What did we learn from the Xbox exclusivity freakout?

Hi! I’m Mikhail Klimentov. You may know me for my past video game coverage at The Washington Post, such as my investigation into the “culture of fear” at TSM, or this feature about my three days with Frost Giant, which is building a successor to StarCraft and Warcraft. In previous editions of ReaderGrev, I’ve written about a bad esports organization and the end of The Washington Post’s video game vertical.

I want to offer a tendentious read of the recent Xbox exclusivity freakout.¹

If you aren’t aware: In January, rumors began to circulate that Xbox, Microsoft’s video game console and publishing brand, was considering bringing some of its exclusive titles to rival platforms. Not to belabor the explanation, but brands like Microsoft and Sony have historically been known to compete over exclusives — the logic being that if enough good games were limited to one console, it would drive consumers to choose that console. The platform with the stronger library of exclusives would win over its competitors’ customers.

The rumors, then — that Xbox was planning to take some of its exclusive games and make them available elsewhere — prompted nothing short of an existential panic among some Xbox fans. It appeared to herald Microsoft’s surrender to Sony and Nintendo, portending an eventual full retreat from the console market, and maybe even gaming.

[Spoiler alert: On Feb. 15, Xbox released a podcast in which three Microsoft Gaming executives, including CEO Phil Spencer, explained that Xbox would make four of its older games — later revealed to be Pentiment, Hi-Fi RUSH, Grounded, and Sea of Thieves — available on other consoles. “I do have a fundamental belief that over the next 5 or 10 years, exclusive games, games that are exclusive to one piece of hardware, are going to be a smaller and smaller part of the game industry,” Spencer added.]

The idea of being a fan of a gaming platform’s brand seems totally rotten to me. I own all three of the current generation of consoles, and I regard each with the same amount of emotion that I might a router. (I believe I’m in the minority with this POV, though).

That said, I’ve come to appreciate that one might be fearful of a situation in which a major console maker exits the space. In the most catastrophic scenario, a move like that could make multiple decades’ worth of video games completely inaccessible — as cultural artifacts, yes, but also in terms of “Hey, wait, I bought that.” I am sympathetic to the consumer protection angle here, which can be boiled down to “Hey, what the fuck, that’s my stuff!” or even “You are turning the product into something different from what I expected when I paid for it.”

Is console exclusivity a good practice, or bad one? I am agnostic on this question because I know it deserves more serious attention from more serious people (economists, antitrust scholars, grad students, etc). The argument that competition between the Big Three console-makers will result in better games is intuitive enough, of course. But it is also true that recently, the idea of building a library of “enough good exclusives” appears to have come under scrutiny in the boardrooms of Sony and Microsoft, with both companies reevaluating the exact meaning “enough” and “good.”

Consider the costs of making the kind of game that merits exclusivity. One slide in a leaked internal presentation from Sony-owned Insomniac Games asks whether the cost of Spider-Man 2 — which came out to roughly three times the cost of the original Spider-Man, at an estimated $300 million — was “evident to anyone who plays the game?” The leaked documents also discuss the impact of budget cuts on the company.

On Tuesday, PlayStation announced wide-ranging layoffs, including at Insomniac. Around 900 workers were impacted. In a statement announcing layoffs on Tuesday, the head of PlayStation Studios, Hermen Hulst, warned of a “re-evaluation of how we operate,” as well as “a different approach and different resources” in service of expanding Sony’s live service, mobile, and PC offerings.

How many games is enough to stay competitive? How good does a game need to be to nudge consumers toward a particular platform? Is that sustainable?

Meanwhile, from the loser’s vantage, I can see why Microsoft’s Phil Spencer might tell Game File that “when I look at a game like Helldivers 2 — and it's a great game, kudos to the team shipping on PC and PlayStation — I'm not exactly sure who it helps in the industry by not being on Xbox.” Of course Spencer would have a vested interest in tearing down the competitive advantage conferred by the exclusivity system. Xbox lost that fight! Now, it suffers a reported 1:2 sales deficit between the Xbox Series consoles and the PlayStation 5.

In retrospect, it’s not evident to me why Xbox’s change in strategy was seen as heralding the end of its console business. (In fact, my Washington Post colleague Gene Park wrote about Microsoft’s strategic shift away from trying to “win” in the console market in… 2020.) The more reasonable read, even in January, would have been that the company’s dramatic policy shift was of-a-kind with the broader landscape of layoffs, closures, and project cancellations. Xbox was trying to right the ship, not scuttle it.

So why did the conversation around the Xbox rumors veer away from “who does exclusivity serve” toward “Xbox is abandoning consoles?” I have a theory: The people most obsessed with the fate of their favorite console maker are often also the least scrupulous and reliable sources when it comes to that subject, and their obsession actually hurts the ordinary player’s ability to discern what’s really happening in the industry.

This is where my tendentious reading comes in. Stop me if you’ve heard this one before: There should be more professional journalists.

In my view — which may be flawed; I’m writing this sentence this way to acknowledge possible blindspots — the reporter whose stories led the “Xbox exclusivity” conversation was The Verge’s Tom Warren.² Looking back, those stories were peppered with caveats that signal that Microsoft’s plans were hardly set in stone.

Here’s a sample (with my emphasis): “Microsoft has been thinking” about releasing B game on C platform. “Microsoft had looked into launching” Y game on Z console. “Bethesda is also considering bringing Indiana Jones and the Great Circle to PS5.”

To be clear: I think this is good. I’m not knocking Warren for this, or trying to get some slight dig in. I think he’s being very careful — again: in a good way! — and the language he uses ensures that the limits of what he knows are reflected in the text. Reporters color within the lines; the words they use are chosen with purpose, to cordon off reported fact from misinterpretation. (As an aside: This is one of the biggest problems with other sites aggregating reported scoops, and it stands to get even worse as generative AI is adopted by less-principled SEO-driven outlets. Sloppily paraphrasing one reporter’s carefully constructed sentence can dramatically change its meaning.)

But any kind of guardrail that depends on close reading doesn’t stand a chance in an information ecosystem (cultivated in part by both Microsoft and Sony) that is designed to bulldoze over careful turns of phrase.

For decades, fans of both brands have been engaged in a “console war.” Every piece of news about either platform is now viewed chiefly through the prism of how it helps or hurts the competition — which often manifests online as harassment of perceived brand “enemies” or extreme status anxiety. In the case of the Xbox exclusivity reporting, that status anxiety caused fans to ignore Warren’s careful phrasing, shifting the conversation from “What are the merits of this kind of strategic shift?” to “My identity as an Xbox fan is in danger.”

Some of this is plainly Microsoft’s fault. The company’s executives took over a week to respond to the rumors.³ I would also venture that the default gaming news consumer probably isn’t trained to parse the sometimes-too-clever journalism-ese deployed by writers when describing their reporting.

We know why there aren’t more video game journalists around, and I don’t blame any of the remaining working journalists for the problem. But in an ideal situation, there would be five times more reporters cold calling Microsoft sources around the time the rumors started swirling, ultimately stemming the tide of speculation with more concrete information.

The Xbox exclusivity blowup — and all the layoffs of the past year — portend the exact opposite situation. A crisis of opacity, in which there are fewer reliable journalists trying to reach an ever-shrinking set of potential sources, who feel increasingly disconnected from and even frightened of their managers and corporate bosses.

Thanks for reading ReaderGrev! If you have a tip, I can be reached on Twitter at @LeaderGrev, or via email at mikhail (at) readergrev (dot) com.

1. Yes, I know I’m late.

2. Honorable mentions: Stephen Totilo, Jeff Grubb, Shannon Liao, and Destin Legarie, who does not appear to be a reporter, but who offered relatively sober analysis as the situation unfolded. GameSpot did ok too!

3. I want to grant here that it’s possible that the outrage caused Microsoft to change its plans, though I don’t really believe that. I think if that were the case, we’d have the reporting to back it up.