Could’ve fooled me 
they seem just as volatile and impatient constantly switching up strategies and demanding unrealistic returns immediately then when they don’t get them pushing the nuclear button to downsize and start over. That’s just every tech company at this point. Experience seems to play a very small role.
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I put a lot of that blame on Phil Spencer. He is the one who ran Xbox to this point and forced a reset, like i am sorry but you can’t expect Microsoft to flip the bill until the end of time…though ID shouldn’t of got hit as hard as they did
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I can’t say I’m happy that a studio is being forced to stop making their own IP (POE is a fantastic universe) and got downsized to make a new fallout game. Obsidian previously interviewed about shortening dev cycles and getting back to their bread and butter, so I wonder if this new Fallout will continue that. Their next major game was supposed to be in a 3 to 4 year dev cycle and be a more manageable scope. Ideally that’d still be maintained but either way completely scraping work on a Avowed sequel and just now being forced on Fallout means we’re probably in pre production and planning so it’s gotta be a minimum of four years out. That’s still 2030 at least until this game materializes. I also feel like people are underplaying the creative process. If Obsidian didn’t want to make a new Fallout game and Bethesda didn’t want them to make a new Fallout game, then suddenly forcing them to literally drop everything to do a new Fallout game might be a problem down the line.
You know if Microsoft wanted to they could’ve injected some growth into Xbox to make this happen. Okay margins are small, but why not reinvest the profits there are? See if you can make more profit that way for once. It’d barely move the needle on shareholder dividends. A new team could’ve been established made up of creatives from both Obsidian and Bethesda as a task force for getting a new Fallout ready and they could’ve been given a budget and allowed to hire more devs. Supposedly Avowed sequel was going to be a smaller production than the first and grounded 2 is Obsidian working with another studio. The situation is that after putting out five games for Xbox in like 9 years, Obsidian had to deal with getting staff laid off, their own IP project canceled, and forced to work on a Fallout game like they’re a COD support studio. I can’t say this is something I’m interested in applauding.
This might be the better business decision (not entirely sure about that with how long game development is and they’ll have to design and have ideas for what type of Fallout game to make too) for the more marketable game & franchise, but it’s a harsh blow to one of the most creative teams at Xbox that actually had a really good output. And again we can blame sales, but Avowed launched only on Xbox & Steam. It was primarily played on Game Pass and on Xbox it did see millions of players and stayed on the top charts for a while. The Playstation release was another year late / lame duck one. Very very few Single player games can survive that. It also probably was just priced too high on Steam and PS. All of that is on the publisher though (however not having a good dev cycle and rebooting the game internally is on Obsidian still). This is Xbox saying their business models haven’t worked to make them enough money, so they’re making all their creatives and studios suffer. I struggle to say they’re refocusing on major franchises, when they could’ve actually moved money around or reinvested into Obsidian then. Instead they laid off 50 staff and canceled the studios ongoing projects (whatever “other projects refers” alongside Avowed 2).
I do see the positive response though and I’m kinda confused. I’ll say I’m someone who enjoyed Avowed a lot and isn’t really super interested in Fallout. But I thought gamers hated the COD factory? Or that studios like Insomniac can’t work on their own IP anymore in favor of what makes more money. I guess they don’t cuz the COD factory sells yearly. The POE universe is a major one for Obsidian and a lot of gamers. That they’ve been forced to cancel work there, been downsized, and pushed into doing a Fallout spin off sounds familiar in how corporate it is. Just needing to optimize everything for the most sales. I wonder if this is what we’ll see? Making things more like the COD factory with the remaining studios working on more spin offs with the big owned franchises and less of their own IP?
Ran it to what point? Microsoft has taken a loss on Xbox since the OG. What’s change is that (for some totally unknown reason) they suddenly want more and more ROI faster and faster. But Let’s say Phil right after Zenimax was bought canceled Obsidian was working on and told them, “Hey, you’re doing a Fallout game now. Find a way to coordinate with Bethesda despite them still barely being integrated with the rest of Xbox.” We would at MINIMUM be seeing that new Fallout Game this year. They still wouldn’t have had a game in time for the TV show. They still wouldn’t have had a fallout game before all this nonsense. What would that solve under the current circumstances? Microsoft currently isn’t even entertaining seeing how games perform before cutting off studios. Microsoft is the one reversing decisions and constantly turning over Xbox and demanding more growth at a faster pace than the production cycle of a AA game.
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The xbox was profitable at multiple points in the 360 era and I genuinely believe it would of reverted to profitability even if behind Sony if Don Matrick stayed on
Maybe with the 14 levels of management stuff had to go though which he could of changed…and being honest the stuff he probably introduced. Like you can argue Microsoft is responsible for a lot of these decisions which sure but Phil is the one who bought us to that point. He had 0 over sight, like why was keeper and kilm given the green light? Why was a 8 hour game in hellblade 2 allowed to be in development for so long? Why wasn’t redfall canned? Why was south of midnight in development for so long despite having a more niche audience? Why did Halo Infinite release in such a feature incomplete state? I could ask these questions all day but it all falls on Phil and his teams heads, the only thing he achieved is somehow getting Microsoft to invest heavily into gaming which admittedly had both pros and cons
I just want to point out that people shit on Don Matrick all the time when you can say the exact same thing for him…except he delivered a great 1st 2-3 years of games for xbox one
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Hah, yeah it was mostly a dig at myself 
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Pretty much the same for me. I really enjoyed Avowed especially since it’s a new IP. Now, it’s just going to be the same shit as before. Sequel after sequel after sequel so the IP (in this case, Fallout) can be milked to fucking death.
I still have to play through The Outer Worlds 2 and both upcoming expansions at some point. I would imagine that Obsidian will be working on Fallout: New Vegas 2. I would be shocked if it’s Fallout 5.
Doesn’t Obsidian have multiple studios/teams? Or have they been gutted?
It’s amazing, only Microsoft could end up disappointing me while still in the current generation. I go from being hyped in 2020 and six years later, it’s all just meh to me now.
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I don’t get people blaming MS on this specific case, Obsidian was one of the biggest Xbox studios with around 300 employees, located in California which cost around 150K $ to maintain yearly per each one.
They had 5-7 years to develop what they wanted which was ToW2 and Avowed, both are at around 300k sales on Steam, probably 500k on all platforms, let’s say 50-80M profits from both games combined at best without counting Gamepass of course.
So considering how expensive is to run that studio, what do you think would have happened if Obsidian wasn’t owned by anyone? At least they have now an IP to work with which will help them find the stability they needed.
They didn’t want to work on Fallout maybe? unlucky, but at least it’ll be profitable unlike the IP’s they made and worked on for almost a decade, can’t blame MS for that.
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I played all of the games they made since they’ve been bought buy MS and was happy with all of them, but in today’s market, it’s very hard to make something new and successful. MS bought all of these IPs, imo it’s only normal for them to start using them.
I’ve seen some thinking they’ll run them into the ground, but I think there is probably space to innovate within an IP. COD manages to stay fresh with yearly releases, so I think it’s possible for different studios to have fresh takes on the same franchise if needed. People enjoy those universes at the end of the day, so develop more side stories and new areas unseen before or new timelines.
Like how many Star Wars movies and TV shows do we have from different directors and writers? And yet this still manage to do cool stuff like Andor!
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Also it’s safer to work on Fallout than Avowed or ToW. For instance if DF worked on Psychonauts 3 instead of Keeper and Kiln they might still be part of XGS.
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I also enjoyed Avowed and TOW2 but… Fallout. New Vegas? Completely different level. Other than people being laid off I see this as a very positive shift for the studio. Finally someone told Todd to stop being a Gollum about “his” IP and we can get some games!
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Xbox is profitable now. That’s what even Sharma is saying while justifying the layoffs with doom and gloom. What they (namely Microsoft) doesn’t like is that it’s not even more profitable and they aren’t seeing a higher return on investment faster. And a lot of the reasons for that come down to things completely outside of anyone’s control. Like the hardware crisis that Sharma constantly brings up as the largest issue Xbox is facing. All else being equal if this was the 360 generation but with all the same external issues then Xbox would either be in a very similar or a far worse position. Especially as long as Microsoft has other desires for money (like wanting to invest in AI) and shareholders demand higher returns.
Maybe with the 14 levels of management stuff had to go though which he could of changed…and being honest the stuff he probably introduced. Like you can argue Microsoft is responsible for a lot of these decisions which sure but Phil is the one who bought us to that point. He had 0 over sight, like why was keeper and kilm given the green light? Why was a 8 hour game in hellblade 2 allowed to be in development for so long? Why wasn’t redfall canned? Why was south of midnight in development for so long despite having a more niche audience? Why did Halo Infinite release in such a feature incomplete state? I could ask these questions all day but it all falls on Phil and his teams heads, the only thing he achieved is somehow getting Microsoft to invest heavily into gaming which admittedly had both pros and cons
You’re posing these questions like they’re rhetorical, but they all have an answer. Either given through interviews, by Microsoft themselves, or insiders. Some of them are basic common sense.
First off you don’t purchase an entire publisher and then integrate the whole company overnight. Microsoft didn’t buy Bethesda Game Studios, they bought ZENIMAX. Yeah that creates a ton of different levels of management and a lot of annoying communication chain problems. That’s what happens when you aquire an entire company. Sharma is being a little misleading acting like neither Xbox nor Microsoft understood that ahead of time. The acquisition closed in 2021 and ever since Xbox has been gradually integrating Zenimax more and more at a solid rate. For all the legal hurdles and outstanding contracts (they literally had to publish and maintain timed PS exclusivity for games due to existing contracts; imagine all the staff and operations related contracts Zenimax would’ve had at the time) 5 years isn’t a bad timeline at all to have really integrated an entire publisher. That’s not even a full game dev cycle.
Redfall immediately falls under this. That’s a game that Zenimax leadership had pushed wanting to get into live service and the studio head basically lied about it’s progress. When Microsoft bought Zenimax some developers expressed wanting the game to be canceled or rebooted, but think about that for a minute. Either option would mean that Arkane Austin has NOTHING for a minimum of 4+ years and their last game was still “kinda” Prey which had mixed critical reviews and poor sales. It’d also mean canning all the money that Zenimax had put into Arkane Austin thus far. In either outcome do you think Arkane Austin would have better chances than they had with Redfall releasing? Heck, Phil gave them the best chance by delaying the game.
A lot of the other delays go under COVID and the games were greenlit because they were great pitches and yeah those games released to great critical success even earning awards. I mean are you really complaining about Double Fine releasing 3 incredibly creative, unique, and well liked award winning games within 5 years. The business model was game pass which benefited from a variety of games in both size and genre. It’s not like Phil was delusional while trying to push that model. Microsoft only believed in Xbox and began supporting it again (after very very nearly actually killing it) because of Game Pass. Heck, he wasn’t even wrong based on the data Microsoft gave shareholders themselves about game pass. The only problem was that it’s not “fast enough” for Microsoft so they decide to trim whatever they can remotely justify. Hellblade 2 is an especially interesting one because by all accounts Xbox was really happy with how Ninja Theory built up the studio. They could license out their tech and studio for motion capture and stuff like that to make money even outside of standard game development. On top of that Hellblade 2 was a technical Marvel and now we know Ninja Theory built upon that for even faster turn around with the next Hellblade game.
Halo Infinite is a very cautionary tale that you’d think Microsoft would have learned from. It released feature incomplete because Microsoft (MICROSOFT) insisted on heavy employee turnover, laying off workers when a studio didn’t have an immediate use, and using contractors instead of permanent hires with experience. It was literally to the point where Halo Infinite had a propietary engine THAT THE DEVELOPERS AT 343 DIDN’T UNDERSTAND HOW TO USE. They literally said in early live streams that they were still learning the engine and what’s possible. Then when they finally do understand the engine better, hit a cadence, and there’s good energy among the players, Microsoft hit them with catastrophic layoffs, pulled back funding hard, and wouldn’t even market Infinite anymore. Microsoft gave up because Infinite wasn’t an immediate success. The result is that 343 is gone and Halo Studios had to be built in its place using the industry standard engine because otherwise building the studio back up would’ve been too difficult. This should sound very familiar.
Maybe Phil should be hated for convincing Microsoft to invest in gaming. Because now that he’s gone they’re asking for returns during the worst periods of costs for gaming ever (that they’re partially to blame (and this is also so they can invest more money into worsening that problem with the AI bubble)) at rates faster than games are even produced in while game production is getting longer and being harsh on studios that got caught up into COVID. it’s a disaster for everyone Microsoft bought and made worse because this has somehow gotten normalized in the industry. What’s crazy is that you know Microsoft will still want those GP numbers to stay up and grow despite them hurting the pipeline for content for it and also the more creative games that rounded the service out. Not sure what the play is with the big franchises as they probably want big sales from them but that won’t happen if they stay on GP, but they also probably don’t want GP to lose anymore subs. Microsoft refuses to pick a lane and stick to it and everyone else suffers. They especially don’t understand the importance in long term investment in humans with experience. Microsoft is acting like they were somehow blindsided by the fact that acquiring an entire video game publisher takes time or like they aren’t keenly aware of the numerous economic crisises the gaming industry has faced now (as if they didn’t contribute to causing one of them).
It’s all about money and they’re a for profit, so yeah I know the deal. I also know they could have chosen to buckle down (because they are making a profit and running a sustainable business) to really succeed when the economy does pick back up. They chose not to do that. Instead they are gutting their content pipeline and doing what they can to “reset” with their biggest franchises in focus and you know I’m really concerned because where will we be in another 4 or 5 years when these studios again don’t have games because game production takes too long? The best case scenario is that this all works out. The economy starts to turn around and Xbox has a new exciting fallout as people start to have hope in gaming again. I hope that happens, but I’m not optimistic with how trigger happy Microsoft is and how volatile they are with consumer products and creatives.
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“Our business today is not healthy. We are operating at margins that are 3–10x lower than comparable platform and publishing businesses.”
“in a typical year, we lost 64 cents for every dollar we invested.”
“XBOX is not healthy”
Yeah definitely a comments from a profitable business
Bruh even being generious, avowd 2 got green lit, clearly they were just not planning on telling Obsidian to do the most obvious thing ever. Asha dropped the boot
Interesting that Asha fix/is fixing that just like that, and before you say Zenimax is more intergrated now…what about Activision? I mean Asha is putting King directly under her, that is a pretty major structural change
Bro Double Fine literally admitted Keeper was a joke pitch. They piched the self admittedly most unpitchable game they could think of and somehow got the green light
2 questions: was this hiring policy a thing though Halo 4, 5 and MCC and did Phil try to step in because I think the rumours of Halo being moved to being under Activision will be Asha answer if those rumours are true
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I still can’t find a single source that breaks down that 64 cents lost - it has to include acquisitions otherwise we’d see huge losses every year in the financial results, but Xbox has shown a profit every year (even Asha admits core Xbox cherry-picked data by excluding ABK and GP etc was in profit, even if just 3%) and acquisition accounting doesn’t work like that.
The margins she’s comparing to PlayStation (9%) who have the advantage of install base scale and publishers like EA who just pump out the same sports game every year only manage less than 15%.
So which company is she claiming has 30% margins?! The only ones I can think of are either Apple or Nintendo, both of whom are not comparable at all to Xbox, they have fanatical fans, big hardware margins and Nintendo can make games cheap and cheerful.
Xbox’s margins aren’t going to get better anytime soon either - consoles are going to cost a ton, the studios set to work afresh now aren’t going to deliver games for years, many of those with games releasing soon have been let go and layoffs aren’t going to help get games out any faster.
But I imagine the new management will just cherry-pick a new set of data (for example including ABK this time after the next CoD) to show improvement even if nothing has got better, then cherry-pick data a different way when they want to do more layoffs.
You can slice financials any way you like to make your point most of the time, and I don’t trust a single thing this lot have said so far as either there’s a ton of caveats or they give a figure with no background, while throwing red meat to the console warriors
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About time, nice to read some good news that makes perfect sense
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I’m not sure what the question here is exactly? I think you forgot to add in punctuation somewhere.
I couldn’t tell you about Halo 4, 5, and MCCs development because those were ages ago and I wasn’t remotely following them. Infinite’s is well documented. What I do know is that Infinite’s development story wasn’t a unique one. In fact compared to other games Infinite came out really well polished because Xbox delayed the game and gave them time. The problem is that the tech industry in general (even beyond gaming) has chosen to move to temporary workers and contracted software engineers over hiring permanent staff. It’s a really big issue in the USA and plaguing the job market in general. The issue is independent of studio leadership and even Xbox leadership. It’s this. This right now that we’re on the forums discussing recent layoffs and canceled games at Xbox. Microsoft started doing these yearly layoffs but this type of employee turnover just doesn’t work well with gaming. It doesn’t work well with a lot of businesses actually and is why tech companies are losing value in basic parts of their products and services. They’re cutting off parts of their workforce with the experience needed and who have helped build an identity for their business. Then just thinking it’ll be fine if they hire back new people when it’s time to ramp up production again. Giving control to Activision wouldn’t help. I’m not sure why anyone thinks it would. When 343 can’t even hit a stride without having the rug pulled from under the them the studio leadership and even management isn’t the problem. The problem runs a lot higher up the chain and is far more of a larger fundamental issue at both Xbox and tech companies across the USA.
“Our business today is not healthy. We are operating at margins that are 3–10x lower than comparable platform and publishing businesses.”
“in a typical year, we lost 64 cents for every dollar we invested.”
“XBOX is not healthy”
Yeah definitely a comments from a profitable business
The fact that they have operating margins at all means the business is profitable. Sharma’s writing here is concerning to me because of how clear & yet vague it all is. In the same article there’s also
To grow, we bet on Game Pass, multi-platform, and a broader portfolio of content. While those businesses have created meaningful value, they did not grow at the pace we expected.
And then there’s
As that happened, our core business weakened, and we added more teams, more investment, and more time, hoping for a better outcome. And now the industry is facing the most severe hardware crisis in its history. We must reset XBOX.
She never outright says Xbox isn’t profitable because if that were the case then they’d have been lying to shareholders for the past several years. What she spoke about this and last post focused on losing money on the investments specifically, but that investment was spread across different actual products and services. What I read here is that the investment was creating value in Game Pass and games, but not fast enough for Microsoft’s returns. Even then I’m not sure how they’re even doing this math as a gaming business. How do you track an investment yearly when games take a minimum of 4 to 5 to produce? Last post as well. Sharma said Xbox invested 20 billion over five years and is making 500 million less in annual revenue specifically ignoring ABK. It’s that weird heard of turn of “We’re doing bad if you specifically look at this data right here, ignore that data over there, and use this context we’d like you to use.”
Both posts highlight that the biggest problems are the increasing costs of hardware. I can very easily believe that things are on the downturn for Xbox now because they’re on the downturn for the entire industry and the console market is uniquely being awfully impacted due to hardware costs. What Microsoft is trying to spin it into is that these external factors are actually internal decisions they made and it’s Xbox’s fault for not making better decisions to increase profitability sooner. But they’ve also highlighted repeatedly in past years how Xbox is growing and milestones and gamepass. They shared year over year growth abd it’s been consistent for overall gaming revenue. I don’t see what’s so catastrophic now all of a sudden that they need to gut their entire business.
Like at face value the two blog posts are saying, “We’ve been lying to your faces all this time, but don’t worry. We’ll fix the problem now by giving up on our investments, cutting staff, and starting over. Nevermind that it takes like five years to actually produce a new game (if you’re lucky). Also our biggest problems are all external crises that we aren’t presenting a plan to resolve other than focusing on the core despite the core being the biggest cost sink right now.”
But deeper it reads that.“We’ve been making investments and they’ve created meaningful value, but not as fast as our executives and shareholders want. We tried some things the past few years but still not enough growth fast enough. We’re giving up, pulling back, and starting over with yet another new plan. Also our biggest problems are all external crises and this does nothing to address any of those.”
It also feels like there’s not much nuance put into what an investment is. Most new small businesses take 3+ years (a lot 5+) just to be profitable after starting. Investments don’t pay off immediately. Xbox not only remained profitable and with steadily growing YOY revenue, but they did so in the gaming market with long production times (that are increasingly getting longer) and with increasingly more costs on the horizon. Microsoft also kept increasing their stock market valuation through other businesses. I’m not saying they should money hat Xbox, but I don’t buy that things were so bad they had no choice but to gut things this bad. And for Obsidian specifically it sucks that they got staff laid off and projects canceled and forced to be on Fallout. You ask why Avowed 2 was greenlit, but why wouldn’t it have been? We’re again acting like the game did god awful when on Xbox it stayed in the top charts with millions of players for a while. It also reviewed well. If the business model is the problem then that’s Xbox’s or Microsoft’s problem. Especially now that they already have assets and a starting place (no internal reboots), Avowed 2 is an easy game green light. It’s not this weird “gotcha” that proves Phil Spencer was running Xbox into the ground. With all that gone and Obsidian now told to do Fallout, we don’t know what the actual production cycle will be. I hope it goes smoothly but if they didn’t start off with ideas then there’s probably going to be some production issues and maybe the internal reboots that caused problems with Avowed. I’m even more confused with Keeper… what do you think games are? Yeah Double Fine described their process for starting new games and it’s a great process that encourages creativity and fun. Keeper got the greenlight because it was an incredible game idea. And you don’t have to take my word for it. Just look at all the praise it got from reviews and online. They pitched a fun & unique game and it got green lit.
You’re writing like every single game Xbox publishes has to be COD or Minecraft and they certainly want it to be. I mean you’re getting that as they move toward it. And I hope it works for them. I do because if it doesn’t we’ll see worse layoffs and closures before long. But I don’t see something as cheap to make as Keeper or Kiln and as creative and unique and critically acclaimed a stain on Xbox as a business. Those games were there to elevate the brand and bolster game pass and have a more well rounded business. And it wasn’t going to happen overnight. That’s the biggest problem with Microsoft. They want to have like 13 cakes and to eat them all too. And they expect them all to bake in the oven at the same time and be done in five minutes.
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Keeper is one of the best games I played this year though, Double Fine can definitely cook some great game, the public is the problem if they cannot see greatness in this game to be honest. It’s short but I think it was priced accordingly considering the quality on display. The only downside of this game is that it was too short.
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I think Obsidian should turn the Avowed 2 assets and ask if they can make a quick Elder Scrolls game. Maybe team up with Zenimax Online and see if they could make a coop game that they originally wanted to do with Avowed but make it in the Tameriel
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I dont think we need anymore avowed or outerworlds ever again bro. Just make elderscrolls and fallout from now on please 
I swear I need to read a collage citation to respond sometimes 
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