News Xbox One 2

Microsoft ‘Transitioning’ Xbox Into ‘Live Service’ Model, Says Analyst

Xbox One

Today’s news regarding the cancellation of the Xbox-exclusive Scalebound is indicative of Microsoft’s transition of the Xbox brand and its games towards a ‘live service’ model, according to a prominent gaming analyst.

In a series of tweets posted earlier today, Niko Partners’ Daniel Ahmad, perhaps better known by his Twitter handle ZhugeEX, set out his belief about the direction Microsoft is heading in with the Xbox brand:

“My take on all this, and I’ve been seeing this for a while, is that Microsoft is transitioning all their games to the ‘live service’ model. Basically Microsoft want to have their games emulate what Minecraft has been able to do: long lifecycle; large user base; increased spend.

Microsoft’s future direction is about being able to offer the Xbox games and live services on multiple devices that run Windows 10.

Here are some truth facts about Microsoft’s Gaming Division. (W10/XBX)

+ Xbox Live users/rev is up
+ Xbox software rev is up
+ XBL users are spending more per transaction
+ XBL users are buying more games/add ons
+ XBL + software is more profitable than hardware

But XB1 sales aren’t doing well at all:

– XBX hardware revenue is decreasing
– XBX hardware margins are low
– Overall growth is slowing

Clearly the money for Microsoft is more in the services side than hardware – hence the W10/XBX gaming strategy and switch to service games.

The issue for Microsoft right now is growing those users/revenue across the ecosystem, which is not easy when W10 store sucks and XBX hardware is down; hence the focus on core gamers with live service and multiple platform options (Scorpio), and attempts to widen the overall ecosystem and player base.”

Ahmad’s comments were later reinforced by noted industry insider shinobi602, who posted on a NeoGAF thread dedicated to discussing Scalebound’s cancellation to state that Ahmad’s assessment was “exactly what I and some devs I spoken to feel”.

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  • Bryan Manning

    Then why go forward with Scorpio.This theory would make sense if not for that.

  • Legionarius

    So they’re going to start canning singleplayer-only games and produce more Halo, Gears and Forza, each with their own type of microtransaction and online games like Sea of Thieves, where you buy the game, probably pay for expansions and have to pay 60 bucks a year to even access. They just want to milk you dry at every opportunity with this “games as service” crap.