Among the chunkier morsels from yesterday’s leak of Microsoft documents is an extended email from Xbox CEO Phil Spencer, dating from 2020, in which he argues that today’s largest AAA videogame publishers remain dogged by their “failure” to adapt to the shift from physical to digital videogame distribution, and especially, subscription models such as Microsoft’s own Game Pass. This inability to move with the times, Spencer suggests, has created a situation whereby the largest publishers rely on sheer “production scale” to attract and retain customers.
In turn, this has meant that publishers are unwilling to bet on new IPs – it could be billions down the drain, after all. Instead, “AAA publishers are milking their top franchises but struggling to refill their portfolio of hit franchises”, while relying on “rented” IPs such as Star Wars. This is an older email, of course, and there’s an obvious element of self-flattery in the shape of Microsoft talking up Game Pass. Still, it’s a persuasive account of recent industry history, bolstered by Spencer’s notes from conversations with Assassin’s Creed outfit Ubisoft and GTA publisher Take-Two Interactive in particular.