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>150M at 5B revenue is not great: that's 3% margin!

Oy vey maybe this kind of money grubbery is not good for our society.

> "Mid-cycle": lowering manufacturing costs,

That was true historically but is no longer the case. Even last gen manufacturing costs didn't go down as much as they used to. This current gen they actually increased multiple times.

Reads to me like multiplayer and server-side games incur a hefty infrastructure cost that eats into their profits, subscriptions notwithstanding. Maybe XBox should focus more on single-player exclusives. They certainly have enough studios to do it.

    > 150M at 5B revenue is not great

- A company which has undertaken a concerted, long-term effort to consolidate the industry under its umbrella (something they themselves call out as a problem in this post), reducing consumer choice

- A company which has captured a significant chunk of the console market. They're one of the big three (alongside Sony and Nintendo), and have been since the early 2000s, arguably, for crying out loud.

At a certain size (typically as measured by market capture) the expectation for growth needs to be reality checked. This is still $150M of pure gravy every single year. Sure, this is going to a corporation, but that's more money than most people could possibly dream of earning in ten lifetimes.

Every year. For a company that's already putting money towards opex in the form of developing new games and new content for existing ones, for a ridiculously broad portfolio.

To be clear: it is Microsoft's and Xbox's prerogative to pursue more profit, but I reserve the right to call this out as absurd under the circumstances.

If you want to make the argument that Xbox has suffered from a lack of focus in the past decade (... or even longer), or that there's been mismanagement (I would say since around the time 343 got created), then those are fair arguments, though I don't think those are justifications, on their own, for cutting thousands in headcount.

Allowing this org to balloon to fourteen levels of management on any vertical is a joke. Allowing the absorption of so much of the game dev industry and still being unhappy with $150M in annual profit after being such an active participant in the oligolpolization of console gaming is just a bit unserious.

Sure, 3% is terrible. But the point is you spent a fortune buying all these studios-- aka key strategic intellectual properties-- and then you manage them badly. Then you just sell or shut them down at their absolute bottom and you end up just destroying value.

Older forms of media understand this. WB loses money and its still really valuable because people see the potential of Batman, Harry Potter etc.

IP studios are really valuable because they can drive attention to your platforms. Try starting a premium streaming service or a console without IP. But you can't manage it like tech. It's not going to grow all the time and returns are uncertain.

MSFT could be in the XBox as a platform business. They could have a few in house studios to prime the platform pump. Once it started being a content business they got lost.

> The bigger issue is that console manufacturer revenue is highly cyclical. This is hard to see in e.g. Xbox and Sony since they are both part of a larger conglomerate, but really obvious for nintendo.

There is absolutely no reason to be in sync with Sony on their console release date. They could have effectively released consoles bit more frequently. But they choose not to do so. Their acquisition has been questionable - Activision/Blizzard.

At the end of the day, the employee pay the price for bad management decision which they keep on making.

Development costs are far from their lowest at end-of-cycle.

That's exactly when the prototype development kits come out of small scale testing (maybe tens of units, all incredibly expensive bespoke units, probably hand soldered and assembled), production ramped up a little and the evaluation kits are produced and distributed to first party studios and large third party studios, with thousands of consoles produced with the expectation that their lifespan is likely only going to be 3-6 months. These are then extensively tested by developers, both to see what needs to be done to get their launch titles actually working on the machine, but often very serious hardware bugs are found in this period that may require fixes to the chips themselves or software workarounds that affect performance. For some of the recent console launches there have been 2 or 3 rounds of evaluation kits in a year, and the previous evaluation kits are effectively bricked.

After the evaluation kits seem to have converged on a final product, the development kits are produced to ideally match the final version of the evaluation kits, but again these are tested before production is ramped up because some things do change (most trivially the case, even if the board is fine). At this point tens of thousands of dev kits are produced, each different enough to retail kits (more memory, maybe extra ports, etc), usually at least 6 months to a year before console launch so studios can make a final push on the launch day or first quarter titles, and in the background the same evaluation process for retail kits (usually just stripped down from the development kits, but usually different cases etc) starts, and eventually a final design for the retail product is produced that's good enough for manufacture.

This time is definitely not just when the console manufacturers kick back and rake in their profits, this is when they're already spending big on the final push to get to the point where they even have a new console to start a new cycle with.

Separate to the console manufacturing side, the years before release are when big money is spent getting studios on board to produce launch titles, because without those, the console will be dead on arrival.

TLDR: revenues at the end of the console cycle aren't funding the next generation, because it's probably already been in development since the launch of the current console, rather those end-of-cycle revenues are hopefully paying off the gamble they took funding development for the current generation.

>> 150M at 5B revenue is not great: that's 3% margin!

and yet everybody - including Microsoft - is in a big rush to sell us AI services, which could look an awful lot like a historical utility business. 3% will be a dream return in that scenario!

I never understood the esteem Phil Spencer was held in, seemingly both by fans and industry insiders. I never understood Phil’s strategy.

Buy a plethora of studios. Pay an order of magnitude over the odds for the big ones - just to be sure you get them! ‘Rescue’ smaller ones of questionable financial value - as part of Xbox they’d somehow be successful enough to justify the price paid. Heavily manage the studio heads - but, uh, also give them total creative freedom - and allow them to make niche games. Sell hardware at a loss - but also make the games available on all platforms. Don’t allow any software that takes advantage of your most powerful hardware, because it also has to run on the other, less powerful console you are also selling. Also, the future is streaming! But, uh, maybe not!

Not just the strategy, but almost every aspect of the ‘strategy’, was incoherent - as current management is very close to outright saying.

Acquiring a game studio only makes sense if you see a way to make it grow either by providing capital or better management. E.g. Activision acquired Treyarch in 2001 for $20M, which was probably 4-5x of its annual profit at the time. Seeing that very few people played (or even heard of) Die By The Sword or Draconus you could imagine that there was still a room to grow so there was a good chance you break even on your investment even sooner than 5 years and start making profit for yourself. Treyarch, who did not need to do the sports games contracts anymore and could hire more people, proceeded to making Spiderman and, later, CoD. I believe Spiderman alone made way more than $20M spent in the acquisition.

Buying Activision for 20x of its annual profit, on the other hand, makes zero sense. ABK was not lacking capital, had the same MBA management Microsoft has and did not have much room to grow, Blizzard alone had 5K employees. Their IPs had long time since plateaued or had been in decline already. What was Microsoft plan to increase profit? Switch everyone to Teams? Put more people to work on CoD and release 2-3 CoDs per year, hoping they all will sell as well as the annual CoD? The more realistic path to return of the investment could come from increasing Xbox's share of the market by making their newly acquired IPs Xbox exclusive. But they did not do even that.

Phil and the likes were too hands-off on these studios post-acquisition. They got too complacent enjoying steady paychecks over years of delays while working on their niche games that only highlight their artistic vision over generally fun gameplay. That's where they failed. The Activision/Blizzard acquisition and GamePass fumble were just a nail on the coffin

Over the last 8 years

Undead Labs has shipped nothing Compulsion shipped South of Midnight topping at ~1600 players on Steam Ninja Theory has shipped Bleeding Edge and Hellblade 2 and Double Fine shipped Keeper and Kiln.

It's a net positive that these studios and this culture is gone. I am sure that food was amazing.

> Phil's strategy made sense on paper

It was a risky bet that became even higher risk when MSFT spent ~$80 billion dollars rolling up game studios near the peak of the historic COVID gaming bubble. They bet it would greatly increase Game Pass sub growth. Instead, Game Pass sub growth slowed down. At the time I thought it was a reasonable plan - but not at the prices MSFT was paying for content. Then the DRAM drought killed hardware sales to gamers forcing the issue.

So, Phil gets a golden parachute, and all the studios that got bough up because of him will be "set free" if they're lucky and disbanded if they're not. Yay for capitalism...

I certainly enjoyed gaming their rewards system for years on a series S. $300 for the box, maybe spent $40 over roughly 4 years for gamepass. It was nice while it lasted!

Asha sounds like the kind of person you bring in to shut down a division cleanly. "Headshot!" as we gamers might say.

On the margins, that's crazy thin for the size of the org... One bad quarter could turn from a few million in profits to hundreds of millions in losses. It's too close, and there's no way to build/store funds for any kind of storm at that level.

Now, I think the vast majority of the pain is more than self-inflicted... I think actual business, marketing and focus need to start taking priority over idealistic political PoV. Let the games target their natural audiences and have the broadest appeal... at a certain point, trying to gain 1% of audience means alienating 25% or more.

Keeper needs an optimization pass so badly. Once I finished the first zone the framerate dropped to the floor on my Steam Deck. Presumably it runs okay on the current XBox, but it sure feels like Double Fine's attention has moved on and will never return.

Absolutely drop-dead gorgeous but I don't think I am going to ever finish it until I get a Deck 3/4 in like 5-7 years.

Really 191 players or 191k players?

>Double Fine (one of the studios being chopped) has released 2 games since 2021, Keeper (191 peak player count on steam) and Kiln (163 peak players); these would be flops even for a normal indie game, for a studio getting Microsoft salaries those are enormous flops.

Hard to really say. Kiln and Keeper can easily be made up for by the sales of Psychonauts 2. I'm sure an indie Double Fine would not have been able to make those kinds of games.

This takes me back to Pertinent, another small game from a reputable studio, had its main writer saying that "this kind of game would not be possible without Gamepass". Which I 100% believe. Microsoft definitely didn't buy Double Fine trying to make the next Fortnite, but that arthouse strategy clearly isn't a factor these days.

Being a Steam competitor involves making a store that's actually good. All the other major stores/platforms don't really seem to give a shit, to be frank. Steam has like 20x their feature set, and the gap appears to be still growing.

If anything, it should be easier to make cool new features when you own the hardware side of the platform experience too, but no, it's Steam that has stuff like remote play together, not PSN or Xbox.

>Microsoft really wanted Game Pass to be a steam competitor which is pretty much what everyone in the industry tries to do and fails.

Gamepass is quite literally the most anti-steam strategy ever. It's a massive loss leading (or rather, low margin leading) service relying on a pseudo-rental service to provide value. Steam got to where it is by keeping all its costs lean and developing a service around taking a cut from premium digital goods.

>From other child comments many studios they bought probably were below average.

In revenue, maybe. That's the fault of Microsoft in two fronts. One for purchasing game studios who always operated at low margins, and two for directing them to focus on quality over budget. Double Fine and Ninja Theory aren't studios you buy with an expectation of 30% ROI in 6 years (ignoring the pandemic in the middle of that). Let alone when you explicitly tell them not to worry about finances.

On an artistic level, Hellblade was an insutry darling and about as close as you can get to an "oscar-bait" of a game. It's something you buy for prestige. Double Fine is a very seasoned indie studio who delivered several cult classics. You buy that for a brand that gives you variety from the current "online FPS juggernaut". Those strategies changed dramatically over the decade.

Traditionally if you're going to play through a game in a couple weeks and then not own it anymore, that means you sell it and someone else buys it for their own couple weeks, and the company should be happy if they make $15 per person in the chain.

Also this is part of why I'm really worried about how weak the concept of game ownership is getting.

See also how anyone buying GTA6 near launch will be unable to resell it.

It seems really odd to have a Netflix consumption model for games. Generally people want to play a few favourite games for a long time and get very skilled at them. You just don't need to churn through content like movies.

Point of clarification:

While Bungie had historically been tied to Xbox / Microsoft during the Halo era, Bungie spun out to be its own company in 2007, and then was bought by Sony in 2022. It was Sony, not Microsoft, driving the most recent layoffs at Bungie.

Edit: even though i inaccurately associated Bungee with MS, they are not. However, the comment stands when you replace it with any of the other successful studios like Bethesda, Id software, Blizzard etc. A bunch of studios and their ips were gutted not because their games sucked, but because they didn’t meet the profits Microsoft expected, which is ridiculous.

Bungie is not a MS studio since 2007.

This attitude seemed prevelant at Blizzard too based on a book I read (Play Nice)they wouldn't fund anything that wasn't a billionaire dollar idea.

Never ending growth and profits just seem to ruin everything

Fair, but who told them to buy up everything? That part annoys me to no end.

And the bad plays are management-related, so they’re firing a bunch of people…

I think they changed it not long ago so you can play free to play games without the online subscription. Just like on PlayStation network.

But paid online games you need to be subbed yes.

If everyone thinks like that, no jobs are created. Xbox hires a ton of people and creates genuine value for consumers. Okay, that last part you can question, but I’m an original Xbox-er so I believe in it.

3% profit should be totally fine for any business. The planet is cooked, I think we can live with the shareholders making a bit less.

This is the frustrating thing reading these comments, where people seem to assume that any profit margin is good enough to sustain a business.

People see a 3% return and think, "Well, they aren't losing money so there is no reason they can't just keep doing business as usual." What this idea is missing is that the investors in a company aren't choosing between "keep my money in this company" and "sit on the cash", they are choosing between "keep my money in this company" and "invest my money somewhere else"

In other words, you aren't just looking at direct returns on an investment, you also have to think of the OPPORTUNITY COST of the investment. By keeping their money invested in a business making 3% returns, they can't invest that money somewhere else.

Might work if you don’t: out-price your hardware, get rid of disc trays, make GamePass expensive, force Microsoft accounts and online mandates, buy up every studio and force them to out out crappy updates,… ahm, no it’s the users, they’re getting old and cranky.

Yikes, I bought every Xbox console and plenty of day-1 releases, but skipped the last gen when it became clear that the platform isn’t about gamers anymore.

Triple-As are also getting tiresome, so I think plenty of people are happy to get a cheaper title on Steam that feels like better value.

"Chasing the highest margins" is almost the entire point of a market based economy, and is the main selling point for capitalism. I get your complaint, but if you reframe it I think it isn't the real problem here.

The whole point of a market-based economy is to allocate resources to making things people actually want. How does the market figure out what people want more of? Well, profit margin. If someone is making a lot of profit selling something, that is a really good sign that people want more of that thing. Other people see the high profit margin, and move to get into that business. More of that thing is created, and people's demand is satisfied.

The high profit margin is the signal (and the incentive) to get more of that thing.

In other words "Compulsively chasing only the highest margins" can be rephrased as "investing in things that people want more of"

What else do you expect from publicly listed companies?

Mix that with the increasingly higher concentration of wealth, and things are just going to get worse.

I don't really have an opinion on Sharma since she's very green, but Phil Spencer's tenure was an unmitigated disaster. The strategy of rolling up studios and trying to grow through GamePass both completely backfired, with the studios producing few and generally unsuccessful games, and GamePass failing to convert casual players while demolishing your take from your hardcore players.

Was definitely time for major change at XBOX. Is this the right direction? I have no idea.

Just out of curiosity, I checked her Wikipedia page and this caught my eye:

> Sharma posted in 2026 that she had recently begun playing video games under the gamertag AMRAHSAHSA to "learn and understand" the games industry

Imagine running the Xbox division and only just now picking up a controller.

Are you conflating Asha Sharma with Satya Nadella? Asha just joined Xbox, she had no role in any prior decision making.

She’s been in her position for less than 6 months. All of the problems were under Phil, so I don’t understand what you mean by course correcting her own actions

Don’t know why this is being downvoted because it’s absolutely on the money. She’s a very green exec that is doing the classic “change everything to make it look like I’m doing something” while also not really achieving anything.

The rebrand to ‘XBOX’ is a good example of how they’re already out of ideas

> Too much effort is going for dazzling graphics at the expense of overall gameplay.

Yes, 100%. I love good graphics, but game play is the most important thing. If you don't have good gameplay the graphics mean nothing. A game with great game play and great graphics is something to behold.

I recently finished Split Fiction and they really nailed it. I hope studios take notice!

Also dazzling graphics has been mostly visual instead of experiential, that is, with the advances in GPU capabilities, we do get beautiful effects, but the intractability with the said infra is seems to be stagnant (and in some cases regressed)

The way things interact in the game world peaked around mid 2000s, just in time when CPUs started to not follow moors law.

As of now, interactive environments are still almost as good as half life 2 from 2004. Gaming is all about the feel of it, which also includes the visual component.

This is where Nintendo is at. It’s hilarious how much fun me and my kids are having playing games like Animal Crossing, Super Smash Bros, Mario Party, Pokemon Pokopia, and the surprise smash hit has been Tomodachi Life: Living the Dream. My kids make all the neighbors and have them get married and laugh about it and it’s just such a goofy concept. The graphics are good enough that you no longer notice there’s graphics, just the art.

Switch 2 is a fantastic console with an astonishingly fun first party library, and Nintendo just over there doing their own thing like they’ve always done.

> gotcha

Gacha?

https://en.wikipedia.org/wiki/Gacha_game

Cutting edge graphics can even be actively detrimental to a game by lowering performance and limiting game design.

It's... odd that while Steam is the biggest PC gaming platform and the biggest platform for new, unique, interesting games ever, Microsoft isn't investing more in the people developing games for it. Microsoft can use it to filter out the slop, make offers to the best games, offer help with porting to consoles, and (probably most importantly) offer to put them into the xbox live program, because the xbox live subscription is xbox's biggest source of recurring revenue.

Access to Steam's library for a fixed monthly price would be huge. Actually I'm surprised Steam/Valve isn't offering that yet, it'd be huge, and for their new consoles it would be a perfect fit.

> Too much effort is going for dazzling graphics

Could have fooled me. I haven't seen a meaningful improvement in game graphics for at least a decade.

you don't get the insane profit margins they want without those predatory practices, not in this industry and if you do it's a one-off and not something you can do every fiscal year

I’ve been saying this for 20 years. I care much less if the game is visually stunning than if the core game is fun. It could be a paintball themed FPS for all I care as long as the core mechanics are fun and the story is engaging, I care very little. Also, good graphics don’t have to be hardware intensive—not everything needs to seem photorealistic.

I do still play a good bit of Black Ops II Zombies... which came out in 2012. Treyarch took notice, and the last CoD was a crappy attempt to cash in on the fact that the last good CoD game was over a decade ago.

A few great games I've played in the last 8 years, about the span of a generation, a mix of AAA and indie:

- Red Dead Redemption 2 https://store.steampowered.com/app/1174180/Red_Dead_Redempti...

- Cyberpunk 2077 https://www.gog.com/en/game/cyberpunk_2077

- Supraworld https://store.steampowered.com/app/1869290/Supraworld/

- Outer Wilds https://store.steampowered.com/app/753640/Outer_Wilds/

- Mini the Hollower https://www.gog.com/en/game/mina_the_hollower

- Pipistrello and the Cursed Yoyo https://store.steampowered.com/app/2870350/Pipistrello_and_t...

- Shadows over Loathing https://store.steampowered.com/app/1939160/Shadows_Over_Loat...

- Animal Well https://store.steampowered.com/app/813230/ANIMAL_WELL/

- Dwarf Fortress https://store.steampowered.com/app/975370/Dwarf_Fortress/

- EMUUROM https://store.steampowered.com/app/1634360/EMUUROM/

- Dispatch https://store.steampowered.com/app/2592160/Dispatch/

- MOUSE: P.I. For Hire https://store.steampowered.com/app/2416450/MOUSE_PI_For_Hire...

- Split Fiction https://store.steampowered.com/app/2001120/Split_Fiction/

- Final Fantasy Tactics - The Ivalice Chronicles https://store.steampowered.com/app/1004640/FINAL_FANTASY_TAC...

If you want to see what modern AAA gaming should be and haven't already played it, I highly recommend Cyberpunk 2077. It's not perfect, mostly due to time constraints, but it excels in most categories, and it looks and plays great. No microtransactions, no DRM and the one DLC is very good. It's on sale for $18 on GOG. No DRM should be enough reason to signal to the market to produce more games like this. Also, the developer owns the GOG storefront and so 100% of your profits go directly to them.

I also cannot recommend Supraworld enough to anyone who likes classic 3D platforming and puzzle games such as Portal or Antichamber. Supraworld has ruined other platformers for me. The developer, David Munich, is a puzzle maestro who has already put out other successful games such as notpron https://notpron.com/ and Supraland. His philosophy for puzzle design is going to influence the genre for decades to come.

And of course, if you haven't played Red Dead Redemption 2 already, it's a bonafide masterpiece, deserving of 10/10. The game is an absolute behemoth in terms of development/marketing costs and profit, and is just a sight to behold. I know it borders on last-gen because it came out in 2018, but the ninth-generation of consoles was where it found its home, since the eight generation could barely handle it. Dan Houser left Rockstar after finishing this game due to being a 50-year-old man completely exhausted from inflated development cycles, so this might be the best game Rockstar will ever make.

Of course I could go on to recommend dozens of other memorable recent indie games, but I definitely think AAA has mostly stagnated. Cyberpunk 2077 initially released 6 years ago. Red Dead Redemption 2, the modern gold standard, released 8 years ago. I have heard great things about Clair Obscur, but I haven't given it a chance. There are some worthwhile remasters, like the Shadowman remaster and upcoming Thief Gold remaster done by the Kick brothers at Nightdive Studios, or the recent Final Fantasy Tactics remaster.

Game production could stop today and I'd probably be good for the rest of my life. There's still such a vast back catalogue even after playing all of the classics. With development cycles for groundbreaking AAA titles closing in on a decade and production costs surpassing half a billion, I get a sense that a mature ecosystem of AI-augmented tooling is what might end up bringing some sanity back to this business.

I'll also point out that in the 80s, AAA video games have been $40-70 since the 80's. If the price of games had gone up with inflation, we'd be paying $100-150 per AAA game, there would be more money in the industry and ideally better salaries and working conditions across the board. As consumers, we need to stop and analyze the perverse incentives driving this market and figure out how to have better dialogue with developers so that we can come to an agreement on more realistic prices but less anti-consumer bullshit.

> No one wants "the game only Microsoft can make", everyone wants another great Zelda. Or Gears of War. Or Satisfactory. Or Mina the Hollower. Or UFO 50. Or Animal Well.

This IMO is a display of what is wrong with a lot of online gaming discourse — it is dominated by people who spend more time playing and critiquing games than 99% of the population and has a tendency to overemphasize indie darlings and ignore the massive commercial success of mainstream titles. Forza 6 released in May and is wildly popular among normie gamers. So is your yearly call of duty instalment which is now a Microsoft property. Go ask people coming out of a Walmart if they know what is Animal Well and they will probably think you are soliciting donations for a local animal shelter.

I'm not saying you can't criticize mainstream AAA games. I get they are boring, formulaic and increasingly rely on predatory business models. But if you want to talk about business and what kind of games companies should invest into, you can't just ignore the massive commercial success AAA already enjoys or the fact that most indie games flop anyway.

And yes, people will play games that can only be made in an established franchise by a major company. Forza is able to license real world car models from companies like Porsche because it is a well known and safe brand backed by a big company. Not to mention games like Microsoft flight simulator or GTA.

AKA "we just passed the 8th anniversary of the Elder Scrolls 6 announcement trailer"

Also worth noting Skyrim first came out on the 360; an honor shared by GTA5, but at least they have an imminent release.

I think another big issue they have is their insistence that most (ideally all?) of the people working on their games should be temporary employees. When your most valuable studios get out of the business of providing secure and sustainable employment, you lose the ability to build institutional expertise. When you treat your creatives like a commodity, you'll get generic assets and writing regardless of budget. When you focus on everything but the games themselves, it shouldn't come as a surprise that your big franchises degenerate into undifferentiated revenuemaxxing slop and unique new projects that might get people excited die on the vine.

Overall I think western AAA game development is dead. The executive class killed it with their greed and incompetence, and as long as these huge corporations are allowed to keep buying smaller studios/publishers and shutting them down a few years later, nothing is going to change.

It was once the Wii with anemic hardware and waggle ended up outselling the 360 that MS changed. They went from pushing forwards to chasing trends.

I agree, they need to be focusing on smaller projects that take risks. Maximum 24 month dev times but with modern tooling could do some special things. Maybe if after 6-12 months they see something that is gold, they can give it more resources but that would be on a case by case basis.

Xbox Live Arcade, and the accessibility it bought for smaller studios and indie developers was massive.

You could say it's just a response to Steam and the PC gaming indie scene, sure, but the 360 era is definitely one where Microsoft hit all their strides. Then they ruined it with the Xbox One.

i don't know, it's hard to generalize about audiences this big.

Thus the yearly Call of duty titles.

> Of course those last few prices were 90/00's

Two years ago, you could get an XBOX/Switch for 300, or a PS/Steam Deck for 400. Granted, the PS and XBOX were digital only. But now the cheapest XBOX is 500, the Switch 2 will soon also be 500, the PS5 starts at 600, and the Steam Deck is 789. Things have been going up slowly, but the last year has been absolutely killer.

$200 in 1985 (NES launch price/date), adjusted for inflation is just shy of $600 in 2026. RAM and GPU prices are really hurting the consoles right now, but compared to inflation benchmarks up until about 2020 they were considerably below inflation.

I read that when they designed the Xbox Series S and X they knew it was going to be difficult to lower prices down the road because wafer costs were increasing every year. Which is why they launched with 2 models from the get go, one cheaper than the other. And even so they were losing between 100 and 200 dollars per console.

Now things are even worse with the RAM and SSD components crisis. The Series S has now the price of the Series X when it launched.

I'm in software and I do alright, but I'm still on a PS4 too. Just can't justify the upgrade when there's still so many great old games available. Maybe when the next Horizon Zero Dawn comes out, I'll be forced to upgrade, but I'm taking my time about it.

Microsoft also didn't do themselves any favor with that naming scheme. In the current generation (I think?), you have: - Xbox X - Xbox S - Xbox Series X - Xbox Series S

Compared to: - PlayStation 5 - PlayStation 5 Pro

or: - Nintendo Switch - Nintendo Switch OLED - Nintendo Switch Lite

Anyone who's literate in English (and knows that OLED means "nicer screen") can immediately rank the PlayStations and Switches into "good, better, best". But with the Xbox, how is anyone supposed to know which one is which? Is the Series version better or worse? Is it a whole new generation, with whatever backwards-compatability implications that a new generation brings? I need a chart and I probably still won't be able to tell you if you ask me in a month.

> Consoles aren't specialized hardware for "magic experiences" and everyone knows this, it's just another "device" that happens to be connected to a TV with a controller where people are gatekeeping software availability.

Arguably; Sony and Microsoft have both played it safe for a long time, with their consoles mostly being "just for video games", but it wasn't always like this. Current-gen has VR additions, but the previous generations had things like Kinect, the PS camera addon, things like that. But they seem to have given up on fun things like that, they were innovative but probably not a sweeping commercial success like idk, subscription services.

Nintendo still makes their stuff unique though. The Switch is great, portable, detachable controllers for multiplayer and wiimote-like interaction, etc.

It can be art even if you don't consider it artistic. CoD is an example of military art. Marvel is American blockbuster art translating American comic book art to the screen. They are their own kind of artistic expression and achievement, even if you personally don't consider them art.

The gaming world also evolved a lot during that time period

  > human like NPCs and smarter enemies and some other use case they can sell to the masses.

> Only it was all a ruse to ensure people didn't jump ship too quickly and make the bleeding too heavy

You go when we tell you to go! Not before!

Sandboxes. Minecraft was one. Now it’s getting called a platform, at least in the submitted article. That’s good for engagement and monetization I guess, but sounds way less fun.

Nah, expedition has enough of a game in it. Parry mechanic is pretty addictive, and gameplay is kinda fun. Exploration, too, is strictly gaming aspect, not cinematic.

God of war is plainly movie on rails compared to E33

A walking simulator that has you fighting between multiple dimensions and is one of the best looking games of its generation.

> acrimoniously splitting from the traditional studio system.

Yeah, he split from the traditional studio system to create... his own traditional studio system.

Kojima is precisely what happens when you stop thinking of games as actual an interactive entertainment format and start thinking of it as a "cinematic experience" instead.

Death Stranding is only a game by the narrowest of margins. What it is is a movie with Kojima's Spotify 'favourites' list as the soundtrack that so happens to have one interactive element or two thrown in there for good measure.

It's pretty telling that all he's done after splitting away from Konami and surrounding himself with his own sycophantic group of developers is Death Stranding. Kojima is the direct result and pretty much the face of a lot that is wrong with the games industry right now.

> Nintendo also shipped Metroid Prime 4, with massive delays and unsatisfied customers, following the same "interactive Hollywood" philosophy which disappointed Metroid fans.

I'm not convinced that Metroid at least really is a great data point for "Nintendo is ruining things in-house". From Wikipedia[1]:

> Nintendo announced Metroid Prime 4 with a teaser trailer during the Nintendo Direct presentation at E3 2017, and announced that Retro Studios, who developed the previous main Prime games, would not be involved.[15][16] In February 2018, Eurogamer reported that Prime 4 was being developed by Bandai Namco Studios in Japan and Singapore.

> In January 2019, the Nintendo EPD manager Shinya Takahashi announced that development had restarted under Retro with Tanabe remaining as producer. Takahashi said the previous studio had not met Nintendo's standards and that the decision to restart was not taken lightly.[21] Shortly after, Nintendo reevaluated Prime 4 after noticing changing attitudes towards open-world games, but maintained the direction as the development was already taking longer than planned. The team ignored new developments in action and shooting games to prioritize the adventure elements.

There's a perspective where this is almost the exact opposite of the problem being discussed about Microsoft. They chose to let it get developed externally, suffered delays, and by the time they moved it back in-house, the ecosystem had moved from under them. They probably could have chosen to rethink everything and delay it further, but they also arguably could have avoided having to make that call by keeping it in-house and letting the studio who made the previous entries work on it from the start and landing it in time that the original vision still fit what people wanted.

[1]: https://en.wikipedia.org/wiki/Metroid_Prime_4:_Beyond#Develo...

I’ll concede that Metroid Prime 4 has been sitting on my shelf.

But Star Fox? Phenomenal. Such a fun game. Luckily I have the pro controller so I could map A to the back paddle or else my poor old tendons couldn’t handle the rapid fire shooting required at the high levels, but I’ve had an absolute BLAST playing the remake.

I'm curious about the Star Fox comment. Tell me if I got this wrong:

A remake (1) of a remake (2) of a remake (3)

(1) A remake (Switch 2 Starfox, a remake of StarFox 64)

(2) StarFox 64 (A remake of Super Nintendo's StarFox)

(3) ??? I don't know what the 3rd level of remake you mention is, but I'm curious!

I can understand complaints about Metroid but Star Fox fans were probably expecting jack squat from the start of the year. Putting it in the last movie is a pretty strong indicator for more content.

A lot of Nintendo's remakes end up being training exercises for the real deal, such as Metroid 2 remake to Dread. Meanwhile, some of the laid off devs here might have never seen a properly produced title with zero crunch and anomalies. Not every title should be an auteur title, but we have too many auteurs and we want more auteurs.

There is absolutely nothing wrong with remaking a 30 year old game if it’s done correctly, and Nintendo usually does it right.

What I mean by "interactive Hollywood" is a game with a $200M+ budget that relies entirely on high-fidelity graphics and cinematic stories to differentiate itself, while offering almost zero new gameplay innovation.

Neither of your examples fit that description. Metroid Prime 4 wasn't chasing Hollywood cinematic design; it was a highly targeted attempt by producer Kensuke Tanabe to make a tight, isolated first-person exploration formula resonate (especially in Japan where it has consistently failed). Its goals are mechanical, not cinematic. Meanwhile, Star Fox is a classic arcade rail-shooter remake with modernized cutscenes, not a prestige movie-game. Early sales data shows it's actually working well, too, having just debuted at #1 on the physical charts in Japan and nearly doubling Star Fox Zero's launch week in the UK.

Ultimately, Nintendo operates like a Consumer Packaged Goods company. They treat their library of IPs like a diversified product portfolio rather than betting the farm on individual interactive movies. They use massive, high-margin, mechanics-first games like Tomodachi Life and Pokopia to generate enormous cash reserves. They then use those profits to subsidize legacy IPs like Metroid or Star Fox to keep core fans happy and feed their broader brand ecosystem. Because Nintendo spreads its risk across a wide spectrum of lower-budget games, they can easily absorb a minor product flop. Sony's interactive Hollywood model sinks $300M into a single basket, meaning one bad miss can completely wreck a studio.

They have. Which makes this hard skew towards live service all the more baffling. Having your premier studio basically miss the generation trying to make a multiplayer version of one of these games then cancelling it really shows how much they overextended.

And it's not like it had to be Naughty Dog: They had some dozen titles published or in house being prepared (including one that sunk what could have been an amazing remaster/remake studio). And in the end they really had one come out as the dark horse, with one megaflop, and 2-3 stragglers that don't seem long for this world (one of which seems to be taken down the existing, safe life service Sony spent billions on).

Gen 9 will be a huge blemish carried by their very smart acquisitions of Insomniac and Housemarque, with some decent support coming from Santa Monica and Guerilla. But at what cost?

Sony's had to bet the house on those types of blockbuster, crowd-pleasing experiences. The PS5 has yet to crest the cinematic peaks of the PS4 (PT, Bloodborne, Uncharted, etc), so people are rightfully getting a little worried that this gamble won't pan out. The bestselling PS5 exclusive is currently Ghost of Yōtei, behind eight better-selling crossplatform titles.

Nintendo's exclusives outsell Sony's by a significant margin, and they're usually simpler games that are broadly accessible. They leaned the right lessons from the indie gaming boom, and didn't try to resist it by pumping billions into making the next Overwatch killer or whatever.

I played TLoU and while the story was interesting, the feeling of being steered, forcefully and constantly, was very frustrating.

"Press this button exactly when the game tells you" and "as soon as you cross this exact point, this exact enemy will appear" - that's year-2000-ish (or worse) gaming tech.

The final confrontation was essentially ruined because the designers apparently never thought you'd use a sniper rifle, so you can set off a deafening shot that kills an enemy and the other enemies don't even notice the shot because it apparently happened outside their detection range.

I'm glad Nintendo does a bit of everything. Taking the time to try out new IPs, give older ones a chance to rise, and go truly off in the weeds with series no one else can really do (the Fit series and Labo being some of the biggest examples). It really feels like there's something for you there, no matter what kind of games you like (unless you only play the GTAs/CODs/Maddens of the industry). Even if you're not actually someone who games. My mom loves the Fit games.

Nintendo is also a Japanese company and japanese stocks aren't doing great due to their economy and the weak yen. Also, stock price does not correlate with good games or a healthy business.

Basing an art form on your stock portfolio is a good half of everything wrong with the industry.

And it's not surprising Nintendo isn't doing well in this clown market. They are taking a hit because they resisted pressures from shareholders who wanted them to raise prices on its new system. Nintendo eventually gave in, but with a much smaller price increase and a delayed effect from announcement to implementation (~4 months forewarning). And on top of all that they are not hyping AI to the moon.

And I haven't even gotten to the overall economic climate of Japan yet. Nintendo's stock falls would happen regardless of if they followed the above.

These are good, pro-consumer moves. It shows that more companies need to think past next quarter and resist the whims of people who don't have your company's long term interests in mind. You're the expert here, not them.

I find it really sad that the GameCube and N64 were where they were the most innovative and also happens to be where they floundered the most in sales.

I don't know how you can say that when some of their most recent well received games include Tomodachi life and Rhythm Heaven. Those aren't the kinds of games made from those maximizing bean counters.

Huh? They are trying a lot of things and when they want to establish a new franchise they are often successful, see e.g. Splatoon. Innovation also does not correlate with new IPs.

Buying Activision was a Phil decision. Not spending 67 billion dollars puts you in a different place

Oh I definitely agree the C-suite at Microsoft needs blame. Microsoft need everything to be framed as avenue into services.

But Phil was the one who dug two incompatible holes and kept digging hoping they’d meet in the middle with buried treasure.

Halo Infinite was the moment I knew Xbox was gone. The core game engine was the best Halo has ever felt, but everything around it reeked of incompetent management.

Giving a player a reward for putting in effort is one of the fundamental principles of game design. If you remove all the rewards, what incentive do they have to play?

Their response to player backlash which was essentially “deny, defer, gaslight and ignore” killed the online community for it within a couple of months, and I think they dropped what little content support it had within two years as well, after initially marketing it as a long-term “live service game”.

Blatant incompetence, how Microsoft ever let itself get in this state I’ll never understand.

Also I can’t even remember the campaign story. Was there an angel or something? It was a cliffhanger about some new enemy, as if they’ll ever make another game?

I just remembered the monstrosity that is the Halo TV series as well now, ah god… it’s been a rough decade.

Just looking at Sharma’s history, she rejoined MS in 2024. Xbox was struggling long before that, so I don’t see how anyone can blame Sharma for the past 10 years…

a) Asha didnt push Phil out.

b) She's been in the role for 4ish months, not years.

How would Asha pull him out? How do you think she even had that kind of authority or seniority?

They say that only after they buy up like half of the IP in the entire gaming industry without a plan and it doesn't end up being a fast enough money printer. Activisions back catalog is the result of hundreds of acquisitions and IP purchases.

> I have no idea why they didn’t realize that earlier

14 layers of management :-P

Good read. A studio can be both good and not good enough for Microsoft. They’ve never made a secret of the fact that they are in it for huge numbers. A studio can do well and still make little enough that it’s a management headache for Microsoft.

>> We can't afford it

But they've already spent the money. They spent about 70 billion on activision blizzard. That was and still is an outrageous amount of money that will take fever to break even let alone turn a profit.

I've been replaying a lot of Gamecube (emulated) games recently and its kindof shocking just how quick you can get into the game.

From hitting run Run to first Player Input is seconds in most cases. No console bootup, no system updates, no game patches, no agreeing to game EULA version 5.129912342, no denying the game access to online content on every third screen, etc.

I'm sure its loading slightly faster emulated, but 90% of it is just not having the junk that has accumulated over the last 20 years.

It's a combination of two things that never should have been normalized:

- Steam forces game updates, even for single player games.

- terrible delta updates. Baldurs Gate 3 had 8 patches in 3 Years. That's 800GB of updates.

If a patch drops on the afternoon you planned with your friends, you're not playing that night (actually happened to us). Both decisions should have caused outcries, but I guess people would rather overpay for fast internet contracts.

I check for game and system updates on my Deck before and after a session and it just takes a few minutes at most. I get excited to read changelogs if a game has a big update. These updates are not automatic/forced if you don't want them to be, and for singleplayer stuff at least you can just go play the old version if you're in a hurry or have little to no Internet.

Steam update is FAST. Less than 10 seconds and their CDN saturates any pipe. And since it’s a PC you can do other things while waiting.

Xbox is a dedicated gaming device and while the game/device is updating I’ll have to sit there. Plus the updates for some reason slows down the longer it takes. They’ve lost my attention.

I've never had a steam update take more than 30secs.

Game updates can take a lot longer if you need them (ie multiplayer) to play. idk

I don't think you could say humans prefer a physical thing, as for a majority of mediums, digital is the winner, by a significant margin.

Of my friends who own vinyl collections, they almost always use Spotify/Apple Music 90% of the time.

steam does not force you to update though. you can just start the game without updating. if it's multiplayer ofc it might require an update anyways

These days it’s probably all CI automated. So your Xbox updating probably means dependabot bumped some package automatically and it got built and deployed despite zero end user impact.

I wonder how many of these updates are security fixes. I wouldn't be surprised if a majority were.

This is a very different take than I have. People who are good tend to leave sinking ships much faster.

I guess it becomes a problem when the money-hungry people still make money, but the larger organization doesn't.

> Last year, Bloomberg reported that Microsoft estimated it had lost $300 million in direct sales of Call of Duty games due to the title’s inclusion in Game Pass, according to an anonymous employee.

Yeah, that's a bullshit number. It's like when people provide piracy counts as lost direct sales, a lot of people will download something for free, those same people won't always pay full price if they can't download it for free.

I downloaded a TON of games from Game Pass, played <1hr, and uninstalled. Without GP I would have just never bought the game.

Maybe MS paid the publisher full price for your "see what it is about"? Wouldn't be anything but Uber or Moviepass.

I'm sceptical of Hacker New's fascination with all managers being worthless, but I don't follow your logic here.

Why is "lets have more people who do things" a move away from multidisplinary teams? Unless you count being a middle manager a valuable discipline in game making?

The only benefit is, long-term, hopefulyy, the people ejected from this model can often end up forming their own indie teams and creating their own games.

Indie games are at an incredible place right now (I am aware it's crazy cut-throat, though). It would be nice to see what quality comes out in response to this disaster.

"I deal with the goddamn customers so the engineers don't have to. I have people skills, can't you understand that?? What the hell is wrong with you people!?"

He's referring to this list of invited guests: https://www.theguardian.com/commentisfree/2026/jun/24/peter-...

You must not have ever worked for a company owned by one. The statement is not what I’ve heard, it’s what I’ve experienced, and it matches the experience of others in my large developer network.

It’s great for concentrating ownership and mass applying ruthless management tactics at scale, and for using IP as leverage to hollow out a company.

Source please?

I find that extremely hard to believe given that South of Midnight peaked on Steam with only 1.5k players.

Let's be honest here.

How many people would have played if it wasn't on Game Pass though? I doubt many.

Expedition 33 was on game pass and still sold 8 million copies.

Judging by the credits [1] it indeed looks very conservative.

1. https://www.mobygames.com/game/240054/south-of-midnight/cred...

Plus there's plenty of evidence that Microsoft hasn't been hands off across that time period. At the very least we've seen them cancel a Rare game and layoff a bunch of Rare staff because of it, The Initiative shut down for not meeting game development goals, 343 Industries stripped apart for low results versus expectations with Halo Infinite and the "new" Halo Studios is basically just a shell and an outsourcing venture in direct line with ActiVision's old Call of Duty tactics.

I think non-technical EMs are fine, but they need to manage an appropriate headcount. I see EMs who manage 2-3 ICs and have no other responsibilities, those EMs need to either take on more ICs or start coding.

As someone who works in big tech with a partner at a similar big tech company _but with player coaches, DRIs, etc_ it is basically the same thing except messier.

Your manager who used to just focus on motivating and unblocking their people? Now they have to ship code too since they’re a player coaches! You’re a DRI who needs management to get your project unblocked? Too bad your player coach who has to ship code now also has 20 direct reports because the hierarchy was flattened so you can’t get time with them until next week and are blocked until at least then.

It is the hot new trend from the “thought leaders” who have all consistently copied each other’s bad ideas for the past 10 years.

Damn, not ID. Some of the best engineers in the industry and they are all nearly gone?

Not to mention the legacy. Some of those people may have been there for over 25 years, in times where the idea of programming for a dedicated GPU was cutting edge. Absolutely crazy how little respect the industry has for these golden geese.

Even in the age of AI how the hell can you make a game without programmers?

Yes from what I can tell :/

I was in the console/platform dev org so not a ton of insight into studios, but I've seen a ton of ESO and Id folks posting on twitter

What is Halo 14-39? Google wasn’t helpful for me.

Name 1 case that we can evaluate 10 years after the layoffs.

You know sorta feels to me like some new physical tech would be warranted here. Something with a good amount of storage, very quick I/O, and read/writable. More like a fancy thumb drive than a disk. Let the version on it be updated by the system to stay current, gain add on content, etc.

anyone who has the disk can download the patches and extra content. there is no way to block a specific copy or prevent transfers like with a digital purchase. the point of physical media is sharing and resale, not the piece of plastic sitting on your shelf.

i agree that mandatory downloads are a big problem (thats why willitplay is a thing) but offline installs from disk are the biggest change that made ps5 games load so much faster than ps4 and opened up a lot of new options for devs. reading data from ssd will always be faster than a blu ray. the only downside is you have to manage space a bit more but its worth it. if you want straight from disk get ready for slower uglier harder to develop games.

You’re certainly right, especially for the AAA games coming off the presses, but it’s not always true with certain indie games, especially if they’re doing a physical print run long after publishing.

You can occasionally get one where a very final version copies straight off a PS5 disc.

> I doubt that they will go back to where Sony are now.

I agree. However, I do think they would get some positive attention (and some accompanying sales) if they were to backtrack and announce a console more like the 360.

It feels doable if they care to do it. Physical media should still be viable for holding all the game data for a while longer. Blurays can manage up to 128 GB, and I think the average game install size is ~60GB right now, giving most games some room to grow.

The biggest issue with a strategy like that is that they're, like you said, pushing digital-only hard already, and they're also trying to save money, so the idea of spending more money to make future consoles with disk drives, and to make disks, is unlikely to appeal to them.

It is a shame, though, because it seems like the Xbox 360 will have been widely viewed as peak Xbox until the end of Xbox.

If you want to see it outside the context of tech forums, you can look up the industry reports and see the numbers yourself. There are some media types that are dropping, obviously, but there are multiple types of physical media that have seen notable growth recently.

> Xbox is the value proposition for people that want to play on Console + {PC/Handheld}

Okay. Then who is that? Most of the people who play games who I know are either A.) Console gamers who only use PCs for work, 2.) PC gamers who don't see the point in a console, or III.) The top 1% who just go where the games are and are willing to spend to get there, and that group isn't generally a fan of not actually owning their games, nor are they very price conscious (they don't like higher prices, but they'll drop 400 USD to buy a PS4 and Bloodborne, since that's the only way to play that game).

I'm yet to see someone using Game Pass on a handheld.

So if that's the intended market, no wonder it isn't doing too hot.

I can't see this happening without either Windows getting in the way, negating much of the advantage of a console (have a look at the Windows handhelds and how they're not selling and how they're not a great experience), or Microsoft swallowing a massive part of their pride. Valve started directing work towards Linux literally because of Microsoft trying to close down the Windows ecosystem,[1] and Valve wanted an escape route if Microsoft decided to actually do that.

MS crawling on their knees to Valve to get them to cooporate on something (and Valve saying yes!), or MS figuratively doing the same by undoing all the problems MS have made for themselves with Windows and making a decent 10-foot UI so you'd actually want to use Steam on your Xbox, both seem incredibly unlikely.

Not to mention that this is more or less just admitting defeat for MS, leaving every single penny of profit in PC and Xbox gaming to Valve, other than what's directly tied to the hardware, which isn't where any of the profit actually lies.

[1] https://www.pcgamer.com/gabe-newell-i-think-windows-8-is-a-c...

I can't believe he just left the building

It's quite insane that twitter went from 7500 -> 1500 employees and the site didn't implode. 80% of the people gone.

My experience has always been that the more you're trying to do, the messier the codebase is.

But that to clean up a codebase requires even more people.

So, at first blush, it looks like "more people = more problems," but if you actually give yourself some breathing room, the code can get cleaner with effort.

"Write a new Halo game. Make no mistakes."

A non-trivial amount of their ARR is still from Valve-made games. Counterstrike still nets a bit over 1b per year from just case unboxings, and Dota is in the hundreds of millions. I wouldn't call 8-10% a margin of error.

"Valve rarely releases games" would be more accurate

Ah wow of course, I think you just made something click for me.

It's strange how we take interest on cash as a law of nature, when the original intention might have been nothing more than compensation for the risk the lender was taking on.

Now the risk (on bank deposits, govt bonds etc at least) has effectively been removed so the interest rate is the baseline expectation.

So compound interest is underpinning the infinite growth forever delusion...

Yeah, that is what I was referring to about the lack of detail on restructuring. I want to know if people are losing their jobs and/or titles are being cancelled as part of these sales.

I'm hopeful (but maybe not optimistic) that Arkane gets out of this with the ability to do what they're really good at again.

Yet the biggest selling console of all time, the PS2, sold 160 million units.

Because approximately most of them exclusively play mobile games

You even felt the need to use quotes yourself.

I’m guessing 90% of them are mobile gamers exclusively, so no, that is not realistic

"Let's go from 1 in 15 gamers to 1 in 3 gamers" sounds nice, probably gonna need employees for that!

> Microsoft not honoring that agreement, which they said they would, is a step too far.

They already took that step too far - they broke ToS and closed all MC accounts that weren't linked to a MS account within the timeframe.

I'm obviously not saying I'd like them to make everything an Xbox exclusive, but it's the only play that makes sense after throwing $75B to buy Activision.

I see no difference in this story between where studios are and the challenges facing their employees.

It’s the basic fact that you are in an organization which may change direction. And you do not control that organization.

Right? Talk about losing the pulse here. Millions of people would rather pay monthly for thousands of games vs $70 for one?

I think I've bought like 1-2 games this whole generation and even with Game Pass I might have bought 1-2 more max. Yes, I dabbled in a handful of games but never more than a hour or two before I lost interest (and I never had the interest to pay $60 for it).

Mostly I was playing indie/older games that could have been playing on the Xbox One.

No? They're fixing profits at best