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Xbox's biggest crisis right now isn't games. It's hardware. (Opinion - Jez Corden)
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this post was submitted on 28 Jul 2023
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If I've got money to invest now, I'm going to invest in two things that are likely to make money rather than waiting to see if the first one makes money over a couple of years. Especially when ActiBlizz was on a fire sale.
I'm not saying Microsoft itself should have been the one to decide this.
Do you think the Bethesda acquisition by itself, before Activision, would have been enough to turn PlayStation's 2:1 market lead into something far more even? Because I don't. And I think that's why the deal didn't get blocked. There's also tons and tons of third party competition in the gaming industry worldwide, so I don't think they're a threat to competition there either.
I believe this framing is misleading to begin with. Not only Microsoft as a whole is already a much larger company to Sony, so the whole idea that it deserves a boost to catch up is missing the forest for the trees. On top of that, it seems like a remnant of Console War mindset to consider the ideal of the market to be a 50/50 or a 33/33/33 split.
It is better for the industry to have more publishers and studios which are beholden to no platform owner. The idea that whoever is below the top 3 is entitled to swallow up everything under them so that they get a chance to reach #1 is a convoluted way to justify consolidation. It's not fine just because Microsoft is #4 rather than #2. Being #4 is not such an insignificant position in first place, and it's weird that it's assumed that Microsoft is owed an even position.
And I'm sorry, if freaking Microsoft can't use the many studios it already has to make their platform they have appealing, the issue is not lack of studios and IPs. I don't think the "competitiveness" of taking games that already could be available to everyone and locking them to a platform is actually making the market any better (no, not even when Sony does it). It's a net negative for everyone except the acquiring company itself. If they want to make their platform more appealing, they should make better games for it.
With regards to this industry, it really doesn't matter.
That is the ideal. It means each one has to try their damnedest to earn the dollar of their consumer. Like you, I'd prefer that it was achieved by any means other than exclusives, but as long as it's a legal business practice, it will be an effective one.
They need to be successful enough that they don't leave the console market entirely. Otherwise you create a monopoly in that space. There are some industries that are just colossally difficult for a new competitor to enter, and the console market is one of them. If you lose a competitor, it ruins the market for everyone.
Yeah, they've got this game Starfield coming out, plus Hellblade II, Fable, Clockwork Revolution, South of Midnight, etc. But games just take so long to make that it takes forever to make up for a deficit they created last generation. It doesn't make the market better for the customer, but it's far worse if Sony's lead is so immense that a console manufacturer doesn't profit from making consoles. That is, unless the entire console market disappears, but I don't think that'll happen for several decades at the earliest.
Yes it does matter. It still gives them advantages, from the wealth and influence their other endeavors amass as well as technology being directly related to gaming. These matters don't exist in isolation.
This makes it harder for upcoming innovators to compete, when that is what they have to face (or be bought out by).
It's shortsighted to assume Sony, Microsoft and Nintendo is what this industry will ever be and it's the most competitive we can expect it to be. In fact, letting them gobble up any other significant publisher is an obstacle towards more competition. Nevermind that even among those three, third-party developers create an incentive to make their platforms appealing beyond simply being the only place that has that game. Features and services.
That is the business that they are in. Lets see how they are doing and how much they need more when these come out. Why should they acquire more if it isn't even proven that they are handling the others well? If anything, those layoffs are not a good indication.
Worse for who? Nintendo's consoles are profitable and Microsoft can definitely afford to sell units at a loss so that they can sell games, which is the same that Sony does. And is it better for Sony and Nintendo customers if they lose access to third-party games because Microsoft gobbled them up? Sure it would be better for the customer if Microsoft made good games that made their consoles a more appealing option, but gating existing franchises isn't helping them in any way.
I see a lot of these arguments are ultimately taking pity on Microsoft, for being behind, because it should do what is more profitable to it, but they don't actually help the customer any. It's funny to see this "poor little Microsoft, they have it so hard" when Nintendo is a smaller company with a weaker console under the same difficulties and they are doing better than them. Of course you don't hear of big acquisions from Nintendo because they don't have as much spare money as Microsoft does, which it can take from profits of other segments.
Which haven't manifested in market share.
No, it's the only thing one can reasonably expect short an absolutely unpredictable paradigm shift. The longer this market has existed, the more difficult it is for a competitor to get into because the stakes and production values have been raised so high. There's a reason you don't see companies lining up to get into the microprocessor business, and it's because working with silicon requires an enormous capital investment. The only new players who emerged in this industry did so when mobile processors became that paradigm shift to shake things up. While these things are pretty much inherently unpredictable, the only one I can see happening is if consoles disappear entirely in favor of a more unified, open format akin to a PC, which means these three players are no longer in the industry for the reasons they are now.
The fact that they didn't become a runaway success immediately after acquiring all of those other companies, including Mojang and Bethesda, is why the merger was allowed to go through. If we're talking about breaking up Microsoft, as a non-expert, I imagine the gaming arm of it stays in one piece.
Everyone in tech had layoffs. Not only is it common after a merger, it's also common when credit becomes more expensive and the economy contracts.
It's worse for the consumer if Sony doesn't have a Microsoft to keep them in check. Now if you want a console that plays Grand Theft Auto VI, there's one place to go (because you're not playing that game on a Switch). The market is cornered. Microsoft can only sell consoles at a loss and stay in the market if their install base is large enough to make that money back later. No one knows what their break-even point is, but if they don't sell enough consoles, they're not getting enough game sales or Game Pass subscriptions to make that math make sense, and they have no incentive to continue producing consoles.
Don't mistake anything I'm saying as pity for Microsoft. They are where they are in the market because they tried to sell a horrible product back in 2013, for more money than their competitor did, and they divested themselves of a lot of studios that, long-term, could have dug them out of that hole in favor of some bad bets for where the market was headed. Also, I'm a Linux nerd. I could hardly be less interested in seeing Microsoft succeed. What I would hate more though is if Sony ran away with an entire sector of the market when they're doing a lot of nasty anti-consumer stuff too, including trying to acquire exclusivity of a lot of the stuff Microsoft just bought.
Once again you talk about it like the are owed the #1 place rather than having to, you know, compete for it. Are you going to tell me that they didn't get any market benefits from, say, experience with OS and the hardware architecture as well as the networking and cloud technologies that they use? It would make more sense to assume that if not for this they could be even further down, but you are not even counting it because they are not exactly on par with Sony. You gotta do better than to just dismiss this.
By the way, a paradigm shift is already happening. For a lot of people their phones are their primary computing and gaming platform, and while I'm not a fan of the practices in it, a significant change in the market is anything but unpredictable. The second largest gaming company is Tencent, a mobile-focused one. Mobile revenue has surpassed consoles.
But that says nothing of the consoles that we could have tomorrow. It used to be that SEGA was one of the biggest console manufacturers and Sony wasn't even in the market.
Sure, but what is the point here? The question here is whether Microsoft should acquire ActiBlizz. If it has enough capital for that, it's not going bankrupt. It would be a false dichotomy to treat acquisition and leaving the gaming market as the only two options. After all, aren't all the other companies they already acquired appealing enough? Or weren't they worth it? And if they weren't, why would this fix anything?
Even if Microsoft is not so interesting a platform right now, Sony cannot relax or they could catch up, like they did in the 360 era. The only thing lacking here are Microsoft's own efforts.
Well if you are concerned that the top player resorts to anti-consumer tactics, you shouldn't be defending that the playing field is "levelled" (only between two large players) through more anti-competitive and anti-consumer tactics. If you think it's shady that Sony paid to have FF16 as an exclusive, why are you defending that Microsoft does that to Starfield? At least when it comes to Sony, Microsoft could have outbid Square for exclusivity
Which I want to make clear, it can do. Because it has a lot of money, enough to buy Activision Blizzard, the 6th largest game publisher. It could be funding new studios, it could be playing from Sony's handbook, but they decided to one-up them instead by consolidating the market and taking away options from everyone else in a far more concrete way.
The ideal solution here, is that Microsoft's acquisition should be blocked but Sony should also be punished for anti-consumer tactics.
Not at all. I'm saying they have little chance of making Sony even sweat without the acquisition or something like it. Even after this deal, they will not be the #1 console. It will just be closer, and close enough that they decide to stay in the console business.
That seems to be a parallel market rather than one that would overtake it. There's a non-zero amount of overlap, and you can find plenty of examples, but there seem to be games built for mobile and games that aren't. If this is the paradigm shift you expect to shake things up, are you saying you expect Apple or Samsung to enter the console market?
You know how Spotify has exclusives besides Joe Rogan but still got Joe Rogan exclusive? It's the same answer. A bunch of smaller acquisitions move the needle a little bit each. One large acquisition moves the needle a lot on its own. In aggregate, they all make the product desirable. Microsoft needs to move the needle a lot to catch up to Sony.
Maybe now after this deal they can't relax, but they've been going down this path of requiring arbitrary upgrades from PS4 to PS5 in a way that Microsoft had not been, which is the kind of move you only make when you're relaxed enough to take advantage of your customers. Plus their own exclusivity deals.
Defending is the wrong word. Why do you think Microsoft has Starfield? Because they outbid Sony. This acquisition happened because they outbid Sony as well. At the scale that Microsoft is operating at, they may as well buy them outright; and word on the street was that Zenimax and Square Enix were both seeking to be acquired. Activision only makes like 4-6 franchises anymore anyway, so it's basically the same thing as buying exclusivity to those franchises but with more upside.
Exclusivity and studio acquisitions are both out of Sony's handbook. Microsoft just has a bigger pocketbook.
The ideal solution here is one that forbids exclusivity, but I have no idea how to do that ethically.
Again, when this has been in question at all? Does anyone really think the 4th largest gaming company is going to drop the market? Despite all that they already invested even before ActiBlizz?
We've just been talking of if it matters that Microsoft is a larger company in general, and here you are spelling it out like it's a gotcha at Sony, which, seeing as it will lead to more exclusivity, it's not even in your interest as a customer.
I'm just wholly baffled with the way people take Microsoft's side simultaneously like it's a desperate underdog and as if it would be a fool not to crush it all and take it all over with piles of money. As if whatever is more profitable and advantageous to them would be good for the customers losing options too. And that would be fair???
But seeems like you are set in seeing it this way and there's nothing I could say that would make any difference, so I guess I should just drop the matter.
To state one last time, my perspective is that all exclusivity sucks, but it's better that Microsoft buys them than for Sony to have an uncontested high-end console market. That is not me taking Microsoft's "side". It's me not wanting a monopoly.
Acquisitions are what leads to a monopoly.
Currently, these acquisitions are preventing one.
No they aren't. First of all, because Sony is not monopolizing the market. Microsoft is there and so is Nintendo. There is a difference between being a market leader and being a monopoly. Sony doesn't actually control SquareEnix, they can release games for different platforms, which they do. Octopath Traveler II is multiplatform, Dragon Quest Treasures is a Switch and PC release.
The horror scenario of Microsoft leaving and Sony dominating everything isn't going to happen. Xbox is just half as popular as Sony, which is still a sizable chunk of the market.
But lets say it goes as you wish, Microsoft bravely acquires most of the market to match Sony... and then they just keep buying. What do you get then? Microsoft will be able to just tell Bethesda and ActiBlizz not to release for any other console, and refuse any deals.
If you are a Linux user you should know that MS doesn't stop at what's reasonable.
Still, that's not saying that Sony is acting fine. Which is why I believe they should be prevented from making exclusivity agreements for games that aren't entirely funded by them.
Just because this acquisition was let through does not mean all future acquisitions go through. They're under too much scrutiny now.