#382: Ball point

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Hit Points is no great fan of Matthew Ball, the venture capitalist, analyst and recently installed chief strategy officer at Xbox. It is after all hard to root for a man who pops up in the depths of midwinter with another 20,000-word essay, or more recently a 200-slide PowerPoint deck, about the miserable state of the game industry.

If you’ve been reading Hit Points for a while, you will know the reasons for my distaste. For one thing he wrote the literal book on the Metaverse, an international best-seller during that mercifully brief Silicon Valley fever dream. His reports, while heavy on detail and largely correct in their explanations of how the game industry has got itself into this mess, take some rather odd leaps of logic (my favourite one from this year’s report sees him ascribe the downturn in game spending to the rise of, among other things, OnlyFans and Polymarket). Most of all it’s that, despite stuffing 200 slides of waffle down my gullet every January, he has vanishingly little to offer in terms of answers. He’s good at explaining the problems, sure, but if it’s solutions you’re after — and I think it’s safe to say that, in videogameland of late, we most certainly are — you’re shit out of luck.

All this makes it a bit awkward, and honestly quite weird, that it is Ball to whom new Xbox boss Asha Sharma has turned as she sets about turning Xbox around. Perhaps I am missing something here, but what else is a chief strategy officer for, if not to provide the answers? Instead she has pegged her fortunes, at least in part, to the hiring of Mr Here’s Your Problem. This seems, well, not great. It’s a risk for Ball, too: after all those years shouting ‘you’re doing it wrong!’ from the sidelines he must now put his money where his mouth is, and his reputation as an Understander Of Things on the line. It’s like Geoff Keighley putting me in charge of his not-E3 broadcast. (I’ll do it, Geoff, but it’ll cost you, and I’m going to have to insist on creative control of your outfit too. If we’re doing this, we’re doing it properly.)

It’s early days, of course, but Ball’s first few weeks on the job have done little to suggest he’s the right man for the chair. In the latter years of Phil Spencer’s tenure, the strategy underpinning Team Xbox’s manoeuvres was maddeningly incoherent. It appears little better under Sharma, and may in fact be even worse. The handful of absolute lemons on not-Twitter that comprise the last garrison of the brand’s army of defenders are still reeling from the whiplash of Xbox hosting a luxurious fan event to celebrate its best not-E3 showcase in years, then darkly announcing another corporate ‘reset’ before the YouTube archive had even finished processing. Reporting since that announcement suggests Compulsion Games, Ninja Theory and Double Fine are now on the chopping block as another monstrous round of layoffs, closures and cancellations looms, soon after the end of Microsoft’s fiscal year on June 30.

The strategy, if we can even call it that, behind all this is hard to discern. Those three studios may not have made system sellers or even produced any hits, but then they were never supposed to. All were acquired early on in Xbox’s acquisition era, back when Microsoft was trying to turn Game Pass from a novel little experiment into an industry-defining subscription service. It knew it would need a steady stream of exclusive games that had a broader appeal than the guns-and-cars fare in which its existing family of studios were so specialised, and the rather one-note cinematic stuff coming out of Sony. Now that was a strategy, albeit one that didn’t work out.

So if Xbox no longer needs those games — or at least, those studios — under Sharma and Ball, what are we to infer about its plans for Game Pass? Are they taking that out to the woodshed too? If so, why bother with the recent price cut, and why plaster the Game Pass logo all over the place in the not-E3 showcase? And if not, well, who’s going to fill the void left by those three studios? Who is going to keep the service stocked with groovy new exclusives in between the bigger studios’ once-in-a-generation blockbusters? Or are we saying we don’t need those anymore either? What is going on? Am I having a stroke?

Ball also appears to have been behind the decision to restore Gears Of War: E-Day to console exclusivity. This was clearly quite the eleventh-hour call, given that on the day of the announcement the UK ratings board PEGI still listed it as coming to PS5. Now, clearly Ball believes that exclusives sell consoles, and Xbox won’t be turned around without them. To his credit, I agree with him, on the first part of the equation at least (I think it’s a bit late for the second part). But is this really a wise decision, at a time when Microsoft demands a 30% profit margin from its divisions, Sharma claims to be building the world’s number-one entertainment company, and both she and Microsoft CEO Satya Nadella have described Xbox’s current financial situation as unsustainable? Is now really, really the time to cancel Gears on PS5, and in doing so deprive it of 90-odd million potential customers? A PC release will paper over the cracks to a degree, sure, but it will not erase them entirely.

If this was some new, ambitious, omelette-making policy, perhaps I could understand it. But it’s not; Ball has only said that future exclusivity will be decided on a game-by-game basis. While I imagine this makes a certain sense within Microsoft — games that are guaranteed to sell zillions on PS5, your Forza Horizons and Elder Scrollseses and so on, will still be multiplatform; the Xbox die-hards will be thrown the occasional Gears-shaped bone — this is hardly the sort of move that sells consoles, let alone helps Sharma achieve the whole number-one thing. It’s just a thing a guy decided to do. That is not a strategy.

I realise these are early days for Ball, just as they are for Sharma. But I’d argue that time isn’t something Xbox has very much of. It seems intent on firing the starting gun on next-gen in the thick of a component crisis, and operates day-to-day for a company that lays off workers by the thousands, beneath the steely gaze of a CEO who carries the permanent air of a man who would like nothing more than to throw all this videogame nonsense to the wolves. There is precious little time and even less room for error, and this might be Mr Here’s Your Problem’s biggest problem of all. In Ball, Sharma hasn’t just hired a chief strategy officer; she has also nabbed herself a fall guy, an insulating layer for when things don’t quite work out. If he carries on like this he may, like so many of his namesakes before him, find himself on the wrong end of a cannon. On this early evidence he will have only himself to blame.

There you go! No time for a round-up today — I lost this morning to a consulting deadline, and am once again out of time. This does keep happening, I realise. Will try and get back on top of things next week.

A final shout for that 55% discount! It’s been a rare wonderful week for the dreaded analytics page, with all the important metrics doing good up-and-to-the-right things. Let’s keep that going. Have a lovely weekend, won’t you, and I’ll see you all next week.