On his YouTube channel, Jason Schreier uploaded a video that retraces Xbox's struggles and problems from the launch of Xbox One to the recent layoffs. Most of the stuff is already known but there's some new and interesting behind the scenes info. Since the video is almost 30 mins long, I tried my best to summarise it.
Key info:
- these studios (Ninja Theory, Compulsion...) are just the beginning. He's heard that other studios are having trouble.
- huge layoffs are about to hit the entire division
- Microsoft has many divisions that sometimes are at odds with each other. What's good for one might not be for another. While many companies are like this, Jason says this is particularly true in Microsoft’s case.
- during the Xbox One gen, due to the rise of production costs, Phil Spencer had the idea of focusing on the software side of Xbox. Thus gamepass was born. The idea was making Netflix for games (this was when streaming was growing at a massive rate), keeping people subscribed to make them pay a monthly fee
- with the decline of hardware sales, Spencer decides to put their games on pc
- between 2018 and 2022 Microsoft goes on an acquisition spree. Bethesda keeps its autonomy, while studios like Obsidian, Double Fine, etc... are "limited integration studios". They're given some freedom and they're told to take risks, keep having bold ideas, win awards and that not having a system seller wouldn't be a problem because it would still help to grow gamepass's offering
- Halo infinite had a very troubled development. Jason doesn't go into detail but says that the game's budget was larger than most people would even guess.
- around 2021 the console is struggling, their cloud initiative (streaming games) isn't going as well as they wanted and gamepass subs are stagnating. That's why Spencer decided to buy Activision in 2022, in the hope of driving its growth and expanding into the mobile market (King).
- during the regulatory process (jan. 2022- oct. 2023) the climate started changing. Covid growth starts slowing down and AI is becoming the new tech trend.
- around the same time Microsoft starts putting pressure on the Xbox division. The higher-ups want it to be more profitable
- Zenimax Online's cancelled project Blackbird was an online shooter similar to Destiny. Jason has seen some footage and thought it was pretty cool and has heard mostly positive things about the game, despite the game having budget issues and other problems.
- Jason says that around 2024 it became much harder for studios to know what Xbox/Microsoft wanted from them. You'd hear different things depending on who you asked. The differences among the divisions became even more evident
- the last couple of years have been messy inside Xbox. He mentions a lot of political fights, people having different opinions on where to take the Xbox brand. People openly questioned gamepass saying it cannibalised sales
- earlier this year Jason talked to someone in a management position at Xbox. This person said that there was a lot of uncertainty for the future but they trusted Phil Spencer. A week later Spencer was replaced by Asha Sharma to "reset" Xbox
- many games started development 5 years ago when the message was very different. It went from "make a game. Help us to bolster gamepass" to "it needs to be profitable"
- some of the blame is on the studios, but they're basically being punished for following what they were told years ago
- Jason has talked to several people and they told him it's gonna be brutal. Many people used the word "bloodbath" to describe how bad the situation is
-studio heads are talking with Microsoft about the possibility of going indipendent or finding a buyer
- a major reason why Xbox struggles with making good games is the constant uncertainty and fear of layoffs that the devs experience.
- he'll report more news on Bloomberg when the picture is clearer