Xbox Needs a Massive Win or a Hard Pivot - I PROPOSE THE FULL SEGA

Tango Gameworks, the award-winning studio behind The Evil Within and Hi-Fi Rush, has been shut down.

It wasn’t the only one. Arkane Austin, which developed the failed Redfall, and Alpha Dog Games, a mobile developer, got the ax as well. The reason? According to these studios’ owner, Xbox is “making these tough decisions to create capacity to increase investment in other parts of our portfolio and focus on our priority games.” Simply put, Xbox is downsizing at Bethesda to make room for bigger names like Indiana Jones and The Great Circle – mentioned later when addressing the email sent to affected staff by Matt Booty, head of Xbox Game Studios.

So what gives?

So what gives?

Xbox should be doing great. Its acquisition of Activision Blizzard is finalized, giving them unprecedented access to major titles like World of Warcraft and Call of Duty. The legal battle is over and it has won one of the most decorated publishers in history. In theory, the closures that are happening all over the gaming industry should not be affecting Xbox

But it is. For a few reasons. 

A report from IGN in March of this year suggested that the PS5 is outselling the Series X/S 2-1, according to a Take-Two earnings report. This isn’t unusual for Xbox. Back in 2022, Xbox head honcho Phil Spencer revealed that Microsoft takes a loss on console sales, and looks to make it back through the Game Pass subscription service, software, and accessories. The difference now is Xbox just dropped $69 billion on an investment that isn’t returning yet – and few else are faring better.

The pandemic boom didn’t last, and companies that made huge financial projections on a profit high are having to drastically course correct. This is why we’ve been seeing layoffs all across the industry – Unity, Embracer Group, Twitch, and, you guessed it, Microsoft. But shouldn’t the acquisition of a major publisher like Activision Blizzard be great for them? Make them immune to the sweeping firings happening by the thousands?

The Activision Blizzard acquisition is huge on paper, yes. But so far, that hasn’t translated to any sales numbers or profits for Xbox. As long as Xbox is committed to the multiplatform, non-exclusive vision of Phil Spencer, the best way for Xbox to make a profit with its acquisition is to make Activision Blizzard games available on Game Pass day one. The next Activision Blizzard game dropping in such a way is most likely a big one: the new Call of Duty. But Black Ops 6 won’t drop until later in the fall, meaning Xbox needs to cut costs until they can start reaping the rewards of their purchase. This, combined with skyrocketing development costs and the pandemic shift, means layoffs. Lots of them.

So, I have a proposal. It won’t solve all Xbox’s problems, but it could help give them some breathing room. Moreover, it would put them in a uniquely powerful position and complement their vision for the future perfectly.

Xbox should stop making consoles and go the route of the publisher. They should go full SEGA.

THE FULL SEGA

At the turn of the 21st century, SEGA was drowning. The SEGA Saturn and Dreamcast had both bombed in the face of more lucrative competitors like the N64 and PS2. While they had one of the most iconic characters in games in Sonic the Hedgehog, he was shackled to a console no one was buying. So, in the face of economic devastation, they made an unprecedented move. They announced an indefinite halt on all hardware production, a shift to solely developing third-party software, and plans to bring the Blue Blur to the Gamecube with games like Sonic Heroes.

This saved SEGA. Now, they’re a thriving publisher free from the pains of building out an ecosystem. They can bring games to guaranteed audiences without worrying about crafting their own.

Maybe Xbox should take notes.

If you’ve heard this before, that’s because people have been making this argument for a while now.  A few months ago, Phil Spencer had to hold an internal town hall and reassure both his staff and the public that Xbox had no plans to halt production on the Series X/S. But why not?

Spencer has already gone on record saying that hardware is a profit loss for Xbox this generation. It doesn’t have many console exclusives, so stopping production on the consoles wouldn’t landlock any titles to obsolete hardware. And if the vision is to bring Xbox games to as many platforms as possible, wouldn’t it make sense to commit fully?

Of course, there are arguments against this. The idea of such a major games company like Xbox throwing in the towel and halting production due to lack of sales is ludicrous – what would that press conference even look like? “We fought the good fight, but no one’s buying our consoles. Better luck next generation!” Besides, Xbox has a devoted fan base that is loyal to a fault, as any jaunt into Reddit or YouTube comment section will tell you. Xbox has been content with Game Pass, PC, and the ecosystem it has built – why throw it all away?

The answer: Xbox is a distant third compared to PlayStation and Nintendo, and the closure of Tango Gameworks (and Xbox’s piss-poor response) puts their public perception at a shocking low. They either need a massive win or a hard pivot. And if Summer Game Fest doesn’t bring them that massive win? Maybe it’s time for a hard pivot.