Xbox May Have Lost The Console War, But Microsoft Wasn’t Planning To Win It Anyway

In 2007, Netflix, a small company that started out as a DVD rental service, launched its movie streaming service. 3 years later, Blockbuster, the leading player in the DVD rental industry, with a maximum valuation of $3 billion, filed for bankruptcy. Once valued at $3 billion, Blockbuster was sold 6 months later for a meager $320 million.

While movie streaming services weren’t the only cause of Blockuster’s downfall, it was the most significant. Consumers were opting for convenience and ready-to-watch availability of multiple movies over physically owning a single media.

The current state of the gaming industry is heading in a similar direction with the rise of game streaming services like the Xbox Game Pass. Where once the success of a gaming console heavily depended on how many units it sold, that isn’t the case anymore.

Xbox Has Lost The Ninth Console Generation War

Despite being owned by one of the largest companies in the world, Xbox has been constantly losing the console wars for the last three generations, lagging behind Sony and Nintendo – companies that have multitudes of less funding than Xbox. The ninth generation of consoles is no different, and Xbox holds a meager 16% percent of the market share.

Even Microsoft itself admitted that Xbox has “lost the console war” during a court battle over the acquisition of Activision and Blizzard in 2023. Why would a company, whose entire revenue depends on them selling their console and the games on it, publicly and openly declare that they lost?

The answer to this lies in a new strategy that Xbox is trying out; A strategy that made Netflix the behemoth it has become.

Xbox Wants To Sell Convenience, Not Consoles

In 2017, Xbox should have been investing in new IPs and exclusive titles to give its upcoming Series consoles a fighting chance against the PS5 and the newly-released Nintendo Switch. Instead, Xbox launched the Game Pass, which got extremely positive reviews.

Game Pass allowed gamers to get most of the popular titles on an Xbox by paying a small, monthly subscription fee. This was fundamentally different from the cloud gaming services that were still trying to find a foothold in the industry: you didn’t need a crazy fast internet to play a game, nor did you have to deal with video compression and input lag issues. All the games available on the Game Pass could be directly downloaded to your console for as long as you paid for the subscription.

And this resonated extremely well with gamers. Instead of paying $60 upfront for a single game that they didn’t know was good or not, they could instead pay $10 every month to get more than 100 Xbox One and Xbox 360 games, which would even include day one launch titles down the road. But to get this service, you had to own an Xbox. 

For the people who buy all of their games, is game pass worth it?
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Since the eighth generation of consoles was already in the middle of its lifespan, and Xbox hadn’t sold too many consoles, many people couldn’t get a slice of this convenience. So instead of doubling down on making Game Pass a service exclusive to Xbox consoles only, just to sell more consoles and try to win the upcoming console war, Xbox went ahead and released it on PC and Mac. For just a few more bucks, you got access to a readily downloadable library of games on not just your console, but also on your computer as well. 

The Game Pass eventually expanded to include the Xbox Cloud Gaming service which would play all your favorite Game Pass games on your smartphone and non-gaming PCs and laptops via the cloud. Even if you didn’t have a great internet connection, you got the option to enjoy every Game Pass game on the go, as well as being able to download them on the platform that could run them. The value for money was mind-blowing.

Xbox Killed The Console Wars Forever

Scrambling to launch a service similar to Game Pass on the Playstation, Sony was a few years too late and a few platforms too short. Had the Game Pass remained only on Xbox consoles, Sony might have had a chance, but in its current state, PS Plus Premium, even with all its exclusive games, cannot compete with Game Pass.

Xbox plans to bring Game Pass to “every screen that can play games”, including the PS5 and Switch. It’s available now on the Steam Deck, on smart TVs and refrigerators, and even on a Tesla. Their strategy to sell a service instead of consoles is what made them lose this console war, and also kill it indefinitely.

PS Plus vs Xbox Gamepass: Why have I always heard Gamepass was better?
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We won’t be seeing Game Pass on a PS5 or Switch anytime soon, but it’s still a possibility, especially considering Sony did go back on their stance on not allowing cross-play, and is now releasing PlayStation IPs on PC, something nobody could’ve predicted.

There might be a few more generations of consoles, but from the direction the gaming industry is headed, it seems like console generations will be a thing of the past. Xbox, Microsoft, and Nintendo will fight to sell games and streaming services instead of hardware.

Microsoft, with Game Pass and all the big developers like Activision and Bethesda under its umbrella, is leading the charge, leaving its competitors with no choice but to follow suit. If movie and show streaming services like HBO Max, Amazon Prime, Hulu, and Netflix can co-exist on the same television, Xbox, PlayStation, and Nintendo games can also be played on a single console. The only question is, when will Team Blue and Team Red accept that the future of the industry lies in game streaming and not in consoles?