Gaming Console Biz Is in Flux. Do Consumers Care?

After weeks of speculation, there is finally an answer to which Xbox exclusives will soon come to PlayStation 5 and Nintendo Switch.

The titles in question aren’t as significant as the strategy pivot itself.

Xbox confirmed last week that Obsidian’s “Pentiment” would kick off the multiplatform expansion the next day, with surprise 2023 hit “Hi-Fi Rush” from Tango Gameworks following in March. “Grounded,” another Obsidian game, and popular live-service title “Sea of Thieves” are also due in March and April, respectively.

Each title was received fairly by critics, but none match the AAA scope of other Xbox exclusives, such as “Starfield” or upcoming “Indiana Jones and the Great Circle,” indicating that Xbox would rather test the sales viability of going multiplatform before committing much bigger games to the same plan.

This may seem like a timid way to embrace multiplatform, but the console business isn’t front of mind for most consumers.

An exclusive survey VIP+ fielded with CivicScience in January showed just 29% of U.S. respondents were eager to see PlayStation and Xbox become closer partners. Fewer respondents were opposed to the prospect, and far more didn’t seem to care, despite the implication of Xbox parent Microsoft’s acquisition of Activision Blizzard in October.

The truth is much of the world’s estimated 3.4 billion gamers play on more accessible platforms. As covered in our “State of the Video Game Industry” special report, half of this $184 billion market comes from mobile games, while the console sector sits at a little over $50 billion.

PS5 and Xbox Series systems cost hundreds of dollars and were elusive from 2020 to early 2023 on account of limited semiconductor chips, so it’s easy enough to see why smartphones are a more accessible way to play games. Mobile games are typically free to play as well and rely on in-game purchases for revenue, whereas most new AAA games often sell for $70 to recoup development costs.

Even when 2023 saw big indie games like “Baldur’s Gate 3” break through to significant sales at that price point, most gamers would rather prioritize their pockets.

Nearly half of respondents in the VIP+ survey aren’t interested in paying for indie games, due to the availability of gaming subscriptions. Swen Vincke, head of “Baldur’s Gate 3” developer Larian Studios, has lamented the presence of subscription gaming and pledged to keep his game off services like Xbox Game Pass and PlayStation Plus.

Game Pass has long been the more valuable service for console gamers on account of the amount of new exclusive games available on the service upon initial release, a move PS Plus has avoided to preserve first- and second-party sales.

Development cycles for AAA games have tremendously widened gaps on the calendar, so much so that Sony Group in February warned investors there won’t be “any new major existing franchise titles” during fiscal 2025, which ends next March.

Smaller games such as “Pentiment” and “Hi-Fi Rush” can certainly help bridge this gap for hungry players, but scaling back development of big games to support more low-cost development in general would go against a lot of console gamers’ wishes, per VIP+’s survey. As much as Sony may wish it could save more on development costs, it’s much safer to dip into a competitor’s library. 

Every new generation of gaming systems brings substantial technical improvements on the hardware front — an important selling point — but this has drummed up expectations for AAA games to unsustainable levels. Exclusivity is important to console brands, but without enough games overall, consoles are simply tougher to sell. Even with the substantial lead it has on Xbox Series, Sony Group is anticipating lower than expected PS5 sales for the end of its current fiscal year. And this is after the chip shortage! 

Game Pass did become the major selling point of the Xbox ecosystem for some time. But after years of rapid growth, Xbox went two full years without disclosing subscriber numbers for the service, which sit at 34 million as of February 2024.

After overhauling its own PS Plus service in 2022 to better match Game Pass, Sony stopped reporting subscription numbers entirely in its supplemental earnings. Don’t be shocked if the subscription climate is the next to undergo a big strategy shift in the console space. 

Until then, this early batch of Xbox games going platform is a baby step meant to gauge the degree to which too-big-to-fail titles follow suit. 

Now dig into a data-fueled VIP+ subscriber report ...