Xbox's Exclusive Problem

on the 18th of January 2022 Microsoft announced a deal worth almost $70 billion to purchased AAA game Juggernaut Activision Blizzard the deal sent shock waves throughout the Gaming Community as people realized that this meant that Xbox would now own Crash Bandicoot which really doesn't feel right but it also send shock waves throughout Market Regulators most notably the FTC who within a few months announced their attempts to entirely block a deal that they felt would lead to a full-on Market Monopoly before they knew it Microsoft was sent down a rabbit hole of appeal after appeal bringing Executives from all across the industry into an allout corporate war between Microsoft and Market Regulators that despite some false alarms took almost 2 years to finally slow down it's easy to see why you'd want to buy Activision Blizzard they own an amount of Ip that Rivals that of Nintendo some of which not only make billions of dollars a a year but are some of the most valuable IP in human history but the amount of effort and legal battles that was put into securing the Activision Blizzard deal takes on an entirely new meaning when you analyze the company that managed to close said deal Microsoft or specifically in this case Xbox Xbox has been throwing large swaps of money at every corner of the industry for the past few years now and this purchase of Activision Blizzard is just the most recent and by far the biggest manifestation of Xbox's attempts to fight their way to Icon status but despite popular sentiment online these attempts are not a practice fueled by corporate greed nor are they a valiant donation to increase the quality and funding of other Studios games but rather it's all an attempt to fix an exclusive problem that Xbox started its life off with before we begin a brief thank you to my patrons on patreon for making these videos possible these kind of videos take a very long time to make so all support is greatly appreciated and more info on how you can join at the end but for now let me bring you back to a time before Halo and master chief to show that as Xbox should have learned time and time again simply fighting your way to Icon status is easy as said than done and so uh for the first time let me now unveil Xbox the original Xbox was announced at CES 2001 with a release scheduled for lace that year and right from the get-go they had a massive Mountain into climb or more accurately two their competitors Sony's Playstation and Nintendo's Nintendos had already been in operation for many years and had become well oiled machines pumping out exclusive title after exclusive title many of which became long running and beloved series of games that millions of people would buy an expensive box for just because that box came exclusively with that game but unlike the industry of just a decade prior where the major Market players weren't necess set in stone and thus liable for quick collapse Nintendo and Playstation were Titanic stable entities with millions of Die Hard fans who were either built rapidly off the Fatal failures of the previous gaming giant or gradually refined over Decades of quality products and establishing of trust and Xbox being the new kid on the Block had none of that and they found themselves in a position where they had to replicate the market control of Nintendo and Playstation as fast as they could without the Decades of time or fatal failures to capitalize on and the quickest way to do that is with exclusive reasons to buy the Xbox over the competition they started with the release of Halo Combat Evolved an exclusive launch title for the original Xbox in 2001 which is not only a game lorded by The Gaming Community as a masterpiece to this day but is also historically significant for popularizing the twin stick analog control scheme for firstperson shooters that subsequently became industry standard this started a long string of equally influential and successful sequels that gave Xbox its killer app something that Xbox never managed to replicate outside of Halo and that's not for a lack of trying Xbox's strategy at the time was not necessarily to build their exclusive lineup with teams entirely in-house at Microsoft but to fill it with games made specifically for the Xbox by third party Publishers such as Sega and KO techmo as part of a several yearlong partnership deal the games that resulted from these external Partnerships ended up being very good but unlike the Studios owned by the competition the only incentives from this deal for these external teams was just to make whatever game they wanted in whatever genre they wanted but only for the Xbox when Microsoft needed games that could compete against Nintendo and PlayStation's biggest franchises so whilst Nintendo and Playstation were releasing top-of-the-line Platformers RPGs and first-person shooters Xbox only had an answer to one of them with the rest being more experimental Niche titles that aren't realistically going to become system Sellers and because the games produced from the deal was still wholly owned by the respective companies it acted more as a delaying of Xbox's exclusive problem rather than a solution and the few internal teams that Xbox did have either tried and failed to make games that could compete with the likes of Mario Zelda and Final Fantasy or didn't have the Time Manpower experience or quite frankly the interest to take on these challenges leaving Xbox's killer app as essentially the only app worth buying an Xbox for and although it was enough to keep Xbox relevant in the eyes of core Gamers the much larger casual Market instead FL lots to the GameCube and especially the PlayStation 2 as their consoles of choice leaving Microsoft handily in last place and with no games to work with by the end of the generation now to all the Final Fantasy fans watching that just began typing a really pedantic comment about how I implied Final Fantasy as a PlayStation franchise when it is in fact owned by Square Enix hold that for for just a second because although you are correct it is also true that no Mainline Final Fantasy game released on either the Gamecube or the original Xbox unless you count Crystal Chronicles as Mainline which I don't know why you would the same is true for the Devil May Cry series The Tekken games of that era the Kingdom Hearts games Dragon Quest Guitar Hero and Metal Gear Solid 3 Snake Eater none of these are owned by PlayStation either so why restrict your game to just one audience because porting a game to a console takes time and money and why bother spending all of that on porting the Gamecube or Xbox when the vast majority of Gam were gaming on the PlayStation 2 this is the second part to console exclusivity that people don't talk about or rather when your console becomes so popular that developers don't need to worry about porting to other consoles to reach a wide enough audience anymore and thus will release their games on only your console effectively making them exclusives in and of themselves at least temporarily and allowing you to circumvent your exclusive problem entirely of course this is easier said than done when it comes to the subject of this video box would need to release a console of the right price with the right features and the right Hardware at the right time in comparison to their competitors to become the Market's console of choice and not even the best marketers and engineers in the world could predict what other companies had in store so it was really nice that when the time came for the next generation of consoles Nintendo and Sony made sure their consoles were so bad that Microsoft didn't even need to predict what they were doing [Music] code named the revolution the Nintendo Wii is unanimously known for being controlled not with a traditional dual analog controller but by a white stick with at the time brand new motion control technology that brought with it countless opportunities for neverbe seen gameplay mechanics whilst also being extremely easy to use and Nintendo knew this Prospect of whipping a stick around and feeling like you're actually playing tennis would appeal to a gigantic casual audience and appeal to them it did the Hope Was That by coalescing this massive grandmar and family go to the Wii Nintendo could convert them all into more hardcore Gamers that would buy the next Mario Zelda and Metroid releases but as we have all learned from the Advent of mobile gaming casual gamers are fickle are only likely to play games for an average of 5 minutes between other activities and are incredibly unlikely to sit down and play the newest Zelda game on a console that otherwise contains outdated internal hardware and Antiquated online features this left Nintendo in a bubble a highly profitable bubble but one that Xbox and Playstation did not operate within a bubble that was quickly left Hollow after the initial highight period of its release died down with comparatively low software sales for most of their non-casual oriented games and a bubble that third-party Publishers would not even dare to touch with a 10-ft pole because of the previously mentioned weak hardware and the PlayStation 3 wasn't much better the deal sounds intriguing to any gamer no matter how dedicated built in backwards compatibility with not only the PlayStation 2's entire catalog but the original PlayStations as well the ability to acts as a central media hub for music photos and Blu-ray discs sophisticated capabilities for online play and Incredibly Advanced Hardware performance using Sony's proprietary cell processor but all of this came at a price one that most Ordinary People let alone Gamers weren't willing to pay what's more is that the Advanced Hardware of Sony cell processor was not only so expensive to produce that they'd sell each PS3 at a significant loss but it was also an ass ache to develop for because of its Reliance on an APU a relatively new and confusing piece of hardware at the time meaning developers didn't like it either both the Wii and the PlayStation 3 left the majority of game developers with no conventional place to go at the Advent of the seventh generation of consoles so when Xbox released a bog standard comparatively low price machine of similar Hardware strengths to the PS3 developers by far and and wide couldn't help but jump on Microsoft's ship Microsoft had come into the Seventh Generation expecting to fight for their chance of the spotlight but because of these aforementioned fatal failures from its two competitors the Xbox 360 released a full year before both the PS3 and the wiii had sealed the deal on the console war before it had even started by basically being the least weird and the best priced of the three Seventh Generation consoles cast your mind back to the mid to late 2000s and you'll know fond memories of Halo 3 and Modern Warfare 2 on Xbox Live the Indie arcade that came with them the birth of online content creation on video games and the weirdos on the school playground left out of the hype because they owned a PS3 all of these memories and events were centered around a green box that left a profound impact on the lives of tens of millions but no other entity was impacted as much by this as Microsoft itself the success of the Xbox 360 was Monumental for Microsoft roft but it was a success fueled largely off the failures of others and definitely not off their lineup of exclusive games they had prepared for the 360 of course Halo was still breaking sales records but most of their exclusives after the first few years performed inconsistent at Best in sales probably because they decided to call them such amazing names like blue dragon but the Xbox 360s exclusives overall did not become an instant success because they were on the most popular console in the way that Microsoft may have thought they would and you'll see the true effect of this when advisor to Microsoft entertainment and devices division Don matrick was promoted to the role of head of Xbox in October 2010 whilst the latter half of the 2000s saw dozens of unique titles being either commissioned for or created by Xbox for the 360 the dawn of the 2010 saw matrick move towards abandoning their pursuit of exclusives in exchange for better deals on third party hits such as Call of Duty and deciding to finally embrace the full mass of casual appeal with the launch of the Xbox Connect in November of 2010 a camera hoping to one up Nintendo's Wii remote by being capable of motion capturing the players's movements onto onscreen characters without the need to hold anything at all in one's hand it sounds impressive in theory but looked clumsy on the stages of e3 performed too clumsily in the homes of Hardcore Gamers and ultimately failed to capture the attention of said hardcore Gamers that populated the Xbox 360s user base a user base that bought the console in part because of those abandoned exclusives but this did not matter to Microsoft or Don matrick because why bother spending time and money on making quality exclusive games that will probably flop when you've convinced the majority of people to buy and use the Xbox 360 to play the latest Call of Duty or FIFA installment anyway the shift to more casual appeal with the connect brought in millions more players to the Xbox 360 without tampering with the consoles already established strangle hold on third party games and Publishers and head of Xbox Don matrick was considered in the business world to be the star of the show in August 2011 Fortune Magazine cited him as one of the smartest people in the tech industry and a year later in 2012 he was named as one of the top 10 brilliant technology Visionaries by CNN Money alongside the founder of Android Andy Rubin and designer of the iPhone Johnny IV and it's all thanks to his role in developing and releasing the highly popular connect peripheral despite the disappointment of Hardcore Gamers public perception on the Xbox brand could not have been any higher because of a team and Technology matrick was responsible for assembling they made movie tie-ins dancing games sports games Fitness games blue sales expectations out the Water by selling 10 million units in a single year and even saw connects used in academic and Commercial settings thanks to it state-of-the-art depth sensing technology and all of this led to the Xbox 360 being the uncontested victim of the seventh generation of consoles overall and better yet a new frontier was just on the horizon for Xbox if the connect blew the minds of the average consumer then what Dawn and his team at Xbox had in store for the next generation of consoles was going to absolutely eviscerate them it was time for a new vision for Xbox one that would not only expand on the entertainment Juggernaut they had established in the PRI years but consolidate both sides of the entertainment Spectrum under One X signed under after years of hard work by Dawn and his revolutionary team the date was set and journalists from countless Publications sat down with laptops and Laps to witness Microsoft's Grand Fay into the eighth generation of consoles on the 21st of May 2013 and if the connect was Don matrick magnum opus then the [ __ ] storm that he created in the coming days and months is undoubtedly his [Applause] legacy [Music] the reveal of the Xbox one was one of the biggest PR disasters in gaming history trying to adapt to an oncoming shift in entertainment consumption far too early fans and journalists alike were left completely dumbfounded when head of Xbox Don matrick came out on stage and professed the Xbox One's capabilities as an all-in-one television and entertainment device rather than its abilities to deliver Next Generation game games and graphics and the hardcore Gaming Community was immediately left skeptical of the Xbox One's chances of satisfying their want for high quality gaming experiences going forward and the worst of it had yet to come in the next few months Xbox announced the revised connect would not only come with the console but be required to play it something the hardcore Community didn't like the console's launch price was announced to be set at $499 something both the hardcore and Casual player base did not like and then they announced announced a DRM policy for the Xbox one that banned used games from being used outside the original owner's console and required the Xbox One to always be connected to the internet something that everyone absolutely hated Xbox quickly backed away from all except the price tag in an effort to not burn every single Bridge they had built since the 360 era but as they look to rebuild those bridges Xbox soon realized something even worse that in the aftermath of all this that the bridges were hastily being rebuilt not by themselves but by PlayStation although the Xbox 360 did win the seventh generation of consoles overall Sony had been working around the clock to build back trust among developers and fix their botch launch of the PlayStation 3 and their work had meant they actually surpassed the 360 in sales figures by the time the PlayStation 4 was just around the corner and with Xbox seemly knocking into walls at every turn Sony took that as an opportunity to burn them even harder at any chance they could when Microsoft announced the Xbox One's launch price at $499 at E3 2013 Sony W up them by assuredly showing the public a price tag $100 cheaper to resounding Applause I'm very proud to announce that PlayStation 4 will be available at $399 when Xbox snaps DRM policy for the Xbox one that effectively made used games completely unusable Sony made a short video last second showing how simple it is to play used games on PlayStation 4 almost mocking Microsoft for their mistake and all the gaming press could think about during all this chaos was what head of Xbox Don matrick had to say to assure diard Xbox fans that everything was going to be okay and this was the visionary's actual response fortunately we have a product for people who aren't able to get get some form of connectivity it's called Xbox 360 right so stick with 360 that's your message if you don't like it in one Fell Swoop PlayStation 4 had not only positioned themselves as the console for core Gamers but the cheapest and easiest option for casuals as well taking everything Microsoft had established in the previous generation in the blink of an eye and Microsoft quickly found themselves in a situation all too familiar to them where they had to give people an actual reason to buy an Xbox one over its competitors through quality exclusives but as we've already addressed Xbox abandoned their pursuit of quality exclusives in the latter half of the 360 era meaning that at the time when they needed them the most the state of XBox exclusive games at any given time was about as good as whatever the most recent Halo game was and those conveniently stopped being good at around the same time so while Sony was building strong relationships with first and third party developers alike Xbox had nothing going for them if I asked you to name games games that you'd categorize strictly as Nintendo games or Playstation games you'd be able to name a plethora of titles and franchises that are inextricably tied to the identity of those platforms and in turn give them a baseline of value but try to do the same for Xbox games and you may be able to name a few but you'd always come vastly short when comparing to the Titans that are Nintendo or Sony this is the root cause of all of Xbox's problems in the modern era the decision to abandon establish a legacy of exclusive games whilst both of their competitors were still on the treadmill in the hope that their system could leave a mark on Gamers not for its unique products but by being the best place to use other people's products and when they no longer were the best place to use other people's products they didn't have the Legacy they needed to break their fall like other companies would and all of this was facilitated by a Visionary who Tunnel Vision on the potential prospects of casual appeal it's not a problem that Don matrick caused but one he def definitely accelerated the prominence and severity of and by the middle of 2014 he had left Microsoft to lead mobile game developer Zinga and left his successor as head of Xbox game studios Phil Spencer to inherit said problem Phil was definitely more in tune with the hardcore Gaming Community than Don was but he still struggled within the first few years of his leadership to turn things around for Xbox one he tried making partnership deals with external developers allowed the original Xbox but when that gave very similar results to the first time they tried it Phil Spencer wondered what solution was going to fix their exclusive problem and then he suddenly remembered what kind of company he worked for in 2014 they suddenly purchased Swedish indie game Studio Mojang creators of Minecraft as well as making it clear at conferences and press events going forward that Xbox's Focus would shift hard towards producing the highest quality games rather than all-in-one entertainment he tried again at the whole partnership thing but when that resulted in nothing but a canceled Platinum game he decided to double down on the acquisition train in 2018 when he announced a series of Acquisitions at E3 of compulsion games nxl entertainment Undead Labs playground games Ninja Theory and Obsidian Entertainment because Microsoft may not have had a lot of exclusive games but what they did have a lot of was money far more than Nintendo and Sony combined and because of that unique Advantage they realized they could just buy popular game studios in their int ual properties outright to fix their exclusive problem instead of giving them exclusivity deals and hoping they stayed they followed through the next year with the acquisition of double fine Productions in 2019 and then shocked The Gaming Community by spending $7.5 billion to purchase Bethesda creators of the Elder Scrolls and Fallout and owners of doomed Dishonored and prey in September 2020 but even this was apparently not enough for Phil the PlayStation 4 had not only become one of the bestselling cons consoles of all time at this point but Nintendo had made a staggering comeback after the abject failure that was the Wii U with the release of the Innovative Nintendo switch in March 2017 finally bumping Xbox down once again to last place in the console war by the time the Xbox series X was to release it quickly became obvious that the purchase of a culturally beloved company such as Bethesda would not be enough to bring them back on top Phil needed something bigger something that would satiate the appetite of Gamers so hard they're forced to switch sides to Xbox and this hungry search for console power would lead him to the Monumental deal that began this [Music] video the 70 billion dollar Activision Blizzard deal is the manifestation of 20 years of failures at Xbox a Patchwork attempts to fix their exclusive Problem by just throwing as much money at it as possible and hoping that will be enough but just as much as this is a patchwork solution to their problems as soon as the FTC got involved it soon became apparent with very recent events just how much damage it would cause to Xbox internally when making your case to governments of the world a lot of sensitive information is passed around sensitive information that is very easily leaked in a case as big as this which is exactly what happened to Xbox in September 2023 extremely detailed plans for the Xbox business leading up to 2030 including timelines and images of upcoming Hardware lists of exclusive games coming to their systems a lot of which were unannounced at the time of the leak and business emails going back and forth between Phil Spencer and the CEO of Microsoft as a whole on the future of the Xbox brand and although we can sit back and gawk at the chaos and damage that this has caused to Microsoft what's more interesting to me and it's also more valuable to the gaming industry as a whole is what this detailed look into Xbox's current mindset might possibly mean for the gaming industry as a whole through the leaks Phil Spencer emails we have seen interest from Microsoft in buying out Studios such as Warner Brothers games and most notably Val and Nintendo of old companies if any one of these deals were to go through they would have an effect on the games industry drastically higher than any of Xbox's Acquisitions thus far however Xbox is likely to even get close to making any of these deals a reality as even in the slight chance that these companies accepted a deal from Microsoft if the FTC put this much of a fuss over Market monopolies because of the attempt to buy a company like Activision Blizzard then I can't imagine how they would get if Microsoft announced a deal on valve or Nintendo two companies that either actually have monopolies on a certain large sector of the industry or are Microsoft's literal competitors in the same sector it's not entirely certain but I believe this is left Xbox with a limit to how big their Acquisitions can be going forward meaning Microsoft are either going to have to look around for Publishers of similar size to Activision Blizzard be content with only bringing in smaller developers like Ninja Theory or obsidian from now on or stop with the Acquisitions entirely and although that may sound like the end to Microsoft's current growth strategy I would argue that it's only the end to part of it this is something that Phil Spencer has alluded to in the past and it's also something I failed to mention up until now and that is the existence of Xbox game [Music] [Music] pass a subscription service started by Microsoft in 2017 Xbox game pass has only started to gain major traction just in the last couple of years the service provides players with an ever expanding selection of games across Xbox and PC whilst only having to pay as little as $10 a month for for all of said games which at this point numbers in the hundreds and even includes new releases from Xbox on the same day that they are sold in stores the offer sounds incredibly generous to Consumers so much so that me simply describing it sounds like an ad but Microsoft want you to think that way because the frequent Acquisitions Xbox have been pursuing over the last few years aren't in service in making Xbox consoles more valuable but to make Xbox game pass more valuable the idea behind it is that if you own the studios that are making Call of Duty Crash Bandicoot and OverWatch you can put those games on Xbox game pass day one whilst paying little to no licensing fees to those Studios not only saving a huge amount of money on licensing as demonstrated by the recent leaks but also giving game pass a level of almost guaranteed value in the eyes of Gamers because if Starfield launched on Game Pass day one then chances are the next Elder Scrolls and Fallout games will also do the same as will every other Bethesda activate Vision or Blizzard game going forward the untapped potential of this hasn't been lost on either Microsoft or The Gaming Community with just over 33 million monthly subscriptions to Game Pass as of 2022 which at $10 a month equates to roughly $330 million a month in profit all of this makes it sound like Xbox have finally found their footing so much so that Xbox have completely shifted their strategy towards evolving Game Pass even supposedly going around to other game Studios to make the case why game subscription services and the adventure Advent of cloud gaming are the future of the games industry and it's easy to see why Microsoft feel this way they appear to be on their way to establishing themselves as the best place to play other people's games rather than just the only place to play Xbox games with Xbox original titles just being there to add icing onto the cake in this regard it has much more in common with the successful strategies used by Microsoft for the Xbox 360 rather than what Nintendo or Sony have been doing for decades except this time it's for much lower maintenance cost than say producing a several hundred game console for each person who wants to play on the Xbox ecosystem but this is where the potential problems with Game Pass present itself because Microsoft are still producing Xbox consoles and are doing so at quite a significant loss the Xbox series X and S are in a weird spot they are both a necessity and completely useless at the same time as on one hand most people don't want to go through the hassle of researching funding and building a powerful PC just to play Xbox games but on the other hand if you do put the effort in at least guessing a pre-built PC powerful enough to run Game Pass games then what value is there in buying an Xbox a PC can do everything in Xbox series X can at that point but not only better in every single way but with the almost unlimited feature set a modern Windows PC has something in Xbox simply can't replicate in its current form game pass's equal existence on PC has devalued the Xbox console considerably it's a big reason why the console was sold so poorly despite the inherent value Xbox game PASS gives and I don't see how a subscription service at just $10 a month is going to make up for the billions loss producing a games console nobody wants and adding on to that is that exact same Subscription Service going to pay for the development and maintenance costs of the AAA games made by companies such as Activision and Bethesda especially if Game Pass becomes the Main Avenue for playing these games rather than purchasing them separately at $60 is that exact same Subscription Service going to pay for the extensive research and development costs of making Xbox's next console that is probably guaranteed to have the exact same results as the series X and S if Game Pass remains available on PC the answer to these questions is probably just about yes but that's only if the subscription numbers of Xbox game pass remain a consistent high level and considering it has been confirmed by Phil Spencer himself that game pass subscriptions have plateaued in the last year then the chances of it remaining high are somewhat questionable of course this is all just speculation at this point but it's incredibly apparent that Xbox game pass and by extension cloud gaming is Xbox's future whether it's going to be successful or not they have tried to play the traditional game of console exclusives for years and lost so they are taking a page from Nintendo's and trying to build out their own niche in Uncharted Territory but unlike Nintendo's invention of hybrid consoles being so obviously lucrative from the beginning Xbox game pass has a lot of uncertainty surrounding it as Microsoft's last ditch effort to save the Xbox brand and if the aention strategies centered around Game Pass don't work out I would not be surprised if XBox decide within the next decade to either pull out of the console Market entirely due to unnecessary costs or try to avoid the problems with Xbox game pass by Shifting the Xbox brand more towards something like glorified pre-built PCS running on affordable hardware and windows rather than a proprietary Xbox operating system in effect combining both the PC and Xbox audiences for Game Pass but all that is certain as of now is that Xbox's exclusive problem has not yet been solved but has instead transformed into a new kind of problem one the Xbox are going to have to tackle alone thanks to my patrons on patreon for making videos like this possible and if you would like to directly support the channel you can consider joining my patreon through the link in the top of the description below this video took way longer to make than it should have so to all the current patrons that have kept supporting me despite 2 months of Silence thank you for sticking around this has been Arrid and thanks for listening

Channel: Ardrid

Views: 131,244

Keywords: xbox series x, xbox series s, xbox

Id: ZnL6YpAcoqQ

Length: 31min 48sec (1908 seconds)

Published: Wed Nov 15 2023