A recent report has shed light on the extent of Xbox's failures across its game studios, with titles like Avowed, Keeper, and Hellblade 2 falling short of Microsoft's expectations.
Xbox's Troubled Game Lineup
Despite a strong Xbox Games Showcase, any goodwill generated by Microsoft has quickly dissipated over the past few days. After confirming that Gears Of War: E-Day and Clockwork Revolution are Xbox console exclusives, there has been much confusion surrounding the company's strategy. Additionally, reports indicate significant layoffs and studio closures are expected at Xbox at the end of the month.
Xbox CEO Asha Sharma recently admitted that the company's revenue has sharply declined, despite numerous high-profile studio acquisitions over the years. The ongoing memory shortage is also not helping matters, leading to drastic rethinks around plans for the next console.
Games That Missed the Mark
According to Windows Central, Avowed, Keeper, Kiln, South Of Midnight, Hellblade 2, Forza Motorsport, and The Outer Worlds 2 'didn't come within range of expectations' set by Microsoft. This shortfall is either in terms of 'raw sales on external platforms' or via engagement and retention on Xbox Game Pass.
Additionally, several other games from Xbox Game Studios and third-party publishing deals reportedly did not meet expectations, including Minecraft Legends, Ninja Gaiden 4, Minecraft Earth, Bleeding Edge, Battletoads, Towerborne, and Ara: History Untold.
While it is unclear what Microsoft's exact expectations were for these titles, especially for niche games like Keeper and South Of Midnight, the list is damning when lined up. It leaves few Xbox games that have been successful, with Forza Horizon 6, Microsoft Flight Simulator, and Indiana Jones And The Great Circle being the only major ones omitted from the list of failures.
Profit Margins and Strategy
Last year, reports claimed Microsoft had placed a 30% profit margin target on the Xbox division, something the company refuted as 'inaccurate'. According to Windows Central, this 30% margin was actually an 'average', with some parts of Xbox 'operating up to a 40% accountability margin' to offset shortcomings elsewhere.
Since her appointment in February, Xbox CEO Asha Sharma has pushed back against the idea of 30% accountability margins, so this may have changed amid the leadership shift. However, it is clear that Xbox's acquisition spree is not generating the hoped-for revenue.
Sharma admitted this in the recent Xbox Reset blog post, describing the business as having 'over extended'. She added: 'We are the fortunate stewards of industry-defining franchises that have enormous potential and player demand, but we have not adequately funded them to compete and win.'
She continued: 'At the same time, as we saw this past weekend at Showcase, a reliable pipeline of first and third-party exclusives and new IP are critical to our success. We need to reassess the balance between these and our investment priorities for the next five years.'
Challenges Ahead
The mention of third-party exclusives is astounding considering Microsoft already owns a massive chunk of the Western games industry. If it still needs additional partnerships when it already owns the studios behind Call Of Duty, Fallout, The Elder Scrolls, Candy Crush, Minecraft, Halo, Warcraft, and Diablo, something has gone very wrong.
The key problem facing Xbox is rejuvenating these franchises to make them exciting again. Call Of Duty has been on a downward spiral in recent years, Halo has not been relevant for over a decade, and Bethesda has been working on The Elder Scrolls 6 for over eight years. Given how long games take to develop, these problems cannot be solved overnight. The big question is whether Xbox has enough time left to reverse the damage and make Project Helix the comeback it needs to be.
