The current state of Microsoft is not solely due to poor management; the brand’s decline began in 2013, specifically with the launch of Xbox One, under the direction of Don Mattrick.
When the company first introduced this console, it was mandatory to buy it with the infamous Kinect, a device that tracks the movement and voice of the user. This particular move marked the beginning of the end for the brand; the competition took advantage of this and cut the console price by $100, winning the entire generation with that strategy.
The Downfall of Xbox May Have Begun on May 21, 2013
After the PS3 and Xbox 360 generations reached an end with similar sales numbers for both consoles, both brands were in a pivotal position to take advantage of the opportunity to begin the new generation. Don Mattrick, the head of Xbox at the time, made a unique decision to introduce the console, focusing not on games but on the features that the new Kinect version would offer to the user.
The Xbox One requires constant internet connectivity to function properly. After almost 30 minutes of talking about the Kinect, Mattrick focused on how this device will help the user, not the gamer, to control all their streaming services and any kind of apps that are not games thanks to the Kinect. After the conclusion of the presentation, Mattrick disclosed the price of the Xbox One, revealing that the Kinect will be part of the bundle, costing $499 without the possibility of buying only the console.
The final nail in the coffin was that players could not share their games. Fans were completely mad about this presentation. Sony took advantage of this and decided to cut the PS4 price to $399, and they also made a video where they showed how players can share games. With this simple but effective strategy, Sony began the generation with an amazing advantage, with only two exclusive titles to sell: Infamous: Second Son and Killzone: Shadowfall.
The Numbers Don’t Lie
With the Xbox 360, Microsoft achieved the most console sales of any Xbox hardware, with 84 million units. The PS3 barely passed these numbers, with almost 88 million units sold. This demonstrates that Microsoft had a historic opportunity to make a significant impact, but due to poor management and decisions, the company was never able to recover from that forgettable day in 2013. Currently, the PS5 has doubled sales of the Xbox Series S/X, even after Game Pass and the entire acquisition spree.
When Phil Spencer became the head of Xbox in 2014, just a year after Don Mattrick nearly led the company to bankruptcy, he implemented an aggressive pro-user strategy that significantly transformed the situation for Xbox. Spencer succeeded in restoring the brand’s fate with the launch of Game Pass, heavily investing in studio acquisitions to make more exclusive games, something that Xbox could not achieve.
Almost 10 years later, the Xbox brand is facing a similar scenario. The executives’ lack of understanding of player preferences has resulted in a series of poor decisions, leading to a decline in console sales and a peak in Game Pass user numbers. Microsoft acquires more than 15 different studios, but the exclusive titles remain average, and this is the only thing that can really make a console sale.
The Solution to this Problem
The current state of the industry is also an impediment for Xbox to recover its former glory. With longer development times and budgets that make no sense, AAA games have become almost unaffordable to launch. Microsoft has the IP power to turn things around, but the model is currently unstable, so the best way to sell more is to make successful games that are not that expensive to make or buy.
After closing down four studios that Microsoft acquired only three years ago, the current vibe in the company is bleak and dark. The brand doesn’t know whether to increase the Game Pass price or make more games available in the competition. The strategy is unclear, and this trillion-dollar megacorporation needs to reorganize and think about the future, especially without panicking and sacrificing jobs in the process.
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