#372: Green shoots

A few months ago a subscriber emailed me about my coverage of Xbox. They’d noticed, probably because I kept pointing out, how fed up I was getting writing the same old stuff over and over about Microsoft’s gaming woes. They suggested that I stop focusing on what was happening, and instead consider what Microsoft could, or ought to, do in order to get itself out of the largely self-inflicted doom spiral in which it has near-constantly found itself since the announcement of Xbox One.

I tried, I really did. I thought about how Microsoft could make Game Pass essential again, how it could actually sell hardware, how it could coach a generation of players it has taught to expect games to be basically free to pay full price like they used to. It’s not that I had nothing, I’m not that useless. But Xbox is a big, sprawling, complicated machine, and every half-decent idea I came up with had negative knock-on effects elsewhere.

For example, I figured the solution to the Game Pass problem was to get day-one firstparty games off the service entirely. You’d knock the price down accordingly, keep it well stocked with indie bangers, thirdparty deals and back-catalogue stuff, and basically copy Sony’s approach to firstparty stuff on PlayStation Plus. Maybe a game turns up on the service after 12 months; maybe it’s 18 months, or maybe it never shows up at all. The only way to be sure of playing something you fancy at launch is to buy it. Under this model Game Pass would become the additive service it should probably always have been, rather than the one that defines the whole platform, impacting—and more often than not complicating, as we’ve seen over the last few years—every strategic decision the Xbox leadership tries to make.

Then I thought of Double Fine, and Obsidian and all the other studios Microsoft acquired for the express purpose of keeping a subscription service stocked with new, exclusive games. What happens to them in this imagined scenario of mine? Nothing good. Into the drafts folder it went, never to be seen again.

Throughout this fruitless exercise, things kept changing, both within and without Microsoft, throwing more of my ideas on the bonfire. On the hardware side I figured Xbox should get to market first with its next-gen console, stuff it to the gills with powerful components, and leverage Microsoft’s near-infinite financial safety net to take the most enormous bath on it. Like, one final roll of the dice, let’s redefine the entire fuckin’ concept of a loss leader. Now look, this was probably not a great idea in the first place but a) it shows just how much of a mess Xbox is that this feels like an option worth considering; b) I am but a humble game consultant with a newsletter side-hustle, though it admittedly often feels like it’s the other way round; and c) I really was getting pretty desperate for ideas at this point. Then the whole AI thing happened, component prices shot through the roof and, well, never mind. They could take the biggest loss in game-industry history on the next Xbox and it would still, based on current trends, end up being the most expensive console ever sold.

Then Phil Spencer retired — feel free to add your own sarky airquotes — Asha Sharma took the seat in his big gamer chair and inherited a now badly oversized collection of gamer-cred t-shirts, and I thought, well. Thank fuck for that. Someone else can sort it out.

This week, barely two months after her appointment, Sharma has taken her first official steps on this most perilous of journeys. First came word of a hefty reduction in Game Pass pricing, cutting the cost of the top-tier Ultimate subscription by £6/$7 a month; new Call Of Duty games will no longer launch on the service but other firstparty wares, for now at least, will remain. As one insightful member of the paid-exclusive Hit Points Discord pointed out, while everyone knew deep down that they were paying for Call Of Duty every month whether they wanted it or not, it’s quite striking to see it written down like this. While I don’t think it will go far enough to get Game Pass fully back on course — even with this reduction, it is still more expensive than it was before last October’s price hike — it’s a decent first step both for subscribers, who are now saving enough per month to just buy COD outright every year if they want it, and for Microsoft, whose estimated loss of $300m from putting last year’s Black Ops 7 on Game Pass clearly wasn’t sustainable.

Then, just yesterday, Sharma and her second-in-command, chief content officer Matt “Age Of” Booty, published a memo they had just sent to Xbox staff laying out the new vision. This is, in itself, a promising sign: time was when Microsoft would have ‘leaked’ the memo to a friendly client journalist, let them run it through the fanboy filter, and get the message out that way. I would like to think Sharma realises just how transparent and silly this has always been, and is determined that Team Xbox will do things differently under her auspice than it did in the Spencer/Bond era. Sadly my inner realist knows exactly who she'll call the next time she has something difficult to talk about, and finds herself in need of a softball.

As for the post itself, it’s actually not bad, particularly given her relatively short time in post. It’s actually worth a read! Providing you’ve got a high tolerance for almost certainly AI-assisted corpo-speak, admittedly. To Sharma’s credit, for someone with no prior game-industry experience she already has an excellent grasp of why things are so bleak out there — for Microsoft particularly, of course, but also everyone else more broadly. As a diagnosis, I cannot really fault it. As a roadmap? Ah. And hmm. Not convinced.

My biggest concern of all — and, far too many words later, the actual subject of today's newsletter — is, it seems, Sharma’s top priority. “Our new north star,” she writes, “will be daily active players.”

At a basic level, I do not see what value DAU has for a platform. For Game Pass, sure, I can see that if I squint a bit, though I'm not sure it's a more helpful measure than subscriber count. For what used to be called Xbox Live — online play — daily users are a useful measure of engagement. But Xbox Live doesn't exist anymore (it got bundled up into Game Pass a while ago) so never mind. But Sharma reckons it’s about more than that. “We will execute this through four priorities,” she writes. “Hardware, content, experience, and services.”

I do not get this at all. The success of your hardware operation is based, surely, on how many of the things you sell, not how often the people who buy them turn them on. The ‘experience’ part of the equation seems to be about platform features, with Sharma promising overhauls to “discovery, customi[s]ation, social and personali[s]ation to connect the community”. Is there really anyone out there thinking, man, I’d love to turn my Xbox on but the messaging feature just isn’t up to snuff? I'll just go on TikTok instead? If there are, I do not ever wish to meet them.

For ‘content’, meanwhile — or ‘games’, to use normal, non-LinkedIn-person parlance — Sharma’s new north star can only be bad news. Focusing on daily retention is nothing new to the game industry: it’s what got us battle passes, daily resets, FOMO cosmetic stores and every other miserable tactic in the live-service dark-pattern playbook. Extrapolating that approach across the entire Xbox business is ominous enough, but from a software perspective it seems, at least from this remove, calamitous. At the big-budget end of the scale, what does it imply for the future of Xbox’s traditional big hitters? What does Forza Horizon 7 look like, for instance, when its development team is being judged internally on daily metrics? For smaller studios, the prospects appear even worse. You liked Keeper, right? And Pentiment? Good for you. Don’t expect any more of them. This is no place for artful, experimental games that are over and done with in ten hours. They will not help the numbers at all.

I’m sure that, within Xbox, the hope is that the work being done everywhere else — on platform features and cloud streaming, on hardware and accessories, on Sharma’s deeply embarrassing ten-point plan repurposing Live, Laugh, Love for the LinkedIn set (Protect our art! Stay rebellious! Clarity is kindness!) — will point the DAU graph in the right direction, and protect the Double Fines and Obsidians of the world from disaster. I hope so too. But I know Microsoft well enough by this point to know that when things go wrong — or, more accurately, don’t go right quickly enough — the first people against the wall will be those who are deemed to be least attuned to Sharma’s new north star.

There’s tons of good stuff in Sharma’s memo, sure, but that’s by design. It speaks only to the good things she has planned. But bad stuff is inevitable at Microsoft these days; it is simply part of the furniture. Sharma talks a good game, much as Spencer always did. The key thing here is whether, unlike her predecessor, she can actually get stuff done — and just how badly things will go if and when it turns out she can’t.

No round-up today, sorry! I’ve got three consulting gigs on the go and just accidentally wrote 1,500 words of newsletter nonsense, there simply is no more time. Have a great weekend, and I’ll see you all next week.