Microsoft’s Dilemma: To Console or Not to Console?

The console market has been a battleground for years, with Microsoft, Sony, and Nintendo vying for the top spot. However, as the industry evolves, Microsoft finds itself at a crossroads. With its significant investments in cloud gaming and game publishing, should Microsoft continue to produce consoles?

Microsoft’s recent history in the console market has been a rollercoaster ride. The launch of the Xbox One was met with controversy due to its always-online requirements and DRM features. This misstep set the stage for the next decade, leaving Microsoft playing catch-up to Sony and Nintendo. Despite this, Microsoft has been making strides in the industry, focusing on building a platform-agnostic, cloud-first future for video games.

The argument for Microsoft to abandon console production is compelling. Microsoft is now a mega-publisher, with over 30 in-house studios, many of which are world-renowned. It also operates one of the largest game subscription services, Game Pass, which has grown significantly during the pandemic. However, Game Pass subscriptions have stagnated, and Microsoft’s console sales have lagged behind Sony and Nintendo.

Microsoft’s plan for this console generation was clear: sell hardware and upsell a subscription service populated by its own games. However, it’s challenging to sell Game Pass to someone without an Xbox, and not enough people are buying Xboxes. Microsoft stopped reporting hardware numbers during the Xbox One era, but analysts estimate the combined sales of the Xbox Series consoles at around 25 million. In comparison, Sony has sold over 50 million PS5s, and Nintendo has sold around 140 million Switches. This gap is growing, and it’s more pronounced in Japan and Europe than in the United States.

To grow Game Pass, Microsoft seems to be positioning Xbox to be a platform-agnostic, software-publishing powerhouse with the industry’s most stable streaming network at its back. In this landscape, it’s surprising to hear Xbox talk about building a hyper-powered console for the next generation. The question then arises: why bring an expensive next-gen console to a war that is actually about software, subscriptions, and streaming?

Microsoft’s acquisition of Activision Blizzard, which is currently under regulatory review, further strengthens its position in the industry. This acquisition will add iconic franchises like Call of Duty, World of Warcraft, and Diablo to Microsoft’s portfolio, making it an even more formidable player in the gaming landscape.

However, there are valid reasons for Microsoft to continue producing consoles. Console exclusives have been a significant selling point for Xbox, and Microsoft’s first-party studios have produced critically acclaimed games like Halo Infinite, Forza Horizon 5, and Fable. Additionally, consoles offer a more consistent gaming experience, as they have dedicated hardware and are not reliant on internet connectivity.

Microsoft’s recent announcement of four formerly exclusive games coming to PlayStation and Nintendo consoles signals a shift in its strategy. This move could potentially attract more players to Game Pass, as they will have access to a wider range of games. However, it also raises questions about Microsoft’s commitment to console exclusives and the value proposition of owning an Xbox.

In conclusion, Microsoft is at a pivotal moment in its gaming journey. Its investments in cloud gaming and game publishing have positioned it as a significant player in the industry. However, the console market still holds value, with console exclusives and a more consistent gaming experience. Microsoft’s decision to continue producing consoles or focus solely on cloud gaming and game publishing will have significant implications for the industry and its consumers.

Bonus Content:
– Sony president Hiroki Totoki announced plans to be more aggressive in bringing PlayStation titles to PC.
– Xbox confirmed which of its games are coming to other consoles: Grounded and Pentiment will come to PlayStation and Switch, while Sea of Thieves and Hi-Fi Rush will only arrive on PS5. Both Sea of Thieves and Grounded will support crossplay across all platforms.
– The Pokémon Company has scheduled an anniversary stream for next Tuesday at 9AM ET, which might reveal a Switch remake of Black & White.

Now Playing:
If you’re a Switch or PlayStation player curious about all of these Xbox games coming to your consoles, I have one easy and clear recommendation: play Pentiment. Obsidian’s narrative-driven, tapestry-looking game is a surprise and a delight, and I’ve had a lot of fun playing it on Game Pass recently. It’s out now on PS4, PS5, and Switch, and I’m sure it’s just as great on those platforms.