Back in February, Microsoft ended a few torrid weeks of swirling speculation (not helped by its own cryptic pre-announcement of a forthcoming announcement) when it revealed that four of its formerly exclusive games – Hi-Fi Rush, Pentiment, Sea of Thieves, and Grounded – would be launching on other platforms.
At the time, the company stressed the point that these were older games, each having launched more than a year previously, and highlighted Starfield and MachineGames’ upcoming Indiana Jones title as exclusives that were not included in the announcement.
Nonetheless, it would have taken a bit of wilful delusion not to anticipate that this was only the beginning of a broader strategic turn – and sure enough, at Gamescom this week the other shoe finally dropped, with a Spring 2025 launch date on PS5 being announced for Indiana Jones and the Golden Circle, just a few months after the early December launch on Xbox and PC.
Microsoft clearly isn’t minded to just rip this band-aid off and transition to its intended future business model in one fell swoop. It’s been clear for some time that Microsoft has extensive plans to shift its model towards third-party, cross-platform publishing, but the exact shape of that future business model remains a little elusive, not least because of these slowly staggered steps, each couched in careful denials about the next.
Microsoft doesn’t care about the potential dampening of Indy’s influence on Xbox sales. That’s no longer the metric it cares about nor the prize it has its eyes on
Like a timid swimmer braving a cold sea, Microsoft is delicately lowering itself – and perhaps more importantly, the Xbox fanbase – into the water, letting each body part adjust to the temperature shock in turn. Would it be faster and easier to just jump in and get the shock done with? Certainly, but if you’re not exactly in rude health to begin with, that also seems like a hell of a way to give yourself a heart attack.
So, this week the company waded out a little deeper.
From old games launching on other platforms to expand their audience, we now see a major new game effectively turning into a timed exclusive, with a PS5 release coming only months later. Some observers will probably expect this to be the new status quo for a while, at least; major Microsoft titles launching as timed exclusives on Xbox and PC, before coming to Sony and/or Nintendo platforms a quarter or two later. I don’t think that’s correct, though, or at least I don’t think that this new status quo will be anything more than a temporary pattern, for one key reason: the PS5 launch date announcement was made right alongside the Xbox launch date announcement, which is, frankly, really weird.
This isn’t generally how timed exclusives work. When a platform holder has paid for a timed exclusive, or has planned a timed exclusivity period for one of its own games (such as when Sony launches titles on PC), it’s more common for the very existence of the version for rival platforms not to be discussed in any detail until after the launch on the timed exclusive platform.
At the least, launch dates for other systems don’t get confirmed until after the launch on the primary system has had a chance to sell its fill. The reasoning for this is obvious; timed exclusives are meant to sell consoles, and going out of your way to tell people they’ll only have to wait a few months before getting to play the game on other systems is a significant dampener on that effect. You could reasonably question whether platform holders would see any competitive benefit at all in paying for timed exclusivity if details of the launch on other systems were going to be discussed so early in the process.
Why, then, would Microsoft announce the PS5 launch window for one of the biggest Xbox titles launching in 2024? Why not announce the Xbox and PC launch date – December 9 – then let it sell its way through Christmas before announcing the PS5 version a few months ahead of launch in early 2025? That timeline would be more normal for a timed exclusive game.
One possible reason for announcing the dates together, of course, is that it’s a mistake – that Microsoft isn’t familiar yet with the gears and moving parts of being a platform holder that’s also a major third-party publisher, and didn’t think through the consequences of including this information in its announcement. It’s possible, but I don’t buy it. The sheer number of checks, balances, and sign-offs that are done prior to a Microsoft announcement makes a mistake or oversight of that kind extremely unlikely.
It’s almost certainly not a mistake, which leaves the second explanation: Microsoft does not care about the potential dampening of Indy’s influence on Xbox hardware sales, because that is no longer the metric it cares about nor the prize it has its eyes on. Announcing the PS5 date so early makes perfect sense if Microsoft’s business strategy is now more focused on further strengthening its position as a major third-party publisher on PS5 and other platforms than it is on selling Xbox consoles.
That would seem like wild conjecture, if it weren’t for the fact that Microsoft’s executives have been pretty much directly telling us this for some time. Phil Spencer has been blunt about the company not being in the business of trying to “out-console” Sony or Nintendo. Even as the company emphasised the specific circumstances of moving those four initial titles to other platforms back in February, it was also being quite clear that this represented a change in strategic thinking – a new paradigm, not a one-off event.
The elephant in the room in all of this is the acquisition of Activision Blizzard, a move which irrevocably changed the balance of Microsoft’s games business. Overnight, most of Microsoft’s game catalogue became multiplatform by default, because Activision Blizzard games are multiplatform, and have to remain so to avoid cratering the revenues of the business unit. Consequently, Microsoft’s games division is no longer a console hardware and platform business with some studios attached to turn out exclusive games; it is now a gigantic game publishing business with an important but nonetheless somewhat vestigial console platform business attached to it.
What does the future look like for a business like that? In the short to medium term, it needs to show revenue growth – the price tag for Activision Blizzard, Microsoft’s most expensive acquisition ever, plus the billions already spent on the likes of ZeniMax, doesn’t need to be repaid as such, but it needs to continually justify itself in bottom line growth.
Like a timid swimmer braving a cold sea, Microsoft is delicately lowering itself – and the Xbox fanbase – into the water, letting each body part adjust to the temperature shock in turn
That means that the notion of making the Activision Blizzard catalogue into Xbox/PC exclusives and eschewing launches on its competitors’ better-selling platforms is simply impossible – there’s no scenario where the Xbox division pushes Microsoft to approve spending $70 billion on an acquisition only to promptly neuter that company’s primary revenue streams. With the immense bulk of Activision Blizzard therefore remaining a third-party publisher for other platforms, keeping other games within the Xbox studios family platform-exclusive feels like an artificial and pointless distinction for the company to make – so it’s inevitable that it will simply stop making it.
The distinction for Microsoft’s games will no longer be which platforms they’re on, but which game streaming and subscription services they’re on at launch – they’ll happily rack up sales on Sony and Nintendo platforms while encouraging people in the direction of Game Pass Ultimate subscriptions on PC and Xbox.
In that context, the timed exclusivity for Indiana Jones feels like a halfway-house that’s not really satisfying for either of the company’s goals. It will depress Xbox hardware attach rates for the launch, while also — as Chris Dring pointed out in our Gamescom Opening Night Live podcast — likely depressing potential sales on PS5 down the line.
This isn’t a strategy for the long term; if I had to speculate, I’d guess that the company would have been happy to rip off the band-aid a little more aggressively this time and launch Indiana Jones day-and-date on Xbox and PS5, but has been pushed into a timed exclusive because the PS5 version started development later and won’t be ready for a winter launch.
It’s also possible (and not mutually exclusive with that situation) that there are concerns about making these changes too quickly and creating disillusionment among Xbox owners, so a temporary compromise solution was chosen, even if it leaves Xbox halfway in the water with its arms wrapped around itself and its teeth rattling.
What, then, is the final goal for this strategy? What does the Xbox division look like once it’s finally finished this transition and managed to get its head into the water? Fans of Xbox consoles fear that the company is heading down the Sega pathway – pure third-party publishing – but I don’t think that’s a model Microsoft is seriously considering for now. It still very much wants Xbox to have an ecosystem of its own, not least because games sold on Xbox are dramatically more profitable for the company than games sold on any other platform.
Moreover, the dream of having a huge audience of locked-in customers on Game Pass services remains very much alive. Selling games via the Xbox digital retail platform and signing up customers for Game Pass is significantly harder if there’s no actual Xbox hardware platform to build the brand identity and customer loyalty around. The vision for now seems to be that Xbox hardware will be a “premium” place to play Microsoft’s games and access its services – but this “optional console” model, where all the games and services are also available elsewhere, is a major gamble, and it remains to be seen whether it can retain brand loyalty in the long term.
One point that’s worth thinking about is that all of this is happening at Microsoft at the same time that we’re seeing a renaissance in PC gaming devices – not just PCs themselves, but small form factor gaming devices and PC gaming handhelds from the likes of Asus and Lenovo.
Valve kicked off this market with the Steam Deck, which remains dominant in this space – and by default, doesn’t run Windows, with Microsoft’s operating system support for such devices being so poor that Valve instead went to the trouble of engineering a custom version of Linux with an amazing emulation layer for playing Windows games.
Microsoft will happily rack up sales on Sony and Nintendo platforms while encouraging people to buy Game Pass Ultimate on PC and Xbox
The other devices in this space are impressive in hardware terms, but remain hogtied by Windows’ weak support for such gaming systems. In the realms of pure speculation, we can imagine what a massive step-up in support for such systems would be achieved by making the Xbox software, services, and interface into part of a licensable operating system for such devices – especially in an era when Windows’ support for powerful, low-energy ARM chips is being rapidly improved.
An eventual shift in focus towards that direction, with Xbox becoming both a line of console hardware and a part of the Windows operating system that third-party manufacturers can put on their own PC gaming devices, would see Microsoft bringing Xbox back onto what has traditionally been more comfortable ground for the company. In this scenario, Microsoft’s own Xbox hardware would occupy a similar space in the market to the Surface laptops, as a premium, reference-spec type range of devices.
This isn’t a new idea; the concept of Microsoft setting reference specs and letting other people build Xbox consoles is as old as the Xbox concept itself, but the broader market and Microsoft’s own strategy are arguably finally aligning in a way that makes this viable.
It would, however, set up a new conflict for Microsoft, because the dominant player in this field right now is Steam. Xbox may have given up on trying to out-console Sony and Nintendo, as Spencer himself acknowledged; but might the coming years instead be spent trying to out-PC Valve?
