Xbox targets Steam users in its vision for the future of consoles I Here’s The Dring

What an open-platform Xbox could mean for the console business

One of my favourite parts of doing interviews is often the chat we have after the interview is finished.

When the recording light is no-longer flashing, this is when we all loosen up a bit and start to gossip. About two weeks ago, during one of these post-interview chats, one very senior games boss asked me: “What is going on with Xbox?”

It’s a common refrain. Xbox is a business in an almost constant state of transformation that it can be hard to keep up with what it might mean for everyone. But when I asked what prompted the question, the games boss replied: “They just seem to be all about Windows.”

This was new to me. They’d talked about Windows before, but I hadn’t realised it had become central to its overall strategy. A week later I was being briefed (and shown) the ROG Xbox Ally X (which I’m just going to call the Xbox handheld from now on), and I noted all the talk about the firm’s collaboration with Windows.

Then barely a week goes by and once again Xbox is discussing hardware, revealing a new partnership with AMD, and once again came the line from Sarah Bond on how Xbox is working alongside “the Windows team to ensure that Windows is the number one platform for gaming."

The vision, according to Bond, are devices not locked to a single storefront (so think Xbox Store, Steam, GOG, Battle.net etc..), powered by Windows and built with AMD technology…. so, PCs, basically.

After the video dropped, in came the text messages from across the industry. Are Xbox now just about gaming PCs? Is this the end of Xbox as a console? Even IGN’s headline reads: ‘It Sure Sounds Like the Next Xbox Will Be A Gaming PC’.

As much as that might be the case, I don’t really think this changes anything from an end-user perspective. Aren’t all games consoles just gaming PCs, with a unique UI and (occasionally) bespoke controller? And it’s not as if Windows hasn’t been involved in console gaming before. Even the Dreamcast had it.

What is a change is the idea of an open platform games console. The idea that you’ve got an Xbox under your TV that boasts multiple stores, and can also play your Steam library.

This is quite a bold move as it means Xbox is creating competition for its own store business, and therefore putting at risk the 30% cut it receives from third-party game sales. Xbox will feel capable of taking this impact more so than PlayStation. With the popularity of Game Pass and Xbox’s comparatively small install base, it won’t be taking quite the same hit as Sony would if it followed this path.

Nevertheless, losing some of that third-party game revenue could have an impact on the price of Microsoft’s next machines. Console makers tend to keep hardware costs as low as possible, often even taking a loss on each unit, knowing that software revenue would make up for it. If Xbox is going to earn less from that side of things (at least from third-parties), then that will likely be reflected in its hardware pricing.

But perhaps that’s happening anyway. One analyst told me last night that the “subsidised hardware strategy is slowly dissipating”. The next generation will likely be a pricey one.

Ultimately, Xbox will feel it needs to do something to drive its platform business, increase Game Pass subscribers and grow its audience. And creating products that target not just Xbox users, but Steam users, too, is a way to do that. In theory, you’ll even be able to play PlayStation games on the next Xbox devices (the ones released on PC). This opens up the addressable market for Xbox, and in some ways makes it simpler for developers, too. It’s really just three platforms to develop for now: PlayStation, Windows and Switch (alongside mobile, of course).

AMD is powering the next Xbox hardware

One component that Xbox hasn’t talked about yet is what the social element might be. Are we looking at a unified place where gamers can have one username, one friends list, and one destination for all of their gaming needs? With the ability to jump between games and storefronts without leaving friends behind?

It’s a future that Epic is also trying to create. In our interview with Tim Sweeney earlier in the month, he discussed the firm’s social layer designed to connect everything together in one place. He called it the firm’s ‘superpower’ that will become increasingly important as gaming goes more and more multiplatform.

“These social capabilities will operate across all platforms and stores,” he told me. “So when you're playing Fortnite, you have this awesome friend list, and you have the ability to form a squad, do voice chat, and go from experience to experience without leaving your mates behind. We're bringing that to the Epic Game Store, and to every third-party game through the Epic Online Services multi-platform overlay.”

If I was feeling cynical, I might argue that stores like Steam were already social overlays on-top of games, so what Epic is talking about here is an overlay for the overlays. And if Xbox and others are planning to do similar things, how long before we need an overlay for the overlays for the overlays?

Cynicism aside, we will have to wait to see what Xbox’s full proposition for the next generation will be (although the upcoming handhelds provide a clue). But it’s clear that the future for them is multi-platform. Xbox’s Play Anywhere pitch is this idea that you can buy the game on, say, PC and play it on console, or in the cloud, or on mobile, or on the Xbox handheld for no extra cost. We know from TV that the ability to view your shows and movies via all screens has become important for customers, and it’s enabled them to watch more as a result. This is the same goal for Xbox and the entire game industry… make it easier to play games in more places, which increases people’s ability to spend time in this worlds… which tends to equate to more revenue.

So this is mostly an hours play, rather than a userbase play. Attracting PC users into the Xbox ecosystem isn’t widening the audience for gaming. And that’s fine. But I don’t believe games consoles should be viewed as simplified PCs that sit under the television. The console is meant to sit between the worlds of mobile and PC, but we’re seeing both smartphones and PCs encroaching into its space. Mobile devices are becoming increasingly powerful with a growing slate of bigger, more advanced games, while PCs are now home to Xbox and PlayStation IP. Therefore, it’s important that the console space showcases what makes it distinct. To me, consoles are about that big screen experience, but they’re also about SingStar and fitness games and local multiplayer. They’re machines built for the living room and play games designed for that environment. If you want to succeed in the console space, it’s vital to build games, services and hardware that speak to console gamers (or potential console gamers), not PC players.

Xbox will argue that it’s the only company capable of not only speaking to those different worlds, but also uniting them. It’s the company of Candy Crush and Fallout, Minecraft and Forza Horizon, Call of Duty and Crash Bandicoot. It has the games and it has the understanding in order to build a platform, and a suite of devices, that can serve individual audiences, whilst offering them a path to other experiences should they want it.

Is this what gamers are really after? Maybe. Xbox has had great-sounding strategies in the past that, for whatever reason, failed to connect. Windows doesn’t have the best legacy when it comes to gaming. And Steam’s own efforts to bring PC gaming into the living room via the Steam Machines was hardly a success.

But ultimately Xbox needed to do something on the platform side to try and shake things up. And PC gaming is more popular than ever. There are more active users on Steam than on PlayStation. It’s the space everyone wants to play in.

So once again Microsoft’s gaming ambition returns to where it all started with Windows. The question now is whether this marks the end, or an exciting new chapter, for the Xbox console.