Episode 151
Big Layoffs coming for MS
Asha Sharma Posted a dismal outlook for XBOX.
“We will end this fiscal year at about a 3% accountability margin, down year-over-year. Excluding Activision Blizzard King, over the past five years, we have spent over $20 billion on ongoing investments in our content, platform, and hardware subsidy, but our annual revenue has declined nearly half a billion during that time. Going forward, this cannot continue.”
“We are in a hardware component crisis. When I joined as CEO in February, the price we paid for console storage components was over 2x as high as we paid last fall. These costs have since doubled again. And as we plan for the 2027 holiday season, we expect another significant increase, taking us over 5x the prices we paid only two years earlier. Memory costs have followed a broadly similar trajectory. While the entire industry is facing a components crisis, we believe we have been impacted more greatly than many of our peers due to the choices we made over the last half decade. We are currently unable to make as many consoles as players want to buy, and we need a new business model and partnerships for hardware as we remain committed to Helix.”
“We expanded our studio system when we needed a pipeline of content to meet multiple strategies across subscription, streaming, and devices. In the process, we have found ourselves over extended as we executed on changing strategies in a landscape of more readily available content. We are the fortunate stewards of industry-defining franchises that have enormous potential and player demand, but we have not adequately funded them to compete and win. At the same time, as we saw this past weekend at Showcase, a reliable pipeline of first- and third-party exclusives and new IP are critical to our success. We need to reassess the balance between these and our investment priorities for the next 5 years.”
Microsoft’s new Exclusive strategy
Microsoft dipped its toe in the waters of exclusivity again during their Summer Games Fest Showcase. Games that are getting the “console exclusive” treatment, are the new Gears of War game E-Day, which brings us back to when the first locust attack. The other is new IP Clockwork Revolution.
Microsoft has stated these are not timed exclusives, however they are coming to PC as well, so PC gamers like myself will still be able to play them. Microsoft has said that games already announced for multi platform releases will stick to that plan. Specifically they said “If we’ve promised something to players already, we’re going to honor that promise”.
They go onto say “and then we’re going to make the right decision and not the fastest decision - we’re going to keep thinking about this going forward… and our principle is, when we announce the date, we announce the platforms. So its going to be case-by-case, but we’re going to be clear.
Xbox is rethinking Helix
Mathew Ball said Microsoft may need to rethink project Helix “We are very cognizant of the ways in which we need the change as a company to make sure it is affordable, to make sure that it’s flexible,” he added. “We are working hard to rethinking what that console model can look like, not in an exclusionary way, but in an additive way, so that as we take a look at this crisis, which may have acute effects for 2-2.5 years.”
He also stated that Gamepass lost millions of subscribers when they raised the price
Xbox ad supported games
Comments from Matthew Ball of Microsoft came under scrutiny as he seemingly suggested that Ads in games would help more people have the ability to play games.
“There is a two-sided problem. The costs have gone up way too high on development, and at the same point, everyone feels terrible with prices going up on hardware or software or microtransactions. That is a challenge. It’s not good if that is the only option,” he said. “I think the best evidence comes from the [TV] streaming space. In excess of 100% of net adds in the United States for years and years have been on the ad-supported tier.””
However he pushed back after the backlash
“This is not correct:
• In the interview, I am asked about a comment I made before being hired at XBOX, then state that I was only 10 days into the role, and that I am not stating the company’s plans or beliefs
• What I do say is that ads should be used to offer more affordable alternatives alongside today’s ad-free experiences, in the hopes more could play as a result. Similar to how Netflix and Disney+ have ad-tiers with all the same content, but at half the price or so
• At no point do I even mention in-game ads
(I personally believe interrupting the gameplay experience would be bad)”
Xbox and Nintendo announcements
Everything announced at the Xbox Showcase
Nintendo direct Games
