Xbox console sales continue to crater with 42% revenue drop

I think the issue is that consoles are now just storefronts for a digital platform. Xbox lost the PS4 generation, where most people stopped buying physical games and started purchasing digital games.

If you have your entire collection of games on PS4 (or Steam, or Xbox), moving to a different ecosystem is a pain. Even if the console itself is cheap and they give away games, once you have everything in one place, there is little incentive to move away from your console of choice on the next generation. You have to differentiate a lot of your competition, (as nintendo does) but an xbox is basically the same as a ps5, just with 20 or so different games (exclusives).

That wasn't the case in the past. With physical games, I usually had more than one console, and depending on the price, performance, or other factors, I would choose one platform or another.

That's why I think they want to push PC and even TV gaming. Getting people into their ecosystem is the tricky part.

The console as hardware is actually great, probably better than the PS5, and really cheap for such a powerful computer.

Why would someone want to buy the latest xbox?

I own an xbox (previous generation), and pay for game pass. There hasn't been a game on game pass or that has come to the store (that I am interested in) that doesn't play on the previous generation. I _want_ a new one, but haven't bumped up against anything that I haven't been able to do with my older xbox, so I haven't had anything to look forward to or get access to with the new system.

I also wonder how much their naming scheme hinders their sales. I find it so confusing, and the current and previous generations may as well have the same names as I can't disambiguate them.

Everybody who wanted an Xbox has purchased one. The only way they'd increase sales is to do some crazy promotions for Christmas, like an Xbox Series S for $200 or $250. Which they've done before with their previous "lower tier" consoles.

The entire story of Xbox is: If Halo didn't exist, Xbox would have died years ago.

Microsoft is fundamentally culturally incompatible with basically any product that isn't Enterprise B2B. The stories from e.g. Seamus Blackley out of early-day Xbox are harrowing; the division exists despite the rest of Microsoft, almost in flagrant opposition. They've invested hundreds of billions of dollars into game development over the past ten years, managing to produce literally zero new titles achieving even same-magnitude levels of cultural and market success as a typical Playstation triple-A. They've sustained themselves on ZIRP acquisitions of big games, and given enough time have managed only to run their acquisitions into the ground.

Xbox made a call a few years ago that "more eyeballs on games is always better"; they reduced the prominence of the Xbox console, brought all their games to PC on day one, and even started selling them on Steam. That prioritization gave up all of their platform power; tithing 30% of every sale to Steam is a huge revenue leach, not to mention losing out on their own 30% on Xbox consoles. Spencer's argument has always been that Game Pass is the platform; but gamers aren't the kind of passive consumer of content that e.g. Netflix subscribers are. Gamers very regularly make value assessments like "yeah I want to try this new game, I'll pay the $10/mo for one month of Game Pass, cheaper than the $20 upfront", or "I'll be playing call of duty all year, cheaper to buy it upfront on Steam than pay for Game Pass". It was obvious to anyone that Game Pass's primary function was to save gamers money; no one sticks with the platform when it stops doing that.

There is literally no company I would short harder than Xbox, if Xbox were shortable independent of Microsoft. The world would be better off if Spencer had never taken over for Mattrick; Mattrick is actually mind-numbingly, fool-in-the-public-square level incompetent, and if he had remained in charge we wouldn't even be having this conversation in 2024, ABK would still be independent, maybe even Halo would have been sold off to a better studio than 343i. Spencer has done better, but in his valiant attempts has taken a dozen classic gaming brands and franchises down with him.

Xbox is weird. They offer a game pass to play (stream) xbox games onto non-xbox devices (tv, pc even I think). So if you really wanted to play xbox games, you don't necessarily need the xbox itself anymore.

I wonder if this makes sense at scale? Sure the sales of the console itself are down, but are sales of games/passes up? Is selling a subscription to a choice of games more lucrative than selling a console one time, and selling a game one time?

Something that hasn't been brought up is how had Microsoft is at marketing xbox brand internationally. In Europe (maybe excluding UK) there is hardly any xbox presence. No adverts, no presence in stores. Gamepass is not officially available in many European countries. Gamepass streaming even less. At the same time I see Sony game ads everywhere and presence in physical stores.

How is Microsoft expecting to sell hardware when it's not available officially?

I find myself slightly annoyed that I always turn to my PS5 - as it has the better catalogue and people I want to play with on it - than my Xbox, since the Xbox controller is frankly nicer on my old ass hands.

Xbox Series X and Gamepass comtinues to serve as an awesome introduction to console gaming for me. I really do hope physical XBox consoles continue to exist.

They really haven't been able to recover from the Don Mattrick era.

Seems to be by design at this point. I don't even blame the higher ups at Microsoft for forcing Xbox to go console-less and 3rd party only. After 10+ years under Phil Spencers watch, almost every franchise Xbox was known for went to complete shit. Halo Infinite cost an estimated $500 million and might literally be the biggest entertainment flop in history.