The Weekly Download
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Join industry veterans Tom and Alex as they use their expertise and industry knowhow to help you speedrun through the last seven days in gaming. We cover everything: massive mergers, studio shake-ups, indie success stories, and the latest strategic plays from the biggest studios.
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The Weekly Download
Sony Kills Physical Games & Xbox Fires 3,200 and Sells Off 4 Studios!
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The Weekly Download by Big Games Machine is your essential weekly speedrun through the biggest stories in the global video games industry.
This week's story:
- Sony announces it will end physical disc production by January 2028 for new games releasing on PlayStation consoles
- Microsoft confirms 3200 layoffs alongside four studio divestments in major shakeup for Xbox
Hosted by industry experts, Tom and Alex, we break down the most intriguing, complex, and vital developments of the week to keep you informed.
Prefer your news in written form? Subscribe to our free newsletter for a concise, easy-to-digest summary of daily industry developments, delivered fresh to your inbox: https://bit.ly/big-games-machine-the-daily-download
Links to today’s talking points:
- https://blog.playstation.com/2026/07/01/physical-disc-production-ending-in-january-2028-for-new-games-releasing-on-playstation-consoles/
- https://news.xbox.com/en-us/2026/07/06/resetting-xbox/
- https://www.gamesindustry.biz/original-switch-console-lineup-to-be-discontinued-in-europe-by-mid-february-2027
- https://www.videogameschronicle.com/news/video-game-history-foundation-calls-on-the-esa-to-find-a-way-to-legally-preserve-digital-only-games-for-research/
These cuts and how how strong they are and the amount of studios that they're pushing back out. Was this really aggressive acquisition policy flawed? Welcome to the weekly download, the definitive weekly podcast on the video game industry. Hello. New listeners, I've already done my. I was gonna say. Hello, everybody. Welcome to the weekly download, the the weekly speedrun through the biggest stories in the games industry brought to you by Big Games Machine. Alex has got a new background for any returning viewers. Any returning listeners, Alex has got a new background. Any new listeners or viewers, if you don't know, Alex has got a new background. I don't have a new background. I think now we've done the like the housekeeping.
SPEAKER_01Possibly, possibly the biggest week in video game news of the year. And we kicked it off in the background. I love it.
SPEAKER_02Yeah, but well let's well you're being so impatient. I was I was enjoying hashtag background chat, but we can talk about the biggest two very big stories.
SPEAKER_01We normally having missed last week, right? Because that's impacting this week's story as well.
SPEAKER_02Yes, there's some two two very big stories, very different subject matter, but we're looking at Sony, we're looking at Xbox, and we're looking at Sony's decision to end production of discs by January 2028. And then the not the flip side, but we know Microsoft also very keen on a more digital future, where you know Game Pass, the they're very much less on the physical train, just like Sony now. But with gay with Game Pass, with Xbox, we'll be looking at the big news that a lot of layoffs at Xbox um starting this week running through to the end of the 2027 financial year. As a part of that, we're also seeing divestment in a few studios. So Xbox taking the decision, hey, we're gonna we're we're doing layoffs, but we want to make sure we give these studios a chance. And but yeah, that that's the that's the top line for today's episode, Alex. Do you have anything to share before we we get started?
SPEAKER_01Not beforehand. I think there's a lot in there's a lot in there, and I think the the PlayStation using we get to it had so many other things that kind of happen alongside it. I don't know where they were going to happen anyway or if people saw the opportunity, but it was a really wild week for digital, so excited to get in.
SPEAKER_02Yeah, I I think what we'll do then, we will get straight into it. We'll start by looking at this news around PlayStation. So if you're if you are interested in video games but you've not seen this, A, where have you been? And B let's tell you what's going on. So as I was saying before, Sony uh has announced last week that it's no longer going to be producing physical discs for new games released on PlayStation consoles by January 2028. After this point, new games will only be available in digital formats on the PlayStation store and at retail stores. I imagine brick and mortar stores as well as your Amazons, your online retailers. One last piece of context I think to add before we do talk about this. There's no impact on any games launching before then. You know, the your your physical library will will work. There's there's nothing going on where Sonya are gonna cut those kind of things. But I think from the PlayStation perspective, this is a natural direction to the drastic increase. And we've spoken about this on the podcast, Alex, the the big increase we've seen in physical versus digital, the the number of digital sales continuing to eclipse physical. So you know, I don't know if we're starting to sort of question, but does this does this make sense from a Sony perspective?
SPEAKER_01You know, is it a response to from a Sony perspective, from a Sony perspective, and from a consumer trend perspective, actually, yes, it makes sense. But I just think that there's I I think a lot of the key evangelists and and kind of truly passionate people still have either a massive affinity for physical games, like in one shape or form, or that they remain collectors and do still purchase things physically. I mean, we know like Limited Run and similar um kind of physical media out there that are producing indie titles that have blown up. And I'm not sure if they're going to be ultimately impacted because they're obviously not made by Sony. I don't know if that's going to be a kind of like the license will still be out there to continue to make it. Yeah, where will where will they source the discs from if there's a well we know we know they're going to continue we know Sony's going to continue to allow people to break discs for games released before that date. The question is if it's then going to be forced on them retroactive, you know, on on anything launching after that date, does it become an impossibility if they manage to source the outside? That's a good question.
SPEAKER_02I think there is so many questions like that, isn't there? We're still we are still, you know, 18 months away from when this is supposed to be happening, but there is a a lot of questions. I think so far, and and for context, we're recording this on Wednesday, the 8th of July. The the episode will be live on Friday the 10th. Um since this was announced, and I think this is interesting if we're looking at you know, we're speaking about consumer trends. Since this was announced last week, today, the 8th of July, is the first time Sony have posted on their social platforms in in five or six days at this point. And we've already seen, I think, 17 million views on the post, which is nothing to do with a conversation. It's about a control stick, 17 million views, nearly 60,000 replies as of the time of recording. And it's the same on YouTube, people posting comments on YouTube videos that Sony have uploaded. And I don't need to tell you what the comments are. These comments are very much there's a lot of anger, there's a lot of demand for physical games, but then I'd be saying, you know, where was everyone when you know when these games were still available to buy physically and everyone was buying them digitally? It feels a bit performative to me.
SPEAKER_01They're still there, and I I'm yes, and I'm massively conflicted. Firstly, like, is it the noise the noises, people being noisy, which is always the case here? And obviously, it is a it's a massive change. And I I don't think something you're in. Are gonna change it at all. Like that, I just don't think that's on the cards. I don't think any amount of ground swell is gonna change that. I don't think this is an Xbox One kind of situation. I think the world has moved on to even Xbox is very much the same boat that this is like this is going to be their uh there you go, you can do it now moment, because obviously Xbox were the people pushing for this before anybody else.
SPEAKER_02Yeah. I mean, interesting. There's a uh there's a change to org petition that has 212,000 signatures.
SPEAKER_01I'm sure they'll I'm sure they'll get them, but ultimately, I mean the a business case likely isn't there, and I get I guess the trend continues on its downward course. Arguably, I guess if people go out and put an absolute fortune into uh buying all the physical discs and like having some kind of strange this is what we're doing, maybe there'd be a stranger, but you know GTA just announced that they're going to put a code in the box. Another thing that, like, well, there we go, if that's allowed, then you know, biggest game in the world is doing it, then I guess it gives us the allowance as well. Do you think that's all we can only speculate on this?
SPEAKER_02Do you think there's anything in in that in terms of Sony saw maybe this is something Sony have been thinking about for a while? They saw Rockstar go ahead and announce that they were doing it, and that might have pushed them to announce it now rather than perhaps later down the line, because yes, there's been backlash, but I imagine from some of the data Rockstar have seen in terms of pre-orders, they could probably say, you know, this hasn't changed anything.
SPEAKER_01No, I and I and I imagine ultimately there was some kind of level of discussion about it. PlayStation, I'm not imagining this. PlayStation and take two have have a deal around kind of promotion.
SPEAKER_02Yeah, they have they're doing the GTA 6 best on PlayStation this time around.
SPEAKER_01So we'd we're just in a place where it's like, okay, this is you know, this is happening. And so they would have known that was was there. And I I don't know if they would have sat there being like, do we hit fire on this? Let's see what the reaction is, or if it was just always going to happen. I I I believe the two are connected, but whether whether one was one gave the green light to the other, or whether they were always just together as kind of like covering fire for each other, I don't know. But I can't imagine that deal went down without both of them being made aware of what was happening.
SPEAKER_02So, guys, I thought you were gonna make all our discs for us.
SPEAKER_01Yeah, yeah. But I think where I I kind of sit on it ultimately, I mean, it it's obviously gonna impact the talk collectors, and it does remove one place where deals could come up because ultimately, you know, digital is a lot more controlled. This is gonna give Sony a lot more control, and I'm sure that's gonna be part of the reasons I'm doing this because you know, boxed retailers have an incentive to clear inventory space for the next thing. So if something isn't proving as popular, it's naturally pushed down in price to get it out the door. As I remember with BMX Triple X when I worked at GameSpot, they grew like they got into we had so many copies of that. Please find us get it out again.
SPEAKER_02Free with every purchase.
SPEAKER_01I don't want it to be because it's an 18, so you can even do that.
SPEAKER_0218 purchases. Yeah, yeah. That that's a good point, though, about the what so one of the things in this announcement was that it's not just going to be, hey, you can only get games on the PlayStation store. There will still be those retail listings, there will still be ways to get games outside of the PlayStation Store ecosystem, but then when those ways amount to a code that you have to input on the PlayStation Store, my the alarm bells to me ring in terms of Sony and PlayStation have a massive monopoly here, surely. And and and that's something where I do wonder is there a I'm not a legal expert, is there some degree of a legal basis where someone will be able to turn around and challenge this on the grounds of whiz because we've seen it with Steam and we've seen it with Valve in the last year, and iOS. Yeah, where where there's a case to say removing the ability to sell physical games like you're saying at heavy discounts at retail, sell games secondhand to people, because that completely it's the death of the second hand market on PlayStation. So do do we have a monopoly situation here where Sony will be able to dictate exactly when games go on sale? They'll be able to dictate exactly what their first party catalogue is worth. You we've seen with Nintendo, Nintendo don't do sales, they barely do sales on physical products. Are we gonna see that kind of thing again where we don't see these big discounts on first party games because they don't have to compete with anyone, really?
SPEAKER_01This goes right the way back to the the deal was always, and I I think I've said this before on podcast, but the deal was always, oh, we won't have to distribute, we don't have to manufacture, you're gonna have to send it. Country it's gonna allow us to bring the price down. We haven't seen that. Like games, the price of games.
SPEAKER_02Nintendo kind of have with their kind of cheap one between physical and yeah, we could see we could see Sony go down the same route that Nintendo have gone down with I think Nintendo has spoken very recently as well about the dynamic price, not in terms of going up on down, but that them setting prices quite dynamically for based on the games, is a tactic they're going to use a lot going forward. And we've seen it with Star Fox, we've seen it with the new Splatoon. So maybe there is an opportunity here where by having all of that control, Sony throw players a a bone once in a while, but I to argue with myself, I can't see that happening because I feel like Sony sell most of their games as very premium expensive experiences in a way that Nintendo has showing themselves to not do.
SPEAKER_01PlayStation do what Nintendo is to quote an old bring that back to quote the old Sega Yeah, no, I I think there's a there's a we're at risk of jumping around a lot here because I think there's also an argument as I've jumped around again of like you know, when I was a kid trading things in so I could buy, you know, both trading with friends so we could, you know, between us play two games, or trading things in so I can get the latest, greatest game. Those things are kind of being removed from people's tool set to get in and play more games, which is sad, but at the same time that's a that's a an affordability problem. Yeah, but at the same time, are the young is it the younger audience that's making the switch the switch to digital even more interactively? Sean Connery coming out then.
SPEAKER_02Yeah, yeah, yeah. Uh he was a massive PlayStation fan. Yeah, he he famously was a big collector, I believe, of PS4.
SPEAKER_01Yeah.
SPEAKER_02That's a good point though, that is a good point. And that but that to me it comes back to the point that clearly this is a consumer-driven trend. Like I know we we've spoken before about you used to be very you had a big physical collection, now you tend to be quite digital. Yeah, I don't have a disk drive and I rarely, if ever, buy physical things from a switch. Yeah, it is it it's sadly a reality of where things are going. I I do want to touch on before we move on to Xbox, not that we need to do that quickly, but I think and I think this is something that you'll speak on, and it might have been what you were hinting at about before. The fact that this announcement came alongside the news in the same day, maybe even the same hour that PS3 and Vita shops at storefronts, even are both closing down.
SPEAKER_00Yeah, by mid-next year.
SPEAKER_02Yeah, and obviously, we we do what we do for a job. The PR metric, the PR like overview of saying, hey, we're not making physical discs anymore. Also, by the way, we're shutting those stores down soon, so you won't be able to access them. And and by the way, this will definitely happen with the PS5 in the future. It will when we when it's not useful for us anymore. It it feels like why did you have to announce those at the same time? Or was it a case of getting all the really bad news out there? But I feel like the reaction would have been better if they hadn't given a very good example of why physical media is so important immediately after saying, hey, we ain't doing physical media anymore.
SPEAKER_01I mean, and I I I think a lot of people have made this point. I mean, ultimately those day one decision, those the the the updates you get day one for discs you bought often render what you're getting on the disc irrelevant anyway. So even having that day one disc, I mean, what was it the Medal of Honor Warfighter? I think the discs that arrived, and Ninja Gaiden back on the Xbox the first one, or Classic Three, one of them. Both of them were unfinishable, one of them was unplayable without day one patch, or without early patches. So ultimately closing down the store, if that's taking off final the updates and everything that comes with it, is essentially the same whether you've got a physical disc or digital version. So there's a question there as to like the deal was made the moment we agreed to DLC was okay, that you could ship something that had some that had a bug or was feature incomplete. That was always gonna make it impossible the moment you close the server. But yes, PR-wise, it's not a great screaming own. I mean, it probably isn't a screaming own goal. They probably did the calculations like much like everything else, much like as we're about to discuss in a minute, Xbox pulling the band-aid off and telling people all the things that are gonna happen at once. It feels makes more sense than doing it over time.
SPEAKER_02This is quite like a a UK-centric point to make, but I think you'll understand what I mean by this. It feels like there's a big thing with the UK Parliament where before they break for the summer, they push through a load of unpopular bills or new laws. Because under the logic of, hey, let's just get it all done now, we can go away, and people will forget about it by the time we come back. And I know this this isn't the exact same thing, but it does feel quite like let's just shove all the bad news out. We'll we won't tweet for a bit. Everyone can get angry, everyone can, you know, all the journalists can write their articles, everyone on Reddit can talk about how despite they they haven't bought a disc for the PS5 in four years, they're really angry about this, and then we'll come back in a few weeks and just be like, so what did we miss? We're we're all we're all happy again now.
SPEAKER_01Especially before the the the the the Independence Day long holiday that every took, obviously, like they put it out just before did they put it out on the third? Did it go out the day of?
SPEAKER_02It was either the fourth it was either the third or the second.
SPEAKER_01Yeah, I can't remember which it was, and it does kind of make a difference. Uh yeah, I mean, and that's across the board. I mean, there's a great episode, one of my old favourite shows, The West Wing, where CJ, the press secretary, is like they I think he's called put it out with a trash day or bin, yeah, it must be trash. They're not gonna call it bin day, talking to being really cryptic. But it's like uh and the the crux of it, yeah, yeah, they're all stories, didn't they? We put it all in, we just kind of like bundle everything together and chuck it out, and then hopefully nobody notices. And sometimes people do it. But we've noticed, I think a lot of people have noticed.
SPEAKER_02It was hard not to, I think. But I I think we'll we'll we'll wrap here to move on to Xbox. I think maybe just a rhetorical question for you, for anyone listening.
SPEAKER_01You no, I do have one other because go for it, go for it. I I had the joy of putting together one of the newsletters while you were out recently. And off the back of this, there was also a video game history foundation that reached the video.
SPEAKER_02Well, maybe don't talk about that just yet. Maybe don't talk about that just yet, because you might come back to that later. Okay. I will be quiet. We'll be quiet. We'll we'll wrap there with Alex. Uh Alex clearly hasn't read all of today's plan because there's a there's a certain story that might be puffing off at the end of the episode. Fair enough.
SPEAKER_01Perfect.
SPEAKER_02Well I'll let you I'll let you conclude your thought then. Yeah, I I think I mean mine was a rhetorical question. We're about to speak about Xbox. We've already seen Nintendo go for the Game Key cards as a potential solution to this. Obviously, there's benefits that you can resell those, which now feels like a amazing in comparison to what this could look like. I think, yeah, my my question for the for anyone listening is, you know, who do we think will be next? And I think we'll come on to Xbox in a moment, and I imagine this is probably something that came out and was celebrated, I imagine, within Xbox. Because I think, as you've alluded to earlier in this conversation, Alex, I imagine Xbox were there thinking we've kind of been quietly doing that. You know, we've been I still find it funny that Indiana Jones on Switch 2 is the only version to be complete in physical form. All the others are are just codes in a box, I believe. Uh so yeah, I think we'll Xbox do this quite soon, I I imagine. So but we'll we'll move on to speaking about Xbox now.
SPEAKER_01And and as we do, and referring back to the bin day, this news it came out on Monday. Xbox, yes. Yeah, I think they were very keen to tackle this just after I sent a newsletter, as I recall, which is like, Mr. Biggie. Thanks, thanks a lot. Asher Sharmer, thanks. You could have waited. Because we're the ones that have been impacted. Yeah. I will say it definitely indicated that they were aware of how big this would be and were prepared to take it off. They they I think it's gonna fall, yeah. I think it's gonna fall throughout. They're very aware of what they're doing and they want to attack.
SPEAKER_02Yeah, I mean 100%. Let's let's look at what they they're doing because it this is this is big. Xbox is cutting 3,200 roles um throughout its studios, its publishing path, all these things by the end of the next financial year. 1,600 of those will be laid off immediately or in the very near foreseeable future. On top of that, Xbox is also divesting from studios it's acquired on this big long acquisition spree that we've seen in the past five or six years. We'll talk about that, but we're looking at compulsion games and double fine productions, both being cut loose. They're going to become independent again. They've got their IP in the catalogues there, which I think is a really good gesture. Hellblade Developer Ninja Theory and State of Decay Developer Undead Labs have both entered terms to have new ownership and funding to complete Senua and State of Decay 3. Don't have the details on who those new owners are, but those four studios that we're seeing leave the Xbox gaming umbrella. And then one last point before we open up and have this conversation is and one that really you know doesn't necessarily upset me, but I I do find this one really sad is a lot of roles as part of these layoffs are going to be lost at id software. I I think if you're if you're in the industry and and and you've been Been around for even a little bit of time, we're all aware of how not just important id software are now, but how foundational they have been to to getting the industry to where it is now. And so that's a a really sad one. And a lot of those departures are reportedly in QA and in the the tech side of things as well. So I I know we were speaking about this, Alex. It's a question of what will happen to the the engine, which is you know, it's it's it's a great engine, it's what Doom's built on. But that's the the overview, Alex. Please.
SPEAKER_01Yeah, I mean they've been I mean, I for it, they've been kind of I think we were looking the other day, they were found in like 91, pioneered the first person shooter genre with Wolfenstein and then Doom and like continue to make incredible engines from the Rage engine up to I don't know it's called the Doom engine, but whatever they're running on now, and then the Quake engine, like they have done incredible things and think that that tech is going, and you know that it is the Doom franchise remains one of the pillars that Xbox say they're gonna continue to lean on. But yeah, what does that look like when it loses that freshness? Because every time you know you'd have had this kind of habit of reinventing themselves with entirely new engines to make incredible games. If that's gonna go, then are they just gonna become another not another Call of Duty studio, that's not quite what I'm saying? Another support studio. No, more are they just gonna be on a treadmill of to churning out content, get content games. I don't know what that means.
SPEAKER_02But then yeah, gangers content rather than innovate. We've got there's so much it to talk about, so I don't just want to say talk about id. But no, I I think id is the the biggest one to me because you know we can look at south, you know, compulsion games, South of Midnight, critically did well, commercially did poorly, double fine, you know, Psychonauts 2. They've released a couple of games since then, but Psychonauts 2 was really their the last big success they've had. So again, they've had commercial struggles. You know, Hellblade, I think the follow-up huge kind of indie darlings kill and kind of blew up when they announced.
SPEAKER_01Yeah, but just on the commercial side, they don't sell or they don't get downloaded, I suppose, because they're part of Game Pass.
SPEAKER_02So I I kind of, you know, and then if we look at Ninja Theory, Hellblade, the follow-up to that I think really struggled commercially despite launching on all platforms. State of Decay 3, I believe that was announced in 2020 and they had to re-announce it this year. Yeah, yeah, yeah. I think that's right. So I look at those four studios, and I think, not to be cold, but it makes sense that this is Microsoft looking and Xbox looking and thinking, if we're focusing on our core franchises, we don't have a place for this big list of studios that will put all the games on Game Pass, and we'll have this big network of teams that make small games and big games. So they all make sense to me in terms of yeah, let's we need to get rid of these studios, let's push them back out. They can go on their own way, they can find their own path, but it's just not with Xbox. But that's why the id stuff really confuses me because surely everything that they're doing is for the it is commercially working. I believe this week they've just launched a DLC for Doom, the Dark Ages, so they're still actively working on stuff. As you said, in a the Doom franchise, which is reportedly one of the big pillars that they're going to base the business around. So it that's the one that I just can't really wrap my head around.
SPEAKER_01We also don't know the scale of it. And you know, there's two sides of it. One, we don't know if that's their entire engineering team or if they're cutting it back to something leaner for some reason. But yeah, I mean it if they're losing.
SPEAKER_00I understand losing QA because they can probably internalize that and put it into another studio and like have an Xbox QA, and that's just gonna be what that is.
SPEAKER_02Yeah, that just feels like a consequence of because we I think we saw a lot with Activision when that that came into Xbox and it was like, right, as you've said, there's a lot of roles here which we don't they're not specialized. They can Xbox will have teams that do QA, so their studios don't need those teams.
SPEAKER_01Exactly. Although all of this kind of falls under the Bezda umbrella, still they're gonna need QA if they want to get Skyrim or Elder Scrolls 6 out, right? They're gonna need QA.
SPEAKER_02This year, apparently, that's what the uh this financial. No Elder Scrolls fans seem convinced that it's coming out next year. I was gonna say put it out the same.
SPEAKER_01Let's put it out, I don't know, maybe say November 18th, maybe Yeah.
SPEAKER_02Sorry, was it so Starfield came out three years ago, but we've definitely scaled up and built the whole game by then. I mean something something that from so a lot of this has come out of a memo that was shared internally at Xbox and then they published on Xbox Wire. And I think what really stands out to me is something that Asha Sharmer, who's the new Xbox CEO. Is she new new now though? It's been three or four months, so I I don't know when that label wears off.
SPEAKER_01I'd still call it my new job if I was there three or four months.
SPEAKER_02True. But according to her, the margins that Xbox are running on are and this is a wide data point, but uh three to ten times lower than their competitors, and they they cited Game Pass and multi-platform releases as both things that did not achieve the growth they expected. Something that's not in here, actually, which I I saw this morning was that Xbox and Microsoft had forecasted 70 million subscribers to Game Pass by 2026, and they're at 30. So clearly that bet failed.
SPEAKER_01Yeah, it it it's it's a sad thing. So I remember when they announced Game Pass and I was like, yeah, if somebody was stepping into gaming now and didn't know what to buy, I'd probably recommend they just pick up an Xbox and Game Pass. Yeah. And that's somewhere along the way.
SPEAKER_02It's a great deal. I think it's just an amazing deal. I I don't want to be here being like, I I said this would happen. I'm fairly sure though, if you go back into our correctly, it's an amazing deal.
SPEAKER_01It's an amazing deal while it's at 20 while it's at a lower price point when it went up before they were spent. It's amazing. Not a great deal.
SPEAKER_02But I I'm fairly sure, and I'm gonna go check afterwards for the receipts, but I reckon in our in our company Slack, in our BGM Slack that we have, there's stuff from me in like 2022 disparaging Game Pass and saying there's no way this is sustainable. I don't understand how Microsoft's make any money from this. And lo and behold, You were right. I could have told you this three years ago, four years ago. But Tom Tom Stradamus. Well, I I I don't want to be correct, but I just think it's to me it I think it's one of the things you've said, Alex, and and it's true, is that I don't think Xbox is doing this for the sake of it. I think they're clearly in a lot of trouble and cutting so many roles seems drastic, but if in a year's time they're in a a much better position where I'd hope they don't have to do this again, then I imagine everyone who's still working at those studios will be a lot happier. It's just not the the news that you want to see.
SPEAKER_01Absolutely. It it's awful for partly for the people that are let go, it's obviously awful. But for people who are there for the rest of the year, it's awful because they know more cuts are coming. Like those are the two sides of this. However, companies can't operate at a loss and cut and owned companies, traded companies can't operate on a on a low, low profit margin. I what I will say is that in and I I alluded to this before, like they they came out, they weren't hiding from how negative this was. They've been very upfront with what they're doing and what has to happen. They have tried to build off ramps for the studios, they could build off ramps for big big credit. Yeah, as well as much as you can when you're letting go of a huge percentage of your work. I can't I know it's because Microsoft as a whole is doing it, and then the Xbox ones is an even larger percentage, and I can't remember both numbers. Do you but it's a huge but considering what they're doing, this is not I'm not gonna say the best, but a really good way to have handled it.
SPEAKER_02It's a really good way of having what what I'd ask is do these cuts and especially the way to me the studio divestments in particular, this feels like a bit of a a damning of like judgment of and I'm not just calling out one person here, but Phil Spencer let you know and with a team of people, I'm sure, but the fact is I think these cuts and how how strong they are and the amount of studios that they're pushing back out, to me it kind of says, well, were was this really aggressive acquisition policy flawed? Because I don't see what Xbox has really gained out of it at the moment, and you could because you look at most of these studios that they're pushing back out, and they've acquired all of these studios within the last couple of years. So was that an entire a bit of a waste of time then? Because I don't really know what they've gained out of it, and it's just led to these really drastic cuts. And I think it's great that these studios have off-ramps again to take off and become independent, some are moving under new ownership, but they're probably in a much more unstable position than they were before they got acquired.
SPEAKER_01I just had a quick Google because I think this is important to the conversation here, because you know, Phil Spencer made that gamble, or at least an outside gamble, when it started back in 2017. And I think that's worth bearing in mind. This is nearly nine years of trying to make Game Pass work. Now, there's an argument here where right at that point, Fortnite came out a few months later. Suddenly, everybody shifts to playing one or two games all the time, and the value of something like Game Pass, which like kind of launched with an old school paradigm of people are gonna jump between a lot of games, and you know, maybe they play a lot of Call of Duty, but you know, they also have other things, with the exception of Father and Cod players. I don't think to be dismissive of that, but you know, there are different breeds in this. But then I think there are a lot of people in the. But I think you can play games. Absolutely. There's people who actually play them, unlike me, who just buys them and never plays them. It's it's not a great deal. Um you don't even have the boxes now either.
SPEAKER_02You don't you can't even display them. You're just you're just buying data on a console.
SPEAKER_01Wow, look at the look how good the logo looks on the home screen. But yeah, it feels like a gamble made at exactly the wrong time because there was a paradigm shift, partly due to COVID, like changing the way people play games, but also with a lot of these live service games really stepping up and becoming predominant, like the predominant way a lot of especially younger players play games.
SPEAKER_02I'm not I'm not gonna sit here and pretend like you're saying that if Fortnite hadn't come out, Xbox would rule the world.
SPEAKER_01I'm saying Fortnite is perhaps the embodiment of the point I'm making, which is the way people play games changed right in the window they were making this gamble.
SPEAKER_02And yes, yeah, like live service had been a thing for a while to that point, but not too I don't think anyone had m monetized it, perhaps. Not as effective.
SPEAKER_01No, they certainly aspectedly as the Epic Rip. And you know, you look at what Ashishama's bringing directly under her, I believe one of the things is uh Candy Crush and King is coming under yeah, and that's why they bought Activision because it had that live service and it had the card that is kind of their solution to Fortnite. I'm talking very broadly. If this is taken out of context, I'm gonna sound like a weapon maniac.
SPEAKER_02You just wait to see what clips I clip you out and really screw you over. Yeah, basically, if Fortnite hadn't come out, then we'd all we'd all be on by Xbox.
SPEAKER_01Yeah, yeah. But I I I just think like it was a really bold decision that I think at the time probably in the lead up to when it was being decided, probably made a lot of sense. And then the instant it was decided, stop making as much as I think.
SPEAKER_02And then they doubled down buying studios.
SPEAKER_01This is my that's the issue I yeah, so there's there's a part to that, absolutely. But I that's where the Activision Blizzard kind of decision came in. So it's I'm still really energized by the concept of the Netflix of games, as it was always called.
SPEAKER_02I just think that it yeah, it's got a feeling it does. And and you'd like to think no one can possibly uh make uh the same mistake again because uh you know I'd if if that if this if these things that have been reported that 70 million was the target by 2026 in terms of subscriber base, if that's true, that feels very like corporate well, we just keep things just keep growing. Think more people are born, more people play games, more people subscribe to Game Pass, and we're fine, and eventually it'll be a hundred million, and then it'll be a hundred and fifty million. And instead, that's I mean, if anything, they peaked, I believe, last year, and then once the price increase which you spoke about came in, they dropped from about 35 million down to 30. So they were halfway there last year, and if they'd had a really good year, they maybe could have got up to 70, but they are not.
SPEAKER_01I'm not gonna you know, I'm not gonna blame the cost well, I am gonna blame the cost of the prices, that's exactly what I'm gonna have to do. But you see however much coming out of your account each month, and that's massively off-putting at the moment for a lot of people. The flip side of that would be or not the flip side, but rather when they put that price up even more, the momentum of like, well, I just have game pass, it's like, well, now I just have game pass and it's a lot of money. Going back into making that subscription when you maybe you've come to the realization that a lot of the games you play aren't on it, or yeah, you're not gonna get those five million back as easily as as you'd hope. It's not a foregone conclusion.
SPEAKER_02Yeah. I think that I think we'll we'll end it there. It yeah, i it it it's it's interesting because I know we've spoken quite positively about Xbox's communications in the past few months, and I think today, even we've both given them credit for the way they've gone about this, they've not tried to backdoor it, they've been very upfront. I will give a lot of praise for divesting in these studios rather than just shutting them down or laying, you know, there's so much talent in these studios. My my biggest fear was that it was going to be another case of cut loads of staff, make them support studios, and we've seen that far too much, and that's something which does upset me is when when the great studios just end up being credits in a game because they they helped develop something, so I'm grateful for that.
SPEAKER_01Yeah, it does sound a little bit more like they were trying to protect the games. Yeah, if that makes sense. Obviously, the people the people in the studios as well, but it does feel a lot more like we wanna these are games we're excited about, but we're not gonna be the ones making them. We're excited to play them, so we're gonna help help these teams out.
SPEAKER_02Yeah. But anyway, shall we shall we maybe run through a a few a little quick a little quick Yeah, a few little quick stories of a a little rapid rundown of of some of the a few of the week's smaller stories that I think are interesting. Yes. The first of these is that the original lineup of Switch consoles, so the Nintendo Switch, the Nintendo Switch Lite and the Nintendo Switch OLED are being discontinued next year in Europe, only because there's a new EU law which mandates that all electronics must have replaceable batteries, and Nintendo have presumably thought there's no point manufacturing new consoles when this thing is and here's gonna here's gonna make Zol feel really old. Ten years old next year. So almost as old as old as Game Pass. Yeah. And one of them's well, Game Pass hasn't been discontinued yet. The Switch has had a a a successor of sorts. Well, maybe Game Pass 2 next year. Maybe Game Pass 2 Electric Boogaloo. I don't know, I they'll continue to manufacture them in other parts of the world, so they'll still be available. But I think 10 years is a is a hell of a run. I'm sure that Nintendo are happier that they're discontinuing a system after ten years in Europe rather than what felt like three for the Wii U. I don't even know if they made any more after the initial batch because I bought one and then looked around and there was no one else there to buy one. So I'm I I I think it's yeah, again, sad to see in a way. It feels like the the ending of a of a chapter for what has been a an amazing system.
SPEAKER_01I really don't think I I think people will probably start importing and stuff. Like I mean if they I mean there's so many out there on the secondhand market.
SPEAKER_02And that too. Unless Nintendo go digital only with the the Switch going forward, and and it's just uh it's a concept that you have to buy into on to find the cot to the concept of the switch. Yeah, you get it for a little bit and then we get it back. It's digital only.
SPEAKER_01Yeah, no, I I think it makes absolute sense. There there's there's rumors of a new Switch 2 coming that uh that meets these requirements of the removal battery as well.
SPEAKER_02Yeah, and obviously that that makes total sense because they can sell that thing for 10 years. I think we've seen the Switch sales decline a lot. I still hope it has what it takes to beat the PS2, and the fanboy in me is demanding that. Although I'm sure that Sony will uh find a few spreadsheets should they need to, with another 20,000 units sold for the PS2 to or they'll re-release it like uh like Avengers Endgame and Avatar have kept doing for the past five or six years to uh surpass each other. But the the other story, and I think this is what you were thinking you were you were gonna talk about before, Alex, and I think this is a very optimistic story. I guess it shows that there is some care for the physical you know history of video games too. The Video Game History Foundation has essentially called on the the the ESA to find a way for people to legally access digital only games for research to preserve these games from the perspective of someone who is a consumer but also you know a a historian in in other ways, not necessarily video games, totally makes sense. I just don't see the publishers and the people who own these games from allow allowing this to happen. And by the have you got any thoughts? Because I know you picked this out.
SPEAKER_01Yeah, I I thought it came at a really interesting moment. It was kind of like it shoehorned alongside we're scrapping digital and there's gonna be no physical.
SPEAKER_02It's like but we've got to find a way to look after them.
SPEAKER_01Yeah, like I don't even think I think it's not even just allow them to try is kind of all I kind of want off the back of this. Because obviously there's people that kind of block it for IP and you know, ownership reasons. I'm just like it's nothing nefarious, it but you know, if you these things are lost.
SPEAKER_02Well it's preservation, isn't it? And exactly the the reality is whether people like it or not, these I am a hundred percent sure that there is some people out there who have got all these games downloaded, locked away somewhere. They're just asking in this case, hey, we want to help you, we want to preserve this stuff, but we want to try and do it right. If you don't let us do it right, we're gonna do it anyway, to quote Barry from EastEnders.
SPEAKER_01Yeah, and it and there's nothing you can really do to stop that, which is I can't remember, but there's all sorts of things of this throughout history, but throughout history, it's okay selling it. But like when Alexander the Great was uh Yeah, was playing his Wii U.
unknownYeah.
SPEAKER_02There's two. It was kind of like he loved Zombie U famously.
SPEAKER_01Yeah. When the Okami Wii release came out, it had like an IGN Watermark because they lost the original art for that, and they'd pull it from there. Then you've got like I can't remember which Nintendo platform it was that was using a ROM that had been ripped from somewhere else because they couldn't buy the original. I think they've done that on Switch Online, yeah. And so I think I can't remember which Silent Hill it was, Konami, or maybe some some of the early ones, lost the original code to PC. So it's just not out there on PC, so you can only run ROMs and and like whatever. So having a body out there that it is at least kind of tasked with not being corporate and thinking about money and being like, oh, it's easier if we just ignore it. We've lost movies and all sorts of this over time. It's not it's not a unique issue to Yeah, we've lost games, haven't we? There'll be uh I think this makes to maintain it because it makes total sense.
SPEAKER_02And there's there's very to me, I I understand there's going to be legal hoops to jump through, but there there needs to be a body that exists in the same way that libraries do for books that, like you said, have got a game comes out. I don't care if it's the best game ever or if it you know if it's so bad it might it should never have been made. You've got to preserve these things.
SPEAKER_01You've got to keep getting opinions on either end of that scale.
SPEAKER_02But it it it it doesn't matter what the games are, they need to be looked after, don't they? 'Cause this is the you know, we love video games. This is culture. It's a sign of you know if a game comes out 15 years ago it's a sign of the era it comes out in it the the politics of the era the the social landscape the the global events that are happening and and those things shape games and it's really important to preserve that and and like I said before the the reality is if if companies don't want to work on legal ways to do this people are going to do it illegally anyway if I don't understand playing wrong can possibly really be that but and they should be proud of it like they should embrace it they should absolutely give like their blessing to it because ultimately it's a massive endorsement of you know what they created.
SPEAKER_01I'm sure there are reasons why that isn't a great idea for them in some way, shape or form legally with IP rights but that's how I feel that's how I feel too but then I have my own takes on jail breaks and and other such things as well so I'm all for this because I think it it makes total sense.
SPEAKER_02But yeah I think on that I guess a positive note we'll we'll wrap here. Yeah just a a a really big week I I'm really intrigued to see where Sony go next communication wise. I mean they have every ability just to completely ignore the backlash and I kind of think they will but it would be interesting if they do speak more on it. Maybe have a bit more of the transparency that we've we've seen with Xbox and a little bit more of the decision process behind it. Because I think we know why they're doing it and it makes sense they have far less need to though don't they?
SPEAKER_01I was thinking about this when we were because ultimately Xbox were impacting lives in terms of jobs and things and PlayStation just be like this is happening.
SPEAKER_02I'll I'll be honest though and this isn't me grandstanding on it because I don't you know no one has to care what I think or do but it's really put me off investing in whatever Sony do next. Like it really has because you know there's as an I've got enough games to play probably for the rest of my life at this point and I think you know is this something where I I kind of want to put myself to something and say yeah I'm not investing in this I already thought it was ridiculous that I had to buy a disk drive for the PS5 Pro. I think it's a nonsense that that was even a thing but the idea of just saying hey we're not making physical games anymore and I'm I've said this I'm like 90% digital on the PS5 so I know I'm part of the problem but I I think people deserve the right to choose how they engage with media and you know I I love Edge magazine. If you said to me right we're we're only doing the digital one now I'd be like well okay we'll cancel my subscription because I'm not I'm not there for that but yeah we're both hypocrites aren't we because look at us with our digital libraries being like well I'm outrageous that Sony would even follow the consumer trends and and commit to this but yeah I don't know it's we're just just two people sharing our thoughts aren't we? But if you've enjoyed listening to our thoughts be sure to if you're watching on YouTube be sure to give us a like leave your thoughts about this definitely comment um what you think about both of these stories happy to hear any opinions and and yeah be sure to subscribe if you're watching on YouTube if you're listening on your favorite podcast platforms also be sure to subscribe there. We make episodes every single week we've had a a few weeks in the the past three or four where we've had a few technical issues and we've been off site so we haven't been able to deliver episodes but you know we've we've pretty much been on this since last October and we've been very consistent at the develop next week that might happen again. It might or we might do a we might do a live episode from the beach hut yeah we'll see bring the microphone down and we'll we'll we'll talk about everything and everything we've seen at around a little thing like this like with Bruce hello what do you think about the news that Sonya can teeny tiny microphone. I've just this this outro is just going up completely all over the place where where when are we ending if well we'll end in a moment if you're also interested in reading the the weekly download we have the the weekly download newsletter that is available on LinkedIn. We also have the daily download newsletter but big news on that is that the we'll be moving that over to Substack and that will also be becoming a weekly newsletter. So you'll have three different ways to engage with the the biggest stories in the industry and and seeing our thoughts on them as people within the industry itself. But I think that's everything for today uh so Alex thank you as always for for joining for for sharing some great insights it's it's always a pleasure. It's always fun. Thanks for having me again Tom No you're very welcome I'll see you all next time. Goodbye