A lot of the strategy you outlined -- buying all these studios, replicating netflix, giving away day one games, raising game pass -- was a strategy put in place by Phil Spencer. Phil pushed for this investment with the promise it would pay off later for MS. He's talked publicly about having to convince Nadella to put up ungodly amounts of cash for these investments and about how the bar for expected return was very very high. It seems like it clearly hasn't worked out to Microsoft's expectations or they've lost patience for waiting, and Phil has now "retired to spend more time with his family" (i.e. been fired).

Now Asha is here and presumably has a mandate to fix this and get back the profit margins that were expected from xbox. Sarah Bond, the xbox president, has resigned, and with this letter it seems the previous Xbox COO is out too. There is clearly a huge shift in Xbox leadership happening and it shouldn't be surprising that Asha -- who is known as a business-driven executive and not a 'gamer' -- is going to be reverting a lot of previous strategy decisions.

My 2c is that Phil's strategy made sense on paper, but I don't think they were able to manage this many studios in practice: nearly all the studios they bought have failed to produce the number of games expected on time or on budget. It also turned out that overly cheap gamepass would cannibalize their business and overly expensive gamepass turned away subscribers. I think the netflix model isn't something you can speedrun and execution of it turned out to be very hard and expensive. Maybe it would've worked out with more time but it seems MS didn't think so anymore.

But then she did some minor, pandering actions and suddenly everyone was "oh boy! A new era of xbox!" Only it was all a ruse to ensure people didn't jump ship too quickly and make the bleeding too heavy. They want people to keep pumping money into a platform heading to the graveyard.

> We can't afford it, and it's a bad investment anyway

Spencer's strategy for Xbox was very 2010 coded: rely on the billion/trillion dollar company to undercut the competition and gather market share and leverage. Classic embrace, extend, extinguish. That's why they bought a bunch of arthouse studios who don't immediately make money, invested hard in a subscription service that was wildly unprofitable (a strategy that even TV services couldn't make profitable, mind you), and focus on moving software more than hardware.

That strategy shifted dramatically between rising interest rates, a cooling consumer market, business uncertainties, and companies simply wanted to throw any excess fat into the AI rat race. So those art house studios were removed, Gamepass needs to enshittify pre-maturely,production needs to slow from a variety of offerings to the usual safe and sure releases. And of course, the biggest expense needs to be trimmed down on: because no one is stopping them from doing it in the US.

The number will still go up, but in different ways. They aren't doing this because they are in the red, they are doing it because they want all the money instead of a lot of it.

https://www.bloomberg.com/news/articles/2025-10-23/microsoft...

A company that sells consoles complaining about not having enough games after 25 years in business and acquiring most popular game studios is hilarious.

They keep cutting game studios, killing games and then set ambitious profit margins. At some point you have to question, do the people in charge understand their own business at all?

They just gutted bungee and basically killed Destiny 2, not because the game won’t sell, but because it won’t generate the profits they unrealistically set.

With the money being spent on AAA titles these days, they are not going to make any money without increasing the price of Game Pass majorly. The big price bump they quickly backtracked on was an attempt to make Game Pass somewhere closer to being profitable.

> So first of all, they are big! Secondly they are not at a loss. They just have a "thin, non-growing margin". So to fix all this they are trimming down, so they can "return to growth" (which I think is ridiculous).

How is that profit margin distributed though? King (Candy Crush etc) and Mojang (Minecraft) are specifically called out as money-makers, it's possible that they're carrying the majority of profits while everything else is a dud:

> We have also learned that we are not the best home for every type of studio; in a typical year, we lost 64 cents for every dollar we invested.

As an example, Double Fine (one of the studios being chopped) has released 2 games since 2021, Keeper (191 peak player count on steam) and Kiln (163 peak players); these would be flops even for a normal indie game, for a studio getting Microsoft salaries those are enormous flops.

You go when we tell you to go! Not before!

14 layers of management :-P

Not only that, but RAM/GPU/SSD prices going up so much recently (which is especially jarring for SSDs, which for like a decade had been getting more affordable; I bought a 120 GB SATA SSD in 2012 for around $100, and I was able to buy a 1 TB m.2 one for around the same price a few years ago) is starting to equalize pricing for PC gaming. In 2022, the initial Steam Deck launched for just $400, and it continued to be offered at that price for a few years, which made it cheaper than the Switch 2 launch price.

I feel like if I were a console manufacturer, I would be trying to figure out a way to take advantage of that. Other than price (previously), the other obvious selling point of PC gaming is more control over your system, so there could be an opening to try to lure away wayward PC gamers with some changes that give them a bit more control on the console. I agree with you that I can't really imagine Microsoft doing this though.

The rebrand to ‘XBOX’ is a good example of how they’re already out of ideas

I haven't bought a console since the Xbox360 and Wii. But I have a friend who still games pretty heavily and is low income. He can not afford the latest PS5 and is still on a PS4. We were talking the other day and he said "I love consoles because they are simpler and cheaper than a PC but now I can't afford either. The graphics aren't getting much better so what am I paying for? What happened to $400-$500 consoles? Remember when consoles were 200-300?" Of course those last few prices were 90/00's but I agree, the cost of a new console is quite insane for not much gain.

And even then, already the PS4/XbOne generation added stratification making it more "PC-like" with the XbOne-X having heftier hardware (not to mention it being PC-like compared to PS1/PS2/PS3/Xbox360), that then continued with the Xbox-series-X and Xbox-series-S.

Consoles aren't specialized hardware for "magic experiences" and everyone knows this, it's just another "device" that happens to be connected to a TV with a controller where people are gatekeeping software availability.

The graphics can only carry you so far. There's indy adventure games with SNES level graphics that have millions of daily users.

Nintendo also shipped Metroid Prime 4, with massive delays and unsatisfied customers, following the same "interactive Hollywood" philosophy which disappointed Metroid fans.

Same thing goes for Star Fox, a remake of a remake of a remake, with poor visual and dialogue choices.

And meanwhile, the same silent push for digital-only, forced upgrades and the like...

Also one must consider the likes of Hideo Kojima who can sell ~7 million copies of a new IP that is effectively a cinematic Walking Simulator as an Auteur acrimoniously splitting from the traditional studio system.

Clair Obscur: Expedition 33 also shipped over 5.4 million copies as a AA, in what is also arguably an interactive cinematic on-rails RPG.

She has done everything but focus on delivering games (product).

But they've already spent the money. They spent about 70 billion on activision blizzard. That was and still is an outrageous amount of money that will take fever to break even let alone turn a profit.

I doubt that they will go back to where Sony are now.

> Compulsion Games and Double Fine Productions will return to management and transition to independent studios with their IP, catalog, and runway for their next games. Ninja Theory and Undead Labs have entered terms to join new ownership with funding to complete and grow Senua and State of Decay 3. In France, Arkane’s management is beginning required consultation with its Works Council to review potential strategic options.

If anything, it should be easier to make cool new features when you own the hardware side of the platform experience too, but no, it's Steam that has stuff like remote play together, not PSN or Xbox.

Gamepass is quite literally the most anti-steam strategy ever. It's a massive loss leading (or rather, low margin leading) service relying on a pseudo-rental service to provide value. Steam got to where it is by keeping all its costs lean and developing a service around taking a cut from premium digital goods.

>From other child comments many studios they bought probably were below average.

In revenue, maybe. That's the fault of Microsoft in two fronts. One for purchasing game studios who always operated at low margins, and two for directing them to focus on quality over budget. Double Fine and Ninja Theory aren't studios you buy with an expectation of 30% ROI in 6 years (ignoring the pandemic in the middle of that). Let alone when you explicitly tell them not to worry about finances.

On an artistic level, Hellblade was an insutry darling and about as close as you can get to an "oscar-bait" of a game. It's something you buy for prestige. Double Fine is a very seasoned indie studio who delivered several cult classics. You buy that for a brand that gives you variety from the current "online FPS juggernaut". Those strategies changed dramatically over the decade.

Absolutely drop-dead gorgeous but I don't think I am going to ever finish it until I get a Deck 3/4 in like 5-7 years.

Two years ago, you could get an XBOX/Switch for 300, or a PS/Steam Deck for 400. Granted, the PS and XBOX were digital only. But now the cheapest XBOX is 500, the Switch 2 will soon also be 500, the PS5 starts at 600, and the Steam Deck is 789. Things have been going up slowly, but the last year has been absolutely killer.

I mean, if you're assuming that Microsoft had a fully hands-off approach to managing these companies after buying them, then sure. It's not clear to me that you can make a compelling claim about whether the issues were from the bottom or the top just by looking at the final outputs.

Now, I think the vast majority of the pain is more than self-inflicted... I think actual business, marketing and focus need to start taking priority over idealistic political PoV. Let the games target their natural audiences and have the broadest appeal... at a certain point, trying to gain 1% of audience means alienating 25% or more.

The way things interact in the game world peaked around mid 2000s, just in time when CPUs started to not follow moors law.

As of now, interactive environments are still almost as good as half life 2 from 2004. Gaming is all about the feel of it, which also includes the visual component.

But Star Fox? Phenomenal. Such a fun game. Luckily I have the pro controller so I could map A to the back paddle or else my poor old tendons couldn’t handle the rapid fire shooting required at the high levels, but I’ve had an absolute BLAST playing the remake.

Neither of your examples fit that description. Metroid Prime 4 wasn't chasing Hollywood cinematic design; it was a highly targeted attempt by producer Kensuke Tanabe to make a tight, isolated first-person exploration formula resonate (especially in Japan where it has consistently failed). Its goals are mechanical, not cinematic. Meanwhile, Star Fox is a classic arcade rail-shooter remake with modernized cutscenes, not a prestige movie-game. Early sales data shows it's actually working well, too, having just debuted at #1 on the physical charts in Japan and nearly doubling Star Fox Zero's launch week in the UK.

Ultimately, Nintendo operates like a Consumer Packaged Goods company. They treat their library of IPs like a diversified product portfolio rather than betting the farm on individual interactive movies. They use massive, high-margin, mechanics-first games like Tomodachi Life and Pokopia to generate enormous cash reserves. They then use those profits to subsidize legacy IPs like Metroid or Star Fox to keep core fans happy and feed their broader brand ecosystem. Because Nintendo spreads its risk across a wide spectrum of lower-budget games, they can easily absorb a minor product flop. Sony's interactive Hollywood model sinks $300M into a single basket, meaning one bad miss can completely wreck a studio.

God of war is plainly movie on rails compared to E33

b) She's been in the role for 4ish months, not years.

1. a long dragged out distraction over decades trying to make it work

2. a painful but quick 40B write down and the ability to refocus the company on better projects tomorrow

.. then they are, quite rightly imo, going to pick #2. In fact I would assume this going to be the next announcment.

Yeah, that's a bullshit number. It's like when people provide piracy counts as lost direct sales, a lot of people will download something for free, those same people won't always pay full price if they can't download it for free.

I downloaded a TON of games from Game Pass, played <1hr, and uninstalled. Without GP I would have just never bought the game.

I agree. However, I do think they would get some positive attention (and some accompanying sales) if they were to backtrack and announce a console more like the 360.

It feels doable if they care to do it. Physical media should still be viable for holding all the game data for a while longer. Blurays can manage up to 128 GB, and I think the average game install size is ~60GB right now, giving most games some room to grow.

The biggest issue with a strategy like that is that they're, like you said, pushing digital-only hard already, and they're also trying to save money, so the idea of spending more money to make future consoles with disk drives, and to make disks, is unlikely to appeal to them.

It is a shame, though, because it seems like the Xbox 360 will have been widely viewed as peak Xbox until the end of Xbox.

Compared to: - PlayStation 5 - PlayStation 5 Pro

or: - Nintendo Switch - Nintendo Switch OLED - Nintendo Switch Lite

Anyone who's literate in English (and knows that OLED means "nicer screen") can immediately rank the PlayStations and Switches into "good, better, best". But with the Xbox, how is anyone supposed to know which one is which? Is the Series version better or worse? Is it a whole new generation, with whatever backwards-compatability implications that a new generation brings? I need a chart and I probably still won't be able to tell you if you ask me in a month.

Switch 2 is a fantastic console with an astonishingly fun first party library, and Nintendo just over there doing their own thing like they’ve always done.

I'm not convinced that Metroid at least really is a great data point for "Nintendo is ruining things in-house". From Wikipedia[1]:

> Nintendo announced Metroid Prime 4 with a teaser trailer during the Nintendo Direct presentation at E3 2017, and announced that Retro Studios, who developed the previous main Prime games, would not be involved.[15][16] In February 2018, Eurogamer reported that Prime 4 was being developed by Bandai Namco Studios in Japan and Singapore.

> In January 2019, the Nintendo EPD manager Shinya Takahashi announced that development had restarted under Retro with Tanabe remaining as producer. Takahashi said the previous studio had not met Nintendo's standards and that the decision to restart was not taken lightly.[21] Shortly after, Nintendo reevaluated Prime 4 after noticing changing attitudes towards open-world games, but maintained the direction as the development was already taking longer than planned. The team ignored new developments in action and shooting games to prioritize the adventure elements.

There's a perspective where this is almost the exact opposite of the problem being discussed about Microsoft. They chose to let it get developed externally, suffered delays, and by the time they moved it back in-house, the ecosystem had moved from under them. They probably could have chosen to rethink everything and delay it further, but they also arguably could have avoided having to make that call by keeping it in-house and letting the studio who made the previous entries work on it from the start and landing it in time that the original vision still fit what people wanted.

[1]: https://en.wikipedia.org/wiki/Metroid_Prime_4:_Beyond#Develo...

A remake (1) of a remake (2) of a remake (3)

(1) A remake (Switch 2 Starfox, a remake of StarFox 64)

(2) StarFox 64 (A remake of Super Nintendo's StarFox)

(3) ??? I don't know what the 3rd level of remake you mention is, but I'm curious!

A cynic might say they spent most of that for King, which continues to be profitable. The rest of Activision Blizzard just came along for the ride

Expedition 33 was on game pass and still sold 8 million copies.

IMO Phil was very clearly pushed out by “AI will cut costs talk”. No one makes huge investments into acquiring companies and then suddenly retires (after running the division successfully for decades) and none of his underlings were promoted into the role, they all left when he did.

I spent a few years in and around the industry and there was so much insanity around the need for in game monetization that it just made things much worse.

And because the game studios didn't care about it, none of the money stuff worked, making executives even more upset.

All to catch some vision of F2P money which is an entirely different business that these companies couldn't possibly support.

It's very sad for the industry overall (this particular decision is MS killing stuff off because the margins aren't good enough to funnel more cash into GPU gods).

A few years into the generation they updated the Xbox One, putting it into a smaller form factor called the Xbox One S, and at the same time released a spec bump model called the Xbox One X. I don't believe any of these are still available for purchase.

The new generation has the smaller/lower-powered Xbox Series S, and the higher-specced Xbox Series X. Leaving the overall generation with seemingly no name, other than "Xbox Series" I guess?

But yes, the names are terrible because S and X both refer to consoles from last gen and current gen.

MP4 is what OP was talking about, an "interactive Hollywood" experience that betrays previous Metroids, adds discutable open-world design cues, and locks features behind $30 figures.

Using Phil as a scapegoat and Sharma as the savior is disingenuous.. and is honestly pretty consistent with how i view Microslop: opportunists, tasteless, and visionless executives, shareholders and fanboys

The fall of Xbox started before the launch of thier current gen:

- HW: they announced 2 SKUs, with polar opposite performance profiles

- SW: their system sellers got delayed to couple years

The reset needs to happen at the highest executive order, not at the lowest, workers implement whatever project was greenlit

People chose PS5/Switch over Xbox (it now sells 3x less than Switch 1, wich is a previous gen console), people see through the lies of the media

SoM was an Xbox/PC/Game Pass exclusive for a year.

It's not a perfect comparison.

Star Fox's development is an incredibly wild story where British teenagers argued what the SNES could do with bespoke hardware, and they ended up being shipped out to produce it because Nintendo felt they couldn't ever do it themselves. It all started with Argonaut's demo of what would eventually be released in Japan as "X". Entirely software-based 3D, on the original Game Boy.

There's actually a very humble quote by Miyamoto where he learned that someone can't just get better as a function of age and experience, after he clearly realized that these teenagers could produce something no one else in Nintendo ever had a hope of. Perhaps it's why the franchise has done so little -- Nintendo's just not in a remotely similar headspace the Argonaut lads were.

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Fun videos on the subject:

"The Teenagers Who Taught Nintendo How to Make Star Fox" - People Make Games, https://www.youtube.com/watch?v=to4Ekb0kXiE

"The Making of Star Fox" - Strafefox, https://www.youtube.com/watch?v=GDhNT2Qv-Mo

A high revenue but low margin business is a lost opportunity to invest that same revenue in a different area with better margins.