With Microsoft distracted, the Xbox console experience is suffering
As Microsoft expands horizontally, is the Xbox console experience being forgotten?
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It can be exhausting to be an Xbox customer sometimes, particularly if you're paying attention to the news cycle.
PlayStation 5 sales in the UK have surged by upwards of 369% year over year, while Xbox's have dropped by 11% according to reports. It's a small snapshot of the overall desirability and availability of Microsoft's Xbox consoles, which are increasingly struggling to maintain their foothold in the wider gaming mindshare.
Microsoft has been on the back foot. After an incredible 2021 which saw the firm take home the top publisher award on Metacritic, it seemed as though the wait for Xbox's momentum to kick in might have ended. Sales in Japan were even looking strong, as Microsoft described the market as its "fastest growing" region. This past week, Microsoft didn't sell thousands of Xbox consoles in Japan. Not even hundreds, but instead, dozens. Meanwhile, the PS5 sold almost 40,000 units. That's a dire comparison that is near impossible to gloss over
The problem with this expansion is that it's largely horizontal, rather than vertical. The Xbox console platform is not seeing any serious growth according to what little information we can get, and Microsoft commits more and more silicon to multi-purpose cloud servers instead of home console stock levels. Furthermore, as Xbox sees its priorities elsewhere, increasingly, Xbox fans are starting to feel left behind in a variety of ways.
At times, I feel like we've been here before with Windows Phone, which struggled to keep pace with two more established, more dominant competitors. In this case, that would be Nintendo and PlayStation, who can seemingly do no wrong in recent years. It's important to note my use of the word "feel," here, because it is just that, a feeling, that oftentimes doesn't reflect the reality of the Xbox platform. By all accounts, Xbox is more profitable and has more revenue flowing through it than ever before. The monthly active user base has grown by huge amounts too, creating opportunities for recurring billing. We've not heard how well Xbox Game Pass is doing, but the fact Microsoft hasn't yet changed course on how it functions doesn't necessarily suggest it's having a negative impact — but the secrecy makes it hard to know for sure what the situation here is.
It's hard to know exactly what Microsoft's goals are with its games these days. Is it Xbox Game Pass engagement, or is it retail sales? Xbox Game Pass undoubtedly cannibalizes retail sales, but it seems as though Microsoft's investment in marketing and projections still revolve around how much these titles will likely sell. Hi-Fi Rush, Ghostwire: Tokyo, and Pentiment — none of these games saw physical releases. Will Microsoft blame the developers for not selling enough digital units? Why should these games sell units, when they're in Xbox Game Pass? And if they're not performing in Xbox Game Pass, who is then to blame? Marketing? How can they perform in Game Pass when there are no consoles to buy, while the PC Game Pass Xbox app experience on Windows 10 and Windows 11 remains atrocious? Just this past week, an update to the Xbox app broke various games, including Fallout 76, Windows and Xbox continue to struggle over the delivery of the gaming experience on PC. If I had a dollar for every time I've had to run a Powershell script to reinstall the "Gaming Service" on Windows 11 to get Xbox PC games to run, I'd probably end up with enough cash to buy an RTX 4090 and switch to Steam gaming full time.
The PR mantra Xbox often uses in interviews continuously states that Xbox Game Pass is meant to only be an aspect of the Xbox gaming platform. Xbox gaming CEO Phil Spencer has said in previous interviews that console hardware underneath TVs will remain important into the future while noting that they expect a shift to a plurality of devices. What we're seeing with the Xbox platform in recent years is the investment to meet that multi-modal future. Where Xbox Cloud Gaming is an app built into Samsung TVs, where manufacturers like Razer and LG are building cloud-first devices, and where ASUS and Valve are building handheld PC gaming experiences that either do or can run Windows 11.
My criticism of this multi-platform strategy is that it's clearly sapping development bandwidth from the core console experience, which is where the perception of the Xbox brand lives, and where the best Xbox experience currently exists. Expansion should absolutely not come at the cost of degrading the experience for your existing user base, but that quite honestly seems to be the case right now.
Last year, we put out a survey asking core Xbox fans what they wanted to see Microsoft improve on Xbox consoles. I'm sad to report that very little has been addressed in any meaningful way.
Gamers asked for improvements to the Xbox Game DVR, and while it has improved a little in usability recently, it pales in comparison to the editing tools offered on PlayStation, or even the 2013 Xbox One. In fact, we actually lost a feature this week in the Twitter sharing tools. This could be blamed on updates to Twitter's API costs, but Nintendo Switch and PlayStation, once again, seem to still have access to this feature. Users asked for a more streamlined dashboard experience and more customization, and once again, the dashboard actually got worse. Cluttered with Xbox Game Pass algorithmic content and ads, Microsoft only recently relented, over a year later, to say they'll take the dashboard back to the drawing board. Essentially putting us back at square one.
There's no singular, major issue facing Xbox right now. It's more like a coalescence of smaller problems leaving Xbox consumers feeling second-rate. It's true that Xbox fans have been built up and let down so many times, repeatedly, in recent years. Microsoft can't afford to keep alienating its existing fans while it chases new ones with half-finished efforts like Xbox Cloud Gaming (beta) and PC Game Pass, which face strong competitors of their own.
Xbox Game Studios' first-party has expanded massively through acquisitions, has the management layer overseeing this stuff expanded to accommodate? I have no idea, but the evidence we have isn't exactly encouraging. Nobody at Microsoft seemed to be aware that 343i didn't have a live service plan for Halo Infinite, which was developed to be a live service game. It's hard to see how the franchise, which Spencer previously described as critical to Xbox, has a future. Why would I use Xbox Cloud Gaming in a handheld over something native like the Nintendo Switch? Why would I use PC Game Pass when the app doesn't even work half the time, with its shriveled library of games — many of which are abandonware that never gets updated — over Steam? Even Microsoft itself has stopped updating UWP versions of its own PC games. What right does it have to ask others to believe in its PC Game Pass efforts?
In summary, the strategy of expanding to other platforms makes complete and total sense. It's even desirable, but it shouldn't come at the cost of what is already there. It's exciting seeing the glimpses of how this could work in the future — syncing my save from The Long Dark between my Xbox and hackjob Windows Steam Deck is awesome. But, you know, it shouldn't have to be a hackjob. I shouldn't have to become a network engineer to figure out how to get the most out of Xbox Cloud Gaming. And I shouldn't install first-party games from PC Game Pass to find them broken and unplayable vs. the polished, enhanced, moddable Steam versions. All of these things require developer bandwidth to resolve, and it comes at a co