In this episode of the Windows Central Podcast, Zac and Xbox Senior Editor Jez Corden sit down to discuss the current state of Xbox and where the business is headed.
It’s been a wild month since Asha Sharma took the reins as CEO of Xbox. While the team has been working to recapitalize the brand and bring back some big-name exclusives, the narrative of the last week has taken a negative turn. Between strong rumors that Microsoft is looking to sell or close certain first-party studios, price increases for consoles hitting shelves, and a massive rethink of what next-gen hardware looks like, we wanted to find out what’s really going on with Xbox as a business.
In this episode, we look at the brutal economic realities affecting the industry. From the “RAM apocalypse” that destroyed console profitability to how the free-to-play giants like it fortnite and Roblox have completely disrupted the old hardware subsidy model. We also look ahead to the next-generation “Helix” console, discussing whether Microsoft can really deliver on its vision of the open Windows/Steam ecosystem if the hardware costs a lot, and what sonyThe move away from physical media means for the future of disks.
- (01:34) Introduction to the podcast
- (03:17) The state of Xbox leadership and business health A look at the whirlwind of changes under new Xbox CEO Asha Sharma, moving on from the strategy of Phil Spencer and Sarah Bond, and balancing last year’s record profits with the harsh reality of incoming corporate cuts.
- (06:42) Staff reductions across Microsoft and capital spending on AI Discuss how massive investments in AI infrastructure are forcing workforce reductions and belt-tightening across Microsoft, including Azure, Surface, and Xbox.
- (11:34) Studio closures, sales and the fate of large intellectual properties Jez discusses rumors about possible sales or closures of studios (like Ninja Theory and Undead Labs) and how Microsoft is trying to find buyers to save projects like State of Decay 3 instead of canceling them outright.
- (16:37) Is Xbox becoming a subsidiary? The hosts debate the pros and cons of Microsoft potentially turning Xbox into a more independent subsidiary, drawing comparisons to how LinkedIn and Skype were handled.
- (22:55) ‘Ramageddon’ and the broken console subsidy model How skyrocketing RAM and component prices mean both Microsoft and Sony are losing hundreds of dollars per console. The hosts explain how the rise of casual players who don’t monetize free games has broken the traditional model of selling hardware at a loss.
- (28:32) The death of physical media and diskless futures Analyze Sony’s move away from physical disk drives and predict whether the next-generation Xbox Helix will completely eradicate physical disks due to supply chain economics.
- (30:54) Next generation consoles: power, prices and lifespan A realistic projection of what the PlayStation 6 and Xbox Helix will look like, predicting premium pricing ($1,000+) and a much longer cross-gen lifespan for the Xbox Series X/S.
- (34:58) Xbox Helix: Open Windows Platform vs. Closed Box Jez describes the original plan for the Helix to operate as an open Windows device compatible with Steam, and how Microsoft’s new chief strategy officer, Matthew Ball, is reconsidering that approach due to the financial risk of gamers purchasing the hardware but only spending money on Steam.
- (43:31) Protection of the X/S Series family Exploring the possibility of the next generation skipping clean architectural boundaries and instead keeping the Series S and X as budget tiers alongside the premium Helix.
- (52:12) The unsustainable cycle of AAA game development Zach and Jez express their frustration over 6+ year development cycles, growing West Coast production budgets, and why smaller global studios (like Bloober Team) are creating games more efficiently.
- (57:35) Codename ‘Positron’: Xbox disk-to-digital technology Jez details a leaked upcoming platform feature that allows users to insert a physical drive once, permanently claim a digital license for their Microsoft account, and only lose it if that physical drive is registered to someone else.
- (01:04:12) Xbox One Vision 2013 Redemption A retrospective on how the much-maligned Xbox One vision of 2013 (all-digital, heavy DRM, licensing pools, multimedia focus) was actually correct, just poorly communicated and ahead of its time.
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