaming, from couch trivia to skiing, bowling and what not, guitar hero and what not, fun stuff honestly.
Now these consoles offer none of that anymore, so why not get a PC instead?
Edit: I would buy the shit out of a console offering these things again.

Well you're in luck! Nintendo Switch 2 has all that you're asking for in gaming.

Nintendo just announced 'Nintendo Sports Resort' for Switch 2, releasing 10/22/2026.

'Nintendo Switch Sports' is also available for the Switch and Switch 2.

Also Switch 2 has been getting a lot of cross-platform games that just weren't possible on the original Switch.

(For example, Indiana Jones and the Great Circle. I've been playing it for about a month, and it's a fantastic game, looks beautiful, and runs quite well on the Switch 2.)

 

[pauleyc]

I imagine Double Fine is on the chopping block, after a decade of nothing but flops: Psychonauts 2, Kiln, Keeper

Keeper and Kiln had indeed low sales at launch but Psychonauts 2 is Doublefine's best-selling game to date.

 

[Frodo Douchebaggins]

Keeper and Kiln had indeed low sales at launch but Psychonauts 2 is Doublefine's best-selling game to date.

I mean to be fair, linguistic nuance applies here. It might be their best-seller but could still be a flop.

 

[bruindrummer]

It might have been ok if it cannibalized game sales IF a whole lot of players were paying the monthly subs for it. But, I suspect a lot of players are like me (though not all, of course):

* I rarely pay full price for games. Wait 6 months, a year, two years, and the price of almost every game drops substantially - particularly if you catch it in a steam sale, GOG sale, Amazon sale, etc.

* I play the same small number of games for rather a long time, before I get bored and play another small number of games for a long time

* So, I don't want to pay for subs - if I can get a game for $10 or $20 and play it for a year, that's a way better deal than paying $10-$20/mo just to pay to play the same 2 or 3 games for a year.

Which leaves that the only players who might see good value out of game rental services are gamers who constantly want to switch to new games, and don't play them very long.

I suppose XBox Game Pass is a good deal if you play 4 to 8 games this month and then a completely different set of 4 or 8 games next month. But with a rental service, the longer you play a game, the more you're paying for just that game.

Subs maybe makes sense for things like a music service, because you might listen to a hundred tracks this month and a mostly different set of a hundred tracks next month.

But gaming is a rather different beast where players might play a game anywhere from 10 - 1000+ hours. Lots of games are very much designed to be played for long periods of time - like open world games with huge world maps, lots of character progression, lots of loot gathering, and lots of quests (Skyrim, GTA, Minecraft, etc). Other games will be played a lot because they are competitive 'esports' - fps's like CoD, Team Fortress 2, PUBG, Fortnight, etc; Real Time Strategy games like Starcraft, League of Legends, DOTA2, etc).

I just don't feel like I would actually get value from a gaming sub.

This was the boat I found myself in. I signed up for Game Pass after buying a Series X a few years ago, but I tend to play triple AAA games that take me months to play through. After the last price hike I got myself a "from me to me" Christmas gift of a gaming PC and discovered the incredible world of Steam. With all of the Christmas sales, I now have a backlog of over 20 games, all of which I got for at least 50% off. I now have years of quality gaming in front of me with no monthly fees.

 

[pauleyc]

I mean to be fair, linguistic nuance applies here. It might be their best-seller but could still be a flop.

Yes, well, it might be a relative "flop" compared to the shedload of money CoD or EA Sports games make if one does not have any rational expectations. But I'd say it's still good if a game is able to generate revenues that are 2.5x its budget (estimates of course since no solid data is available).

Smaller games are not automatically flops if they don't have the sales numbers of Minecraft, Terraria or Hollow Knight.

 

[SomewhereAroundBarstow]

View attachment 136859

Never trust someone with teeth this white.

You're getting downvoted but that photo has been so heavily manipulated that at first I thought it was a screenshot from some Xbox title.

 

[thrillgore]

it's the sandwich approach.

Good news: here's some games

Bad news: You're all fired

Good news: I can't wait for the AI features

---

Gaming is not getting any cheaper with these decisions and for the first time in my life, I didn't stop to watch any promos from SGF or anything recommended on YouTube. They've priced me out, and I don't even think i'll be in on a Steam Machine.

 

[Hichung]

I was a big supporter of Xbox up through the 360. Lost all interest when the Xone was announced and went over to ps4 (loved the uncharted games).

Now? I’ve lost interest in any console at their current prices, but I probably actually gave up on consoles during Covid when I never could find the latest Xbox or PS in stores, or if they were it was super expensive bundles.

 

[araczynski]

it’s always the employees that pay for management mistakes. Billions lost in bad decisions and layoffs seem to be the quick answer for most executives

true, but often times overhiring IS the bad decision that firing is meant to fix. granted, not always, but I'd wager wherever there's thousands of employees, there's bloat.

i think money spent on the likes of Activision/Bethsoft were giant wastes, that have produced little of substance. That's not how you create exclusives, that's how you burn money.

 

[chaos215bar2]

but what in this article coverage mentions AI? it seems like an actual brutally honest assessment of MSFT's failures with gaming over the past some years

The dire hardware component situation means Microsoft now says it will pursue a new “business model and partnerships for hardware” for Helix, the recently announced project that will play both Xbox and PC games. The mention of “partnerships for hardware” is particularly interesting, given that Microsoft recently lent the Xbox brand to Asus for the Windows-powered ROG Xbox Ally. Maybe Project Helix will resemble Valve’s decade-old Steam Machines effort, with outside manufacturers releasing their own hardware running Microsoft’s OS and gaming platform at various price points and power levels.

 

[MoranJ2000]

As an Xbox owner since 2001, it saddens me to see how much they've f'ed up the platform.

Maybe Copilot can help Microsoft fix it.

/s

 

[Causification]

I was highly skeptical of an AI CEO taking over Xbox, but so far I've liked almost every public-facing decision she's made, from the name change to the logo to reconsidering exclusivity to dropping the price on Game Pass. Now, if Asha comes out next week and announces Banjo-Threeie I'll know I actually am dreaming.