Microsoft's chequebook warfare is bound to fail
Success in the console industry requires more than deep pockets; paying for exclusivity is no substitute for nurturing great games and services
When Microsoft first entered the console industry with the original Xbox (I guess it's just too confusing to call it the Xbox 1), it was met with a lot of skepticism. The key figures behind Xbox - people like J Allard, Seamus Blackley and Ed Fries - were well-liked, but the console itself had a serious credibility problem. Microsoft made the tedious software you had to use at work, not cool things you entertained yourself with at home; even for PC gamers, it was hardware makers like NVIDIA who made cool things, while Microsoft just made an operating system that annoyed you with cryptic messages about device drivers instead of letting you play. It didn't help that both the console and its controllers were big, ugly and clunky, suggesting a company that just didn't "get" what people wanted from a living room device and couldn't hold a candle to the long-standing masters of consumer hardware at Sony.
Amidst the skepticism, there were a number of voices pointing out the obvious but often-ignored; the fact that we were talking here about one of the richest companies in the world, headed up by the world's wealthiest man. Microsoft hadn't succeeded at everything it attempted, even back then, but it had deeper pockets than anyone else. If Microsoft wanted success in the games market - really, really wanted it - it could buy it. It would take time and a truly eye-watering number of dollars, but Microsoft, and perhaps Microsoft alone, could do it.
In a sense, that's what they did. Throughout the lifespan of the original Xbox and the early years of Xbox 360, Microsoft splashed dollars around the industry like wedding confetti. We easily forget that Halo, the iconic Xbox franchise, didn't actually start out on Xbox - Microsoft in fact caused plenty of upset among gamers when it bought long-standing Mac developer Bungie to get their hands on this promising PC/Mac title and secure it for the Xbox. Later, it would spend hundreds of millions on buying Nintendo's former second-party studio, Rare, and pump countless millions more into a hugely expensive financial arms-race with Sony to secure platform exclusives, knowing that its Japanese rival could scarce afford to compete on these stakes.
"It feels like a knee-jerk reaction from a company which honestly didn't expect to be this far behind so early in the game - quick, buy something big!"
None of this is to say that Microsoft "bought" its presence in the games business - this was only one part of the puzzle, one factor among many which eventually gave the Xbox 360 a tight race with the PS3. Other vital factors included Sony's own hubris and miscalculation with the PS3, and of course, the foresight and intelligence of the Microsoft engineers and designers who doubled down on Xbox Live even as other console manufacturers hesitated to commit to online services. All the money in the world couldn't buy the head-start Xbox Live gave to the Xbox 360 over its rival platforms; it certainly couldn't buy the clear water that separated the consoles in the first years of the generation, as PS3 stumbled out the gates, hobbled by a disastrous price point and terrible, stupid communications from senior management.
All the same, it shows you something about Microsoft's culture during that era. Money wasn't the only thing that ultimately brought success to Xbox, but in the face of adversity, it was the first weapon that an embattled Microsoft reached for. If success didn't come naturally, if a product didn't perform to expectations, if skepticism and uncertainty stood in your way; a deep enough wallet could overcome anything. Nobody could compete with Microsoft's money. It was the company's trump card.
Today's Microsoft might be expected to be different. It's still a hugely profitable company, but its days of market domination are behind it. It's squeezed by Apple on one side and Google on the other, led by new CEO Satya Nadella, who's more realistic about the firm's place in the world than Steve Ballmer was, and might be expected to be more cost-conscious and less bombastic about using its wealth as a hammer (and consequently, seeing every problem as a nail).
All of that may be true, but sometimes, we see flashes of the old Microsoft. We saw one this week at GamesCom, for certain, with the decidedly odd announcement that the next Tomb Raider game will be Xbox exclusive. The wheels are coming off this announcement already, to an extent; "exclusive" in this instance seems to mean "timed exclusive", it's just that all of the mealy-mouthed managers talking about the deal have been carefully coached not to say "timed", not to give any indication about timings, and if possible, to demonstrate an astonished lack of understanding of the basic concept of time itself, and to react like a caveman presented with an iPhone at the mere sight of a wristwatch or a calendar. Still, Microsoft has secured for the Xbox One an exclusive period of time, almost certainly spanning the 2015 holiday season and then some, for a game in a much-loved franchise whose last iteration sold many millions of copies.
That did not come cheap. Square Enix will, of course, have been aware that a potential holiday 2015 launch for the next Uncharted game would render the PS4 hostile territory for a Tomb Raider launch, but with the PS4 installed base still growing at about twice the rate of the Xbox One, if not more, the publisher will have required a truly enormous money hat in return for Lara's exclusive attentions being paid to a much less successful platform. I can't help but wonder, though, who else Microsoft sought to woo with its chequebook before settling on the Tomb Raider deal; Square Enix probably only took the bait because of a willingness to move its franchise away from the Uncharted juggernaut, so just who else did the holders of Microsoft's seemingly loose purse-strings have on speed dial that week?
"For the sake of both the Xbox and the industry, I hope that Microsoft isn't blinded by its own wealth. The reality is that a chequebook war between Microsoft and Sony wouldn't really be good for anyone"
This is, as I said, a decidedly odd deal. It feels like a knee-jerk reaction from a company which honestly didn't expect to be this far behind so early in the game - quick, buy something big! Tomb Raider, though, has pretty much always been a multi-platform game; popular, well-liked, commercially successful, but not really a platform seller in its own right. It's the epitome of a solid third-party game, one you'll probably buy once you've got a console, but not one for which you buy a console. I don't doubt that it'll shift a handful of Xbox Ones, but I very much doubt that it'll justify whatever Microsoft just paid for it. Few PS4 owners (or potential PS4 buyers) will be swayed from their path by the possibility of playing a Tomb Raider game a few months early; some will certainly be annoyed though, and may even harden their view of Microsoft ("trying to buy the industry" doesn't resonate well with consumers unless it's very well presented, and that's hard to do when sewing up rights to a formerly multi-platform game).
Like most gamers and industry types alike, I reckon, I'd prefer if Microsoft had spent that money on finding and funding a really interesting new IP. The company, incidentally, seems to be absolutely fantastic at finding promising IP that's struggling to realise its potential, buying it and honing it to greatness - that's what it did with Halo and with Crackdown, to name but two. More of that and fewer money-hats for existing franchises would be a better long-term plan; but if the Tomb Raider deal is a flavour of the future, Microsoft seems to have fallen back on chequebook warfare. One wonders how far it is willing to go. Speculation about what happens when Microsoft opens its war chest is endless, but if it's now in the business of paying for exclusivity of established franchises, the sky barely even qualifies as a limit. GTAV would cost billions, probably more than any other game, but would probably change the Xbox One's fortunes markedly; for money like that, the firm could even buy a major publisher, wrapping up a bundle of big franchises into the bargain. This is circular speculation, of course; we wondered what Microsoft's billions would buy over ten years ago when the original Xbox launched. That speculation died down as the Xbox 360 built its own success. Today, it seems a little more justified again.
For the sake of both the Xbox and the industry, I hope that Microsoft isn't blinded by its own wealth. The reality is that a chequebook war between Microsoft and Sony wouldn't really be good for anyone; it would just pour more money into franchises that are already successful and create artificial platform divisions that would smother innovation and creativity. Microsoft is losing ground right now and needs to make it up, but the only way to do that effectively is the hard way - it has to be better than Sony. It has to find, nurture and launch better games; it has to provide better services and a better vision for the future of gaming. That's not easy. It takes patience, effort and bloody brilliant people to accomplish something like that, and it's easy to see why the quick fix of reaching for the chequebook is tempting by comparison. The chequebook, however, is no real alternative. The success of Xbox 360 was built on great games and great services; so was the eventual resurgence of PS3. If Xbox One is to stage a comeback, it will need to do so on the same terms. There's no financial shortcut.
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