Microsoft’s Xbox transition moves into high gear | Opinion

It’s been clear for quite a few years that Microsoft’s notion of what “Xbox” actually means has evolved past physical consoles alone. It now describes a whole ecosystem of software and services that spans all sorts of devices, and which is itself just one outlet for Microsoft’s enormous game publishing business.

It’s taken a while for the industry to wrap its collective head around this change and some of the unusual bedfellows it has created – such as Microsoft now being one of the biggest third-party publishers on PlayStation. Given the novelty and complexity of the situation, there’s been an open question about how it would be communicated to consumers. How do you tell the world what Xbox actually is now?

This week, we got a good look at Microsoft’s first real attempt at solving that problem – the “This is an Xbox” marketing campaign, which will use that slogan to highlight the fact that phones, computers, streaming devices, VR headsets, and smart TVs are all “Xboxes”, as are the existing Xbox Series S and X consoles.

The messaging is simple and fun, and it’s a good effort at communicating an incredibly complex evolution of the Xbox ecosystem in a way that disposes of much of that complexity and instead highlights the core benefit to consumers.

It’s probably going to go down like a lead balloon with a lot of Xbox core fans nonetheless. This evolution is a bitter pill for them to swallow, especially since it brings with it certain changes that – while entirely commercially sensible – look awfully like capitulation to a certain breed of veteran console warrior.

Microsoft’s game titles steadily becoming multi-platform by default and picking up plenty of their sales on PlayStation is a tough thing to accept for people who have pinned part of their identity to Xbox consoles. They question what future there can be for game consoles whose platform holder has lost interest in the idea of software exclusives; a valid question in light of decades of industry logic about exclusives being the foundation stone of console sales.

Microsoft knows its strategic shift isn’t going to make all the passengers on the ride happy, and its messaging is trying to assuage fears where possible. I don’t think it’s coincidence that the “This is an Xbox” campaign – which some will undoubtedly and not entirely incorrectly see as minimising the importance of Xbox hardware to the overall ecosystem – rolled out at the same time that Phil Spencer was making a point of emphasising the company’s commitment to future hardware launches in interviews.

Speaking to Rolling Stone, he said that the company would “definitely do more hardware in the future, and other devices” – the “other devices” probably being a reference to earlier comments to Bloomberg, where he confirmed that a handheld Xbox device was in the works, albeit probably years down the line.

This part of a transition is always hard. There are people who signed up wholeheartedly for the vision you had initially – and in few places is that so true as in the game console market, where somehow people feel encouraged to devote a whole portion of their personal identity to brand loyalty to these devices.

Pivoting to a new approach is painful for them, and trying to keep these customers happy and loyal to the greatest extent possible through this transition will always be challenging. Talking about future hardware – even if that hardware is still in the concept stages, and its launch is years away at best – is certainly one way to keep them engaged and enthusiastic.

They’re not the target audience for most of what was said this week, though, and Spencer was very clear in the same interview that while Microsoft may be committed to future hardware launches, Xbox hardware hasn’t actually been a growth market for them lately. They see the growth coming elsewhere – and in pursuit of that growth, they will be building out not only Xbox as a cross-platform offering, but also Microsoft’s position as a multi-platform publisher.

Halo, Gears of War, Forza: the games that have been platform-defining for Xbox are almost certainly going to be available on PlayStation in some form

Speaking to that aspect of the business, Spencer told Bloomberg that there were no red lines, as far as he is concerned, in terms of games in the company’s catalogue that cannot go multi-platform. It’s a pretty clear warning; the sacred cows are now absolutely on the menu.

Short of an actual announcement of imminent availability, this is probably as close as we’re going to get to confirmation that the biggest Xbox franchises will be appearing on other platforms in the relatively near future.

Halo, Gears of War, Forza: the games that have been platform-defining for Xbox are almost certainly going to be available on PlayStation in some form in the coming years. That doesn’t necessarily mean that there will be day-one launches on PS5 for new titles in those franchises (though it also doesn’t preclude it), but it does essentially mean that the era of permanent platform exclusivity for those titles is coming to an end. This is the final shoe that core Xbox fans dismayed by the company’s new direction have been waiting to hear drop.

The commercial logic, however, is unassailable. Franchises like Halo now exist within the same studio system as Call of Duty – which just enjoyed a record-breaking launch with a strategy that combined Game Pass availability on Xbox with high unit sales on PlayStation and Steam.

There is just no way that a commercial strategy for Halo as a single-platform release can be justified when its stablemate franchise is performing so well with this cross-platform approach. If the core Xbox franchises are to remain commercially relevant and viable, they need to fit with Microsoft’s new business model – which is, in essence, as a gigantic multi-platform publisher with a subscription and platform/services business as one of its pillars.

That will also be the fit required for any of the new acquisitions Spencer also hinted at; they’ll be aimed at rounding out a publishing business, not at securing exclusives for a platform business.

It’s worth noting that Microsoft is not alone in this strategic shift. Sony may not be going to the same extremes by any measure, but it’s putting most of its major titles on PC (albeit after a delay) and launching a Horizon spin-off title on Switch (Lego Horizon Adventures), both of which are changes that would have seemed unimaginable not long ago.

Conscious of the feelings of Xbox customers, the company has been pulling the band-aid off slowly so far, but they’re now prepared to rip it off quickly

One interesting thing to consider is what sort of timeframe Microsoft is considering for this transition. Conscious of the feelings of Xbox customers, the company has been pulling the band-aid off slowly so far, but the new marketing campaign and Spencer’s phrasing hints that they’re now prepared to rip it off quickly.

That could hint at many more high-profile Xbox titles going to other platforms sooner rather than later. One goal they probably have in mind – and would like to reach reasonably quickly – is following companies like EA and Ubisoft in establishing subscription services on the PlayStation Store, for which they’ll need a substantial software offering on that platform.

While this wouldn’t be “Game Pass on PlayStation” by any means, a big library of Microsoft, Bethesda, and Activision Blizzard games being made available through a Microsoft game subscription on PlayStation would still be a major step; perhaps eventually we’ll see a cheeky “This is an Xbox” campaign which emblazons that over an image of a PS5?

Whatever fears its fans may voice, Microsoft shows no inclination to follow Sega’s lead by becoming “just” a third-party publisher – but it’s very clear that the reinvention of the company’s games business model is continuing apace and moving from business reorganisation towards large-scale public rebranding.

The objective is to detach the scale and success of the games business unit overall from the success of the Xbox hardware platform. Declaring that there are no remaining red lines in the process of moving to multi-platform is a major statement of intent in that journey.

It might be an emotional few years for the core fans of Xbox – but based on how it’s gone so far, it’ll probably be the most commercially successful period in many years for Microsoft’s games business.