Microsoft’s Games Showcase Comes at a Pivotal Moment for Xbox

After 12 long years at the head of Microsoft’s gaming division, Phil Spencer passed the Xbox CEO baton to Asha Sharma earlier this year, and the new exec aims to turn Xbox into “the number one gaming and entertainment company.” Tomorrow, the Xbox Games Showcase will be Microsoft’s opportunity to prove that it’s still long on gaming.

Sharma, who had no background in the video games industry, said in a recent interview with Bloomberg that her first assignment was to understand the “soul” of Xbox. Now, the exec said that “the next 100 days are … about resetting the business.”

I’ve been following Xbox and the video game industry for more than 10 years, and it’s been strange to see Microsoft spend close to 100 billion dollars on studio acquisitions all while seeing the Xbox brand slowly lose its relevancy. If the Xbox 360 generation was truly a golden era for the brand, the company never really recovered from the disastrous launch of the Xbox One.

Worse, I think Microsoft forgot how to make great games along the way… and how to market them properly.

“Microsoft has no taste”

Back in 1995, the late Steve Jobs came up with a quite provocative statement about Microsoft. “The only problem with Microsoft is they just have no taste. They have absolutely no taste. And I don’t mean that in a small way; I mean that in a big way, in the sense that they don’t think of original ideas, and they don’t bring much culture into their products,” Jobs said in an interview.

I’m not going to say that Apple has perfectly good taste and Microsoft doesn’t: I actually think Microsoft once had great designers, and one of the things that led me to cover Microsoft news was Windows Phone, which I loved. But it didn’t ultimately resonate with consumers.

What Steve Jobs said about Microsoft’s “taste,” or lack thereof, reminded me of an old anecdote about GTA III. Back in 2021, Microsoft published a Power On documentary series to celebrate the 20th anniversary of Xbox. In the third episode of this series, Kevin Bachus, who was head of Xbox third-party relations when the original Xbox console launched in 2001, said that Microsoft rejected a pitch from Rockstar Games, and the game ended up being a timed exclusive on Sony’s PlayStation 2.

“They felt that it was complicated,” Bachus said about a group of new Xbox executives who were reviewing developer pitches back in the day. “They didn’t really understand the interface; they thought that it was based on a game that hadn’t been all that successful. To my surprise, it was rejected”.

GTA 3 went on to sell millions of copies on PlayStation 2 before it was released on PC and then Xbox, and its sequels Vice City and San Andreas also ended up being timed PlayStation 2 exclusives. With Sony getting marketing rights for GTA VI, probably the most anticipated game of all time, I can’t help but think that Xbox would have looked much different today if execs had seen the blockbuster potential of GTA III back in the day.

I see a parallel with Bungie leaving Microsoft after releasing Halo: Reach, the last Halo game with a 90+ Metascore. Bungie later had massive success with Destiny before being acquired by PlayStation. So did Insomniac Games with Marvel’s Spider-Man after the studio was acquired by Sony, just a couple of years after creating the Xbox-exclusive Sunset Overdrive for Microsoft.

Again, I can only imagine what could have happened if Microsoft had the flair to acquire a studio like Insomniac Games for a fraction of the cost of larger companies like Bethesda and Activision. The return on investment for Sony must have been huge, and games like Marvel’s Spider-Man and its sequels were true system sellers for PlayStation.

The OG Xbox and Xbox 360 still had great exclusive games, however: The original Halo and Gears of War trilogies were unforgettable experiences, and even a racing game franchise like Forza Motorsport consistently received 90+ Metacritic scores.

The Xbox 360 era was also when Xbox had a marketing deal with Activision for Call of Duty games. You may also remember that the original Titanfall game from Respawn Entertainment was exclusive to the Xbox 360 and the just-released Xbox One.

Unfortunately, I think the Xbox team started to lose its mojo at the beginning of the Xbox One era. The Halo: The Master Chief Collection anthology was released in a broken state, and Halo 5: Guardians was a disappointment, just like Halo 4 was at the end of the Xbox 360 era.

“If we lose our way with Halo, we lose our way with Xbox,” Phil Spencer predicted back in 2011. In hindsight, this was pretty much a self-fulfilling prophecy.

Except for the Forza Horizon series, it’s hard not to see how Halo and Gears, two of Xbox’s tentpole franchises, lost their cult status in recent years. Microsoft also tried to revive old IPs like Battletoads, Killer Instinct, or Perfect Dark from Rare, but Xbox gamers didn’t care.

All the studios acquired under Phil Spencer’s leadership also failed to deliver the kind of bangers Xbox desperately needs. But even Spencer apparently didn’t believe in Xbox’s ability to create system sellers.

“There is no world where Starfield is an 11 out of 10 and people start selling their PS5s. That’s not going to happen,” Spencer told Kinda Funny Games ahead of the release of Starfield.

I think that was a crazy thing for the head of Xbox to say.

If you just check the list of Game of the Year winners and nominees since the creation of the event back in 2014, you can see that Sony had 13 nominations and 3 wins for God of War, The Last of Us Part II, and Astro Bot. Nintendo had 11 nominations and one win for Zelda: Breath of the Wild.

Xbox, however, had just one GOTY nomination for Double Fine’s Psychonauts 2 back in 2021. But that game was barely marketed, and neither were Double Fine’s latest releases, Keeper and Kiln.

After seeing Halo Infinite, Forza Motorsport, Starfield, Hellblade 2, or The Outer Worlds 2 all fail to reach the level of critical acclaim and recognition Xbox desperately needs, maybe Asha Sharma will need to do more quality control. Hopefully, that’s part of the “hard choices” she said were required to make Xbox stronger.

I remember when Matt Booty, now Xbox’s Chief Content Officer, said in 2021 that Xbox had enough first-party studios to release a new game every quarter. Unfortunately, this focus on quantity over quality probably led to having far too much filler content for Microsoft’s Game Pass service.

The search for Xbox’s soul

Microsoft created the original Xbox console because it was afraid of Sony possibly dominating the living room with its PlayStation consoles. It was also a way for Microsoft to expand the footprint of Windows beyond PCs.

The Xbox 360 was exceptional in terms of game quality and execution, and it also marked the beginning of the switch to digital game libraries. However, Microsoft probably started to lose the plot with Kinect, which was the source for the all-connected vision Microsoft had for the Xbox One.

Xbox has suffered from a perception problem since the beginning of the 8th gen console generation. There was the awkward “TV TV TV” obsession during the console’s original presentation, the bad buzz around the DRM policies and Internet connection requirement (which Microsoft quickly abandoned). Then the Xbox One was criticized for being less powerful than Sony’s PlayStation 4 despite being $100 more expensive with its bundled Kinect sensor.

“Xbox has no games” almost became a meme during that generation due to the game quality problems I mentioned earlier. The Xbox One X launched without any exclusive games back in 2017, and the Xbox Series X had the same problem three years later.

The less-powerful Xbox Series S was also blamed for a lot of Xbox’s failures during this console generation, with some high-profile ports like Baldur’s Gate 3 and Black Myth Wukong being delayed. In some ways, the focus on cloud gaming and bringing Xbox games to more players beyond the traditional console audience also caused some damage to the brand.

In 2020, Phil Spencer went on to say that Xbox’s main competitors were no longer PlayStation and Nintendo, but Google and Amazon. Then, we had the ill-fated “This is an Xbox campaign,” which tried to convince gamers that there was no need to buy Xbox consoles since everything was now an Xbox.

Except that’s not true, even for the Asus ROG Xbox Ally handheld. Despite its Xbox branding, this is a Windows PC that can’t play Xbox console games. So yes, as Asha Sharma said, it’s probably time for a “reset” of what Xbox really means, because I’m not sure Microsoft knows anymore either.

It has also become hard to define what really is an “Xbox game.” Microsoft owns Minecraft, but there’s nothing about Minecraft that really screams Xbox. I also don’t think most gamers would associate franchises like Fallout, The Elder Scrolls, or Call of Duty with Xbox, even though Microsoft now owns them all.

In my opinion, this is mostly a marketing issue. I’m sure many gamers associated Call of Duty with Xbox when the company had a marketing deal with Activision during the Xbox 360 era. However, these marketing rights later went to PlayStation during the PS4 era, and that team did a much better job with them. PlayStation also struck a similar marketing deal with EA for FIFA games, and it did the same with Rockstar Games for the upcoming GTA VI. This will likely greatly boost PlayStation 5 sales.

With almost no marketing, no more exclusive games, and a lack of clarity about what Xbox really is, it’s no surprise that Xbox is seen as “failing,” even though it’s a billion-dollar business and the second biggest game publisher in the world.

Maybe we would see Xbox differently if it followed Sega’s route and just focused on developing great games for all platforms. But in my view, Microsoft can’t really abandon the console market as it needs to provide an upgrade path to existing Xbox gamers who may also be paying for Game Pass. I also imagine that the majority of people who subscribe to Game Pass are on Xbox consoles, and I’m not sure how Game Pass can grow without that console audience.

Project Helix and the future of Xbox hardware

Microsoft already announced its next-gen Xbox console, which is codenamed Project Helix. However, it’s difficult to see how it can succeed better than the Xbox Series X|S generation, which so far is doing worse than the Xbox One generation in terms of hardware sales.

Microsoft said that Project Helix will be able to play PC games in addition to Xbox console games, but will gamers really care? The console audience usually favors a curated experience and hardware and software that “just works.” If Project Helix does run Windows under the hood, we may get a far less polished experience than what we currently have on Xbox Series X|S consoles.

However, if Microsoft doesn’t have great exclusive games to compete with PlayStation and Nintendo, I think offering free multiplayer on Project Helix would be a major competitive advantage. That may well happen if Project Helix does run Windows, which is an open platform with no multiplayer paywall.

Project Helix will also compete with SteamOS devices like Valve’s upcoming Steam Machine. We’ll likely see other manufacturers release their own Steam machines as well, and maybe Microsoft will eventually do the same and allow third-party Xbox-branded consoles to come to market. That may well be the best way to gracefully exit the console market.

In her interview with Bloomberg on Thursday, Sharma pointed out the ambiguity of trying to be both a major game publisher and a platform company. “We’re the number two publisher in the world, and … to be a great publisher, you must have your games reach large audiences to play,” Sharma said. “At the same time, we’re increasingly becoming a platform. To be a platform, you must have exclusive content, and so we’re looking at that very closely,” she continued.

Microsoft already has the biggest gaming platform with Windows. Now, it just needs to focus on making great games.