How will Xbox’s Future Impact the Gaming Industry in the Years to Come?

Entering 2024

The reality Xbox faced when the year started was that they were behind. When looking at the console market, and player populations, Sony and the PS5 were on top. This was nothing new, and hasn’t been for a very long time. However, from a business standpoint, Xbox had to address this, now entering year four of the Xbox Series X. They had just closed the historic $69 billion purchase of Activision Blizzard in 2023, and were trying to put the pandemic years behind them, with several notable games getting delayed and releasing in unfinished states (Halo Infinite, Starfield, etc). 2024 was the year that promised lots of first-party games, which fans had been clamoring for and Xbox had been promising. Hopes were high, and Xbox seemed poised to capitalize on this moment coming into 2024 with a slate of original games announced.

Exclusive or nah?

Microsoft first stumbled in February when they announced that four Xbox-exclusive games are coming to PS5 and Nintendo Switch. Now, from a business standpoint, Xbox was clearly needing to make some changes moving forward, with the majority of gamers simply existing outside their ecosystem. And that’s understandable given the economic reality they were facing after just spending $69 billion. But this didn’t make it any easier for Xbox loyalists to hear, and caused genuine concern from that community because Xbox ultimately messed up in their messaging.

Phil Spencer, Microsoft Gaming CEO and de facto face of Xbox, said at the time, “we’re going to take four games to the other consoles, just four games. Not a change to our fundamental exclusive strategy.” He followed that by stating, “I do have a fundamental belief that over the next five or ten years exclusive games, games that are exclusive to one piece of hardware, are going to be a smaller and smaller part of the game industry.” Starfield and Indiana Jones were confirmed to be not part of the first four games at the time, but he went on to say, “I don’t think we should as an industry ever rule out a game going to any other platform.”

You could call these statements vague, non-committal or just typical PR talk, but now having our hindsight 20/20 glasses on, it seems clear that Microsoft and Xbox knew more than they were letting on. They just didn’t think these comments would come back to haunt them.

Project Latitude

In June, a report from Tom Warren at The Verge came out describing Microsoft’s secret internal plan to broaden the number of games Xbox would release on other platforms. Operating under the code name Project Latitude, the initiative seemingly expanded on the “just four games” that were announced earlier this year. The rumor mill went crazy with legacy franchises like Gears and Halo being thrown in the mix. Naturally, Xbox fans all but declared that the sky was falling.

After previously suggesting that non-exclusive games would be a rarity, Spencer had apparently changed his tune.You are going to see more of our games on more platforms, and we just see that as a benefit to the franchises that we’re building, and we see that from players, and the players love to be able to play,” he explained in a June IGN Live interview. So much for these changes happening over the next five or ten years.

So already in 2024, Xbox had tripped itself up, championing their first-party titles, hinting at a business change, but specifically remaining steadfast in their commitment to exclusivity, only to seemingly completely abandon that philosophy mere months later. This kind of inconsistent, yet demonstrative, messaging has caused many to wonder what the future holds. Clearly, you can’t take them at their word, but just how far and how quickly are we going to see Xbox shift?

Later in June, Xbox tipped their hand even further, announcing that you could play games via an Amazon Firestick, no console needed. Their plan seemed even clearer now: In order to compete with PlayStation’s domination of the market, Xbox was going to breach their audience in untraditional ways. Gone are the days that Xbox can afford to have exclusives on their platforms and still make enough profit to justify them. We’re seemingly in a new “nowadays” where “Xbox” is more brand than console, and will happily make great games you can play anywhere.

This shift in methodology was as jarring as it was abrupt, and it understandably reinforced fans’ confusion. It was a clear case of failed messaging. By trying to keep its business plans secret while openly shifting its ideology and playing the fence with fans, Xbox lost its ability to control its own narrative.

Fall 2024

Now, entering the back end of 2024, Xbox continues to take hits. This month, the brand has suffered multiple bad headlines surrounding the Xbox Series S and game release logistics.There was a lot of speculation around “Black Myth: Wukong” not appearing on Xbox at launch. That was ultimately revealed to be due to an exclusivity deal with Sony (although how Sony got this deal is still being speculated on). This was followed by the developer of “Dune Awakening” citing the Xbox Series S as a challenge to develop for, something that more and more developers have been claiming. And to cap things off, the developer of “Entoria: The Last Song” sent out a plea to the public to help them get Microsoft’s attention after spending large sums of money on an Xbox version of their game only to get no reply on their submission. Thankfully, the plea worked, but all this boils down to Xbox just looking unnecessarily messy. A legacy gaming company with the size and power like Xbox should not be faltering so poorly on a basic PR level.

On top of this, Xbox just announced more layoffs, which primarily affected corporate and supporting functions within Activision-Blizzard. The continued downsizing post-merger has affected 2,500 jobs to date, only adding to the negative headlines for Xbox.

With all of this in mind, it's easy to see why Xbox fans are frustrated. After all, these botched releases and strategic switch-ups give the impression of a company without direction. With Xbox being such a massive entity, predicting its future is the same as speculating about the future of the industry. This leaves fans with lots of existential questions for gaming as a whole. Will hardware really only come from one or two companies in the future, potentially hurting innovation? Will digital and cloud gaming finally kill off physical game releases, and put all gamers at the mercy of digital catalogs and subscription models? If these few remaining companies have such strict business goals they have to meet, what impact will that have on independent studios and the types of games they will be able to make?

Ironically, the reception and quality of Xbox’s own games have been very positive this year, with older games really hitting their stride, like Halo and Starfield, and new games like “Senua's Saga: Hellblade II,” and upcoming titles like “S.T.A.L.K.E.R. II” and “Indiana Jones and the Great Circle” getting a lot of hype. There are some things to be happy about, for sure, so this is definitely not the moment to hit the panic button, and we do not need to declare Xbox “dead,” especially when we all know the news/PR cycle changes on a daily basis. Xbox still has the power to retake their own narrative. However, it’s important to look at this moment, and what comes next, because ultimately their fate will have a great impact on the future of gaming — whether they’re a major part of it or not.