We’ve had plenty to say about Microsoft throughout the years, especially concerning Xbox’s strategies (or lack thereof). Bad decision-making, layoffs, cancelled projects, questionable directions – the House of X has done it all, but that shouldn’t be anything new for a massive corporation, right? Even Sony has had its share of missteps (we don’t talk about August 23rd, 2024).
But there’s a world of difference between the two, and in hindsight, it’s surprising to see how Xbox got to this point, where even the new CEO stepped back and decided it was better to announce a reset.
Confused, especially after its latest showcase? It’s understandable. After all, we saw a barrage of upcoming games, several from first-party studios with actual gameplay and even a few release windows. Gears of War: E-Day looks fantastic, especially throughout its extensive Direct. Clockwork Revolution‘s role-playing potential could have been better showcased, in my opinion, but it still looks quite fun. Spyro is back, Minecraft Dungeons is getting a sequel…even Fable, Senua and State of Decay 3 look intriguing. After all, Xbox console exclusives were back, just like several hardcore fans wanted, even if the messaging around it is more confusing than Cortana’s lore at this point.
But, once the party died down, Xbox faced the proverbial morning after. And with it, CEO Asha Sharma admitted some rather harsh truths about the number two games publisher (her words, not mine) in the world.
An accountability margin of about 3 percent with over $20 billion in investments over the last five years (not including Activision Blizzard), only to a loss of almost $500 million in annual revenue. Storage component prices have increased several times, which will hit Xbox consoles harder than the competition due to “choices we made over the last half decade” (read: Poor preparation). Not “adequately” funding so-called “industry-defining franchises” with “enormous potential and player demand”, and perhaps most importantly, an infrastructure that’s woefully unprepared for what’s to come.
"Even Fable, Senua and State of Decay 3 look intriguing."
A big step down from all the bravado of the last few months, and it’s become quite obvious that the “plan is the plan until it isn’t the plan” isn’t as practical as one would think. And that’s not even considering reports where Xbox’s biggest successes – The Elder Scrolls 4: Oblivion Remastered, Forza Horizon, Sea of Thieves, Flight Simulator, etc. – have had to make up for numerous disappointments. Avowed, Keeper, South of Midnight, Hellblade 2, Forza Motorsport, The Outer Worlds 2, Minecraft Legends, Bleeding Edge – the list goes on and on, and Everwild and Perfect Dark not panning out didn’t help either.
So what does this mean for the imminent future? Why, what it always means at a massive corporation – layoffs. Microsoft hasn’t confirmed this, but reports are already coming in that it will allegedly lay off 1,000 employees after June 30th. That may also include a studio closure and changes to its Xbox Game Studios lineup, which could mean anything from certain teams becoming support-focused to merging with others and existing in all but name. Keep in mind that all of this comes after several leadership changes since Sharma took over.
That’s not all, however, as Microsoft may restructure Xbox entirely. As The Information reports, some options apparently include spinning it out as a subsidiary. Why? Well, because then it could be acquired by someone else. A joint venture could also happen, not unlike Vantage Studios, which has investment from Tencent and is in charge of Assassin’s Creed, Far Cry and Rainbow Six. Granted, there have been layoffs, cancellations, and more than a few rumors of development hell for some projects, but hey, Assassin’s Creed Black Flag Resynced doesn’t look half bad.
And that may be exactly what Xbox meant by meeting “demand” for its “industry-defining franchises,” because it reportedly wants to develop new Fallout, Halo and Elder Scrolls titles at a faster pace. Fallout is obvious after the TV show’s success, and it feels like Microsoft has been leaving money on the table by not capitalizing on it as we head into the third season. Halo is interesting because after numerous disappointments, you would think it’d be far more hesitant. Then again, it’s probably seeing higher-than-average demand for Halo: Campaign Evolved. Maybe it expects far greater returns, hence the rumors of Halo 2 and 3 getting remakes. So expect those to be out even sooner than expected if all goes according to plan.
And as for The Elder Scrolls…well, when you’re sitting on such a huge money-maker such as this, and Bethesda still doesn’t have a release date for its sixth mainline game, eight years after its reveal? Especially with how successful Oblivion Remastered ended up being, never mind how quickly it was abandoned? I would demand something tangible sooner as well.
"It’s probably seeing higher-than-average demand for Halo: Campaign Evolved."
Then again, none of these restructuring plans is exactly imminent. For the time being, Xbox will continue hyping the current roster of titles for the coming months, specifically Gears of War: E-Day, as much as possible. With a reported budget of more than $400 million, it very well should, especially with the company already bracing to potentially sell fewer copies due to not launching on PlayStation. And while it shouldn’t have trouble breaking even, Xbox by its own admission is “currently unable to make as many consoles as players want to buy.” The idea is probably to cater to its existing player base, and really, it’s anyone’s guess if that will turn out well, especially if they can play it on Game Pass at a vastly lower cost.
But for all the hope one may have that Xbox escapes this snafu, look no further than CEO Satya Nadella’s recent statement. “We’ve invested a lot. No one can accuse Microsoft of not having invested for the last 25 years. And now we have to turn this into a sustainable business that delivers what is fundamentally one of the best sources of entertainment.”
And that’s true – no one is saying the company isn’t investing enough money into its gaming division. However, just like with the original Xbox when it debuted back in the day, it’s not just about money. Franchises like Halo and Gears of War have either been treated poorly or left by the side; failures like Redfall simply launched without any oversight; and even when presented with golden opportunities, it feels like Xbox squanders them more often than not (see: Hi-Fi Rush). Saying you’ve put enough money into something is one thing, but when one of your goals is to make it a “sustainable business,” that only tells me that you’ve failed to do so in the last quarter century.
I’d hate to say it’s all doom and gloom and there’s no saving Xbox, but next month is seemingly all about layoffs and “trimming the fat” as the higher-ups may perceive it. The next year could come down to the apparently last-minute decision to pivot to console exclusives. And beyond that, Microsoft could throw up their hands and make it someone else’s problem while it bemoans memory shortages and rising costs, all while spending billions on AI, the biggest reason for the same.
Xbox may still live to fight another day, but even its most ardent admirers can’t tell you in what shape and form.
Note: The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, GamingBolt as an organization.