Gaming industry analyst Rhys Elliott of MIDiA Research noted that the Xbox is now in a “you have to break some eggs to make an omelet” situation.
Elliott believes only an impressive Xbox gaming show in June can calm disgruntled fans.
Despite the overall growth of Xbox, Microsoft continues to cut even the best development studios that create great games. Elliott notes that the 51% increase in gaming revenue and 62% increase in Xbox content/services revenue in the first calendar quarter was primarily due to Microsoft's acquisition of Activision Blizzard.
Studio closures are part of a broader consolidation and cost-cutting strategy now common among major tech companies. Xbox, which previously acquired numerous studios during the expansion of Xbox Game Pass on consoles and a period of low investment costs, is now forced to adapt to a new reality where costs have begun to rise. Elliott notes that Xbox will likely evaluate the viability of its studios in each specific case, deciding to get rid of those that it considers too costly.
In the face of these challenges, Xbox faces the difficult task of maintaining its reputation among passionate gamers and developers. Microsoft's vision or strategy is now focused on bigger and more robust franchises that will help reach the goal of reaching 3 billion gamers.
But will Xbox's future be affected by focusing on short-term ROI instead of building a long-term vision? The answer to that question may depend on how the company performs at the upcoming event in June.
***
Cover author: Xbox. Cover source: Xbox