A new burning platform?

Laurent pointed me at a Jon Kimmich guest post on Games Beat that claims Xbox is a new “burning platform,” similar to the 2011 assertion Stephen Elop made when he took over as Nokia CEO. If you care about Xbox, it’s worth reading, though I’m not sure I agree with the premise.

A console platform is a two-sided market: consumers do not show up without games, and publishers do not show up without consumers. At launch, you are selling a belief system as much as a box. Retailers, developers, publishers, press, and players all have to believe there will be enough gravity for the box to matter.

That is why first-party content mattered. It was not simply about owning studios or filling a release calendar. It was about proving commitment. Halo was not just a game; it was evidence that Microsoft was serious. Bungie, Ensemble, FASA, Rare, and the publishing deals around Dungeon Siege, MechAssault, and others were all part of the same platform argument: we will create enough gravity that third parties can safely invest.

In that context, spending aggressively made sense. We were buying time, credibility, and the right to become a platform.

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The mistake was applying that same logic to Game Pass. Game Pass was not solving the same cold-start problem. Xbox already had customers, content, distribution, and a brand. Game Pass was trying to change the revenue model of an existing business. That is a very different bet. Subsidizing content to create a platform is one thing. Subsidizing content to replace transactions with subscription lifetime value is quite another.

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The console installed base is smaller than it needed to be. Sony owns the premium console mindshare.  Nintendo owns the premium mobile console mindshare.  Steam owns PC distribution.  Mobile is controlled by Apple and Google. Cloud has not become a mass-market replacement for local play. And Xbox carries a cost structure built for a growth curve that did not arrive.

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The harder truth is that the whole thing was built on a smoldering platform now on fire: the Game Pass thesis.