Microsoft to Shutter Xbox Entertainment Studios | Hacker News Reader

Microsoft to Shutter Xbox Entertainment Studios

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96 pointsblacktulip37 comments

I'd been watching this subject with great interest when MSFT first made the announcement several years ago. And watching hopefully, at that. XBox Live accounts for a large share of Netflix streaming usage, and in theory, MSFT could have developed shows the way Netflix is doing so. Unfortunately, as a lot of people in this space are learning, high-quality shows cost top dollar and take awhile to develop. They require a unified, sustained political commitment from the company, all the way up to top brass.

Netflix is able to develop shows because Netflix's core business model involves shows. Original/exclusive offerings are seen as key to maintaining its share of subscribers against would-be competitors. There is a direct correlation between Netflix's content selection and Netflix's subscriber base. Microsoft, on the other hand, is a much larger and more diversified business, with a more complex org structure. XBox is one division of many, and XBox Entertainment Studios was one group of many under the XBox aegis. It's hard to argue, at the C-level view, that XBox Entertainment Studios was core to Microsoft's business. And I can't imagine it was ever going to secure the sort of long-term, serious commitment that it required. In some ways that's a shame. In other ways, I totally get it.

> XBox Live accounts for a large share of Netflix streaming usage

Is that an anecdote or is there some data behind it? I would be surprised to hear a majority of Netflix users are using it from Xbox live accounts since for the longest time it was an extra cost on top of Netflix.

"Is that an anecdote or is there some data behind it? I would be surprised to hear a majority of Netflix users are using it from Xbox live accounts since for the longest time it was an extra cost on top of Netflix."

I don't think it was ever a "majority," nor did I state it as such. But historically, it's been a significant percentage. As recently as late 2013, roughly 39% of Netflix streamers did so through a video game console. PS3 and XBox were basically neck-and-neck for their slice of that 39% [1]. The numbers were higher in earlier years, before the advent of smarter TVs and media players. Around the time Microsoft would have been conceiving of XBox Entertainment Studios -- let's call that late 2011 to maybe early 2012 -- XBox had a larger share of Netflix streaming traffic than it does today. And the numbers went the other way, as well: a large percentage of XBox Live users used Netflix, possibly to the threat or exclusion of Microsoft's own channel offerings.

[1] Source: NPD Group, as referenced in http://www.huffingtonpost.com/2013/11/13/netflix-redesign_n_...

The Xbox 360 was also the first game console to have a Netflix app. I think MS has released stats stating that over half the time spent on the 360 is streaming video, which is most likely Netflix usage.

Majority of XBL users may be using it and that is what Microsoft observed. I do not have any data to back-up, but in general Netflix is one of the premiere apps that I constantly use on my XBox.

The MS first-party games were supposed to be the way the company made money on the Xbox, originally. Halo, Fable, all the tent poles of the Xbox platform started at MS. But those studios they'd purchased to make those games are all now off on their own, and MS is left with an internal games development group.

Traditionally, MS has just hired this group up: they had Jordan Weissman, Elan Lee, and Rob Rinard working on games back in the day. Those folks left long ago.

Thing is, traditionally, you make money from consoles on games, not on consoles. In fact, you sell the consoles at a loss until late in the cycle. That's changed now that youn can make a chunk on app-store sales. Every game sold in MS' online Arcade is giving MS a cut of around 25%, and these games sell much faster, more continually, and require no publisher BS or retail deals.

The industry has changed, and MS' internal studios weren't exactly producing gold. Best thing they'd done in a long time was 1 versus 100, which was murdered likely because it didn't make any money.

All true. I think at one point MS figured that original shows were a way into the "war for the living room" that everyone was talking about back then. XBox had a decent share of Netflix streaming traffic, and a strong share in games, and it seemed like a decent idea to solidify the XBox platform's lead as a multi-category entertainment device by covering all bases.

In retrospect, I think people have been streaming Netflix on XBoxes because it's been convenient. And because, for several years, few alternatives existed that streamed Netflix on your TV, and that didn't require the purchase of yet another specialized piece of hardware to cram into the media cabinet. Netflix on XBox was easy, and that was the source of the correlation. Nothing more and nothing less. Microsoft can be forgiven, IMO, for having read more into the correlation than might have been there. For all of Microsoft's missteps and organizational challenges, you can't fault it for having imagination in this case.

Actually Halo started at Apple[1].

[1]: http://kotaku.com/5796019/when-halo-was-on-the-mac-and-was-a...

And how much money did it make as a Mac exclusive? Oh it only ever released on the Xbox, as a Microsoft property. So bringing up Apple isn't even relevant. At all.

VonGuard wrote:

> Halo, Fable, all the tent poles of the Xbox platform started at MS.

So it's perfectly relevant to point out that it didn't.

None of Microsoft's Xbox IP that lasted originated at Microsoft. Bungie's work was on the Mac and PC at the same time for Halo. I know that, I was there, I saw the demos from Alex and Jason at E3 in 1999. Literally, what happened was: Halo was THE game at E3, but no one could talk about it because it was behind closed doors. Microsoft basically said "What's the best IP we can get, the best game out there? The one everyone is excited about?" and so, they went to Bungie with a semi-truck full of cash.

Wait, where are you getting this from? Bungie sold to Microsoft because they had financial issues, and Microsoft was looking for "anything" to increase their portfolio. It was almost accidental.

In fact, Bungie contacted Microsoft, not the other way around, because MS was going around looking for games for the Xbox.

It was a perfect timing. MS was bringing in developers, and Bungie was the perfect target because it needed help, and because it was the coolest IP in development at the time. The trailer they showed at E3 2000 was the bee's knees, and ended up having little to do with the end game's actual plot, but it sure sold MS on the idea that this was killer IP. It was actually a compromise to bring Halo to the console because it was an FPS, which was not really a console thing, outside Goldeneye. But then, MS had signed Rare, too.

Isn't it obvious MS was buying up things it specifically thought were cool? The original Xbox lineup was a who's who of bad ass computer game devs like Molyneux and the Rare folks. And, clearly, all of the studios were able to negotiate decent contracts because they all were free of MS in the end, unlike other studios that have had their publishers run them out of business rather than see them keep their IP. In the end, bungie was glad to be rid of Halo, actually.

No it is completely irrelevant. Jason Jones was a Mac fanboy, he even wrote a letter in on of the Marathon games about how it would never run on Windows. However, Apple didn't contribute anything to the game whatsoever. Halo was originally targeting the Mac, as well as other platforms. By the time Halo was first being prototyped, Bungie had already released Marathon on Windows.

I agree with your point, bringing up Apple is irrelevant. But Halo did end being released on both PC and Mac.

http://www.amazon.com/Halo-Mac/dp/B00006IQTH

Halo started at Bungie, and merely targeted the Mac. It was never at Apple. If it had been, Microsoft never would have been able to embarrass the crap out of Steve Jobs by buying the company (and thus the game) mere months after they got top billing at a Stevenote.

Also:

Microsoft already closed MSN TV and various Microsoft Game Studios (Aces Studio, Carbonated Games, Digital Anvil, Ensemble Studios, FASA Studio, Hired Gun). (https://en.wikipedia.org/wiki/MSN_TV , https://en.wikipedia.org/wiki/Template:Microsoft_Studios )

At this year's E3 game industry trade show, the Kinect2 sensor was not even mentioned. So some newspapers speculated that the Kinect2 is dead. (e.g. http://www.heise.de/newsticker/meldung/E3-Microsoft-begraebt... (German))

Waggle for gaming certainly seems "done" as a trend.

But Kinect, as technology, has huge potential in the robotics and connected home spaces.

Also, if they can cram it into Windows Phone, they could easily out-pace Google's Tango to consumer-facing apps and products that really differentiate their mobile devices.

If they're serious about 3d printing support, it would be incredibly powerful to have a device that can create a source model just from waving your phone around a thing to be replicated.

> Waggle for gaming certainly seems "done" as a trend.

Waggle is a really bad way to input button presses, which is all it was ever used for. It won't be missed.

It's interesting that MS is apparently giving up on its ambitions in publishing (the publishing of things other than its first-party application and OS software and so on, of course). Those ambitions go back to before the Web went mainstream, when MS had dominated the PC and was looking for new worlds to conquer. Encarta, first released in '93, was shut down recently too.

Side note and possibly off topic. I have the 2001 Encarta dictionary, print edition! Wonderful book. Shame to see them shutting the project down. I wish they would release everything into the public domain.

"Microsoft is the productivity and platform company for a mobile-first and cloud-first world"

Does anyone within Microsoft actually believe this? Do they recognize it as wishful thinking? Or perhaps they use it for motivation?

Disclaimer: I have a block of MSFT stock, but while I think the company stands a chance of turning around and that it could even grow, it has a lot of work to get to the point where I could say that with a straight face.

Each half of the statement makes sense on its own.

Translation: We invented Office and windows. Since then, the world has become focused on mobile and cloud computing.

Then I would say "Microsoft is the productivity and platform company in a mobile-first and cloud-first world" or even better "Microsoft is the productivity and platform company but now it's a mobile-first and cloud-first world". I think they're going to lead the desktop for a while longer. I like the second statement because it recognizes their strengths and weaknesses in one sentence and gives direction.

Here's where I stand:

- Windows: Bullish [1]

- Office: Neutral [2]

- XBox (gaming): Bullish

- Azure: Bullish (surprisingly [3])

- Phones: Bearish

- Tablets: Bearish

- Everything else: Meh

[1] With the recognition that while Windows dominates desktop operating systems, the number of desktops sold is being eroded by tablets and phones. Enterprises will continue to use and upgrade Windows.

[2] Still the de facto standard in the enterprise.

[3] I initially predicted that Azure would fail, but I've been impressed that they're willing to embrace ALL users (for some value of all) with platforms, frameworks and languages that aren't proprietary Microsoft.

Prediction: this major layoff won't be the only one Microsoft has to do in the next 2-3 years. So far I'm not convinced Nadella has what it takes to turn Microsoft around and turn it into a "growth" company. Maybe he does, maybe he doesn't. But the trend isn't favorable to Microsoft now, and if nothing much changes (other than some employee/cost cutting), then this trend will continue, and we'll see even more layoffs - at the top, too.

So far the media has mostly received Nadella in a positive light, but mainly because he's "new" and "different" than Ballmer. But that won't be enough to succeed. He also needs to be better than Ballmer as a CEO and product visionary. Much better.

Shouldn't be hard - I couldn't tell you a single product that Ballmer had a vision for.

I heard a quote a couple of decades ago: "more companies die of digestion than starvation". I'd sure hate to see it happen here with Nokia and Microsoft.

|"more companies die of digestion than starvation".

indigestion, the author of that quote is David Packard.

the CEO isn't _supposed_ to come up with the vision. Jobs's hands on work on products is an outlier for a company with a very small suite of products. MS is a place with a very large portfolio of products, many of which are invisible to the consumer.

Who IS supposed to do that if not the CEO?

Ummm... what? What companies have you worked for exactly?

The downfall may have been that MSFT tried to do too much and enter to many little niche markets. Glad to hear that Halo will continue. I have been following that game series for a decade now.

"The Santa Monica studio" is a Microsoft studio in Santa Monica, not the Santa Monica Studio, the developer of Journey and other very fine titles.

Why in the world would anyone assume that Microsoft was shutting down the Sony Computer Entertainment Santa Monica Studio rather than the Microsoft studio mentioned in the first paragraph?

Hard to say why, but that's how it looked at the first read and, no, it didn't make much sense.

Journey and Flower were made by ThatGameCompany.

http://thatgamecompany.com/games/

Journey was a joint effort from what I remember.

Sony Santa Monica does a lot of support and collaboration with other studios. AFAIK Journey was developed by thatgamecompany, but with funding and other support from Sony Santa Monica.

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