Xbox wants to have its cake and eat it too, which is why it can’t be saved

You have to feel for all the Xbox fans out there – or for gaming enthusiasts in general – trying to make sense of what Microsoft is actually doing over the last few months in terms of its Xbox business. Hell, even people like yours truly – who have been following the company’s console gaming efforts since the original Xbox was nothing but a hastily-put-together “X” shaped prototype in early 2000 – cannot pretend to know what any of this means anymore. They may know what to think about it, but not what to make of it. Not really.

Where to begin? Since late February – when Asha Sharma took over Phil Spencer as the head of Xbox – it’s been a wild ride of vague promises, mixed messages, conflicting announcements, ominous statements, weird choices and seemingly last-minute decisions. These inspire anything but trust or hope to millions of Xbox fans asking for clarity and honesty. Changes in leadership are one thing. Changes in communication strategy that look more like mood swings are quite another… and we’ve had way too many of those in too short a time.

Things have gotten so bad over the last few days that people don’t even know which questions to ask anymore. Does Microsoft plan to fully support the Xbox, to partially support the Xbox, to expand the Xbox, to transform the Xbox, to retire the Xbox? Does Microsoft even know? Is there a plan? If not, when will one be formed? When it does, will it be shared with Xbox fans in full? Will it be shared in a timely manner? Will it… ever?

It’s all pretty confusing right now. So how about taking a look at what all interested parties want from the Xbox moving forward… and what Microsoft’s actual options currently seem to be? That could help clear things up a bit… maybe – so here it goes.

What vocal Xbox fans want, what Nadella wants, what the rest of us want

One of the main reasons why there’s such uncertainty over the future of Xbox right now is this: loyal – and quite vocal when online – Xbox fans are constantly asking for specific changes, Microsoft has repeatedly stated its intentions for different changes… but the company has also made concessions here and there to said fans, muddying the waters. It is as if Microsoft is gearing up to do certain things, all the while signalling to Xbox fans that it’s planning to do other things… hence the confusion.

It’s the discrepancy between that’s said and what’s planned that’s doing most of the damage right now. On one hand, Xbox fans are asking for… well, pretty much everything: a return to console-exclusive games for the Xbox, a permanent focus on the console and its games rather than on services around it, a return of Game Pass subscription costs to affordable levels (with first-party day-one releases still in place), even a future Xbox model following the classic gaming console paradigm of fixed hardware at subsidized, consumer-friendly retail pricing.

On the other hand, Microsoft’s CEO, Satya Nadella, has made his intentions clear on multiple occasions: the Xbox division needs to be profitable (so no significant subsidies for hardware), the future of the Xbox is aligned to PC gaming (so the traditional console business model is not applicable) and the Xbox needs to meet the players where they already are (so no console exclusivity for major AAA releases or huge money-making franchises).

What die-hard Xbox fans want and what Microsoft’s leadership wants, in other words, are totally different things. Some of the changes Xbox loyalists want are unrealistic, while some of the changes Nadella wants seem too difficult to make if the Xbox is to keep even a part of its console identity. This gap between them looks simply too large to bridge and half-measures would probably leave both sides unsatisfied.

It’s no wonder that, if one also takes into account a handful of Asha Sharma’s recent moves – such as the small reduction in Game Pass subscription costs or the Xbox exclusivity of Clockwork Revolution and Gears of War: E-Day – what ensues is total confusion. Even the opinions expressed by some Xbox executives, supposedly working together, contradict one another at times (which is telling).

In this context, what the rest of us – not the fanboys, not Microsoft’s execs or inventors, just consumers and gamers really – would like to see from the Xbox seems meaningless. Anyone who actually cares about gaming would love to see the Xbox offer Sony’s PlayStation the kind of healthy competition this market needs: to build a true alternative to the PS6, to release great games, to deliver competitive services. But what can we really expect of a company that tries to appease its most vocal fans short-term while planning to do a hard “reset” and follow a different business model long-term? Assuming that Microsoft does intend to “save the Xbox”?

So what are Microsoft’s actual Xbox options going forward?

Since that last assumption – that Microsoft actually wants to keep its gaming console business, despite reports indicating it contemplated spinning it off at some point – is all we have to go on right now, let’s take a look at… options. Xbox is at crossroads. What are the different ways Microsoft could handle all of this, based on current market conditions, as well as the context of the company’s goals as a whole?

Option one: the Xbox survives, cuts its losses, adjusts its strategy for the next generation of consoles. This looks like the most probable scenario right now, although we’d have to wait for the full extend of Microsoft’s cuts and adjustments before assessing its viability. It’s easy to imagine a smaller, more profit-focused Xbox division launching an expensive first-party console, leaving the release of more affordable models based on the same platform to other manufacturers and driving its own AAA Microsoft Game Studios titles hard on all formats, including the PlayStation. What is hard to imagine is Game Pass offering those premium titles upon release, as Microsoft won’t really expect the service to drive console sales anymore.

Option two: the Xbox does not survive beyond its transition to the next, hybrid console generation. The next first-party, PC-compatible Xbox system launches as promised, but Microsoft basically uses it as a way to “offboard” Xbox fans, redirecting them to a “living room PC gaming plus Xbox backward compatibility” model instead. Support for bespoke Xbox versions of Microsoft Game Studios titles does not extend beyond the next generation (PC versions just get some Xbox-specific optimizations… maybe), all first-party games go multi-format, Game Pass is radically changed (if still in the picture at all) and Microsoft is leaning more on other forms of content delivery (e.g. game streaming). There’s a good chance of this scenario playing out if the next Xbox platform as a whole proves to be a commercial failure.

Option three: come 2027 Microsoft assesses the RAM/SSD situation anew, decides the Xbox console model cannot be profitable (even through manufacturer partnerships), does not launch a first-party games console (not even as a reference system) and greatly reduces the value of Game Pass. The company then focuses (a) on making Windows 11/12 a true gaming platform sporting Xbox backward compatibility and (b) on making Microsoft Game Studios the most powerful multi-format games publisher globally. This nuclear option – leading to Microsoft shutting down the Xbox business altogether – can’t be ruled out because (a) the company is not shifting its focus away from AI anytime soon and (b) retaining its commanding presence in the PC space through Windows is crucial to its future, whereas the survival of the Xbox brand isn’t.

Die-hard Xbox fans are not going to like seeing any of the scenarios described above play out: even if Microsoft-produced AAA games exclusivity is the only thing sacrificed so that Xbox can survive, they’ll be up in arms (again). But it’s also hard to see how their perceived wants or needs can actually align, in any scenario, with Microsoft’s repeatedly spelled-out, long-term goals. As stated earlier, this gap is just too wide to bridge, which is why “saving the Xbox” – in the sense its superfans seem to mean it anyway – is, realistically, impossible at this point.

At the end of the day, Microsoft is a company that invested hundreds of billions of dollars in the Xbox business, over a quarter of a century, without achieving most of the goals it has set for itself. Even if the responsibility of gross mismanagement, numerous bad choices and a distinct lack of vision still falls on the shoulders of the company’s executives, it’s easy to see why Nadella and his lieutenants just lost patience with the Xbox part of the company’s business at some point. What remains to be seen, frankly, is how high a price the Xbox crowd – and, to a certain extend, the games industry as a whole – will pay for that.