The week that ends tomorrow easily ranks at the very top when it comes to the sheer amount of public statements made by Xbox and Microsoft executives in the span of a few days.
Through a series of interviews, Xbox CEO Asha Sharma and Chief Strategy Officer Matthew Ball outlined a bold plan to rescue the division from its low margins (and the potential spin-off, joint venture, or sale by the parent company). Yesterday, in a video interview with Hard Fork, Microsoft CEO Satya Nadella claimed no one could accuse the company of not having invested in Xbox throughout the past 25 years, but now the time has come to make it sustainable and monetize the content. Nadella even went so far as to quip that YouTube currently monetizes Xbox games better than Microsoft itself.
Asha is really 100 days in, and she put out a post saying, in the next 100 days, she's going to take a fresh look and make sure we deliver on what our fans expect of us both on the hardware side and on the publishing side. The challenge now for us is to think about how do you innovate both in hardware as well as in the games going forward in a world in an economically viable way.
We've invested a lot. No one can accuse Microsoft of not having invested for the last 25 years. And now we have to turn this into a sustainable business that delivers what is fundamentally one of the best sources of entertainment. The challenge we have is that we've not been monetizing that entertainment. If anything, we've been subsidizing that entertainment. In fact, there's more monetization of Xbox games happening on YouTube than at Microsoft.
From Nadella's statement, it's clear the gloves are off, and Xbox must live (or die) on its own, as Microsoft will no longer bankroll it indefinitely. Later in the interview, Nadella added that Asha Sharma and her fellow execs must define a new model that somehow merges all the various Xbox platforms, from the console to PCs, from mobile to cloud.
Unfortunately, because of what's happening with the cloud and AI, the prices have gone up. It's happening with PCs, it's happening with phones, and Xbox is impacted as well. The scarcity of semiconductor supply and memory in particular is having a massive impact on consumer electronics. That's a temporal thing that I think we'll get through. It is not going to be permanent. There is a permanent thing, which is: what's the Xbox model going forward? PCs and consoles both have their place, obviously, mobile has people playing elsewhere, and so we have to now bring it all together while staying true to what we've always done.
It's no easy feat, though the road appears to be already paved with Project Helix, which will allow users to play PC games on an Xbox console. The software situation is perhaps more problematic: Sharma confirmed that Xbox cannot afford more than one or two exclusives (for now, Gears of War: E-Day and Clockwork Revolution) until the business becomes healthier. And then there's the output issue: the new Xbox CEO openly wants to invest more in big franchises like Halo, Fallout, and Elder Scrolls while reducing funding for smaller games.
It will take some time before the new leadership's actions can actually affect the bottom line. Until then, Xbox must hold fast.
About the author: With over two decades of experience in gaming journalism, Alessio Palumbo has led the gaming vertical at Wccftech since August 2015. He started working at a young age for Italian websites like Everyeye.it, Gamestar.it, Nextgame.it, and Multiplayer.it before kickstarting the indie English-language publication Worlds Factory as its founder and Editor in Chief. In the last decade, he has coordinated the overall output of Wccftech's gaming section, managed PR relations, assigned reviews, produced daily news coverage, edited gaming content as needed, and delivered game reviews. Arguably, his trademark content is the long series of exclusive developer interviews that have been cited by Wikipedia and by the biggest news media and gaming publications. His passion for technology also makes him knowledgeable when it comes to gaming hardware and tech. His favorite genres include RPGs, MMORPGs, and action/adventure games.
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