Following this year’s Xbox layoffs affecting 3,200 employees, both a former Sony executive and a former Microsoft executive weighed in (it’s sad that this is almost becoming a tradition…).

So, what exactly is Xbox? Is it a platform or the largest independent publisher? Microsoft has certainly confused consumers with its constantly shifting strategy regarding first-party content, as well as its perplexing “This Is an Xbox” campaign. After taking over from Phil Spencer, Asha Sharma, the new CEO of Xbox, quickly scrapped the campaign and sought to return to the brand’s core values. However, even she acknowledged the fundamental tension between the roles of publisher and platform, which is by no means easy to resolve. Shawn Layden, who worked at Sony for more than thirty years in roles such as president and CEO of PlayStation America and later president of Sony Worldwide Studios, told Eurogamer that a successful platform doesn’t necessarily have to stifle other publishers.

“There are two roads. You can either be a competitive platform rival in the marketplace with PlayStation or the biggest game publisher in the world. Based on all their acquisitions, they’re either there or very close to it. But those two roads do not converge. They necessarily diverge because, to be a platform and a well-supported, well-accepted, well-selling one, you need exclusive content. Nintendo needs Mario and Zelda, and PlayStation needs Crash Bandicoot, Astro Bot, Kratos, and Horizon.

But if you’re going to be the biggest publisher in the world—which is not a bad ambition; I’m sure there’s gold in them there hills—you have to be available on every platform. Multi-platform is almost a prerequisite. As a first-party platform, our goal was not to be the biggest game publisher in the world. In fact, it was against our interests to muscle our partners out of the market. We weren’t there to steal. I wasn’t making games to steal market share from EA or Activision. My job was to make games that made the pie bigger. My opportunity was in growing it,” said Layden.

Jon Kimmich, a longtime gaming industry executive and consultant who helped shape Microsoft’s original Xbox-era portfolio, outlined a similar principle in a post on GamesBeat. He worked as a lead product designer at Microsoft Game Studios during the development and launch of the first Xbox. Thanks to him, Microsoft acquired Bungie’s Halo and FASA’s BattleTech franchises, among others. Kimmich left Microsoft in 2004 to become a producer and director of business development at Day 1 Studios. The company worked on titles such as MechAssault 2, the console versions of F.E.A.R., and Fracture. Since 2009, he has led Software Illuminati, where he provides consulting services to game developers, publishers, and tech companies. According to Kimmich, Microsoft cannot hope to simultaneously become the “Netflix of games” through Game Pass, create a PlayStation-like console platform, compete with Steam through the Xbox app, and become a major third-party publisher because these goals conflict with one another.

“Xbox must decide what it is. Is it a platform? A publisher? A subscription service? A hardware business? An entertainment ecosystem? It can be more than one thing, but not all things at once. It cannot behave as if all of those missions are equally true all the time. It cannot be the Netflix of games, a Sony-style console platform, a Steam competitor, a mobile cloud entrant, and a Disney-scale IP publisher all at once without deciding which of those actually pays for the others,” Kimmich claimed.

Neither Layden nor Kimmich is suggesting that Xbox should give up on game publishing, subscriptions, PCs, cloud-based services, or hardware entirely. The company needs to establish the right hierarchy, with a clear core business taking center stage and everything else supporting it rather than fragmenting it. For too long, Xbox has tried to position every new direction as a supplementary element. Exclusive titles are important—as long as they remain so. Consoles are important, but every device is an Xbox. Game Pass is the future, but so are selling premium games and multiplatform releases. Microsoft has never convincingly explained how these priorities can coexist without undermining one another.

Asha Sharma has inherited a division that desperately needs this answer. While closing studios and laying off thousands of employees may improve financial results in the short term, none of this addresses the fundamental question for players, developers, and partners: Why does Xbox even exist? Until Microsoft decides if Xbox is a platform built on hardware and exclusive content or a publisher whose games must be made available everywhere, the brand will continue to struggle with an identity crisis, which is costly in terms of financial resources and human talent.

Source: WCCFTech, Eurogamer, GamesBeat