Xbox on Year 4: getting back on track

Microsoft’s home entertainment systems struggled for three long years – can they make a comeback during the next three?

Three years ago – to the day – the most powerful games console ever built, the Xbox Series X, was released. Three years later it serves as a reminder of the fact that, in the world of video games, raw processing power does not guarantee success. (Image: Billy Freeman, Unsplash)

It’s hard to believe it’s been three years already since Microsoft’s pair of home entertainment systems, the Xbox Series S and the Xbox Series X, hit the market. See, in gaming console terms – in typical ones anyway – three years is almost half the lifespan of such systems… but the conditions dictated by the COVID-19 pandemic were anything but typical. Not only was initial consumer demand higher than it would otherwise be, but (especially in the case of the Series X model) there would not be enough stock to meet that demand for many quarters to come. Microsoft got over the chip shortage issue before Sony did – the Xbox Series S became readily available in Q2 2021 – but neither fact proved helpful in the long term.

The atypical launch of the Xbox Series systems more or less mirrored the just as atypical one of the PlayStation5, yes, save for one important difference: there was not a single exclusive game for Microsoft’s systems available on November 10th, while the PS5 did offer some of those a few days later (as well as a higher-quality launch lineup overall).

Easy to say that “the most powerful games console failed because it had no games”… but it’s a bit more complicated than that.

This, unfortunately, held true for almost three years: the Xbox Series S/X delivered almost no AAA exclusive games that really mattered until pretty recently. In stark contrast, the PS5 did deliver – in the same time frame – a number of interesting exclusives showcasing its hardware capabilities, as well as a number of highly desirable, AAA cross-gen titles that really did look and play better on the most capable PlayStation.

It seems that during the first 3 years of a new Xbox and a new PlayStation competing for consumer attention – and dollars – in the marketplace, most gamers chose the latter: the PS5 has already sold almost twice the number of units the Xbox Series S/X has. (Image: Onur Binay, Unsplash)

In retrospect, it might be easy to say that “the most powerful games console on the market failed because it had no games”… but it’s a bit more complicated than that. Yes, Microsoft did drop the ball in terms of exclusive software for its systems, but this was due to a number of different factors – not just sloppy development or resource mismanagement – as well as the result of strategic choices the company made earlier on.

Still, it’s hard to argue with numbers like these: the sales of both Xbox models combined has yet to reach the 25-million mark, while the PS5 is at 45 million units already, targeting 50 million by March 2024. For all intends and purposes, the latest Xbox/PlayStation Console Wars are already over.

That big bet on services still a risky one

As important as AAA games are for any home entertainment system entering the market, quite a few people believe that even if the Xbox Series S/X had offered the same number of exclusive games the PS5 did at launch or on year one, Microsoft would still not have matched Sony’s console sales. The reason is simple: Microsoft lacked the necessary focus to achieve that. Playing the long game with Game Pass, trying to expand its PC customer base and striving to get a head start in cloud gaming while launching two different home entertainment systems may have been too much of a stretch for any one company. It certainly was for Microsoft.

Xbox Game Pass offers tremendous value for money to consumers, but it seems that there are only so many Xbox owners interested in subscribing. Microsoft will focus on PC Game Pass in the hopes there’s more room for growth in the PC gamer crowd. (Image: Microsoft)

Talking about Game Pass and cloud gaming – both representative of Microsoft’s big bet on network and content services – it’s clear that neither reached the level of success the company might have hoped for in 2019 or 2020. Game Pass itself might or might not be profitable (depending on who you ask), but it’s definitely an area where Microsoft is constantly and heavily investing in the hopes that it proves to be a competitive advantage in the future. This may still come to pass (huh) but, for the time being, it seems that there’s a wall the company has hit: we haven’t had an official update on subscriber numbers for more than a year and, with Microsoft openly admitting that it intends to now focus on PC Game Pass, it seems that Xbox Game Pass numbers have either slowed down to a halt or even peaked… for now.

How things will play out regarding Game Pass over the next few years is anyone’s guess. The general idea of “a service so attractive that’s steadily selling consoles that steadily bring in new subscribers”, though, seems to work better on paper than out there, in the real world, where Xbox consoles are not selling in high enough numbers. Microsoft is right to target a larger pool of consumers – the PC gaming crowd – instead of trying to convince more Xbox owners to subscribe… but PC gamers have a lot of options at their disposal and they may not be inclined to pay for yet another subscription service asking for a monthly fee.

Xbox Game Pass seems to have hit a wall of sorts, at least for now, so Microsoft intends to focus on PC Game Pass instead.

Xbox Cloud Gaming presents a different kind of problem. It’s a forward-thinking service and, being device-agnostic, it should have attracted – in theory – more attention than it currently does. In practice, though, it proved to be little more than a nice bonus in the eyes of Game Pass subscribers because “the last mile problem” remains unresolved for everyone: game streaming quality heavily depends on the network connection it works over and not enough people enjoy the kind of Internet access that allows for a great consumer experience in most cases.

Xbox Cloud Gaming is not ready for prime time – as is the case with all game streaming services really – and there’s no way to tell when “the last mile problem” will be solved for enough consumers to exit its current beta status. (Image: Ryland Dean, Unsplash)

There are certain types of games that can be played without much difficulty via cloud streaming, yes, but for a lot of other types of games global network connectivity just isn’t there yet. What’s more, it’s nigh on impossible to predict when Internet access will hit the minimum level of quality required for a flawless gaming experience in general, so it’s extremely difficult to make plans on cloud gaming as a whole.

Time is on Microsoft’s side, obviously, as Internet access is getting faster and more reliable in most countries at a steady pace – but, then again, that’s true for every other game streaming service too, including Sony’s, nVidia’s, Amazon’s or anyone else’s. So it’s not easy to see how Microsoft intends to shape the Xbox Cloud Streaming service into a clear competitive advantage in the near future. Or the distant one, for that matter.

Still a lot to prove on the software front

Addressing the elephant in the room, though: what is Xbox to do in terms of software, about the games themselves, about what most consumers are actually interested in? Microsoft can’t afford another three years of Sony dominance when it comes to AAA exclusive titles or else its next system – whenever that is bound to arrive – is practically doomed. Xbox doing a much better job on the software front, especially when it comes to first-party releases, will unlock… everything: it will allow Game Pass to expand its customer base and reach, it will grab the much-needed attention of PC gamers, it will help sell more Xbox Series S/X units, it could ultimately give Microsoft enough new momentum so as to finish this console generation on a high note in 2027, just in time for a next-generation Xbox reveal in 2028.

AAA productions such as Starfield and Forza MotorSport have finally arrived on Xbox but Microsoft needs to prove that they are just the start of a much-needed comeback in terms of exclusive software for its platform. (Image: Microsoft)

A soft restart, of sorts, is needed and the company would have consumers believe that this is exactly what’s happening these past two months, beginning with Starfield and Forza MotorSport. That might have been true, to some extent, but even a casual glance at the all-formats current release schedule of 2024 is enough to raise concern: there is not a single first-party Xbox-exclusive title coming from Microsoft attached to a specific release date until March or April at the earliest, which is a full half-year after October’s Forza MotorSport. Games such as Avowed, Hellblade 2 or Microsoft Flight Simulator 2024 are all included in a tentative “2024” release time frame, but that is hardly reassuring.

For the Xbox to compete, Microsoft must ensure there’s a steady stream of quality games – plus some AAA exclusives – available for it every year.

If Xbox is to actually compete on the software front, it needs to offer pretty much what Microsoft’s own executives have repeatedly claimed they’d like to see: a steady stream of quality games that includes three to four “tentpole” exclusive releases every year. People following the gaming industry for a while already know that this is a target that’s fairly difficult, if not impossible, to consistently hit: PlayStation managed to offer that with three such AAA cross-gen titles in 2022 and it was widely considered to be more of a happy circumstance than a deliberate achievement. But Microsoft needs to get its act together and, at the very least, aim for that. As Sony has already proved, in time it gets easier.

The recent acquisition of Activision Blizzard King should help Microsoft deliver even higher value to Game Pass subscribers in 2024, but whether that will improve its market position remains to be seen. (Image: Microsoft)

So there you have it: entering its fourth year on the market, Xbox must ensure that all the different cogs of the machine defining a modern gaming format – hardware, content and services – are working together in order to regain some of the lost ground and prepare for what’s coming after 2027. It’s fair to say that the first three years of the current Xbox generation have been a waste, more or less, so it would be a pity (not just for Microsoft either) if the next three prove just as fruitless. Here’s to getting Xbox back on track, then.


Kostas Farkonas

Veteran reporter with over 30 years of industry experience in various media, focusing on consumer tech, entertainment and digital culture. No, he will not fix your PC (again).

Veteran reporter with over 30 years of industry experience in various media, focusing on consumer tech, entertainment and digital culture. No, he will not fix your PC (again).




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