- 1 week ago
**Video Description**
Reports continue to paint a concerning picture for Xbox, with more restructuring and difficult decisions reportedly taking place behind the scenes. In this video, I discuss why Game Pass may not be the solution Xbox hoped it would be, the pressure facing Xbox leadership, and why executives like Asha Sharma and Matt Booty have reportedly been forced into making unpopular decisions such as studio closures and organizational changes.
Is Xbox trying to fix its business, or are these restructuring efforts a sign of deeper problems? Let's break down the reports, what they could mean for the future of Xbox, and whether Game Pass can remain the centerpiece of Microsoft's gaming strategy.
I'd love to hear your thoughts in the comments:
* Is Game Pass helping or hurting Xbox?
* Were the studio closures inevitable?
* What does Xbox need to do next?
⭐ Support the channel on Patreon for exclusive content:
https://www.patreon.com/cw/JamesSchierer
If you enjoyed the video, don't forget to Like, Subscribe, and turn on notifications so you never miss future gaming news and discussions.
Game On!
Reports continue to paint a concerning picture for Xbox, with more restructuring and difficult decisions reportedly taking place behind the scenes. In this video, I discuss why Game Pass may not be the solution Xbox hoped it would be, the pressure facing Xbox leadership, and why executives like Asha Sharma and Matt Booty have reportedly been forced into making unpopular decisions such as studio closures and organizational changes.
Is Xbox trying to fix its business, or are these restructuring efforts a sign of deeper problems? Let's break down the reports, what they could mean for the future of Xbox, and whether Game Pass can remain the centerpiece of Microsoft's gaming strategy.
I'd love to hear your thoughts in the comments:
* Is Game Pass helping or hurting Xbox?
* Were the studio closures inevitable?
* What does Xbox need to do next?
⭐ Support the channel on Patreon for exclusive content:
https://www.patreon.com/cw/JamesSchierer
If you enjoyed the video, don't forget to Like, Subscribe, and turn on notifications so you never miss future gaming news and discussions.
Game On!
Category
🎮️
GamingTranscript
00:00Xbox Restructures as Microsoft Shifts Focus Back to Console Gaming
00:05Microsoft is making sweeping changes to Xbox after years of betting heavily on subscriptions and cloud gaming.
00:12Following a major restructuring that includes thousands of layoffs and the departure of several game studios,
00:18Xbox leadership says the company is preparing for a new direction centered on console players.
00:23The changes mark one of the biggest strategic shifts in Xbox history and reflect Microsoft's efforts to regain momentum in
00:31an increasingly competitive gaming market.
00:34Subscription Strategy Falls Short
00:36Over the past decade, Microsoft invested heavily in building Xbox Game Pass,
00:41a subscription service designed to give players access to a large library of games for a monthly fee.
00:47The company spent tens of billions of dollars acquiring game studios and publishers, including Activision Blizzard,
00:54with the expectation that exclusive content would drive subscription growth.
00:59However, the results have reportedly fallen short of expectations.
01:03Yeah, didn't they have like 34 or 35 million subscribers and that was a failure?
01:11Industry research suggests many gamers purchase only a handful of games each year
01:15and spend most of their time playing those same titles rather than constantly trying new releases.
01:21That behavior makes subscription services less appealing for a large portion of the gaming audience.
01:27Although Game Pass remains one of the industry's largest gaming subscription services,
01:31it has not reached the level of growth Microsoft originally anticipated.
01:36Thousands of jobs eliminated
01:38As part of its restructuring, Microsoft announced plans to eliminate approximately 3,200 positions
01:44across its Xbox division through fiscal year 2027.
01:48The company is also separating several development studios from Xbox,
01:53with some becoming independent while others seek new ownership.
01:57Leadership says the restructuring is intended to streamline operations
02:00and better position Xbox for long-term success,
02:03Though the announcement has drawn criticism through the gaming industry
02:07due to its impact on developers and support staff
02:11Industry-wide challenges continue
02:13Microsoft is not alone in facing difficult market conditions.
02:17Since there's a surge in gaming during the COVID-19 pandemic,
02:21many publishers have struggled to maintain the rapid growth they experienced during that period.
02:26Players continue spending much of their gaming time on established franchises and live service titles,
02:31leaving less room for newer intellectual properties to gain traction.
02:35And lesser-known live service titles that are trying to be born.
02:42As development costs continue rising,
02:45publishers have become increasingly cautious about investing in large-scale projects
02:49without clear commercial potential.
02:52Activision acquisition hasn't solved everything.
02:56And, okay, after I read this paragraph, I'm going to have to stop,
03:01just because I got a lot to say right about that.
03:05Microsoft's acquisition of Activision Blizzard was expected to strengthen Xbox's first-party lineup
03:10and accelerate Game Pass growth.
03:12And it could have.
03:13While the purchase significantly expanded Microsoft's portfolio with franchises such as Call of Duty,
03:19Diablo, and World of Warcraft,
03:21reports indicate that the acquisition has not produced the subscription growth many analysts expected.
03:27The situation has led some observers to question whether simply owning more studios
03:31is enough to drive long-term success in today's gaming market.
03:36Okay, I have to say, is owning more studios enough to survive in today's market?
03:45Not when you're not doing anything with those studios.
03:49This is one of the things, just one of them, that Phil Spencer did that drove,
03:57that made me lose my mind when I heard about it.
04:02I'll go through it again.
04:04Me and Dr. Games 101, we were excited when we heard about the acquisition,
04:09and we were excited when we heard that it went through,
04:12because what we said was, you know, you got the True Crime series.
04:16I guess you can throw Sleeping Dogs in there,
04:19because that was supposed to be a reboot of the True Crime series.
04:22You got Tony Hawk.
04:23You had all, and you had about 20 other franchises that Microsoft finally had access to.
04:29Now, we thought, you know, I can't wait until True Crime Streets of New York is on Game Pass.
04:36I can't wait until the Tony Hawk 1 and 2 is on Game Pass.
04:39I can't wait until, and none of that happened.
04:44Phil Spencer, in his infinite wisdom, thought it was worth purchasing,
04:47it was worth $75.6 billion to, or a million dollars.
04:54Was it a billion or a million?
04:56I don't even remember at this point.
05:00But he thought it was worth all the, he was, thought it was worth tens of millions,
05:05I think it was, to put Call of Duty Modern Warfare 3 reboot on Game Pass,
05:12and then to put Black Ops 7 on Game Pass.
05:18No, he should have, he should have never gotten the acquisition
05:25if it was just to pretend the rest of Call of Duty didn't matter,
05:29and to just start adding newer games to Game Pass.
05:33Because, I hate to say it, Call of Duty,
05:36it's, doesn't have the same appeal that it once did.
05:41But, Modern Warfare 2, the original, the first Black Ops,
05:45that era, in my mind, in my opinion,
05:48is when Call of Duty was, had the most support,
05:51when Call of Duty was the strongest.
05:53Dr. Games 101 said, what about Call of Duty 2, the big red one,
05:57Call of Duty 3, Call of Duty 4, the first Modern Warfare.
06:01He wanted to see those games on Game Pass,
06:04and you got none of that.
06:06So, yeah, if you buy all these studios,
06:09and then you just hoard them, like,
06:11mine, mine, mine,
06:14that's not, you don't make money that way.
06:19So, yeah, owning studios, just for the sake of owning them,
06:23is not a way for you to,
06:25is not a way where you're going to be able to
06:27make money back on those properties,
06:30because you're not doing anything with those properties.
06:34But, I'll go back, let's continue.
06:38A return to console gaming.
06:40Xbox CEO Asha Sharma has outlined a different vision
06:44for Microsoft's gaming future,
06:45while couldn't be the same one that Phil Spencer thought he should do,
06:48because that plan was failing,
06:51and I can't believe that someone like me
06:54could see how much that plan was going to fail,
06:56and Phil Spencer couldn't.
06:59Rather than focusing primarily on subscription growth,
07:02the company intends to place greater emphasis
07:04on traditional console gaming
07:05and rebuilding its hardware business.
07:08A key part of that strategy
07:10is the development of Microsoft's next-generation gaming system,
07:14currently known by its reported codename, Project Helix.
07:18The console is expected to arrive later this decade,
07:21and is rumored to combine elements
07:23of both a traditional gaming console
07:25and a Windows-based PC.
07:27Microsoft hopes the new hardware
07:28will help strengthen Xbox's position
07:31ahead of the next console generation.
07:34Hardware challenges remain.
07:36Developing new gaming hardware
07:37has become increasingly difficult
07:39due to rising manufacturing costs.
07:42Demand for advanced memory chips,
07:44driven largely by the rapid expansion
07:46of artificial intelligence technologies,
07:48has pushed component prices significantly higher.
07:51These increased production costs
07:53could affect the design, pricing,
07:55and release plans
07:56for future gaming hardware across the industry.
07:59Microsoft is not the only company
08:01dealing with these challenges
08:02as hardware manufacturers continue
08:04adjusting their plans
08:06in response to changing market conditions.
08:09Looking towards the future,
08:11another major milestone on the horizon
08:14is the eventual release of Grand Theft Auto 6,
08:17one of the most anticipated games
08:19in gaming history.
08:21Large blockbuster releases
08:22often driven drive console sales,
08:25making the game's launch
08:26an important opportunity
08:27for every major platform holder.
08:29Microsoft will likely hope
08:31that its next generation strategy
08:33and future hardware lineup
08:34are well positioned to capitalize
08:36on major releases like GTA VI.
08:39Can Xbox turn things around?
08:42The recent restructuring
08:43represents a major turning point
08:45for Microsoft's gaming division.
08:46After years of prioritizing subscriptions
08:49and studio acquisitions,
08:52Xbox appears to be shifting its attention
08:54back towards console hardware
08:55and traditional game sales.
08:57Whether that strategy succeeds
08:59will depend on several factors,
09:01including consumer demand,
09:02the health of the gaming market,
09:04and Microsoft's ability
09:05to deliver compelling exclusive games.
09:08For now,
09:09Xbox remains in the middle
09:10of a significant transformation,
09:12and the company's next few years
09:13could determine the direction
09:15of one of gaming's biggest brands
09:16for the next generation.
09:19Yeah, so,
09:20you know,
09:21this actually,
09:22with what Sony's doing,
09:25this actually,
09:26Microsoft could use that
09:27to advantage
09:28by not going completely digital
09:31like Sony is,
09:33although I think
09:34that's a pipe dream.
09:35I think Microsoft
09:35is going to go digital,
09:37completely digital.
09:39They're just waiting
09:40to see how much backlash,
09:42how much more backlash
09:43Sony has to deal with.
09:47I wouldn't be surprised
09:48in five years
09:49if Microsoft
09:50and Nintendo
09:51go that way,
09:52but one way
09:53they could capitalize
09:54on the backlash
09:55Sony is dealing with
09:56is by saying,
09:58listen,
09:59you know,
10:00we're not going that way.
10:01This isn't 2013.
10:02We're not going to try that again.
10:04If Sony wants to go that way,
10:06come over to Xbox.
10:08You know how many people
10:09they could bring over to Xbox
10:11if someone came out
10:13and just said,
10:13yeah,
10:14you don't have to worry
10:14about us going all digital
10:18or only digital.
10:21That would be,
10:22that would get a lot
10:23of people
10:25that were willing
10:25to at least
10:27give Xbox a chance.
10:31So there's that.
10:33There's,
10:35so they could,
10:36you know,
10:38but also
10:40they got to cut cost.
10:42All these studios,
10:44I said what I would have done
10:46and I'll say it,
10:47I'll tell it right now.
10:48If I was Phil Spencer
10:49and the Activision Blizzard merger
10:52had gone through,
10:52I probably would have
10:54like fired up
10:57Microsoft Teams
10:58or, you know,
10:59some conference software
11:00and told every studio,
11:02I want to see
11:03the franchises you own.
11:05I want to see the last game
11:07that was made
11:07and I want to see
11:08if there was,
11:10if it was a net profit
11:12or if it was a loss.
11:14And I want that
11:15for every IPO.
11:17And then,
11:18based on those numbers,
11:19I would have said
11:20either we're going to make
11:21a reboot,
11:21we're going to make a sequel,
11:22or we're going to make
11:24a new IP.
11:25Or some teams
11:27might have to be,
11:28some studios
11:28might have to be closed.
11:31And again,
11:32I don't know how
11:32I could have thought
11:33of this
11:34and Phil Spencer
11:36could not.
11:39So, yeah,
11:39you can't just have
11:40studios just for the
11:41sake of owning them.
11:43That doesn't bring in money.
11:44That's really a way
11:45to lose money
11:46instead of making money.
11:49I don't mean to,
11:50I don't mean to continue
11:52bashing Phil Spencer,
11:53but, again,
11:55with Xbox being
11:55in the shape it's in,
11:57that's because of
11:58the way it was,
11:59the way he ran it
12:00for the past few years.
12:02And the years
12:03that I criticized him on.
12:05So,
12:07you know,
12:07I hope,
12:08I hope that
12:09Asha Sharma can
12:11turn Xbox around.
12:13I will say,
12:14I don't think she can do
12:15any worse than
12:16Phil Spencer was doing
12:17in his last few years.
12:19So, at least there's that.
12:21But then again,
12:22never say never.
12:25So, that's one thing
12:27about
12:29Xbox
12:30possible future.
12:32But, at this,
12:33but,
12:34yeah,
12:35they'd really just,
12:36if you have to cut studios
12:37or sell them off
12:38or let them go out
12:40on their own,
12:41that's what you're
12:42going to have to do.
12:44It sucks
12:45that they have to do that,
12:47but
12:47they can't,
12:48they can't continue
12:49to
12:51hemorrhage money
12:53hanging on
12:54to these studios,
12:55especially with nothing
12:55being done by them.
12:58So,
12:59you know,
12:59hopefully Asha Sharma
13:01can turn things around.
13:02Hopefully the Helix
13:03isn't going to be
13:03a $1,000 gaming console
13:05or a $1,000 plus
13:06gaming console
13:07when it comes out,
13:08whenever it does.
13:11But,
13:13and I think,
13:14and the thing is
13:15with Asha Sharma
13:16wanting things,
13:17I,
13:17and the,
13:18like the way I've heard
13:19her talk in interviews
13:21and seen,
13:22like in press interviews,
13:24I think she,
13:25I don't think
13:26Helix will
13:27if it can be helped.
13:29What I mean is,
13:30like Asha Sharma
13:31has talked about how,
13:32you know,
13:33when it came to Game Pass,
13:34for example,
13:35and the latest,
13:36and the ultimate tier
13:38was like $30 a month
13:39or $29.99,
13:40whichever you want to say,
13:41and she realized,
13:43yeah,
13:44a lot of people
13:44can't afford that.
13:46So,
13:46we have to lower
13:47the game price
13:48for Game Pass
13:49ultimate,
13:49but we also have
13:51to take something away
13:53because we can't
13:54just give everything
13:55we were giving away
13:55for $30
13:56for,
13:57you know,
13:58for nearly a third
13:59off every month.
14:01And that was
14:02the decision
14:03to remove Call of Duty
14:04on day one.
14:07As far as,
14:08like,
14:08most people
14:09don't try out
14:10new games,
14:12they just stick,
14:13like,
14:13to the few
14:14that they would have
14:15purchased,
14:15but instead
14:16that they were
14:16paying a monthly
14:17subscription for.
14:20I do believe
14:21that's most people.
14:22That was definitely,
14:24I don't want to say
14:24that was definitely me
14:26when I had Game Pass
14:27because I did my best
14:29to try out new games
14:31that I would have
14:32never thought of
14:33purchasing
14:33or even giving a chance
14:35because they're free.
14:36They're there.
14:37Just download them
14:38and play them.
14:40And if I hate it,
14:41I can always
14:41stop playing it
14:435,
14:4310,
14:4415 minutes later
14:44and download
14:46something else.
14:47So,
14:49but,
14:49you know,
14:50again,
14:51routines are easier
14:52than exploring.
14:53Routines are easier
14:54than trying something
14:56that you're not sure
14:56if you're going to like it.
14:59So,
15:00I understand
15:02why they were saying,
15:04yeah,
15:04people don't,
15:06they don't try
15:07out a whole vast library.
15:09They got their 5,
15:1010,
15:11or however many games
15:12and they stick to them.
15:15So,
15:16yeah,
15:17that's what I think
15:17about Xbox
15:19restructuring.
15:20And like I said,
15:21it had to be,
15:22they said they're going
15:23to lay off
15:243,200 employees
15:26by fiscal year 27.
15:28And like I said,
15:30it's just something
15:31that had to be done.
15:32It's something that,
15:34you know,
15:34how much longer,
15:36I mean,
15:36if they just continue
15:38to kick the can
15:38down the road,
15:40how much longer
15:41was Xbox
15:42really going to survive?
15:45On the
15:46Let's Discuss Gaming
15:47podcast
15:47that I did
15:49with Dr. Games 101,
15:50I told him,
15:51you know,
15:51if Phil Spencer
15:52had come to me
15:53and said,
15:53James,
15:54I need your help.
15:55Can you help me
15:55turn around Xbox
15:56and stop taking L's?
16:00I would have told
16:01Phil Spencer to his face,
16:02absolutely not.
16:05You devalued
16:06the Xbox name so much.
16:08I don't think
16:08anyone can do it.
16:09I don't think
16:10anyone can help
16:11turn Xbox around.
16:13So,
16:14and Asha Sharma,
16:16Matt Booty,
16:16whoever else
16:17is helping them,
16:19they got their work
16:20cut out for them.
16:23I'm happy
16:24that they're trying,
16:25but it's
16:26not going to be easy.
16:29And I mean,
16:31so,
16:31you know,
16:32what will Xbox
16:34hold for the next,
16:35in the next five years,
16:36ten years?
16:38we don't know.
16:40But,
16:40I do think,
16:41I do think
16:42there is a way.
16:43Will Xbox
16:44capitalize on that
16:45or be able to
16:46capitalize on that?
16:48Only time will tell.
16:50We just have to wait
16:51and see what happens.
16:53Time for the next story.
16:54And I'll see you next week.
16:54And we'll see you next week.
Comments