A few years ago, when Microsoft was buying studios left and right, and even got into an epic legal battle with Sony over the Activision (Call of Duty) buyout. Many wondered if the software giant would use its considerable (if not nearly infinite) financial reserves to match, and eventually choke Sony out of the hardware business over the course of a few decades.
It made sense.
Unlike Sony and Nintendo, Microsoft could afford to take multibillion dollar loses on these purchases while playing the long game against its main rivals (namely Sony). In a true war of attrition Microsoft would eventually win. If you don’t believe this just google Sony’s downright paranoid documents (unveiled on the Activision legal case) about losing the Call of Duty franchise on its platform.
Sony would go as far as saying that no other publisher could compete with Call of Duty’s influence in a desperate effort to block Microsoft’s acquisition of Activision.
The PlayStation brand, since 2013, has been dominating Xbox left and right in hardware and first party software sales, but Sony’s executives  feared that if Microsoft was willing to bleed billions in order to win out the console wars…Xbox’s parent company could have surely accomplished this goal.
But…
Multi-trillion dollar companies ($3.08 trillion) – like Microsoft – don’t become trillion dollar companies by bleeding out billions over a sustained period of time. Microsoft executives are not into the historical nature of “console wars”, or into games at all. They see the Xbox brand as an asset. An asset that can lose or make money given its direction. Thus, Microsoft (despite the fact that it can) was not willing to bleed billions in order to ‘stick it’ to Sony.
Microsoft wants to see a return on their studio shopping spree investment…now. Thus, Phil Spencer and the Xbox team, changed tunes from from previously promising to keep Redfall, Starfield, and Indiana Jones on Xbox/PC exclusively, to earlier this year announcing four of its exclusive titles on rival platforms, and an apparent Multiplatform strategy.
Many of these games such as Sea of Thieves, and Grounded were not necessarily stalwarts. Early on, it appeared Microsoft was giving Sony its leftovers…but now with Indiana Jones and The Great Circle, and Doom: The Dark Ages being announced for PS5 2025 target releases. Potential AAA Xbox system sellers will now appear on the rival platform – albeit months later than they will on Xbox Series consoles.
Which begs the question: Is Xbox going the way of Sega?
What is the point of owning an Xbox if its best exclusive games appear on the PS5 as well? Series X currently holds a hardware power advantage over the PS5, but the advantage has been minimal to say the least. Some games even perform better on the PS5 due to the fact that developers spend more resources on the platform with the largest amount of players (60 million PS5s to 29 Million Xbox Series consoles).
Add to that some games such as Baldur’s Gate 3, and apparently, Black Myth: Wukong have suffered delays because developers are having struggles cramming these next generation experiences into the budget conscious conceived Xbox Series S. Effectively, handicapping its powerhouse of a big brother even further.
The games that have made an appearance on the PlayStation 5 have sold well. This is the reason why suddenly Xbox AAA titles are making their way to Sony’s platform. Game making is expensive (in some cases more expensive than Hollywood blockbuster films) these days, and Microsoft is finally seeing a suitable return on its properties. On the other side, it has become apparent that the Xbox Hardware division is losing Microsoft money.
So the question becomes: When does the Xbox hardware side of things ceases to exist?
Unlike Sega at the turn of the millennium, Microsoft can infinitely sustain its hardware business, but the company’s executives have made it clear that they want money, not the loss of it. All signs point to there being a ‘next’ Xbox in the works. After all, Game Pass remains confined to it and to the PC. No known moves have been made to take that considerable investment within the Xbox brand to the Sony ecosystem, but at this point…it is not a farfetched thing.
In fact, I am sure Microsoft has considered it, but Sony not wanting to have the app on its console could be the biggest hurdle to overcome. Microsoft strikes multi-million dollar deals with third parties to have their games on the app. These deals are not cheap, but these 3rd parties are willing to compromise due to the fact that the Xbox Series of consoles does not have a huge installed base, and perhaps this way they get a return on their investment on the platform.
If Microsoft takes the app to Sony, those royalties, and deals would sky rocket in price for the software giant because those 3rd party publishers will lose out on sales on the platform with the largest installed base of users available to them. Sony itself, would have to sweeten its own PS Plus service which would cause the company losses on its own expensive first party titles .
As long as Microsoft remains committed to growing Game Pass (and Sony doesn’t allow the app on its eco system) it is likely that a hardware box will be needed. This, right now, is the only reason I think Xbox, as a hardware power, will continue to exist in the near future.
Should Sony’s Faithful Celebrate?
Well, it looks like the PlayStation (along with Nintendo) has won the hardware wars. Sony and PlayStation will continue to exist unabated. However, anytime a major hardware maker exits the market it reduces competition. The PlayStation 5, and the Series X, are sold at a loss today because the machines are priced aggressively against one another. This benefits costumers. Both hardware makers deliver the best tech that they can at ridiculously low price at launch because they want to get the upper hand over one another.
If Microsoft were to decide to end the Xbox brand as a hardware maker, nothing really stops Sony from making a box that is more powerful than whatever Nintendo has on the market (not a hard thing to do), but also to price it how it sees fit. Sony would have no major competitor aside from the PC space, and the gamers there are not necessarily the target market that console makers aim at.
So, the trend of aggressive leaps in tech with each console generation at affordable prices would be in danger of extinction if Xbox the console were to disappear at some point over the next decade. In that case, even Sony’s fanboys lose.
The only winners here would be PC gamers, as they have no horse in the race, and they already get some of Sony’s biggest hits (albeit years later) on their machines. It could be argued that the removal of the Xbox console from the market would give PC games a larger share of resources from developers.
If the Trend of Microsoft AAA Titles Going to PS Consoles Continues…Why Should You Buy the Next Xbox, or Even a Current Series Console?
Here is the catch 22 situation for Xbox (the hardware maker). If Halo, Gears, Forza, the Next Elder Scrolls, etc. Go to PlayStation consoles the incentive to buy an Xbox machine suddenly drops to near zero…unless some gamers can’t live without GamePass. Don Mattrick set the Xbox Hardware business into a path of ruin because of the shift away from a focus on games and exclusives which handed Sony the reigns of the PS4/Xbox One generation, and that dominance has spilled into today’s debacle for the brand.
In truth, some of Mattrick’s more preposterous ideas such as DRM, an always online console, and Digital Games overtaking the market have been at play at Xbox for a while now. A lot of discs now just hold a key for you download the game on your console. It is clear that Microsoft has been ditching the physical and embracing the digital for awhile.
But that’s a topic for another day.
Without exclusives, there is no incentive to buy an Xbox. A $500+ machine is a considerable investment…why not buy the one that has ALL of the games, including exclusives that can’t be played on the other one (Xbox). If Microsoft intends to continue the proliferation of Xbox “exclusives” on PlayStation that is a tell tale sign that their hardware business will eventually come to an end.
I cannot see how Xbox can sell hardware in the numbers that they currently have (numbers that are losing them money) when the PS6 rolls around. A large chunk of its 30 million installed base of users will move to Sony’s greener pastures the next time around. Which would basically make the hardware division unsustainable under the expectations of MS’ executive branch.
Unless, MS steals a page from Nintendo, and delivers a super powerful (which would be expensive) portable machine capable of playing cutting edge games, I wouldn’t see the appeal to buy an Xbox anymore.
Keep in mind, that I say this as a long time (since 2001) Xbox fan and owner. Given the announcements of a Multiplatform strategy by the company, and rumors that it wants to become the number one game publisher in the world, as opposed to the console ‘king’…I don’t know how they can attract more consumers to the current Series X/S consoles.
Am I on Panic Mode Right Now?
No, I also own a PS5. But I am fan of the Console Wars. Despite many saying that console wars are ‘childish’ and ‘silly’. Competition is good and healthy for the industry and its consumers. I fear for a future without Xbox having a physical box.
In truth, this one wouldn’t hurt as much as Sega’s departure from the hardware business. Without exclusives, the Xbox Series X, and the PS5 are basically interchangeable machines. The tradition of custom chipsets and unique hardware for consoles died with the PS3 more than a decade ago.
Microsoft can keep making Xbox consoles while losing money eternally, and the company will continue to be much richer than Sony and Nintendo combined. However, if this was Microsoft’s focus (an eventual win in the hardware space) it would have never shifted its focus to becoming a 3rd party publisher. So yes, I do think the Xbox days (or years) are numbered as a hardware maker, and that does make me fearful.
Agree with the author? Couldn’t disagree more and are frothing at the mouth to tell him? Leave a comment here, on Facebook or send an email and make sure to follow Never Ending Realm on Facebook, Twitter, and YouTube!