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How it started
Microsoft closed out Summer Game Fest with a bang. The company’s annual June showcase was packed with crowd-pleasers: Halo, Gears of War, Fable, a translucent Xbox, and even some pleasant surprises like new Persona and Crazy Taxi games. It was the kind of event that harkened back to the boisterous days of E3, when the industry was in a healthier place and game reveals were cultural events.
It was also a sham.
Just three days after the showcase, new Xbox CEO Asha Sharma warned of a “reset” at Microsoft’s gaming division, which would require “making hard choices.” The weeks that followed were filled with reports of impending layoffs, studio closures, and game cancellations. Ninja Theory is reportedly one of the studios on the chopping block, despite having just revealed a new game at SGF. If all this comes to pass, Xbox will be a shell of its former self.
After muscling its way into the console space nearly 25 years ago, Microsoft’s gaming division is at its lowest point ever. And the fallout from some disastrous decisions is going to get very ugly in the coming weeks and months.
It wasn’t always this way. With the arrival of the original Xbox in 2001, Microsoft seemed poised to be a viable contender in the space, with all of its resources helping it play catch-up with the likes of Sony and Nintendo. Major exclusives like Halo and a prescient foray into online play through Xbox Live helped to solidify this position for a time. But Microsoft flubbed the launch of the Xbox One in 2013 with an ill-fated push into non-gaming features like TV, and the brand has never really recovered. With the oft-confusing Xbox Series X / S generation, the company only fell further behind.
There are many reasons for this, but arguably the most damning was Microsoft’s extremely expensive push into subscription services. On paper it made some sense: Streaming services like Netflix were upending the film and TV landscape, so maybe the same could happen for gaming. Microsoft made some absolutely gigantic bets on this unproven future, spending billions of dollars to acquire studios and publishers in an attempt to build out a large library of content for Game Pass that would lure subscribers.
And while Game Pass proved popular initially, it ultimately plateaued, which meant that Microsoft spent all of that money on a business that didn’t grow anywhere near as large as it expected. (The service currently has around 30 million subscribers, while Microsoft had hoped to hit 100 million by 2030.) This misguided play also coincided with the “This is an Xbox” marketing campaign, which suggested that Xbox wasn’t a single console but rather a suite of Game Pass-capable devices, leading to even more confusion around the brand.
How it’s going
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