A lot of people were questioning our premise that Microsoft doesn’t care about gamers for the next XBox, but there is a very good reason why they don’t. It isn’t about making or losing money on console sales, it is about where their revenue stream is coming from.
Insiders have been lamenting Microsoft’s near total apathy toward gaming on Windows for years now, any casual onlooker can see the effects of this neglect. They all said that Microsoft doesn’t care about gaming on Windows because, “They already have your money, games don’t get them any more“. For the past 5+ years SemiAccurate has heard this attitude from multiple Microsoft insiders and closely associated outsiders with unnerving regularity. The internal justification is essentially, “That is why we have the XBox”, that does make us money.
This makes Microsoft’s pulling back from gaming with the XBox 720 all the more confusing. If the current console is both the justification and results of their apathy on the Windows side, what could be the reason for abandoning it? If you look at the signs though, it is clear that gaming matters less and less, the neglect is more pronounced every day. Take the XBox Live Arcade, basically Microsoft’s indy game development nursery and program. There have been more and more reports of problems from the developer side, and public accounts of indifference to serious problems have reached a near constant drone. Microsoft doesn’t care about the grassroots now, only about the high-end blockbusters.
All of the development effort has been going into things other than the console’s ostensible mission of gaming. You can get TV, video, music, web browsing, and so on and so forth, usually for an added fee plus more “content” is added regularly. If you want the Miss Teen USA pageant streamed to your ad-festooned home page, you are in luck. If you want interesting or non-sequel games though, you are in a bit of trouble. The real irony is there are now many more ways to buy DLC and spend points, but far fewer good games worth spending on. Microsoft’s apathy towards gaming on XBox is unmistakable.
Before you think I am mad to suggest this, there is a very good reason why Microsoft doesn’t care. Management is pretty painfully myopic of late, they don’t even understand their core businesses much less a niche like gaming. All it takes to understand the issue is a few tips from insiders then simply following the money trail from there. Unfortunately though, this sad story doesn’t have a happy ending.
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Disclosures: Charlie Demerjian and Stone Arch Networking Services, Inc. have no consulting relationships, investment relationships, or hold any investment positions with any of the companies mentioned in this report.