Microsoft needs to answer a simple question: what is the point of Xbox?

As Game Pass undergoes a major overhaul and Project Helix edges closer to release, GameCentral asks whether the glory days of the Xbox 360 will ever come again.

When Phil Spencer was still in charge of Xbox, he used to balk at the idea that the Xbox 360 was the golden age of the brand, arguing that there are more people playing Xbox today (by which he meant the console, PC, and streaming) than there ever was in the late 2000s. But that was missing the point. The Xbox 360 maintains its reputation as the best Xbox console for many reasons but the most important is that it was the only time Microsoft was leading the conversation in the industry.

The Xbox 360 sold less than both the PlayStation 3 and Wii and yet still most people refer to that generation as the Xbox 360 era. That’s not because anyone cares how many it sold but because it set the pace for the generation, in terms of introducing new ideas – from indie downloads to Achievements – and had better first party support than Sony, while being the lead format for almost all third party games.

It’s a common argument that competition benefits everyone and the Xbox 360 is clear proof of that. Without Xbox keeping Sony on their toes, the introduction of online features to PlayStation formats would have been much slower. The PlayStation 4, in particular, was a pointed response to the lessons learned from Xbox and the console’s outstanding first party line-up would likely have never existed without its stimulus.

Despite all Microsoft’s money they never again had that sort of influence over the games industry, with the Xbox One selling less than the Xbox 360 and the Xbox Series X/S less than both. Something had to change and inevitably that meant replacing Spencer, with new boss Asha Sharma – who has no experience in the games industry and barely seems to have played any games before.

That should not count against her though, as many execs have little or no experience in game development (reportedly, legendary Nintendo boss Hiroshi Yamauchi could barely use a controller) and Spencer being a self-avowed gamer did not seem to help anything.

Sharma’s first few months on the job have mostly consisted of mood talk, as she insists that she won’t ‘chase short-term efficiency or flood our ecosystem with soulless AI slop’, despite that being precisely what everyone expects from Microsoft at the moment.

It’s easy to assume that the next gen Project Helix hardware was designed with AI in mind, given Microsoft’s attachment to the technology and the threat of not just Gaming Copilot but generating whole games with AI. In addition, Sharma’s background is with generative AI, so backing away from it completely seems very unlikely.

The first part of her statement is just as important, as one problem with Xbox since the very beginning has been short-termism. Perhaps blinded by its own wealth, Microsoft is always looking for a short cut and time and again has proven itself happy to rip up the roots of the business just to chase the latest trend.

Its support for the original Xbox was cut short as soon as they realised it wasn’t an instant hit, the Xbox 360’s time in the sun lasted only a scant few years before the introduction of Kinect (an attempt to copy the Wii) and the deterioration of its first party studios, the Xbox One started its life trying to be anything but a games console, and the Xbox Series X/S bet everything on Game Pass… and lost.

The big annoucement this week was that Game Pass prices are being cut, following a previous increase, and that Call Of Duty will no longer be part of it from day one. That’s a sensible U-turn, but there’s still no sign that Microsoft has accepted the fact that most people have no need for a video game subscription service and don’t want to pay for games that way.

With rumours of another massive round of lay-offs coming up, it’s unclear what other changes Sharma will make. The return of Halo and Gears Of War will be important steps forward, but they were initiated before she started. There’s been talk of her bringing back console exclusives but that seem very unlikely given how small the Xbox Series X/S userbase is and how unlikely it is Project Helix will do better (not least because, according to Microsoft, it will be very expensive).

For a long time now, it’s seemed as if Microsoft is just treading water, aware that they are unable to break Sony’s stranglehold on the games market. It often feels like they’re just biding their time until video game streaming becomes practical for everyone – at which point they will have an instant and potentially unassailable advantage over their rivals. And yet playing the waiting game doesn’t seem to be Microsoft’s style.

The company’s impatience is most obvious in its constantly changing marketing focus, which ping pongs from one feature to another with the attention span of a bored toddler. Sharma was praised for killing the ridiculous ‘This is an Xbox’ campaign, almost as soon as she took over, but at the same time that means yet another switch in brand messaging.

There are some things that never change at Microsoft, including the way current and previous execs always seem to talk as if Xbox is a market leader, despite the fact that it’s very clearly not. Sharma immediately fell into this trap and while it wouldn’t matter so much if it was just an act, most execs seem to end up believing their own hype, which then goes on to adversely influence their decision making.

Xbox’s other big problem has been its inability to appeal to anyone outside of North America and the UK. Occasionally, it half-heartedly acknowledges the importance of Japan but it has never had the exclusive games or publisher relationships necessary to succeed there. Continental Europe has been much the same, with Xbox’s marketing attempts amounting to nothing more than the occasional FIFA bundle (‘They like soccer there, right?’) while they give the job of translating the Xbox dashboard and documentation to AI, with predictably incoherent results.

By this point, these failings seem baked in at Microsoft but the biggest issue for Sharma is the simple question of what is the purpose of Xbox? What is its trying to do or be? As a console format it’s never been less popular and its ecosystem offers little tangible appeal to anyone else. People can be drawn into it via the right kind of exclusives but, as mentioned, that prospect seems unlikely.

This year’s Forza Horizon 6 will be a huge hit on PlayStation 5, and there’s a chance the Fable reboot will be too, but that doesn’t make Xbox any different from a third party publisher like EA or Ubisoft. Which is fine, as long as you’re making money, but Microsoft’s aspirations have always been greater than that.

They got into the games industry to prevent Sony from taking over the living room with PlayStation, a concern that smartphones rendered irrelevant. So what is the goal now? Xbox Game Studios is already the biggest games publisher in the West, simply by virtue of owning Activision Blizzard, but so what?

Despite that, Xbox’s influence on the games industry has never been more insubstantial. Neither friend nor foe seems to care what they do and, unlike in the Xbox 360 days, they have no big ideas that everyone’s trying to catch up with and implement themselves.

That is what Is needed though and the worst case scenario is that they’ve convinced themselves it’s AI. One can only hope that the response to DLSS 5 has disabused them of that, but if they have seen sense they still need something else. Not just a selling point but a sign that they understand the games industry and its future better than anyone else.

If you’re a PlayStation owner you should hope they come up with something, so that they can in turn light a fire under an increasingly complacent Sony. Competition is good for the industry, but Xbox has not provided any for a worryingly long time.

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