We are currently living in an unprecedented era in gaming history. On the one hand, there are dozens of incredible games being released on a monthly business. New AAA classics like Final Fantasy VII Rebirth and The Legend of Zelda: Tears of the Kingdom have released in recent years, while the indie scene has provided numerous memorable titles like Signalis and Lethal Company.
On the other hand, however, we’re also witnessing the potential collapse of the AAA standard in real time. From games being made with exceedingly high budgets and unrealistically high expectations to constant layoffs within the industry to numerous acquisitions that cause more harm than good, while there’s never been a better time to be into video games, there’s never been a worse time to be the one making those games.
This brings us neatly to Microsoft. Microsoft has been in the gaming industry for almost twenty-five years with the Xbox division and its line of four systems. The original Xbox and Xbox 360 changed the world and redefined how people saw the medium. For a time, Microsoft was at the top of the world. That said, since 2013 and the Xbox One, Microsoft has been slowly declining as a player in the industry. People believed that with the release of the Xbox Series X|S, the company would improve and release more and more compelling games.
Now, though, Xbox is arguably in a worse state than ever before. After purchasing Activision, the company laid off 1,900 employees and shuttered the doors of beloved studios like Tango Gameworks and Arkane Austin. Franchises like Halo have fallen to the wayside, while previously announced games like Perfect Dark have remained in development hell. Why and how has it come to this? Is it due to poor leadership, corporate interests, or a desperation to stay in the industry by any means necessary?
After looking back at Xbox’s history since 2001, I have found a history of missteps and broken trust and realized that their few recent successes have been almost entirely driven by luck. With the Xbox Games Showcase 2024 now behind us, here’s a retrospective into the company’s history and how we got to this seemingly dire point.
The Original Xbox and the Creation of a Classic
The original Xbox launched on November 15, 2001. The console released alongside a game titled Halo: Combat Evolved. Developed by Bungie, whose biggest claim to fame at the time was a Macintosh gaming series titled Marathon, Halo was one of the first shooter games designed with consoles in mind. It also utilized split-screen and multiplayer in a way that was seen as revolutionary at the time.
The original Xbox was a hit, selling 24 million units, according to a financial record from Microsoft themselves. Yet, even in the early 2000s, there were already signs of the infamous business practices that Xbox would become known for as they garnered more success. First, it’s worth noting that before the Xbox launched, Microsoft had attempted to acquire Nintendo.
According to Kevin Bachus, the co-creator of Xbox, when they approached the company about an acquisition, “They just laughed their asses off. Like, imagine an hour of somebody just laughing at you. That was kind of how that meeting went.” The same experience would happen when Shinji Mikami of Capcom was trying to find consoles to release Resident Evil 4 on, other than the PlayStation 2. When Mikami was trying to ask Xbox executives what they had to offer, while Nintendo described video games as toys, and Sony described them as entertainment, Microsoft had no answer due to translation issues.
Further, a small developer attempted to pitch a reinvention of an old 2D game to Xbox executives. According to their Power On documentary, the executives believed that the game wouldn’t make the transition from 2D to 3D, that the user interface was too complicated, and that it was “based on a game that hadn’t been all that successful.” The pitch was rejected, and that game would go on to become Grand Theft Auto 3.
In fact, over the last few years, people have argued that Xbox only managed to find success in the Halo franchise due to luck. The main reason Xbox was able to release Halo on their console was because they acquired Bungie, a practice that they would continue to hone over the coming years. If Microsoft hadn’t made that acquisition, we’d likely be having a very different conversation.
Regardless, the original Xbox was a massive success with many great games, such as Halo 2, the Burnout series, Splinter Cell, Star Wars: Knights of the Old Republic, and more. The console’s success would eventually lead to Xbox’s next system, the Xbox 360, which somehow managed to be even more profitable and beloved than its predecessor.
The Xbox 360 and Capturing Lightning in a Bottle (Xbox Retrospective)
Believe it or not, the Xbox 360 was a far bigger hit than the original Xbox. With a far more affordable price compared to the PlayStation 3, a compelling set of games, and a brilliant online service, the console would go on to sell 85.7 million units worldwide.
Additionally, unlike other consoles at the time, the Xbox 360 would give a major platform to indie games in the form of the Xbox Arcade label. This would give way to hits like Super Meat Boy, Limbo, Scott Pilgrim vs. The World, and several ports of older titles. Combined with a robust lineup of third-party and first-party games like Halo 3, Gears of War, Alan Wake, Grand Theft Auto IV, Red Dead Redemption, Fable, and countless others, the Xbox 360 was arguably the definitive console to have during the seventh generation of consoles.
Yet, even in spite of the success, there were still major issues. The first was Xbox’s poor handling of its acquisitions. Two notable examples were with Rare and the Halo franchise. In the case of the former, after a long period of success as Nintendo’s biggest second-party developer, the company was bought out by Microsoft and reduced to working on more divisive games such as Banjo Kazooie: Nuts & Bolts and the Kinect games.
As for Halo, Bungie slowly drifted away from Microsoft and opted to go their own way as they went on to create games like Destiny. Rather than end the franchise right there, Microsoft chose to give the future of their biggest franchise to an inexperienced development studio in the form of 343 Industries, which would go on to slowly depreciate the series’ value over the last twelve years.
Speaking of the Kinect, that was another low point in Xbox’s history. What was designed to be a peripheral where players could control games with only their voices and their gestures, rather than needing a controller, instead was seen as a poorly designed gimmick that barely worked half of the time. The subject of “barely working half of the time” brings us neatly to the Xbox 360’s biggest issue: the Red Ring of Death.
The Red Ring of Death was a hardware error that would render the system completely inoperable. The issue was signaled by a red ring appearing around the 360’s circular power button. As Xbox executives would later admit, this was due to the system overheating, a major hardware fault that they had not accounted for. According to Game Informer, the failure rate of the Xbox 360 among owners was a staggering 54.2%.
While Microsoft managed to pick up the pieces, offering repairs to owners at no additional cost, many fans would lose faith in the brand after these repeated errors. Unfortunately, with the release of the Xbox One, that faith would only continue to dwindle.
The Xbox One and the First Instance of Broken Trust
It is no secret that the Xbox One had a disastrous launch. For one, in the lead-up to its official unveiling, two major rumors circulated. The first was the inability to trade used games: after a disk was used to install the game onto the hard drive, the disk was rendered useless. The second was the requirement for the console to always be online. Both rumors turned out to be true.
That, alongside a conference that focused less on actual games and instead placed emphasis on the Xbox One as a television peripheral and a platform for the Kinect, led to an event that is now seen as infamous. So much so that the original announcement has been removed from Xbox’s YouTube account. While Microsoft would backpedal on many of these decisions in the lead-up to launch, the damage was done.
PlayStation would use Xbox’s poor decisions to bolster its own system. During their own E3 conference, CEO Jack Trenton would take a direct shot at Xbox. He pointed out how the PlayStation 4 would support used games and wouldn’t always need to be online, which served as a direct contrast to the Xbox One’s hardware limitations.
It didn’t help that, during an interview between Geoff Keighley and Don Mattrick, the at-the-time president of the company, the latter had this to say: “Fortunately, we have a product for people who aren’t able to get some form of connectivity, it’s called Xbox 360.” You can even see Keighley get a little bit frustrated, laughing in disbelief as Mattrick doubles down.
Microsoft would try to regain some goodwill by rolling back on their Kinect support and releasing games such as Halo: The Master Chief Collection, yet even this would have issues. In the case of the latter, the game would release in an unfinished state, with its multiplayer proving to be completely broken compared to the original releases of all the games in the collection.
The Xbox One only managed to gain success due to its introduction of backward compatibility and Xbox Game Pass. Even still, the PlayStation 4 breached the top five best-selling consoles of all time, reaching 117 million sales. In contrast, the Xbox One sold less than half of that. As Microsoft prepared to launch the Xbox Series X|S, expectations were high for them to deliver a successful system as they would try to regain their footing after the failure of the Xbox One.
The Xbox Series X|S, Present Day, and Where We Are Now (Xbox Retrospective)
When the Xbox Series X|S initially released in 2020, things weren’t looking good. They had delayed the release of their major launch title, Halo Infinite, to 2021. As a result, Xbox didn’t have any true exclusives available at launch. At the time, their main claim to fame was their Xbox Game Pass subscription service, allowing players access to a wide variety of games for free.
This would begin to change, though, as Microsoft would acquire Bethesda. The acquisition would give them access to major games such as Starfield, Hi-Fi Rush, and the still-upcoming Indiana Jones and the Great Circle. Further, after acquiring Activision/Blizzard last year, they now have the rights to Call of Duty, Diablo, Overwatch, and more. In fact, they’re already beginning to take advantage of the purchase, as they plan to release Call of Duty: Black Ops 6 on Xbox Game Pass this year. In theory, then, it seems like Xbox is at the top of the world, right?
Unfortunately, all of the acquisitions over the past few years have proved disastrous in the long run. The first example of this came earlier this year, as Microsoft laid off 1,900 employees across their entire gaming division. The problems would only escalate as Microsoft would shut down Arkane Austin and Tango Gameworks.
The latter of which would be a huge surprise, as Hi-Fi Rush, according to Microsoft VP of Games Marketing at Xbox, “was a break out hit for us and our players in all key measurements and expectations.” Additionally, the game recently received a highly successful port on the PlayStation 5 and has won several awards over the past few months. As for Arkane Austin, despite previous statements that they would never shut down another studio simply because of poor performance, they went ahead and did just that with the studio behind the critically panned game Redfall.
Where does that leave Xbox, then? If Xbox can shut down studios, cancel games, and layoff employees regardless of success or failure, then what hope is there for smaller games like Hellblade II, or studios like Obsidian? What of the Halo series, which is now rumored to be releasing on the PlayStation 5? While Xbox hypes up the next Call of Duty, how do we know that their next potential acquisition won’t end in more layoffs and studio closures?
While I grew up as an Xbox fan, adoring games like Halo and Killer Instinct, I can’t help but feel a sense of disgust, even with the company’s recent Summer Game Fest 2024 showcase now in the rear-view mirror. The showcase may have had great games that I will likely download through Game Pass, but why does that matter? The reason they are able to show off so many exciting games is that they own a third of the industry and have acquired numerous companies over the last few years, sacrificing smaller studios in the process.
Since the beginning, Xbox has not had a grasp on what is needed by both fans and other companies. Whether it be with Nintendo, Grand Theft Auto, Resident Evil, the Kinect, or the slow dwindling of the Halo franchise, they have continued to squander what little good faith they have left. Which brings me back to my question at the beginning: Why and how has Xbox come to this? Is it due to poor leadership, corporate interests, or a desperation to stay in the industry by any means necessary?
The truth of the matter is I don’t know. What I do know, however, is that Xbox’s failure is indicative of a larger issue within the industry. It’s only a matter of time before a straw finally breaks the camel’s back within the gaming industry. Companies that were once under Xbox/Activision are now beginning to go independent, such as Toys For Bob. That said, how long will it be before Xbox, PlayStation, or someone else shut down a small studio for no reason?
One thing’s for sure: people have started to turn against Xbox for their practices. Their next conference will be a litmus test to see how well they are able to pick up the pieces after their latest blunder, especially since fans should be sure to keep a watchful eye on the company’s activities as they take advantage of their numerous acquisitions. Only time will tell if they are able to come out stronger, even with all of the renewed pressure, or if they will be forced to make more poor decisions in order to stay afloat.
