The console wars aren’t over, but they’ve mutated into a new phase.
That’s my takeaway after Microsoft revealed a new chapter for its Xbox business, where it both competes with and supports its biggest rivals.
A new episode of the Official Xbox Podcast dropped Thursday as a response to several rumors from last week.
According to anonymous leakers, Microsoft had explored the possibility of bringing several of its biggest first-party games, such as the forthcoming Indiana Jones and the Great Circle, to rival platforms such as the PlayStation 5. That, in turn, fueled rumors that Microsoft planned to turn Xbox into a third-party game publisher and sunset the Xbox console.
As per Xbox executives who appeared on the podcast, that explicitly isn’t happening. Instead, we got a rare look at the current usage numbers behind Xbox, as well as a glimpse at a new spin on an old strategy for Xbox’s publishing division. The PS5 or Switch aren’t straight-up competitors for Xbox anymore so much as they’re other spokes in its “play anywhere” plan.
Old fronts in new territory
Today’s podcast featured Xbox head Phil Spencer, Xbox president Sarah Bond, and head of Xbox Game Studios Matt Booty, with Xbox broadcast director Tina Amini as host. The 22-minute podcast wasn’t as seismic or revelatory as fans or analysts expected, but did offer some insights into exactly what Xbox has planned.
Specifically, it’s more of the same. Spencer said that while Xbox does plan to bring four unidentified first-party games to the PlayStation 5 and Nintendo Switch, it is “not a change to our fundamental strategy.” Instead, it’s an attempt to expand the overall Xbox audience by offering some of its games to users on other platforms.
“We’re always looking to learn as a leadership team, and to grow,” Spencer said. “This is an interesting point in time to use what the other platforms have right now to help grow our franchises, so we’re gonna do that.”
Under this strategy, these four game releases are explicitly meant as trial balloons. They can expand the games’ audiences in order to make more money for Xbox, which can then be reinvested in the platform. Ideally, as per Bond and Spencer, it might also attract users from other consoles into checking out Xbox, which doesn’t require those consumers to actually buy a physical Xbox due to Xbox Cloud Gaming.
Spencer deliberately didn’t name the Xbox games that are planned to go cross-platform. He did note that all four games were older releases. Analysts have suggested, based on data-mining and recent leaks, that the four games headed to PS5 and Switch might be Rare’s Sea of Thieves; Obsidian’s Grounded and Pentiment; and Tango Gameworks’ Hi-Fi Rush.
Spencer also explicitly denied the rumors that Xbox would publish last year’s Starfield and this year’s Indiana Jones for the PlayStation 5 later this year. For right now, the four mystery games are the only Xbox releases that are planned to go cross-platform.
Microsoft still plans on developing new physical units for the Xbox. Bond noted that there would be unspecified new Xbox hardware announced for the 2024 holiday season, and that the next Xbox would be the “largest technical leap you will have ever seen in a hardware generation.” Unsealed documents from last summer’s FTC trial suggest that the new Xbox is tentatively scheduled to reach the market in 2028.
Exclusives don’t stay that way anymore
“I do have a fundamental belief that over the next five or 10 years, games that are exclusive to one piece of hardware will be a smaller and smaller piece of the industry,” Spencer said.
On the one hand, Spencer’s conviction on this subject could be written off as simple sour grapes. The old console strategy, where exclusive games are meant to persuade consumers to buy one system over another, is working fine for both Sony and Nintendo. Xbox has historically had a hard time with it, but it visibly isn’t an invalid strategy.
On the other hand, Sony has recently released several of its older first-party games such as Uncharted and Days Gone for PC via Steam, Epic, and GOG, and Nintendo has made increasing inroads into mobile gaming after the success of Pokémon GO.
Various Xbox executives have argued for years that system exclusivity only limits your potential audience, and that’s leaving money on the table. Both Sony and Nintendo appear to have taken that to heart in the last few years.
Further, the biggest intended takeaway from Thursday’s podcast might’ve been that the Xbox platform is healthier than ever. Sarah Bond revealed that the Xbox Game Pass currently has 34 million subscribers, which is the first time in a while that Xbox has publicly disclosed that figure, and that Xbox currently has its highest-ever number of users on PC, cloud, and console.
This follows up on Microsoft’s earnings report from late January, which revealed that, for the first time, the company’s gaming division currently makes more money for Microsoft than Windows. While Sony is still way out in the lead on sales, the Xbox is only a failure in the sense that it’s in a distant third place in the console market.
Place your bets
Sony is also in an unusual position of vulnerability at the moment, which has nothing to do with Microsoft’s recent studio acquisitions. On Wednesday, IGN and others reported that Sony officially regards the PlayStation 5 as being in the second half of its life cycle, and that it has no planned major first-party releases before spring 2025. Sony has adjusted its sales expectations for the PS5 accordingly.
This matches reports from May 2022 that Sony had planned a major internal realignment after its acquisition of Bellevue, Wash.-based game developer Bungie. It previously focused its first-party development on elaborate single-player experiences, such as the Washington state-developed Ghost of Tsushima, but intends to switch much of its efforts to making PlayStation-exclusive live-service games by FY2025.
Live-service games, or “games as a service,” include Destiny 2, Sea of Thieves, Apex Legends, and World of Warcraft: games that have no fixed end point and receive consistent content updates. A successful GaaS is a license to print money, but the field became notoriously overcrowded last year, with several major projects like Rumbleverse blowing up on the runway. The market only appears to be able to support so many GaaS projects, and that limit might have already been reached.
That leaves Xbox in an odd position in 2024. Sony had a massive lead with the PlayStation 4, which translated directly into the PS5 shooting ahead by sheer brand momentum. Now the PS5 is in what could be a year-long content drought, and is placing a big bet on a volatile market sector.
Xbox already controls Call of Duty, which we know from last summer is one of the biggest games on PlayStation, and Minecraft, which is still the single biggest game in the world. It’s now officially the single most important game publisher while also making and marketing its own gaming ecosystem, which exists independently of the physical Xbox console.
In conjunction with today’s announcement, it doesn’t mean the console wars are necessarily over, but a significant and increasing amount of the conflict now boils down to a game that Microsoft is playing against itself.
Other notes from today’s podcast:
- According to Bond, Pocketpair’s Palworld, a dark open-world parody of Nintendo and Game Freak’s Pokémon series, was the largest third-party launch in the history of Xbox Game Pass when it came out on Jan. 19. Despite being in early access, accusations of plagiarism from Pokémon fans, and the threat of a lawsuit from Nintendo, Palworld is the first big indie hit of 2024, and pulled in nearly 20 million players between Steam and Xbox.
- Activision Blizzard is coming to Xbox Game Pass with Diablo 4, which will released on the service on March 28.
- Booty noted that there would be at least five more first-party games released on Xbox in 2024. Five were officially announced last month at the Xbox Developer Direct, including Obsidian’s Avowed, Hellblade II, and Indiana Jones. The other five will be revealed during the Xbox Showcase event in June.
- There will be a new Call of Duty this holiday season, which counters rumors that the series would take a break after the relative underperformance of 2023’s Modern Warfare III.
