Microsoft is in the news for hiking the price of Xbox Game Pass Ultimate again,
and this time by 50%, leading to an
historic surge of angry gamers smashing
the unsubscribe button. And it has everyone from Microsoft's partners to
the press to even individual gamers asking themselves, "What the hell is
going on at Xbox?" I mean, one day
Microsoft is celebrating, hey, Game Pass is totally making tons of money. Woo.
And then the next day they're like, "Actually, we're going to need more
money from you. Thanks." On one hand, they're promising new Xboxes are coming
for really actually real this time. And then on the other hand, they're like,
"Look at me. Your phone is the Xbox." Now, the same day that Phil Spencer sent
out a memo that said, "Our game road map has never looked stronger," they
notified Xbox employees of a 10% staff
reduction across several studios alongside the cancellation of multiple
games. Well, which is it, Microsoft? Snip snap. Snip snap. Snip snap. I mean,
it shouldn't surprise us that much. If we go back to 2013, there was that time
Microsoft forgot they were making a game console.
>> Xbox go home. But more recently, these
WTF moments seem to be happening more and more frequently to the point where
it's raising the question, is Xbox even going to exist within another generation
or two, which is a huge problem because
even though I've never actually owned one personally, I 100% appreciate the
value of having Xbox as a player in the space. There's so few console makers
now, and seeing one of the major makers bow out now would be a big problem for
competition. I have owned a lot of Xboxes and I'm also really terrified of
a gaming future where Sony and Nintendo are going to have free reign to do
whatever they like. Free reign, like do our Segways to our sponsors, Hadner. Get
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this off with a crackdown on Xbox for all of its many problems these days, but
let's give credit where it's due. 30 bucks a month multiplied by 12 is
$360. >> Oh my god, we're so back. We're living
in the 360 era again. Let's go.
Okay, but for real, Xbox and PC Game
Pass have been a great value for a lot of gamers. They've allowed people to try
out experiences they might have otherwise overlooked, gotten eyes on
games that might have struggled to find an audience, and according to some devs,
even provided a stabilizing, de-risking presence for some smaller indie
releases. It's been so good, in fact, that the service has, frankly,
overshadowed their hardware for quite a while now, which is a shame because
Xbox's hardware has also been traditionally pretty darn solid. We're
PC people, which means we're often deriding consoles for their aging
mid-tier hardware. But when you bear down on what you get for your dollar,
it's kind of hard to argue with the original MSRPs of the series lineup.
Just ignore the two price hikes just for a minute. We'll get to those later.
Point is, for a long time, the combination of an Xbox Series S or even
the X for that matter, plus Game Pass, was a pretty killer entry point into
highfidelity gaming. And this next one definitely benefits us less. But you got
to give credit, I guess, to Xbox's business side for successfully
accumulating new studios and publishers like a gem-hungry Thanos. It has
drastically increased their overall gaming revenue. And to Microsoft's
credit, for better or for worse, they haven't greedily gatekept those
franchise stones from the competition, which kind of plays into what looks to
us like what might be a big switch away
from hardware and toward providing services. Now, Xbox has stated many
times that they do have more Xbox hardware on the way, but honestly, each
press release feels less and less like an exciting promise and more and more
like damage control over some bad headlines. Through both the naming of
the current two-tier generation and the fact that seemingly everything with the
screen could technically be an Xbox, Microsoft is telling us that a singular
Xbox is not at the center of their game plan. And that means that resources
which used to be spent on making the ultimate Xbox experience in one place
like Engineering and Design Time are trickling out to make their streaming
app pretty okay on your LG TV or your Samsung phone. You can kind of see this
change with the first party Xbox handheld being canned in part due to
Microsoft not being so confident they could sell 10 million of them, which to
be fair, not even the Steam Deck has sold that many units. Instead, we're
seeing Big Green offload their work and the risk to simply facilitate the
release of an ASUS handheld with an Xbox button. And although this might seem
just like a neat little side quest that should have little bearing on the future
of Master Chief's chefs, it does raise
major questions about a shift in paradigm at the old Redmond offices.
Microsoft once fought hard to make their own hardware. Take the Surface for
example, Microsoft's tablet and laptop lineup. They could have easily
maintained the status quo just building their software as bestest as they can
and letting the various OEMs build their systems around it. But instead, they
invested many millions of dollars to design and build devices from the ground
up with custom parts and this is important full control of the
compromises that make a Surface a Surface. And that point is really
important because pretty much every piece of consumer tech has some kind of
compromise at its core. Now, usually these compromises are to keep the cost
of manufacturing down so that the price doesn't go too high. Things like
skipping out on an OLED screen or making the disc drive a separate thing. But
sometimes these compromises could be to the margin of the manufacturer. Say for
example, because they intend to make it back when they sell you software down
the road. That's the big deal breaker with the new ASUS Xbox handhelds.
Microsoft isn't subsidizing the cost.
And ASUS has to make money on every unit sold because they don't get a 30% cut of
whatever you buy in the Xbox store. So, the one you actually want is $1,000.
I mean, that's not that unreasonable given the hardware that's in it and what
the costs of it are, but I mean, that is
galaxies away from mainstream pricing. And it's another signal on top of the
increased cost of services and the increased cost of Microsoft's own
hardware that Xbox just is not focused
on bringing the best value in gaming, at least not the way they used to be. But
then if Microsoft is just getting OEMs to make their hardware for them now, is
Xbox just a logo and Windows? Hey,
what's so bad about Windows being at the center of the future of Xbox? I mean,
Windows has phenomenal cosmic compatibility and ity bitty little
issues that uh really do add up. Windows
has primarily been a mouse and keyboard product and using a joyad or touchcreen
to navigate currently sucks. The years
of patchwork development, multiple releases, and the need for their OS to
do everything, not just games, means
that there's a ton of inefficiencies and extra processes in the background versus
something like Steam OS. Microsoft is
working on these issues. Their new Windows handheld mode might actually
release before this video does, but what they will never fix is a misgreant's
ability to win every match in every lobby by nefarious means. You can't lock
Windows down enough to prevent cheating. And they can't really prevent other
storefronts from appearing on it, which from a gamer standpoint is pretty
freaking great. We love competition, but from Microsoft's perspective, h this
sucks. Unlike a lockdown console ecosystem, Xbox's services on Windows
are just one of several options. They
have to keep the value of PC Game Pass much more competitive than on Xbox.
There is also an Xbox game storefront on
PC, but do you know anyone who buys games from there? I don't think so. And
while I've heard the fan theories that Xbox is desperate to get Game Pass on
competing console platforms, I just
don't see that happening. For one, their primary competitors are not interested
in having Game Pass in their ecosystem. Nintendo, Sony, and Valve all make their
money selling games, and having a competing service that does measurably
reduce the amount of games sold is not good business. Two, even if they do let
Microsoft weasel its way in, they are simply not going to do so without taking
their cut, probably something like 30%.
And at that point, I don't think Game Pass can take that big of a hit and
remain profitable. And three, this might be the biggest one, Microsoft has
signaled that having their biggest hitters as day one offerings on Game
Pass loses them a lot of potential
money, like the $300 million they left
on the table with the latest Call of Duty. Right now, Microsoft gets to eat
their cake with 37 million Game Pass subs and have it too by still selling
millions of copies to PlayStation owners. Black Ops 6 was the highest
grossing title in franchise history. And this isn't just a COD thing. Microsoft
has been the top publisher on PlayStation for several months. And so
even though it feels like Microsoft keeps shooting themselves in the foot at
every possible occasion, and even though customers are seemingly turning on Xbox
in every market, and even though their piece of the hardware pie keeps
shrinking, their gaming division is making more revenue than ever in the
history of all of Xbox. Just because I
don't like what they're doing doesn't mean it isn't working for them. And
while I really disagree with some of their moves, I think the discussion is
less about Microsoft's failing strategy and more about them acknowledging the
situation that games exclusivity driving console sales as a primary revenue
stream is a thing of generations past, at least for them. But with that said,
even Sony is smelling the roses these days. The PS5 has arguably Sony's
weakest lineup ever of exclusives. And
yet, it's their most profitable generation ever, which just goes to show
people are still buying the consoles, even without the killer apps. But thanks
to capitalism, no competition means that the monopoly charges whatever the heck
they want. So, please Valve, please have the new Steam machines be good. Make
them a real competitor for a 4K gaming system. Help me, Obie Gabe Canal. You're
our only hope. Just like this segue is
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like discussions about consoles and you like seeing things ranked, why not check
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lesson. And it really rocks, if I do say so myself. And David was the one who
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