Why Xbox is right to ditch exclusives

OPINION: The Xbox community has gone into meltdown following reports from The Verge and Xbox ERA that Indiana Jones and Starfield may be coming to the PS5. Rumours indicate the Hi-Fi Rush and Blade could become multi-platform too.

Microsoft hasn’t verified these reports just yet, but Phil Spencer has confirmed that Microsoft will be delivering a business update event next week. Many are speculating that Xbox will use this event to announce its plans to go multi-platform.

We're listening and we hear you. We've been planning a business update event for next week, where we look forward to sharing more details with you about our vision for the future of Xbox. Stay tuned.

— Phil Spencer (@XboxP3) February 5, 2024

Many feel that this is a disastrous decision by Xbox, with exclusives historically having a monumental influence on console sales. The Financial Times reports that the PS5 is currently outselling the Xbox Series X by nearly three-to-one margin. With little separating the two consoles in terms of hardware, the most obvious explanation for this lead is Sony’s greater lineup of first-party games. 

Microsoft has hit back with several acquisitions, most notably Bethesda and Activision Blizzard, with the former resulting in the exclusivity of Starfield and Redfall. However, these launches have seemingly not had the desired effect on Xbox console sales. The Financial Times reports that Xbox hardware sales fell about 15% from 2022 to 2023, while PS5 sales grew by a whopping 65%.

So how can Xbox close the gap? The most obvious answer is to simply improve the quality of its first-party games, but that’s easier said than done. 

Forbes reports that the budget of Marvel’s Spider-Man 2 totalled up to a jaw-dropping $300 million. If Xbox intends to seriously compete with Sony, then you’d argue it will need to match these sky-high budgets. But then again, is that really sustainable? 

In a bid to recoup all of the money spent on production, Sony now charges £70 for first-party games. Meanwhile, Microsoft has committed itself to launching every first-party game on its Game Pass subscription service from day one, which only costs users £8.99 per month for access to hundreds of games.

This is a bargain for gamers, but consequently means investing a lot of money on a single first-party game is a huge risk for Microsoft. And even taking Game Pass out of the equation, the smaller user base of the Xbox Series X and Series S compared to the PS5 also makes it a lot more difficult to generate a high number of sales for an exclusive game. Sony has sold over 50 million units of the PS5, whereas the Xbox Series X/S apparently sold just over 21 million as of September 2023. 

So now Xbox has been forced into a really difficult position. Does it keep trying to build its portfolio of exclusives and risk a financial hit due to the small user base of the Xbox, or does it launch all of its first-party games on rival platforms such as the PS5 and Nintendo Switch successor?

The biggest issue with the latter option is that there would no longer be an incentive for people to buy an Xbox console instead of a PlayStation. But I’d argue that the horse has already bolted when it comes to the console war, as PlayStation has become an uncatchable juggernaut. Instead, I’d argue that Microsoft should switch its attention to Game Pass. 

Even if the likes of Starfield, Call of Duty, and Halo were all available on the PS5, plenty of people would likely still prefer to play them on Game Pass due to its incredible value for money. 

Importantly though, making such games available on PS5 would increase both the sales and revenue of Xbox’s first-party games. This would allow Microsoft to justify bigger budgets for its first-party games, while still being confident that it will still make a profit. It could then reinvest the money made into further improving its first-party catalogue as well as the infrastructure of Game Pass. 

Most gamers will feel that such a move is implausible. You’d never expect to see Mario or Kratos on a rival console, so why would Xbox do the same with the likes of Master Chief? But I’d argue that Game Pass has changed the landscape. Exclusives only make sense when you’re attempting to sell more consoles than your rivals, but that same logic doesn’t apply to Game Pass.

Admittedly, making Xbox games multi-platform would probably see a further decline to Xbox console sales, but does that really matter? The age of consoles is slowly coming to an end, and it’s finally time for Xbox to focus all of its attention on Game Pass. 

Note: This opinion piece was originally published on 1st January 2024, but has since been updated to reflect the emerging reports that Microsoft is indeed planning to make its first-party game library multiplatform.