Can a struggling console market create opportunities for others? | Opinion

Recently, Phil Spencer, a prominent figure in the gaming industry, expressed concerns about the lack of growth in the video game sector. This sentiment is not new, and it's one of the primary reasons behind the industry-wide layoffs and rising costs. For Xbox, this is particularly concerning, as the company is trying to expand its market share in a console market dominated by Sony and Nintendo, a mobile market controlled by Google and Apple, and a PC business led by Valve. Xbox's efforts to disrupt the market have yielded mixed results. While Game Pass has made an impact, it hasn't revolutionized the business like subscription services have in the film and music industries. Streaming is still in its infancy, and the Series S, designed as an affordable entry-point for the new console generation, hasn't managed to attract new audiences. One criticism is that Xbox's innovative business strategies haven't been backed by a steady stream of high-quality games. When Nintendo disrupted the market with the Wii and DS 20 years ago, it was the combination of motion controls, touch screens, and games like Wii Sports and Brain Training that made the difference. Game Pass still lacks a consistent flow of quality games to build momentum, and the Series S didn't have a flagship game to draw in new players. Xbox's first-party lineup has included many excellent games in recent years, but the company's biggest bets, such as Halo and Starfield, haven't delivered. Third-party publishers have also been hesitant to support Game Pass with new AAA games. Looking at sales charts, Xbox appears to be under threat. A major European retailer recently stated that they're struggling to sell Xbox products, and two game publishers/developers expressed concerns about supporting Xbox platforms during GDC. This kind of sentiment is unusual, especially from larger players with bigger marketing budgets. In the past, such negative chatter would have spelled doom for a platform, but the market has changed. Digital downloading and direct-to-consumer distribution have reduced the power of retail, and the market is no longer dependent on a few big publishers. Nevertheless, this lack of confidence is still concerning. Given its position and the industry's overall lack of growth, it makes sense for Xbox to focus on areas where it can succeed, such as game development and publishing. The company already has an impressive lineup, including Call of Duty, Minecraft, Warcraft, and Candy Crush, as well as a larger slate of big brands. There are rumors that more Xbox games will be released on PS5 beyond the four announced in January. Xbox is one of the few publishers with games scheduled for release this year, including Hellblade 2, Avowed, and Indiana Jones. While these may not be the biggest game IPs, they have a strong chance of success in a year with few major releases. The more platforms these games are available on, the greater the opportunity for Microsoft in the short term. The upcoming Xbox summer showcase event in June is generating interest, and it may be the first Xbox event that PlayStation and Nintendo fans should tune in to. The fact that Xbox is releasing games on more platforms raises questions about its hardware business. Phil Spencer hinted at what to expect in his Polygon interview, suggesting that other digital game stores could sell via Xbox's platform. Could Xbox's future as a hardware maker lie in creating PCs that sit under the TV or in your hand, similar to Steam Deck or Asus Rog Ally? While Xbox's troubles have garnered attention, 2024 is shaping up to be a challenging year for the entire console industry. The Nintendo Switch is aging, with falling sales, a release slate dominated by remasters, and decreasing technical quality of games. With Switch 2 not due until 2025, it will be a long year for Nintendo. PS5 sales are slowing, and Sony has admitted that it doesn't have any major game launches planned for this year. The third-party slate for 2024 is lacking in big games, although it's possible that some games could still break through. A PS5 Pro is expected to launch, which will help Sony's bottom line, but developers at GDC didn't seem excited about it, and the audience for this is likely to be existing PS5 players. 2025 looks more promising for consoles, with GTA 6, Switch 2, and other notable games on the horizon. However, this doesn't help the current market. Does a struggling console market create opportunities for others? Could Valve push the Steam Deck harder? Could Epic Games make progress with its 'Fortnite as a games platform' vision? Perhaps. Alternatively, this could be a chance for companies like Netflix and Amazon to disrupt the market. While it's rare for non-endemic companies to achieve long-term success in the gaming industry, it's not impossible, as Nintendo, Sony, and Microsoft were all non-endemic at one point. Microsoft has been trying to disrupt the gaming industry from within, but the biggest disruptors often come from outside the industry. Could this be their moment?