Xbox's Strategy Just Doesn’t Seem Coherent And It’s Worrying
When I used to learn Business Studies I learnt about the value of businesses communicating their strategy effectively to consumers so they can buy into the vision and create a long-term relationship with an organisation which leads to repeat purchases. After all, retaining a customer is significantly cheaper than acquiring a new one. Sadly it seems like Microsoft has forgotten this but perhaps it's because they aren't entirely clear on the vision themselves internally. Things like this often happen when there is either poor communication internally or a confusing strategy.
When MS announced their Xbox Game Pass strategy I thought they were onto a winner. Cloud technology something which Microsoft are successful at across their business combined with gaming made me legitimately think that Microsoft was playing the long game now. I thought they realised they couldn't beat Sony and Nintendo in the traditional sense so they were pivoting to make themselves the main player from a services perspective for gamers and developers. Phil Spencer admitted in an interview with Kinda Funny that the previous generation was the worst one to lose as people have now built their digital libraries and it’s hard yet understandable that people don’t want to tear themselves away from that ecosystem when they have invested so much cash into it already.
With Azure, Microsoft could put some great tools to make game development easier and potentially make their tech irresistible to use. In the future gaming will inevitably be completely in the Cloud. I thought Game Pass was Microsoft’s way of signalling, preparing for what might one day be referred to as the “Cloud War” instead of Console War. I thought Xbox was showing they are ready for the next transitional period where people would be willing to switch ecosystems again.
Xbox has made their intention known that they want Game Pass playable on any screen already. A Cloud War is one they could thrive in easily because they would have first mover advantage and the money to develop the infrastructure faster and better than others sort of like how Xbox Live/Core is often deemed as the best infrastructure for playing games online. Xbox seemed to be thinking that by getting people used to the subscription nature now, they are prepped for when Game Pass equivalents are just the norm.
The pricing of Game Pass as well is very attractive. Xbox has done the numbers to realise most people only buy a handful of games in a year so instead of focusing on individual titles doing well, they pivoted to a subscription price that would be attractive and in turn, spend more in their ecosystem than just those handful of games. I have some criticisms of the service sure because nothing is perfect but I love it and am extremely content with its current offerings.
Recently however, it was announced that Xbox is closing down three studios which are Tango Gameworks (Evil Within, Ghostwire Tokyo and Hi-Fi Rush), Arkane Austin (Prey) as well Alpha Dog (mobile games). A lot of these studios' games have been received well. Microsoft themselves have said on record they need games to be critical darlings and award-winning to draw people to play them on Game Pass which those studios had produced but now they have been shuttered. This was something they then reiterated after announcing the closure of the studios. This is a fundamental miscommunication of their strategy both internally and externally. Does Xbox want critically acclaimed smaller titles on their service or not?
And so it leads me to have a simple question but one with a complex answer. What is Xbox's strategy? I don't understand why they closed studios that were delivering things they claim they still need for Game Pass to be a success. They have so many talented studios with huge IPs under their belt but it's clear from their communications their strategy is incoherent at the moment and that's not a great place for them to be.
I understand why they are adopting a multiplatform strategy as the traditional gaming market isn't growing particularly so they are looking to make money off other platforms but even that hasn't been communicated clearly in my opinion. Sony’s PC strategy is more clear (although still a mess). Their games will come to their console first and eventually make their way to PC. Xbox seems to be doing the same but hasn't been explicit enough about it and it's worrying because they could lose their identity if they aren't careful.
The lack of a clearly communicated strategy is alarming, it's been many years now. I want Xbox to thrive in the industry because there needs to be more competition. I don't think it will happen and definitely not anytime soon but if Microsoft doesn't clarify their strategy internally quickly and then in turn communicate it correctly to us, the consumers quickly then we have a big problem in the industry where capitalism could mean the Xbox division closes down in an extreme response. Xbox isn't that big of a division at Microsoft after all and if they close/sell everything up so much talent could exit game development and never return which means the industry can't improve and so much valuable IP could be lost after they had gone on their shopping spree recently.
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