Phil Spencer has spent the past year inadvertently sowing doubts about Microsoft’s long-term commitment to Xbox. The CEO of Microsoft Gaming has denied persistent rumors that the company plans to exit the console market in the next few years, which would entirely cede the high-performance home console segment to Sony’s PlayStation, but these rumors persist largely due to distress among some gamers, especially among dedicated console players, about Spencer’s outlook on exclusives.
It’s been nearly a year since Microsoft closed its contentious $69 billion acquisition of Activision Blizzard, and while the deal could have empowered Microsoft to isolate Sony and at last reverse its exclusives advantage—by locking the PlayStation out of Call of Duty, for instance, as regulators famously feared—the company’s immediate post-deal strategy has been pretty much the opposite: Microsoft now seems weirdly determined to launch at least a handful of erstwhile exclusives for the PlayStation 5 and the Nintendo Switch, as Spencer has frequently expressed his desire to get Xbox out of the business of exclusives. A couple of weeks ago, he was compelled to defend his decision to release Indiana Jones and the Great Circle, developed in-house and previously thought to be an exclusive, for the PlayStation 5 only a few months after the game launches on Xbox and PC. The uncertainty about this strategy in some corners has given way to panic and rage. There’s now constant talk of “lies” and “betrayal.”
Spencer’s outlook is clear enough. Video games are expensive to produce. Exclusivity, by design, limits a game’s player base and thus limits its potential sales. Publishers should opt to expand player bases if they want to salvage the otherwise unsustainably dire financials of video game development in the 2020s. In a recent post on X, Larry Hryb (née Major Nelson), the director of community at Unity and the former director of programming for Xbox Live, summarized this new promiscuous outlook on exclusives even more succinctly: “He’s running a business.”
First, before we assess the backlash to this outlook, it’s worth clarifying the term “exclusive,” which could mean a number of things in this context. Nintendo is the king of true exclusives—you can play the publisher’s games only on the publisher’s hardware; i.e., you are never playing The Legend of Zelda on an Xbox. Sony and Microsoft, as publishers who are far more dependent on third-party developers to make games for their respective platforms, labor under a looser definition of “exclusive.” FromSoftware’s Bloodborne is the closest thing to a true exclusive in the high-end home console market, a game that’s only ever been available to run on a single platform—the PlayStation. You can’t play Bloodborne on PC. You can’t play Bloodborne on a Switch. You damn sure can’t play Bloodborne on an Xbox. Bloodborne is a rare case, though. High-profile “exclusives” on the Xbox and the PlayStation, in the long term, aren’t typically bound to a single platform; rather, they tend to specifically and indefinitely exclude the rival console. So Insomniac’s Marvel’s Spider-Man series eventually turned up on PC years after it launched on the PlayStation, but you’ll still probably never be able to play Spider-Man on an Xbox.
You might say the same about Halo on the Xbox and PC … except, according to industry insiders, Microsoft does intend to bring its signature series to the PlayStation 5. It’s hard to overstate the unorthodoxy of this gesture, if it really happens, and it’s easy to see why some would interpret it as a distress signal. Consider the precedent: Nintendo and Sega were console market rivals for a decade, Mario and Sonic were avatars of that rivalry, and the only reason you’re now able to play Sonic Frontiers on the Nintendo Switch and play as Sonic in Super Smash Bros. is because Sega quit console development in 2001 after the commercial failure of the Dreamcast and instead became a third-party video game developer. That’s exactly the fate that so many Xbox loyalists fear for Microsoft Gaming.
Sony has long held the decisive edge over Microsoft in the way of exclusives. Sony is able to market the PlayStation 5 as a must-own console for anyone who wants to reliably play blockbusters such as The Last of Us, Spider-Man, and Final Fantasy VII Rebirth. Sony’s advantage over Microsoft isn’t only that the PlayStation has more exclusives or has arguably better exclusives than the Xbox, but also that PlayStation exclusives tend to make better use of the console’s high-end specs. Sony isn’t simply winning the exclusives war with Microsoft—it’s made exclusives integral to the value proposition of a PlayStation in a way that Microsoft simply hasn’t with the Xbox, at least not since the Xbox 360. You aren’t getting much out of the marginally superior processor and graphics card in the Xbox Series X playing Pentiment.
The decision to purchase one $500 video game console or another once every six to seven years is a weighty one. It gets prohibitively expensive for most gamers to buy both consoles at launch. Buying into the current console generation, in particular, was a huge hassle for many gamers, given the global supply shortages in the first couple of years of COVID. If you bought an Xbox Series X in 2021 under the assumption that it was the only way you’d be able to play Starfield, only to later discover that you could’ve bought a PlayStation 5 to play Starfield and then also gotten day-one, platform-exclusive access to, say, Astro Bot, well, you might understandably feel a bit burned by Microsoft. This sort of uncertainty about exclusives has always been a factor in console war dynamics to some extent. Nintendo offers consumers a relatively stable and predictable outlook on its exclusives from one console generation to the next. If you want to play the new Pokémon, then you’ve got to buy the new hardware from Nintendo. With Sony and Microsoft, exclusives are often a far more dynamic and unpredictable matter of third-party agreements, studio acquisitions, and cross-play considerations. So gamers are often playing an expectations game. It’s tempting, then, for a console partisan to become perversely overinvested in ensuring gamers on other platforms can’t play their chosen console’s exclusives, believing this reinforces their justification for buying the console in the first place—even if, practically speaking, this means weaker sales, smaller player bases, and a crappier state of gaming overall.
But exclusivity is a very powerful tool for building console brands and publisher legacies. To many people, Nintendo is Mario, Zelda, and Pokémon. Xbox is Halo, Gears of War, and Forza. PlayStation is The Last of Us, God of War, and Final Fantasy. In some sense, Microsoft losing the exclusives war with Sony has weakened the identity of the Xbox; Halo and Gears are both faltering legacies at this stage, and Microsoft has yet to launch any new and exclusive franchises that might effectively succeed them. This disparity might not matter so much in the long run if Microsoft can overcome Sony by maximizing the value and variety of Game Pass and if the diminished importance of console exclusives ultimately means more players on more platforms can play more games in a more competitive market. But it at least explains the consternation of the console warriors who are partial to the brand identity of the Xbox.
Phil Spencer is running a business, and big-budget video game development is increasingly expensive, and, at this point, terribly risky. Unfortunately, as much as Spencer is in the business of expanding player bases and earning a return on the massive deal to buy Activision, he’s also in the business of placating console users. That’s a task as daunting as ever.