That was true historically but is no longer the case. Even last gen manufacturing costs didn't go down as much as they used to. This current gen they actually increased multiple times.

Older forms of media understand this. WB loses money and its still really valuable because people see the potential of Batman, Harry Potter etc.

IP studios are really valuable because they can drive attention to your platforms. Try starting a premium streaming service or a console without IP. But you can't manage it like tech. It's not going to grow all the time and returns are uncertain.

MSFT could be in the XBox as a platform business. They could have a few in house studios to prime the platform pump. Once it started being a content business they got lost.

There is absolutely no reason to be in sync with Sony on their console release date. They could have effectively released consoles bit more frequently. But they choose not to do so. Their acquisition has been questionable - Activision/Blizzard.

At the end of the day, the employee pay the price for bad management decision which they keep on making.

    > 150M at 5B revenue is not great

- A company which has undertaken a concerted, long-term effort to consolidate the industry under its umbrella (something they themselves call out as a problem in this post), reducing consumer choice

- A company which has captured a significant chunk of the console market. They're one of the big three (alongside Sony and Nintendo), and have been since the early 2000s, arguably, for crying out loud.

At a certain size (typically as measured by market capture) the expectation for growth needs to be reality checked. This is still $150M of pure gravy every single year. Sure, this is going to a corporation, but that's more money than most people could possibly dream of earning in ten lifetimes.

Every year. For a company that's already putting money towards opex in the form of developing new games and new content for existing ones, for a ridiculously broad portfolio.

To be clear: it is Microsoft's and Xbox's prerogative to pursue more profit, but I reserve the right to call this out as absurd under the circumstances.

If you want to make the argument that Xbox has suffered from a lack of focus in the past decade (... or even longer), or that there's been mismanagement (I would say since around the time 343 got created), then those are fair arguments, though I don't think those are justifications, on their own, for cutting thousands in headcount.

Allowing this org to balloon to fourteen levels of management on any vertical is a joke. Allowing the absorption of so much of the game dev industry and still being unhappy with $150M in annual profit after being such an active participant in the oligolpolization of console gaming is just a bit unserious.

and yet everybody - including Microsoft - is in a big rush to sell us AI services, which could look an awful lot like a historical utility business. 3% will be a dream return in that scenario!

Buy a plethora of studios. Pay an order of magnitude over the odds for the big ones - just to be sure you get them! ‘Rescue’ smaller ones of questionable financial value - as part of Xbox they’d somehow be successful enough to justify the price paid. Heavily manage the studio heads - but, uh, also give them total creative freedom - and allow them to make niche games. Sell hardware at a loss - but also make the games available on all platforms. Don’t allow any software that takes advantage of your most powerful hardware, because it also has to run on the other, less powerful console you are also selling. Also, the future is streaming! But, uh, maybe not!

Not just the strategy, but almost every aspect of the ‘strategy’, was incoherent - as current management is very close to outright saying.

Buying Activision for 20x of its annual profit, on the other hand, makes zero sense. ABK was not lacking capital, had the same MBA management Microsoft has and did not have much room to grow, Blizzard alone had 5K employees. Their IPs had long time since plateaued or had been in decline already. What was Microsoft plan to increase profit? Switch everyone to Teams? Put more people to work on CoD and release 2-3 CoDs per year, hoping they all will sell as well as the annual CoD? The more realistic path to return of the investment could come from increasing Xbox's share of the market by making their newly acquired IPs Xbox exclusive. But they did not do even that.

Undead Labs has shipped nothing Compulsion shipped South of Midnight topping at ~1600 players on Steam Ninja Theory has shipped Bleeding Edge and Hellblade 2 and Double Fine shipped Keeper and Kiln.

It's a net positive that these studios and this culture is gone. I am sure that food was amazing.

It was a risky bet that became even higher risk when MSFT spent ~$80 billion dollars rolling up game studios near the peak of the historic COVID gaming bubble. They bet it would greatly increase Game Pass sub growth. Instead, Game Pass sub growth slowed down. At the time I thought it was a reasonable plan - but not at the prices MSFT was paying for content. Then the DRAM drought killed hardware sales to gamers forcing the issue.

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.

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.

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.

Hard to really say. Kiln and Keeper can easily be made up for by the sales of Psychonauts 2. I'm sure an indie Double Fine would not have been able to make those kinds of games.

This takes me back to Pertinent, another small game from a reputable studio, had its main writer saying that "this kind of game would not be possible without Gamepass". Which I 100% believe. Microsoft definitely didn't buy Double Fine trying to make the next Fortnite, but that arthouse strategy clearly isn't a factor these days.

Also this is part of why I'm really worried about how weak the concept of game ownership is getting.

See also how anyone buying GTA6 near launch will be unable to resell it.

While Bungie had historically been tied to Xbox / Microsoft during the Halo era, Bungie spun out to be its own company in 2007, and then was bought by Sony in 2022. It was Sony, not Microsoft, driving the most recent layoffs at Bungie.

Never ending growth and profits just seem to ruin everything

People see a 3% return and think, "Well, they aren't losing money so there is no reason they can't just keep doing business as usual." What this idea is missing is that the investors in a company aren't choosing between "keep my money in this company" and "sit on the cash", they are choosing between "keep my money in this company" and "invest my money somewhere else"

In other words, you aren't just looking at direct returns on an investment, you also have to think of the OPPORTUNITY COST of the investment. By keeping their money invested in a business making 3% returns, they can't invest that money somewhere else.

The whole point of a market-based economy is to allocate resources to making things people actually want. How does the market figure out what people want more of? Well, profit margin. If someone is making a lot of profit selling something, that is a really good sign that people want more of that thing. Other people see the high profit margin, and move to get into that business. More of that thing is created, and people's demand is satisfied.

The high profit margin is the signal (and the incentive) to get more of that thing.

In other words "Compulsively chasing only the highest margins" can be rephrased as "investing in things that people want more of"

Mix that with the increasingly higher concentration of wealth, and things are just going to get worse.

> Sharma posted in 2026 that she had recently begun playing video games under the gamertag AMRAHSAHSA to "learn and understand" the games industry

Imagine running the Xbox division and only just now picking up a controller.

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

Gacha?

https://en.wikipedia.org/wiki/Gacha_game

Yes, 100%. I love good graphics, but game play is the most important thing. If you don't have good gameplay the graphics mean nothing. A game with great game play and great graphics is something to behold.

I recently finished Split Fiction and they really nailed it. I hope studios take notice!

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.

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.

Could have fooled me. I haven't seen a meaningful improvement in game graphics for at least a decade.

This IMO is a display of what is wrong with a lot of online gaming discourse — it is dominated by people who spend more time playing and critiquing games than 99% of the population and has a tendency to overemphasize indie darlings and ignore the massive commercial success of mainstream titles. Forza 6 released in May and is wildly popular among normie gamers. So is your yearly call of duty instalment which is now a Microsoft property. Go ask people coming out of a Walmart if they know what is Animal Well and they will probably think you are soliciting donations for a local animal shelter.

I'm not saying you can't criticize mainstream AAA games. I get they are boring, formulaic and increasingly rely on predatory business models. But if you want to talk about business and what kind of games companies should invest into, you can't just ignore the massive commercial success AAA already enjoys or the fact that most indie games flop anyway.

And yes, people will play games that can only be made in an established franchise by a major company. Forza is able to license real world car models from companies like Porsche because it is a well known and safe brand backed by a big company. Not to mention games like Microsoft flight simulator or GTA.

Overall I think western AAA game development is dead. The executive class killed it with their greed and incompetence, and as long as these huge corporations are allowed to keep buying smaller studios/publishers and shutting them down a few years later, nothing is going to change.

Also worth noting Skyrim first came out on the 360; an honor shared by GTA5, but at least they have an imminent release.

I agree, they need to be focusing on smaller projects that take risks. Maximum 24 month dev times but with modern tooling could do some special things. Maybe if after 6-12 months they see something that is gold, they can give it more resources but that would be on a case by case basis.

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.

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.

Now things are even worse with the RAM and SSD components crisis. The Series S has now the price of the Series X when it launched.

  > human like NPCs and smarter enemies and some other use case they can sell to the masses.

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

God of war is plainly movie on rails compared to E33

Yeah, he split from the traditional studio system to create... his own traditional studio system.

Kojima is precisely what happens when you stop thinking of games as actual an interactive entertainment format and start thinking of it as a "cinematic experience" instead.

Death Stranding is only a game by the narrowest of margins. What it is is a movie with Kojima's Spotify 'favourites' list as the soundtrack that so happens to have one interactive element or two thrown in there for good measure.

It's pretty telling that all he's done after splitting away from Konami and surrounding himself with his own sycophantic group of developers is Death Stranding. Kojima is the direct result and pretty much the face of a lot that is wrong with the games industry right now.

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...

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.

A lot of Nintendo's remakes end up being training exercises for the real deal, such as Metroid 2 remake to Dread. Meanwhile, some of the laid off devs here might have never seen a properly produced title with zero crunch and anomalies. Not every title should be an auteur title, but we have too many auteurs and we want more auteurs.

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!

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.

"Press this button exactly when the game tells you" and "as soon as you cross this exact point, this exact enemy will appear" - that's year-2000-ish (or worse) gaming tech.

The final confrontation was essentially ruined because the designers apparently never thought you'd use a sniper rifle, so you can set off a deafening shot that kills an enemy and the other enemies don't even notice the shot because it apparently happened outside their detection range.

Nintendo's exclusives outsell Sony's by a significant margin, and they're usually simpler games that are broadly accessible. They leaned the right lessons from the indie gaming boom, and didn't try to resist it by pumping billions into making the next Overwatch killer or whatever.

And it's not surprising Nintendo isn't doing well in this clown market. They are taking a hit because they resisted pressures from shareholders who wanted them to raise prices on its new system. Nintendo eventually gave in, but with a much smaller price increase and a delayed effect from announcement to implementation (~4 months forewarning). And on top of all that they are not hyping AI to the moon.

And I haven't even gotten to the overall economic climate of Japan yet. Nintendo's stock falls would happen regardless of if they followed the above.

These are good, pro-consumer moves. It shows that more companies need to think past next quarter and resist the whims of people who don't have your company's long term interests in mind. You're the expert here, not them.

But Phil was the one who dug two incompatible holes and kept digging hoping they’d meet in the middle with buried treasure.

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

14 layers of management :-P

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.

From hitting run Run to first Player Input is seconds in most cases. No console bootup, no system updates, no game patches, no agreeing to game EULA version 5.129912342, no denying the game access to online content on every third screen, etc.

I'm sure its loading slightly faster emulated, but 90% of it is just not having the junk that has accumulated over the last 20 years.

Xbox is a dedicated gaming device and while the game/device is updating I’ll have to sit there. Plus the updates for some reason slows down the longer it takes. They’ve lost my attention.

Of my friends who own vinyl collections, they almost always use Spotify/Apple Music 90% of the time.

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.

Indie games are at an incredible place right now (I am aware it's crazy cut-throat, though). It would be nice to see what quality comes out in response to this disaster.

It’s great for concentrating ownership and mass applying ruthless management tactics at scale, and for using IP as leverage to hollow out a company.

Your manager who used to just focus on motivating and unblocking their people? Now they have to ship code too since they’re a player coaches! You’re a DRI who needs management to get your project unblocked? Too bad your player coach who has to ship code now also has 20 direct reports because the hierarchy was flattened so you can’t get time with them until next week and are blocked until at least then.

It is the hot new trend from the “thought leaders” who have all consistently copied each other’s bad ideas for the past 10 years.

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

Let's be honest here.

1. https://www.mobygames.com/game/240054/south-of-midnight/cred...

i agree that mandatory downloads are a big problem (thats why willitplay is a thing) but offline installs from disk are the biggest change that made ps5 games load so much faster than ps4 and opened up a lot of new options for devs. reading data from ssd will always be faster than a blu ray. the only downside is you have to manage space a bit more but its worth it. if you want straight from disk get ready for slower uglier harder to develop games.

You can occasionally get one where a very final version copies straight off a PS5 disc.

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.

MS crawling on their knees to Valve to get them to cooporate on something (and Valve saying yes!), or MS figuratively doing the same by undoing all the problems MS have made for themselves with Windows and making a decent 10-foot UI so you'd actually want to use Steam on your Xbox, both seem incredibly unlikely.

Not to mention that this is more or less just admitting defeat for MS, leaving every single penny of profit in PC and Xbox gaming to Valve, other than what's directly tied to the hardware, which isn't where any of the profit actually lies.

[1] https://www.pcgamer.com/gabe-newell-i-think-windows-8-is-a-c...

Okay. Then who is that? Most of the people who play games who I know are either A.) Console gamers who only use PCs for work, 2.) PC gamers who don't see the point in a console, or III.) The top 1% who just go where the games are and are willing to spend to get there, and that group isn't generally a fan of not actually owning their games, nor are they very price conscious (they don't like higher prices, but they'll drop 400 USD to buy a PS4 and Bloodborne, since that's the only way to play that game).

I'm yet to see someone using Game Pass on a handheld.

So if that's the intended market, no wonder it isn't doing too hot.

Mostly I was playing indie/older games that could have been playing on the Xbox One.