We’re three years into the Xbox Series console cycle and a few things have become clear. The first is that the Xbox Series S has not worked out the way that Microsoft hoped. Not only has it not become a major driver in Xbox adoption, at least as far as we can see, but its technical limitations have started to cause issues, such as the Baldurs Gate 3 Xbox delay, and sent developers grumbling.

The second is that Xbox, despite a series of huge acquisitions, remains the tertiary console. It has its fans and still sells reasonably well but its kind of an afterthought against the absolutely enormous Switch market and the exploding PlayStation 5. Xbox’s exclusives like Starfield have failed to make the waves that the other games have, and Xbox hardware is now being regularly discounted by retailers who are not having any trouble getting stock.

Xbox has not shed the problems of the 8^th generation, even if it has not repeated them. Not enough strong first party games. Limited support from smaller Japanese developers. A lack of buzz and attention. As far as we can tell PlayStation continues to outsell Xbox by at least about 2 to 1 and its not clear what Xbox can do to change that, other than come out with the system selling software it has struggled to create.

Despite this there are positives for Microsoft too. Game Pass continues to grow, though not at the rate Microsoft wanted. The Activision acquisition went through, meaning Microsoft controls a lot of very valuable IP from Diablo to Warcraft to Call of Duty. It has promised not to make much of this exclusive but it can still use it to drive the Game Pass strategy. PlayStation has some vulnerabilities with a limited announced slate for next year and its live service game initiative seemingly struggling. The Series X is arguably Microsoft’s best piece of all around hardware, even if it never manifested the advantage over the PS5 that Microsoft touted at launch.

The real issue with the Series consoles is probably that there isn’t that much to say about them. They’re capable hardware (X more than S, of course) but they’re unexciting. They don’t have Switch’s portability or PS5’s fancy controller and VR headset. They’re just classic game boxes and they work fine but without strong exclusive software they’re not that compelling. The Series S is slightly interesting because of its digital only and underpowered nature, but the flagship Series X is literally just a big black box that plays games.

Looking back over the last year there were a few games of note. Hi-Fi Rush was a huge shadow dropped surprise and a critical and commercial success. Redfall was a flat out disaster, one of the worst first party games we’ve seen since the 32-bit era. Starfield seems to have been a mixed bag, seen as a mostly competent but bland rehashing of the Fallout and Elder Scrolls formula that was so exciting 20 years ago abut has now become kind of rote. Forza Motorsport seems divisive but not the smash hit reboot that Microsoft was hoping for when it took 6 years between flagship installments.

The closing of the Activision merger sets up Xbox’s future. Xbox has also been talking about AI integration into its development suite as a big future move, but we’ll see what that looks like and how long it takes to come to fruition. I remember when cloud integration was going to be the big new thing and then it kind of hasn’t been or at least it hasn’t been notable.

I think the fourth year of the Series console will be very important. We’ll see if Sony’s apparent gap in exclusives can give Microsoft the opportunity to generate a little more buzz and attention. We’ll also see how Activision is integrated into Gamepass and whether that moves the needle. There’s the buzz of new hardware on the horizon for both Sony and Nintendo and we’ll see if Microsoft does anything there. It doesn’t seem likely since Microsoft is focused on Gamepass and potentially getting more into streaming, but perhaps a disc drive for the Series S like Sony’s detachable drive would make sense, or a form factor revision.

Otherwise Xbox seems to be in a decent, if boring, place. It needs some of the studios its bought to come online and actually start churning out hit games, which is a concern, but other than that it’s just trundling along, selling consoles and subscriptions as it reorganizes and plans for its slow integration of the Activision behemoth and whatever the plan is with that.

Of course trundling along isn’t great if you’re in last place, and being boring isn’t a way to get out of that place, but at this point it’s unclear if Microsoft cares about selling consoles. It sees the future in the cloud and in subscriptions and Xbox seems like a bit of a legacy afterthought. It’s never going to catch up with PS5 and maybe it doesn’t have to. Or maybe it will surprise us. Hopefully not with another Redfall, though.

The Series S has been an massive mistake not necessarily in concept but execution. Both next gen boxes are more expensive compared to their predecessors.

Yet MS has two separate sku's which don't share any components in production yelding much higher losses per box, ontop of which producing less consoles over Sony driving up costs further in comparison.

Having just aquired the most profitable third party publisher around and knowing Xbox profitably is very low and having a console less propluar than the previous one, you can imagine over the next few years some difficult questions are probably being asked internally.

Looking at the horizon you don't see many titles that'll move consoles until the end of the generation when the die might already be cast by then.

@thepanzini: The Series S was meant to bring people into Microsoft's eco system and act as a streaming box and a "you have to get it all digital" box that would penetrate a lot of homes. As far as I can tell it hasn't really done that and comes with the problems you mentioned and others. It was meant to be a Game Pass driver, kind of like how the Chromecast would have driven Stadia, but instead it's just a bit of an albatross.

I don't really know what questions Xbox will be asking. Microsoft is not getting out of games after buying Activision, and while it could go third party that's a much dicier proposition with its focus on Game Pass, something I don't see it giving up either. Long term the obvious play is streaming but streaming isn't ready yet. I think we'll see at least one more generation of Xbox consoles, this time driven by Activision IP at launch and an attempt to get all these studios online and humming, before they exist the hardware business to an all streaming future or whatever they have planned. As far as I know (and this is murky) Xbox isn't losing a ton of cash and Microsoft in general is extremely healthy so they can afford to do this as long as it takes.

Given how many big tech companies (Amazon, Google, Apple, even Facebook) keep trying to move INTO the gaming space, with limited success, it seems unlikely to me that Microsoft, the one with the biggest footprint in traditional games (obviously Apple and Google have been wildly successful in mobile to a degree that completely obliterates Xbox) would give up after making such a huge purchase.

@bigsocrates: Spencer said that Xbox was single digits profitable to the FTC which is much lower than everybody else, we already saw in the leaked emails prior to Bethesda MS talking about putting their games on other consoles.

Xbox being a Game Pass box and third party or some variation is something you can see MS talking about, considering their losing so much on the box.

@thepanzini: Single digits profitable with the potential for explosive growth if subscriptions or streaming take off is usually not the kind of situation that makes a company exit a business. Microsoft probably doesn't want to stay in games if it's only a tiny bit profitable forever, but they are potential market leaders in areas that could get big.

I'm not sure what your second paragraph means. Xbox already kind of is a Game Pass box, isn't it? And they already do put out some games on other consoles, almost all of them if you count Steam as a "console."

@bigsocrates: Never said they would exit.

At the moment MS have two sku's which they are losing enormously on, to such an extend it has limited the amount of consoles they can produce each year, subscriptions on console have stalled any growth is going to come from PC in Spencers own words. Price also doesn't appear to be a major factor in achieving better console sales as we've seen from Switch & PS5.

Spencer has also said that current growth from GP isn't good enough probably some posturing for the FTC but likely some truth to it.

It's not that hard to see next generation an almost Nintendo like approch to hardware selling the box at break even or a small profit, and publishing games on the Switch 2 or even the PS6.

Game Pass has about ~30m subs ~25m of which are from console they could easily sell ~35m consoles while still being defacto third party, they would be much more profitable and wouldn't loose that much it might even help them push GP and xCloud in the future.

MS will definitely be talking about it.

@thepanzini: I guess I don't see that as a huge change. They already publish on both PlayStation and Switch. They put virtually everything on Steam. The biggest change would be putting StarField and the like on to PS6 (and potentially Switch 2 if it can handle it) but we're talking like 4-5 games a year. Most of what they publish is already multiplat. Minecraft Legends, the Quake 2 remake etc... This year it would be Hi-Fi Rush, Redfall, Starfield and Forza I think. Of those only 1 is a potential console mover.

Sony will never allow Gamepass on PS6, and Nintendo is the same, so if Gamepass is the focus they need a console until streaming takes over. That's what Xbox does now and what it would continue to do in your scenario, just with fewer efforts at exclusives.

@bigsocrates: MS makes 2/3 revenue through console and its cut in mtx and game sales and Game Pass, MS potentially putting everything day 1 on its rivals platform would be massive change.

MS has consistanly been talking about higher revenue and monthly active users maybe because its the only good thing they have to talk about, but one of the leaked slides said MS no longer considers GP to be a core pillar and we saw they've virtually given up on streaming.

Sony wouldn't allow GP in its current form on Playstation but that's not what I'm saying.

Starfield is MS single biggest release since forever and they won't have a bigger title until maybe the next Forza Horizon, yet Xbox hardware in the US had a single digit bump and a more than 30% fall across Europe with nothing else big on the horizon. The same downward trajectory will continue next year.

Xbox has been down year on year nearly every month so far across the US & Europe, in its third year on the market which is traditionally a consoles peak. The console brand has never been in a worse spot, pretty much since Sony fixed it's supply issues. At this point Series is going to do considerably worse than the Xbox One.

It takes so long to create AAA tenpole titles the situation isn't likely to improve till the end of the generation and it'll be too late.

You must think putting Sea of Thieves on Switch or Halo Infinite MP on PS5 can't really do that much harm, and we've how successful the former has been on PC it could do more good than harm.

Continually throughout the ABK acquisition MS doesn't view Nintendo as a direct competitor described both through internal emails and testimony, and we seen the Switch's fantastic sales hasn't impacted Sony's PS5 and vice versa. How much harm would MS putting everything fesable day 1 one actually Switch be?

The main problem with Microsoft for a while now, is that they don't have exclusive games that give them a wow factor that Nintendo and Sony have. Recent examples are Super Mario Bros. Wonder and Spiderman 2. Both games give a wow factor and create excitement for both consoles. Starfield was supposed to do this but failed. And no, initial sales don't prove Starfield had the same impact. People bought it at first and got Game Pass to play it because of the hype. Once people got their hands on it, the hype died down and people moved on. I'm not saying Starfield was a bad game. It's a decent Bethesda entry, but nothing more than that. Halo Infinite got off to a good start, but quickly withered because of the lackluster multiplayer. Its just now starting to get on track or so it seems, years after its release. I could go on like mentioning Redfall, but this has been the case long before those games came out.

Good write up, just want to add, love my X, I think the Series X has all around better engineering on the hardware, OS, UI, and physical design. Quick resume and ease of use are amazing and just better than the PS5.

it's a strange feeling indeed to be generally onboard with this iteration of Microsoft hardware design and pricing model (Gamepass), but then not really feel the impetus to buy-in.

case and point- i'm primarily a single player narrative fan, and as such i've been telling myself since it was announced that the next Hellblade will be my system seller (was thinking a Series S was in my future).

but now that lil fella seems like a bit of an albatross, and given Xbox's general console/PC software parity- a Steam Deck seems like a more attractive purchase right now.

To paraphrase George Carville, "It's the games, stupid."

As an owner of all three consoles, I would say that the XSX is definitely the one that's just sort of "there" and mostly collects dust. At this point it's much less of an "Xbox" and more of just "a box." If I want the big tentpole, AAA, "prestige" games, I go to the PS5. If I want the smaller, quirkier, indie-type games, I'll hit up the Switch. Xbox has what in comparison? Gamepass?

The issue with that is that, after thinking about it, I don't know that Gamepass is all that great. We almost reflexively say it's great value, but I think that ends up being sort of an optical illusion. Yes, it has tons of games, and a lot of those titles are very, very good. But so many of the greatest titles are a generation or two old at this point. How much of that stuff are you actually going to play? For reals? Am I really going to boot up the original Mass Effect or Gears of War? As great as those games were, probably not. To the extent that there are bigger current-gen games on there, you can usually get them cross-platform and I would prefer to play them on the PS5 or Switch. The great exclusives are few and far between and they've had more embarrassing high-profile flops than successes.

So where does Microsoft go from here? I could think of two possibilities, both of which are unlikely. I do think there's an opening for them embrace being the "B-game console." There's a gap in the market for more games like Hi-fi Rush - in other words, games that are just extremely fun and well made, but much more focused and modestly budgeted than a normal AAA title. Xbox could fill that gap and it's something that would work well with Gamepass. Unfortunately, this one is probably off the table since I don't see Microsoft pivoting away from the bigger franchises in the wake of the Activision acquisition.

The other possibility I see is to focus on getting the cloud gaming thing really dialed (like, really dialed in) in and gradually phase out the consoles entirely. If they could get rid of the box and just market Gamepass as a truly "play anywhere, on any device" experience, that could potentially solve a lot of their problems. It would give them the portability of the Switch, but power parity with the PS5. Again, this one seems like the tech probably isn't there and might be too costly to figure out.

It's definitely worth pondering as to exactly how sustainable a prop it is for Xbox's growth, but even the most cursory of searches on the most limited of platforms shows that Game Pass regularly adds latest-and/or-greatest titles on the regular, and isn't just a repository for the old games.

They may not be headliners designed for players to jump the fence or whatever, but suggesting that they don't count as much as value if they're available for purchase multiplatform is kind of nonsense. Other companies wouldn't be trying to restructure their own subscription services similarly if they didn't consider this kind of thing competitive.

To me, this is a great console for those who love to use the video game subscription service called Xbox Game Pass, as they wish to play heaps of games while not wanting to pay for the full price, but I do understand why there are people who still personally prefer to buy games (Physical or digital copy in regardless of the price for whichever particular platform) because they feel like to own it for their video game collection.

@bludgeonparagon: Alright, let me ask you this - how many of the games in that screenshot did you actually play? Not just "dipped your toe in out of curiosity" but "actually played a substantial amount"?

I don't dispute that there are good games on that list. Neither do I dispute that some of those games are "new". But it's not just about whether those games are there and good and are recent, it's whether you'd play them in place of the newest releases and if you would whether you'd play them on Gamepass as opposed to somewhere else. For example, in my case I've played five - Football Manager, Dead Space, Like a Dragon: Isshin, and Lies of P, and Spiritfarer. The first four I played on PS5. The last one I played on Switch.

All of which begs the questions, if I'm not going to play them on Xbox, then do they really have value as part of the Gamepass subscription?

It's like one of those gym memberships where they try to get people in the door by advertising a $10/month membership. And sure, that's great value for a gym, but only if you actually go. Otherwise it's just a recurring charge on your credit card. That's before the "sign-up" fee of actually buying the box on top of it.

I'd also point out that of the games on that list, only two are exclusive to Xbox - Forza and The Lamplighters League. Forza may as well not have been released for all the attention it got and The Lamplighters League flopped to the extent that it caused a business split and a bunch of layoffs. Not exactly great case for FOMO if I don't have Gamepass.

@therealturk: You have to know that as someone who owns multiple consoles and buys numerous full priced games during their launch year you are something of an outlier, right? Like it's fine for you to say Game Pass is not for you because you have other platforms and are willing to buy your games, but that doesn't take away from the value of something like Lies of P being on the service at launch, or games like the Like a Dragon games joining the service at launch or relatively soon after.

Even if you just played Like a Dragon and Lies of P on Game Pass instead of buying you basically break even and you get a lot more with it.

It's a great deal for someone who likes games, doesn't buy and play everything at launch, but also doesn't just want to play COD and Madden. The question is how many of those people there are.

And yes Microsoft has an exclusives problem, but Sony is emulating Game Pass with PS+ and has no new exclusives on their service, so I think that's more of an overall Xbox issue than a Game Pass issue per se. Game Pass gets a lot of top notch games (including Hi Fi Rush and Starfied this year) at launch or soon after.

For the record, I have both Game Pass and PS Plus and I see the value in both. Well, Game Pass more so than PS Plus now because of the price increase. But anyway, I'm currently playing Yakuza Guardian now, and that was after I finished the Dead Space remake after it came out a week ago on Game Pass. Lies of P, I haven't played to yet, because I'm also playing the Demon Souls remake on PS Plus. And one Souls type game is all I can handle at once.

For people who can't afford to buy every new game that comes out, nor care about owning physical copies (because those truly don't exist anymore), subscriptions services are a good benefit. There are many games I wouldn't be able to play if these services didn't exist. So saying there is nothing of value might be true of people who have the money to spend 70 bucks or more for every game, or for people who just play one of two types of games and forget the rest. But for someone like me, it works out. And judging by how its slowly growing, there are a lot of people like me. Don't get me wrong, I still buy games if I want to play them badly enough, but for other games I patiently wait for them to come out on those services. Gotham Knights is a good example for that. It came out on Game Pass. I played and beat it before it came out on PS Plus a month later.

@therealturk: I would guess most people to tend to avoid Kishing it instead of revelling in it. The thought of having Game Pass and then going out and buying them somewhere else seems fucking crazy to me. Most people don't want to waste money for the heck of it. The comparison to a gym and not the logical one of TV/Movie streaming platforms is also baffling.

I tend to find using anecdotal evidence instead of data and thinking of yourself as the median person to be kinda foolish, but I'll bite! I have bought some games that are on Game Pass, but only after I've completed them on Game Pass and they're on sale.

For posterity, here's a list of games I've played on Game Pass in the last few months:

Games that I completed: Sea of Stars, Venba, Cocoon, The Wandering Village.

New games that I'm currently playing: Mineko's Night Market and Wartales.

Older games that I'm still playing: Slay the Spire, Dicey Dungeons, Crusader Kings 3.

On the docket: RGG Gaiden

I also played some of that W40K Darktide, but didn't like it.

The answer to this is that yeah, if you're an individual in a specific situation that for whatever reason owns every single current generation console and aren't interested in playing games on the Xbox, then... yeah, spending money on Xbox Game Pass is not really a wise financial decision, for you?

These games provide value to the subscription because... they're provided as part of the subscription. If they weren't considered value for the subscription, reviewers et al. wouldn't be pointing out that they were on Game Pass ad nauseum when they list the platforms they're available on.

Not that it means too much because actually laying out stuff like playtime and so forth is obnoxiously difficult on the PC app but based off my achievements unlocked in 2023, from Game Pass I installed:

State of Decay 2 (played through to credits)
Soul Hackers 2
Crossfire X (played the story mode through to credits)
The Last Case of Benedict Fox
Planet of Lana (played through to credits)
Wo Long: Fallen Dynasty (couldn't beat the final boss)
Eastern Exorcist
Redfall (lol)
Venba (played through to credits)
Midnight Fight Express
Exoprimal (played through to credits)
Sea of Stars
Lies of P
Party Animals
Quake II (played through a few campaigns to credits)
Starfield (one playthrough to New Game+)
Hi Fi Rush (couple of playthroughs, this is my brainrot)
Wild Hearts

This excludes multiplayer heavy installs like Halo Infinite, Gears 5 and Forza Horizon 5 (the last of which I kind of have an obscene number of hours played out of habit).

Now it's pretty obvious that I'm an Xbox power user, and I don't own a Playstation 5 (I do have a Switch). But if I did own a Playstation 5 and a Game Pass sub at the same time and wanted to play Dead Space remake, Like a Dragon, Monster Hunter, Persona etc. etc. why would I not just download it to the Xbox? (Or my PC, for that matter? I don't think my Game Pass list here actually includes console exclusive Game Pass options)

Also, I'm probably in the minority on this but I think there is more than one way to consume a subscription-based service, and treating it as a tasting platter by drastically lowering the barrier to entry to titles that players might not have tried otherwise is no less a valid approach. I can pretty confidently say that I would not have bothered playing half of those titles listed if I had to go through the process of spending 30-100AUD to purchase them individually, and my broader gaming experience is all the better for having done so. You can split hairs about the monetary value of that practice however you like and argue that the industry should never have done away with demo culture, but that's really kind of a different set of goalposts and we've already spent enough time trying to vaguely declare personal experiences as some sort of universally-agreed median.

@bludgeonparagon: We're all pretty much power users, like most people on gaming forums I own all three system and PC.

Game Pass value is deceptive I own hundreds of games across Steam, PS and Xbox, anyone with Plus or GP Core will have a ton of stuff. Having a library of content isn't all that attractive it's what I have now, which would be same for a lot people.

Just looking at my Steam wishlist I could pick up 3/4 titles from sales for less than the cost of a GP monthly sub.