Why Buy an Xbox?

The Xbox brand is in a precarious position. The head of Xbox, Phil Spencer, has gone on record stating that no first-party game is off the table for release on their competitor’s consoles.^[1] If Microsoft plans on making its games available on platforms, what differentiates the Xbox from its competitors? Xbox already holds significantly less marketshare when compared to consoles from Sony and Nintendo.^[2] With so much uncertainty surrounding the brand, it raises the question:

Why the hell should I buy an Xbox?

For years, Microsoft has been promising that their first-party studios are going to be releasing games. A new Fable and Perfect Dark. More than one Halo game every six years. The Elder Scrolls VI. All have yet to materialize. I’ve stated this before, but every year it rings truer and truer. And when games are finally released, they are middling at best: Avowed, Starfield, and Forza Motorsport specifically come to mind. Compared to the deluge of quality exclusives pouring out from Sony and Nintendo, Microsoft’s output is almost pitiful.

Sure Microsoft’s multi-platform games are usually released years after the initial Xbox and PC release. But Sony has been releasing first-party games on PC around 18 months after their console debut, and it’s not like PS5 owners have a lack of quality games to play.

But this multi-platform strategy isn’t new to Microsoft. Minecraft has been released on every platform under the sun. Sea of Thieves, a live-service game, has been ported to PlayStation 5. The Ori series of games are playable on the Nintendo Switch. And with Phil Spencer’s comments that there are “no red lines”^[3] when it comes to first-party multi-platform releases, it starts to make sense when high-profile console exclusives like Forza Horizon 5 are announced for the PS5.

Now, platform exclusivity is a double-edged sword. They drive consumers to the specific platform, because it is the only place where certain games can be played. Historically, killer apps like Space Invaders for the Atari 2600 and Halo: Combat Evolved for the original Xbox helped drive their respective console’s sales. However, locking games to a single platform limits how many people are able to experience the game. As game engines like Godot, Unity, and Unreal have become more readily available and used by developers, it’s become easier to publish games across a variety of platforms.

I’m actually a fan of Microsoft’s approach—at least in theory. I believe that consoles should compete on their hardware and the services they provide, not on what games happen to be available on a specific console. Microsoft has been launching games on Xbox and PC simultaneously, and this makes total sense to me; the PC and console markets are different enough that releasing games on both platforms makes logical and financial sense.

Microsoft attempts to differentiate themselves from their competitors through Xbox Game Pass, whose premise is similar to video streaming services like Netflix and Hulu; for a subscription fee, a rotating collection of games are provided that the player can either stream or download to their console.

Microsoft also aims to release first-party games on the service when they launch, providing an incentive to subscribe. Why pay $70 to play the new Halo or Gears game when for $15 a month, you can play those and hundreds of other games whenever you’d like? And for $20 a month, you can get access to Game Pass Ultimate, giving you access to games on PC, and a suite of games from Electronic Arts with the included EA Access subscription. All this sounds like an enticing proposition to pull people over to Microsoft hardware. What’s not to love?

While having hundreds of games available to play at a moment’s notice is alluring, the reality is that the vast majority of people will only be interested in a small selection of games available. In fact, most will only be able to play a small fraction of those games, and it ends up being a better deal to purchase the individual games you’re interested in playing.

The real kicker though, is that the offerings on Game Pass aren’t all that great.

People will have their opinions on major first-party games like Starfield and Halo Infinite (I quite like the former), but these are the types of games that have the potential to drive people to a console. Starfield itself drove up the sales of the Xbox Series X by a staggering 1000% on Amazon alone.^[4] But unlike their competitors, Microsoft doesn’t have enough of these kinds of games in both quantity and quality to sustain sales momentum. Why would you invest in an Xbox when Microsoft isn’t even investing in it themselves?

And look at Microsoft’s competitors. Nintendo has a whole treasure trove of franchises that cater to everyone. And while not as rich and diverse as Nintendo’s library, Sony invests in a lot of first-party studios for games like God of War Ragnarök, Astro Bot, and Ghost of Tsushima. Even third-party games like Infinity Nikki, Final Fantasy VII Rebirth, and Street Fighter VI release first on consoles for the PS5, and often stay exclusive on the console for years. Sony even has their own competitor to Game Pass with Playstation Plus Premium, which I’d argue has an even greater breadth and depth in offerings than Game Pass.

In and of itself, there’s nothing wrong with Microsoft aiming to make Game Pass the Xbox’s main differentiator, rather than exclusive games. Valve does this with Steam and their Steam Deck hardware. But the Steam Deck presents a unique proposition: the ability to play thousands of PC games on the go, in an efficient handheld that just works. Game Pass is just another subscription service without compelling games to make it worth subscribing to. The proposition of “Netflix for games” falls apart when the hundreds of games available aren’t all that interesting.

Furthermore, platform owners are incentivized to create games that can only be played on their platform to bring consumers in. Along with deals for temporary exclusivity, gamers will choose the platform with both a greater variety of games. More specifically, a greater variety of unique games. Because lots of people are on a specific platform, third-party developers are likely to target that console. This results in a positive feedback loop that eventually establishes a network effect; because the console is well supported, there are more people playing all types of games, which means that your friends are more likely to own the particular console.

In an era where live service and multiplayer games dominate the industry, this is more important than ever. Yes, cross-play between platforms does exist for a lot of popular titles such as Fortnite and Call of Duty: Warzone, but the ease of being able to leverage a universal Friend List and know that there will be minimal friction in playing online cannot be overstated.

I don’t see a future in Xbox being just a hardware platform. Yes, Microsoft plans to release new consoles in the future.^[5] You’ll be able to buy whatever form Xbox consoles take on in the future. Game Pass will likely stay exclusive on Xbox consoles. And the integration with Microsoft’s services and network will make their platform the easiest and “best” way to play their games (similar to how Apple makes their software the easiest and best to use across their macOS and iOS platforms). Instead, one can view Microsoft’s approach as something that has become increasingly common in the software development industry—a service model.

The name Xbox as a Service (XaaS) better encompasses Microsoft’s vision for gaming.

The Xbox network service (formally known as Xbox Live), while not the killer feature it once was, is deeply integrated into the Xbox experience. Microsoft is very, very good at ensuring backwards compatibility with their legacy platforms and services.^[6] There's no reason to believe that Microsoft is going to eliminate decades of game purchases, and break apart the community that has been built up on Xbox.

Xbox Cloud Gaming is another service that will likely become a key part of Xbox’s identity. Microsoft has a vision of having their Xbox service everywhere, be it a home console, PC, the TV, or mobile devices. They don’t care where you play your games, as long as you’re playing games on their platforms and services. You’re not required to buy a $300 or $500 device just to play a handful of games. All you have to do is connect to the service, and you can play from a large catalogue of games that encompasses both Game Pass, and games you’ve bought through the Xbox store. Any way you play, they get your money all the same.

But this is an idealized vision of what Microsoft hopes the Xbox can become. If you look at the here and now, these advantages aren’t fully realized. The Series X isn’t the most powerful console on the market anymore—the PS5 Pro is. Assuming that more first-party games make their way to that platform, an Xbox won’t even be the best way to play their own games (and one could argue that is even true today). That’s right, the best way to play games from Xbox’s premier studios are on their main competitor’s platform. This again raises the question I posed at the beginning:

Why the hell should I buy an Xbox?

For Xbox to have a future where players can play their games on any device, on any range of platforms that fits their needs, Microsoft must first provide a service that can stand on its own and provide something that no one else can. Most importantly, this Xbox as a Service strategy has to be worth people’s limited time, attention, and money. And right now, Xbox is fighting an uphill battle to prove its worth.