What the heck is going on with Microsoft Xbox?

It’s been a rough generation for the Xbox brand, but the last couple of months have been particularly brutal. Between massive layoffs, studio closures, and first-party titles coming to competitor platforms, the Xbox fanbase is rightfully confused and frustrated with the current management. So many questions are swirling around the internet, and there is quite a lot of rumors and speculation muddling the real information. The most pressing concerns relate to why Xbox is closing its studios, is Phil Spencer responsible, and what does it all mean for Game Pass and the future of Xbox as a whole.

Some of these questions have official answers, while others we have to rely on reports from reputable sources. I’m here to set the record straight on what the heck is going on at Xbox and give my own two cents on how all these current moves could indicate what the future (or lack thereof) of the brand might look like. This is a messy story, so strap in and let’s sort through all the recent drama to try and make some sense of things.

Why is Microsoft Xbox in turmoil?

Studio closures

Xbox

The inciting incident to all this has to be Xbox closing down three of its studios under Bethesda: Tango Gameworks, Arkane Austin, and Alpha Dog Games, with Roundhouse Games being dissolved. With the exception of Arkane Austin releasing the critical and commercial failure Redfall last year, none of these studios have been underperforming. In fact, Tango Gameworks’ Hi-Fi Rush was a critical hit that received numerous nominations and awards and has recently been ported to PlayStation where it has received even more sales and praise. Considering Xbox chose to purchase Bethesda’s studios to the tune of around $7.5 billion, and just last year shelled out almost $70 billion to purchase Activision Blizzard, fans are right to question why.

The answer is complex, but let’s begin with what Xbox President Sarah Bond said regarding the matter in an interview with Bloomberg. Unfortunately, she didn’t give a very satisfactory answer.

“It’s always extraordinarily hard when you have to make decisions like that… When we looked at those fundamental [industry] trends we feel a deep responsibility to ensure that the games we make, the devices we build, the services that we offer are there through moments. Even when the industry isn’t growing, when you’re through a time of transition.The news we announced earlier in the week is an outcome of that, in our commitment to make sure that the business is healthy for the long term.”

In reality, the answer is more simply stated as needing to cut costs and reprioritize focus in big franchises. Xbox hasn’t listed official console sales numbers in many years, but it has consistently fallen behind PlayStation and Nintendo in the monthly Circana reports. Xbox would also have posted a decline in revenue in software had it not been able to include newly purchased Activision Blizzard titles in in its reports. There’s also a lot of speculation as to whether Game Pass is turning out to be a viable business strategy, but it can really be boiled down to the fact that Xbox needs to start turning a profit, and even if a game like Hi-Fi Rush makes some money, it isn’t enough when those resources could be put into a sure-fire hit like Call of Duty.

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Is Phil Spencer to blame?

Time to go?

Phil Spencer has been the face of Xbox ever since he took over and has been attempting to revitalize the Xbox brand after it cratered during the Xbox One launch. Ever since, he’s attempted to present himself as a fellow gamer who is in it because he loves games just like the rest of us. While this does have its advantages, it also paints him as a clear target whenever a decision is made that fans disagree with. This talk started with the earlier decision to put previous Xbox exclusives on other consoles, and of course, now has the community calling for his head for shuttering studios he himself led the charge in acquiring.

In one way or another, I do believe the blame falls on Spencer but I am not comfortable saying it is right to call for his removal. The way I see it, he either made this choice based on the current sales data and projections as a sacrifice to try and save the brand as a whole, or is now under far more pressure from Microsoft after the Activision deal to become profitable. There is no real distinction between the two at the end of the day, but the fact is Spencer’s persona, whether genuine or not, is conflicting with his current actions. I always urge people to never become loyal to a brand, and even less so to people who represent them. Phil Spencer’s primary job is to make money off of you. He will only pretend to be your friend as a means to earn your loyalty and cash.

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What does this mean for Xbox and Game Pass?

Is it going third-party?

Xbox’s future has never been so uncertain. Spencer and the team have been attempting to change the way games are played, sold, and accessed for years but haven’t found enough success. I can only predict what is in the works, but I have some fairly confident ideas.

First is that Game Pass will stay but become more expensive. This has already been reported as being talked about at Xbox, and it seems like the only solution left since subscription numbers just aren’t going up.

Second is that Xbox will fully commit to bringing most, if not all, of its exclusives to other platforms. Microsoft President Satya Nadella stated, “Earlier this month, we had seven games among the top 25 on the PlayStation Store, more than any other publisher.” That level of success won’t be ignored.

Finally, I believe there will be one final Xbox console, traditional or handheld, and it will be released ahead of the PlayStation 6 to try and make one last play at capturing an audience in the best possible scenario.