Hello all you happy people! Revenge is sweet, is it not?

I’m an old gamer. The Nintendo Entertainment System, the first true video game system as we know it (Atari doesn’t count, for reasons I will get into in another Fandom Heresy post) was released a mere three years before I was born. I’ve been playing pretty much as soon as I could operate a D-Pad.

I grew up on the Super Nintendo, but my first real console was the Nintendo 64 and Game Boy. I would sneak down to the basement late at night to play Pokémon Stadium or stay up all night playing Pokémon at night underneath my bed covers and then pretending to be sick the next day so I could play some more. I ignored homework (which as it turns out was the right idea: homework has no scientific basis) and teachers to play.

When I first started gaming, the enemy was Sega. You either played video games, or you played Sega. There was no middle ground. But about halfway through the 90s, two new enemies showed up:

Sony Playstation and Microsoft Xbox.

Now, to be fair, Playstation and Xbox were probably necessary additions to the gaming scene at the time, much like Sega was when it first came out. Sega, in particular, had grown crazy arrogant (not unlike Microsoft) and botched three console releases in a row. Genesis, Saturn and Dreamcast. What’s more, the Playstation and Xbox pushed some real innovations for their time. Okay, so disc based gaming has outstayed its welcome, but nobody knew that Flash cards and download speeds would get so good. I mean, digital releases have gotten so good that they’re actually overtaking physical releases which is not something Sony could have predicted thirty some odd years ago (good Godzilla I am old).

And while I’ll argue that online gaming is a net detriment to video games (single-player only please) there’s no question that Xbox’s first foray into the online space was a huge change for the gaming market.

But they were still the enemy. And Sony and Xbox fans would do nothing but attack and harass anybody who played a Nintendo console (the exception being Game Boy and DS, as Nintendo’s never really had a competitor in the handheld space). We were told repeatedly that Nintendo had poorer graphics (true in the N64 and Wii era, not the Gamecube one), that Nintendo was doooomed!, that we were pathetic little babies for playing Nintendo, that we needed to grow up…

Well, you get the idea. And we Nintendo fans suffered for years at the hands of Sony and Xbox fans. The Gamecube was a low point for Nintendo, despite making important innovations in the gaming space and, most importantly, was the only console that was just a console. PS2, my favourite non-Nintendo console, was a DVD player. In fact, that’s how the PS2 sold so many copies. Most people bought it as a DVD player, not a game console. And while Xbox started out fairly innovative, by the time of 360 they became basically a Playstation clone. Note that I like the 360.

The only innovative consoles for the last three generations were from Nintendo: the Wii, the Wii U, and the Nintendo Switch. I will acknowledge that all three had significant problems. The Wii was legitimately underpowered and the motion controls could be a bit daft. The Wii U was mismarketed and mismanaged, leading to it being the worst selling Nintendo console of all time (we’ve all just agreed to pretend the Virtual Boy didn’t exist) and the Nintendo Switch is, again, genuinely underpowered and the controls are a tad wobbly.

Now, for my money, Nintendo Switch is the perfect console being both a dedicated console and a handheld unit. But, you know, that does impose some limitations performance wise. We have not yet perfected nanotechnology to the point where I can get my (overpriced) Nvidia graphics card into a handheld device. At least, not for a reasonable price. The Steam Deck starts at 500 CAD and just goes up from there. By comparison, the Nintendo Switch starts at 399.99 CAD, almost a hundred dollars cheaper. The OLED model, the Switch’s premium model, is only 450 CAD.

All of that is somewhat beside the point. The point is, the tides have turned. The Nintendo Switch is officially, indisputably, the third best selling video game console of all time, behind only the Nintendo DS and the PS2. And Nintendo is forecasting another 14 million sales this fiscal year. That’s insane for a console in its seventh year (consoles usually only last about 5 years), even more so when Nintendo just announced its new console.

So to sum up Nintendo’s position in 2024: they have the best selling console of this generation, the third best selling console of all time, they’ve just announced a new console and their profit margin is legitimately insane. Nintendo is the king of this current hill.

Sony and Xbox aren’t doing nearly as well.

I’m going to bring up Sony first mostly to dismiss them. Sony’s problems aren’t nearly as bad as Microsoft’s, but they’re still in a low point. According to the most recent financial report, Sony shipped 21 million consoles compared to the 25 million they predicted and that their gaming margin is a 6% compared to 9% of December last year.

Now, I’m not some sort of big brained business person, so this all seems close enough to me. 21 million consoles is still a hell of a lot of consoles and 6% of a company as big and as diverse as Sony is pretty good you know? But apparently the stockholders disagreed and wiped out 10 billion dollars worth of stock value.

Ouch.

To put some context here, that means the PS5 is doing worse than the PS4 at roughly the same period in their lifecycle. Not by a whole lot, mind, the PS5 is doing pretty darn good and is growing faster than both the Switch (not a surprise, the Switch is seven years old) and Xbox. But enough to be noticeable in the financial statements.

Which brings us to Xbox. And brother, Xbox is doing bad. Like, Sega Dreamcast bad. To begin with, the PS5 is outselling the Xbox by a three-to-one margin. Yes, even though the PS5 is doing worse than the PS4 (though again, not by much: it took the PS5 one week longer to hit 50 mil versus the PS4) it’s still stomping Xbox. Even the Nintendo Switch, which is in sunset mode and has absolutely no business selling 14 million more consoles, is using the Xbox as a punching bag.

That would be bad enough. Remember all those ‘Nintendo is going third-party’ rumours from the Wii U days? Well, now Microsoft is in a similar position. Actually, in many ways they’re worse off, because they’ve actively started porting some of their first-party exclusives to other consoles. Porting first-party exclusives to other consoles, even to PC, is a big risk for console developers because its those first party games that sell consoles. There’s a reason Nintendo has never, ever, made a Mario game for Xbox (though they did license a few spin-offs for PC, like Mario typing).

So that’s problem one. Problem two is studio closures.

In the last week alone, Microsoft has forcibly closed three studios and consolidated a fourth. One of these, Tango Games, had just released the Xbox’s best game, Hi-Fi Rush, so the closures have nothing to do with performance. This is on top of previous studio closures and layoffs, and Bloomberg reports there is more to come. Now Bloomberg isn’t the most reliable source around, but it’s hard to look at Microsoft’s recent decisions and come to the same conclusion. Microsoft execs are out for blood and everybody is potentially on the chopping block.

A lot of blame has been put on Phil Spencer and I don’t think that’s fair. Spencer is a corporate shark, no doubt, and he owns a lot of this. But closing studios for releasing successful games isn’t really Phil’s style. No, these closures are one hundred percent because some c-suite executive’s bonus wasn’t big enough to pay for their new superyacht and they’re taking it out on the workers.

Truth is, I don’t buy any of the defences the Xbox executives have given. These studio closures have nothing do with management, growth, or needing to focus on core priorities. This is all about greed, namely the greed of investors who demand eternally greater profits. Sony’s recent stumbles are a good example: shorting your sales forecast is not worth a ten billion wipeout. That was purely a temper tantrum on the part of stockholders and I believe that’s a lot of what is motivating Xbox studio closures.

Now, again, Phil Spencer is not innocent here. GamePass was absolutely his idea (or at least an idea he put a lot of support behind) and it’s kind of stalled out. It’s a shame, I think the GamePass is an interesting idea and probably the last innovative idea from Xbox, but there it is.

And, perhaps more importantly, Spencer was a driving force behind the aggressive acquisition strategy that we’ve just seen implode. And again, greed is the killer factor. Spencer got greedy here, though there was a certain logic to his moves. First party exclusives sell consoles. And Xbox was dead in the water. If they couldn’t make the good games themselves, and it was apparent Xbox couldn’t, then acquiring the talent from other studios made a great deal of sense.

The problem here is two-fold. The first is that Spencer and his team got greedy and went after Activision-Blizzard for 70 billion dollars. That’s billion with a ‘b’. I think there was a bit of personal crusade there: Bobby Kotick’s deliberately abusive style of management would definitely offend Phil Spencer. Thing is, though, Activision-Blizzard blew up Microsoft’s balance sheet. Nobody else in Xbox’s portfolio is as bloated and disgustingly rich, which is a problem. Because investors are stupid, greedy and shortsighted, anything that’s not as successful as Activision-Blizzard (which is everybody, because AB is basically the modern EA) is going to be seen as a failure and get the axe.

Which brings us to the second problem. Namely that our stupid, greedy and short-sighted investors tried to force every single developer to make online multiplayer looter-shooter games. Like the travesty that is Redfall. And again, there is a certain logic to this: these kinds of games are popular (unfortunately. There’s a reason I think online multiplayer is the worst thing to happen to gaming) and should make lots of money.

However most of these studios have no freaking idea how to make those sorts of games. And so they naturally bombed. And when they bombed, they took other studios with them.

So to sum up: Nintendo is at the top of its game, Sony has taken one on the chin but is still running in a solid second place and Xbox. Is. Doomed!

Now, I want to be clear: Microsoft is not doomed, and I think that’s part of the problem. Microsoft doesn’t rely on Xbox and thus can totally afford to run the division into the ground. Nintendo does rely on its gaming division and thus had to figure out how to make it to work. Microsoft doesn’t and doesn’t really care about Xbox.

Which is why Xbox is doomed. They’re dead last in the console wars. They’re shutting down studios. And Microsoft will still be king of the PC space.

Revenge is sweet. Goodbye Xbox.