Xbox Heading into Next Generation in a Position of Strength

Xbox Next Gen

One of my favorite things to analyze is the how the big three (PlayStation, Nintendo, and Xbox) continually adjust their methodology in relation to evolving market conditions. It’s fascinating, at least to me, to see how these billion dollar companies adjust to the trends that we, the players, set in motion. Over the course of this past generation, I’ve written most frequently about Xbox. This is for good reason. The Xbox One, and even Xbox as an organization, have evolved greatly over the past seven years. In my opinion they have done so far more than Nintendo and PlayStation, and it’s been very interesting to watch unfold.

Last year I wrote an article titled The State of Xbox as E3 2019 approached. Even in the short time since, much has changed. The first of the next-generation Xbox consoles has been unveiled in the Series X which has demonstrated a strong partnership with AMD. Project xCloud is being tested by hundreds of thousands of players globally. And Game Pass has continued to expand across both the Xbox One and PC.

With so many advances being made by the Xbox team in preparation for next-generation and the future of the brand, and the Xbox team being so transparent and confident in their direction, it’s time to put all of the pieces together to see where they truly stand heading into the fall. Let’s dive in.

And please note, this article is purely about the direction of Xbox as a brand – not a comparison to PlayStation nor Nintendo’s direction.


The Next-Generation Hardware

As we’re all aware, the Xbox team boldly unveiled their first next-generation console at The Video Game Awards in December. This took everyone by surprise and according to the Xbox team themselves, wasn’t even their original plan. In fact, Head of Xbox Phil Spencer said he didn’t even like the idea at first. But, feeling the need to try something original with their messaging, they went forward with it by premiering an inspirational teaser that led to the first look at the surprising form factor. It’s safe to say it was a success as the Series X unveiling, and in particular the Hellblade 2 teaser, were the most talked about reveals from the event.

Since that moment, the Xbox team has shown that they are approaching next-generation with a far different tone than the division did back in 2013 (which for all of our benefit, I won’t rehash). Xbox as an organization is pushing the boundaries of what a gaming ecosystem should be and they have been purposeful in their communication, which in my opinion, has been long overdue.

As it relates to the Series X, the team has continued to reveal features and technology advancements that are going to be meaningful to players as they move into next-generation. In late February, Spencer himself took to Xbox Wire to confirm some of the tech specs and features of the Series X. It’s a powerhouse through and through and as Jason Ronald (Director of Hardware for Xbox) commented on a recent episode of Major Nelson’s podcast, it will be transformative in how we play games. While having the next-gen power crown in hand and a wealth of advanced features are no doubt impressive, it’s the depth of the relationship with AMD that I find most interesting.

The context from the Xbox One and PlayStation 4’s launch in 2013 is important here. When those consoles launched, they were certainly impressive when compared to the prior generation. However, they didn’t do anything truly surprising from a technology perspective (outside of the Kinect as funny as that is to reflect upon). Even with the mid-cycle upgrades in the PS4 Pro and Xbox One X being large upgrades over the launch consoles, they were still hampered by extremely dated CPUs. As we saw however, the power narrative became a focal point over the course of the generation and thus the two companies have since entered into an arms race. What this has led to is Xbox, and to a degree Microsoft, putting more resources into their relationship with AMD than ever before to ensure the Series X is notably more advanced at launch than prior generations.

Now that both next-generation consoles have had their veils lifted, at least from a core hardware perspective, it’s clear they are both more aspirational than either the PS4 or Xbox One were at launch. As it relates to the Series X in particular, the holistic approach that the Xbox hardware team has taken to the design of the hardware, and the supporting features it’s touting, is incredible. Planning for the console began in 2016 and referring back to the relationship with AMD, it’s clear how aggressive the Xbox team’s goals were. The Series X features the most advanced SoC ever created for a console with AMD’s Corporate Vice President Sebastien Nussbaum stating:

“…for developers, the console ends up being a playground for technical innovation.” Nussbaum continued “Xbox Series X is the biggest generational leap of SOC [System on a Chip] and API design that we’ve done with Microsoft, and it’s really an honor for AMD to be a trusted Microsoft partner for this endeavor,” said Nussbaum. “The Xbox Series X is going to be a beacon of technical innovation leadership for this console generation and will propagate the innovation throughout the DirectX ecosystem this year and into next year.”

SoC2

However, beyond the next generation of Xbox consoles, the hardware designed in collaboration with AMD will also be leveraged in the future foundation of xCloud. The server blades for xCloud are currently built upon Xbox One S hardware. Each blade houses the equivalent of eight Xbox One S consoles; already an upgrade from when trials first began when they housed four. In the future however, these will be upgraded to Series X chipsets which can each run the equivalent of four Xbox One S sessions while also including a far more efficient video encoder. As next-generation matures and xCloud becomes an integral piece of Xbox’s total ecosystem offering to consumers, the experience for end-users will continue to improve.

xcloud blade
A look inside an xCloud server blade

One thing is for certain; the Xbox team is very proud of the Series X hardware. As well they should be. But as we all know, hardware is only one part of a much larger equation.


The Power of the Cloud

I admit that title is a little bit of a joke but I couldn’t resist. Now, I’ve written about xCloud a few times and commented on its capability to be truly transformative in the gaming space. Since I last wrote about xCloud’s potential last year, we’ve seen the Xbox division continue to expand xCloud’s reach globally.

xCloud2

In October, preview access of xCloud was granted to users in South Korea and it didn’t take long for the data to prove a prior prediction: mobile gaming is Xbox’s gateway into some of the large Asian markets.

The initial data set showed that users in South Korea not only spent more time gaming on xCloud than users in the US or the UK ( by approximately 1.75 times) but players also returned to games three times as often. This shouldn’t be surprising when you understand that in South Korea, mobile is king.

According to Newzoo, fifty-three percent of South Koreans play mobile games at least once a month. Mobile gaming is far more common than console (19%) or PC games (37%). Additionally South Korea has the highest smartphone penetration rate in Asia and is No. 11 in the world. Korea had 34.6 million smartphone users in 2018, and it is well on its way to grow to 39 million by 2021. Of course this is helped by the fact that Samsung, the number one smartphone provider in the world, is also South Korean.

Partnering with SK Telecom in South Korea ensures that the Xbox team reaches that market despite not having a meaningful console presence. Kareem Choudhry, Microsoft’s Corporate Vice President of Project xCloud, stated:

“Our partnership with SK Telecom has played a valuable role in helping Microsoft reach new, mobile-first gamers while also learning more about delivering high-quality game streaming through 5G networks. As we enter the next phase of our preview in Korea, it is critical for us to have a strong partnership with a respected company like SK Telecom to push the technology forward.”

xcloud Korea

More recently, the Xbox Division rolled out their first trials of xCloud for iOS and also began expanding into Western Europe. They’ve also stated that trials via PC are coming in the “very near future“.

It’s exceedingly clear that xCloud is a core focus for Xbox as it’s a feature that can be very meaningful for a percentage of the playerbase. While the offering is certainly attractive as an add-on to your existing Xbox Live profile, it’s the combination with Game Pass where the global strategy comes into focus.


The Potential of Game Pass

Back in October, I published this video which was a deep-dive into the successes of Xbox Game Pass for both developers and Xbox alike. Since then, Game Pass has continued to be a boon for Xbox.

In January it was reported that Game Pass subscribers had more than doubled over the course of the fourth quarter of 2019 and additional data was provided showing just how much more content users of Game Pass consume compared to non-subscribers. Game Pass subscribers not only purchase more games, they play more titles and spend more on each individually than non-subscribers. Yet, it’s not just players that enjoy the service. Developers have also been increasingly vocal in their support for Game Pass.

Outer Wilds was one of the most celebrated titles of 2019. Co-Creative Lead Loan Verneau from Mobius Digital, commented on how Xbox Game Pass was a bright spot for the game in addition to how it could benefit the industry as a whole.

“We’re on Game Pass for Xbox, and it’s been really awesome because I think it’s brought a lot of players to the game who would not have known about it otherwise. So I think that’s been a big shift. The same way it’s changed the TV and movie worlds, the subscription system is also going to impact the game industry very significantly. We’re starting to see that, and starting to see it maybe unlock the market to weirder things and more original things that would have been more risky beforehand.”

Loanverneau.png

He’s not alone. More and more developers are speaking out in support of the service on how it’s either helped with recognition of their game or even development itself. From the husband and wife duo developing Unto the End, to Playdead and Jumpship Co-Founder Dino Patti, there’s no shortage of support for Game Pass despite some developers here and there being more cautious in their approach to the subscription model.

Of course, some developers have been a lot more direct about the positive impact of Game Pass for their game(s). Enter Mike Rose, the Founder of No More Robots:

“Sounded like b*******, right? Weirdly, it’s true. It surprised me. Being on Xbox Game Pass means that you basically have constant featuring on Xbox. Your game is on the dashboard all the time… People are seeing our game every day. And because of that, during launch month, our Xbox sales — we didn’t do any discounts on it or anything — quadrupled, and have now settled to about three times as much as before. It’s essentially an advert; a straight-up advert. And now Xbox is asking, ‘Oh, can we feature Descenders in more of the Xbox Game Pass advertising?’ Yes, you can. Of course you f****** can.”

Coming back to the xCloud strategy I referenced earlier, the potential of digital-only access and the combination with Game Pass is where I believe Xbox will place a strong focus. While today you need an Xbox console or a PC to subscribe and play games via Game Pass, that’s not the best way to approach a market like South Korea as noted earlier. Rather as accessibility to xCloud matures, there can be an offering where players access Game Pass, and thus the Xbox ecosystem, solely from their mobile devices. Thus the Xbox division not only removes all hardware barriers, but they can do so in markets that have been previously impenetrable due to a complicated mix of distribution and logistical challenges.

And what better way to drive interest to the service in new markets than to broaden the range of titles it offers? The Xbox team has been very vocal about growing their support from not only Japanese developers, an obvious staple in the industry, but more developers globally. And we’re beginning to see the results of this work with popular series like Final Fantasy, Nier, and Yakuza rolling out on the Game Pass; many for the first time on the Xbox platform.

Game Pass future


Xbox Game Studios

Ahh yes, games. At the end of the day, they are why we all enjoy this medium. The Xbox One gained notoriety for having a poor first party game lineup. Now while I think some of the arguments against the Xbox One’s game library are exaggerated, I would absolutely agree it’s an area that needed improvement. If you’re reading this, then you’re likely acutely aware of the fact that Xbox Game Studios has grown substantially over the past couple of years. So instead of saying something generic like “Xbox now has 15 studios…”, let’s dig a little deeper to see what we can expect from a first party perspective in the future.

Gamestudios2

The main aspect to be aware of is not acquisitions, but rather organic growth. The studios under the XGS umbrella have grown tremendously over the past 12 to 18 months and it speaks volumes to the investment the Xbox division is making towards internal game development.

I don’t have exact figures but in doing a little research the growth across Xbox Game Studios looks to be in the 750-850 employee range (depending on how you break it down). That factors in the expansion of major studios like Playground Games, Obsidian, and Rare along with the continued build out of The Initiative in Santa Monica. So while the lineup for 2020 is already more impressive than it has been in years for Xbox as a first party (and second party agreements in some areas), it’s next-generation and beyond where we’ll see the results of the long-term investments.

What’s most exciting to me as someone who plays games of all shapes and sizes, is the variety that can be expected. With full creative and artistic freedom, the studios within Xbox are working on a wide range of titles; everything from platformers to AAA RPGs that should delight even the most jaded of skeptics. When you then factor in launch day accessibility with Xbox Game Pass and full cross-generational compatibility, that’s when a deep first-party portfolio becomes truly powerful.

playground games concept

But even beyond first-party output, Xbox is continuing to explore exclusive publishing deals as well. Arriving this summer is Tell Me Why, an episodic title from Dontnod Entertainment; developers of Life is Strange. The game will be published by Xbox Game Studios and will be exclusive to Xbox One and PC. While Xbox leadership has been clear that they are not fans of “timed exclusive content” in cross-platform titles, you can fully expect additional exclusive games from third-party developers that are published by Xbox Game Studios. In fact, Spencer said exactly that in a recent interview with Ryan McCaffrey from IGN:

“…and our publishing teams, our first party organization that works with independent studios to ship games under our first party brand. And we have some unannounced, signed things there that we’re really excited about.”

Tell me why


The Total Package

So now that we know the Xbox team’s plans for technology, the next console(s), their internal growth, and the ecosystem as a whole, what does it mean for the total package offering to consumers? In the spirit of the Xbox team’s communication lately, I will be direct. It will be unmatched.

Assuming all of the ducks line up as expected, Xbox’s methodology of “putting the gamer at the center of everything we do” means that a consumer will be able to purchase a new Xbox this fall and have the following capabilities immediately:

  • Access to every Xbox One game along with several hundred titles from the Xbox 360 and original Xbox generation, the majority of which will be significantly enhanced at no additional expense.

Gears 1 Series X

  • Access to 250+ titles through Xbox Game Pass with nearly all of them also being available via your Live account on PC.
  • Access to all first party titles at launch including Halo Infinite and others that are yet to be announced through Game Pass.
  • The capability to play many of those titles, physical or digital, locally via console streaming.
  • The capability to play many of those digital titles globally through xCloud.
  • Cross-compatibility with the entire Xbox One ecosystem including online multiplayer, parties, and all accessories.
  • Series X enhancements to some third-party titles at no additional expense.

The final point there is worth calling out as when the Xbox One and PS4 released, we saw a large number of titles that were sold in separate SKUs for each respective “generation”. We’ve also seen an extraordinary number of remasters and re-releases over the past several years.

Fortunately for those in the Xbox ecosystem today, this is yet another area in which the Xbox team has been progressive in their mindset. There will be no separate Xbox One and Series X SKUs for first-party titles. The same copy will work on both platforms and thanks to Smart Delivery, owners of the Series X will simply be provided the upgraded version at no additional effort or expense.

Even more promising, CD Projekt Red is the first third-party developer to offer a definitive statement on the matter in the same vein. They have confirmed that in collaboration with Xbox, Cyberpunk 2077 will receive the Series X upgrade at no additional cost. We should all hope that other publishers choose to do the same.

Series X Upgrade


The Road Ahead

As a fan and consumer of all platforms, I’m extremely excited for the direction Xbox is heading. They have been increasingly progressive in their decisions for their fanbase while correcting past mistakes which are attributes we should all expect from the leadership of our supported platforms.

Meanwhile as a fan of technology and someone who’s witnessed the evolution of this industry over the past four decades, it’s exhilarating to see it expand globally with increasing options for accessibility. What a time to be a gamer.

Infinite

By Ainsley Bowden (Porshapwr)

Founder of SeasonedGaming.com, avid game collector and enthusiast since the Atari 2600 era. You can find me online or on Twitter as Porshapwr as well. Thanks for checking out Seasoned Gaming!

6 Comments

  • Hardware looks fine, gamepass is good, but all that matters is Microsoft deliver a lot of high quality next gen exclusive titles. None of what this entire page says matters without them. None of it. See the FF7 remake last week? Persona 5 just before that? Nioh 2 shortly before that? MLB 20 in March? Dreams in February? Every single one of them only on PS4. Top quality unique games like that are why Sony will continue to lead even if they have slower hardware, or weaker backwards compatibility.

    • That’s not true. FF7 is a timed exclusive. Nioh and persona could also go to Xbox or pc. Nioh will for sure. Persona is more likely since you’ve seen more Japanese games go there. MLB is no longer exclusive and coming to Xbox. The only Sony game you mentioned was Dreams.

  • Xbox series X does look impressive, though one major flaw…

    That is, it’s not next generation. Rather an improvement on current technology. I worry that will leave the company behind.

    Half life Alyx is very problematic for Microsoft as it shows where the future of entertainment can go. And xbox is nowhere in the VR space. Rather resting on its laurels. That a 50inch tv and a control will continue to be the standard.

    I actually agreed with them…. until Alyx was released and then I got into Elite, and my mate had the oculus… and I didn’t.

    Well you can see where this is going..

  • Just had to say this is a really great piece. I think a lot of people just like to poke fun at Xbox or dismiss the brand for all the mistakes but man, they are really in a position to offer some great things going forward. I am really excited about what they are doing and I think gaming as a whole is looking incredible over the next 5 years.

  • Andres Escobar -

    Excellent article I enjoyed it and I think it is exaggerated across the board of what is offered because yes a certain kind of AAA game is missing or not as abundant. But there lineup across genres and quality competes with Nintendo also. I am not sure that Playstation or Nintendo can say that. That is you got this genre of game and you got this offered on the platform. Excluding JRPG’s Microsoft has a strong foundation of platformers, puzzle games, sims, strategy games and others.

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