Microsoft Says Xbox Has Been Losing The Console Wars Since 2001

As Microsoft dukes it out with the Federal Trade Commission (FTC) over its $69 billion acquisition of Activision Blizzard, the Xbox maker has admitted something everyone probably already knew by now: It’s lost the console wars.

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“Console wars” here refers to the perpetual tussles between manufacturers like Nintendo, Sony, and Microsoft to dominate the market and outsell their rivals in a given hardware generation. In a document submitted in a June 22 court hearing by Microsoft (and viewed by Kotaku), the company discussed how it’s been losing the console wars to Nintendo and Sony ever since it hit the scene in 2001 with the beefy original Xbox. It suggests that both the GameCube and PlayStation 2 outsold the first Xbox by a “significant margin.” And as Microsoft stated in the document, it’s been like that ever since—even now.

“Xbox has lost the console wars, and its rivals are positioned to continue to dominate, including by leveraging exclusive content,” Microsoft wrote. “Xbox’s console has consistently ranked third (of three) behind PlayStation and Nintendo in sales. In 2021, Xbox had a share of 16 percent while Nintendo and PlayStation had shares of [redacted] and [redacted], respectively. Likewise for console revenues and share of consoles currently in use by gamers (‘installed base’), Xbox trails with 21 percent while PlayStation and Nintendo have shares of [redacted] and [redacted], respectively.”

According to the hardware and software sales tracker VGChartz, Microsoft’s latest consoles, the Xbox Series X and Xbox Series S, have only sold 21 million units as of April 2023. Meanwhile, the PlayStation 5 and Nintendo Switch are neck-and-neck at approximately 36 million units each, though the handheld-console hybrid has a slight lead.

As a result, Microsoft said it’s essentially given up on competing in the current console wars, instead opting to focus on delivering software (that either hasn’t come out, or has flopped) to its playerbase. We’ve seen this pivot through most of what Xbox has been doing nowadays, such as its intense focus on fleshing out its Game Pass subscription service. Microsoft seems to be less interested in being number one in the market and more dedicated to becoming the industry’s first Netflix.

“Having lost the console wars, Xbox is betting on a different strategy than Sony [and Nintendo],” Microsoft wrote in the document. “Xbox generates profits through game sales, not console sales. That is because Xbox sells its consoles at a loss, effectively subsidizing gamers’ purchase of the hardware in hopes of making up the [lost] revenue through sales of games and accessories.”

Kotaku reached out to Microsoft for comment.

Read More: Is PlayStation Really Worried About Losing Call of Duty To Microsoft? Private Emails Say No

These admissions come just as Microsoft has also stated that it expects the next console generation to start in 2028. This would indicate that Call of Duty would still hit competing platforms if such a game were to be released if/when the company scoops up Activision Blizzard. That said, Sony isn’t too keen on the acquisition, with Sony PlayStation boss Jim Ryan admitting in the same hearing it wouldn’t share info on a hypothetical PlayStation 6 with Call of Duty’s devs should the acquisition be approved. Obviously, this could have all sorts of repercussions for Call of Duty fans on PlayStation.

 

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Nintendo’s Thinking About How Fans Will Move To Its New Console

Nintendo seems to be conceptualizing its long-awaited successor to the 2017-released Nintendo Switch, but it isn’t giving much details to what it might be, or when it might actually exist. The Legend of Zelda developer is, however, willing to say that whatever and whenever the new console releases, Nintendo Accounts—which give players access to online amenities like the eShop—will be important in creating a smooth transition to it.

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Read More: Nintendo Says Don’t Expect A New Switch This Year Either

Nintendo president Shuntaro Furukawa explained his intention for Nintendo Accounts during a recent shareholder Q&A, a translation of the event says.

“In the transition from Nintendo Switch to the next-generation console, we would like to make every effort to ensure that customers can make the transition smoothly while using their Nintendo Account,” Furukawa replied to a question wondering if seven years of the Nintendo Switch marks its end-of-life, like how the Super NES rose to replace the NES seven years after it came out.

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That said, though Furukawa would consider the Switch’s year seven as “uncharted territory,” and he accepts that the Switch won’t sell as easily as it has in the past, he still praises its software.

“Never before in hardware has software sold at such a pace,” he said. “Like last year’s Pokémon Scarlet and Violet and this year’s The Legend of Zelda: Tears of the Kingdom, Nintendo Switch titles sold more than 10 million units in the first three days of their release.”

Those impressive sales numbers are clearly important to Nintendo. Though Furukawa was straightforward in that Nintendo Accounts would carry over to a new console, he was less willing to directly respond to a question asking for his thoughts on transferring “downloaded software purchases on Nintendo Switch [to play on] future game consoles.”

“Like you did when you switched from Wii U to Nintendo Switch,” the shareholder said.

“Our company is constantly considering various future hardware specifications, but I would like to refrain from making specific comments on future hardware at this time,” Furukawa replied. “Going forward, we would like to continue to propose unique ways to play games on dedicated game consoles that combine hardware and software, so please look forward to it.”

Read More: Zelda: Tears Of The Kingdom Is Nintendo’s First $70 Game

Nintendo is the latest developer to embrace the $70-per-game industry norm. It would be frustrating if players were unable to take their new games to a new console, though something like a Switch 2 or Switch Pro is very unlikely to materialize within the year, another 2023 shareholder Q&A suggests. 

But even though we’re apparently in it with the Switch for the very long haul, Furukawa’s answer is comically nonspecific. At least I’ll probably be able to keep my Nintendo Account profile picture.

 

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It’s Sony’s Fault We Have Console Exclusives, Says Microsoft

A Starfield astronaut stands on a rocky planet, with a PlayStation (left) and Xbox Series X (right) towering in front of them.

Image: Bethesda Game Studios / Microsoft / PlayStation / Kotaku

As the Federal Trade Commission (FTC) continues to drag Microsoft’s $69 billion acquisition of Activision Blizzard under a microscope, the company’s CEO wants you to know it’s actually Sony’s fault that console exclusives exist.

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Read More: Microsoft Explains Why You’re Waiting So Long For Those Xbox Exclusives

Microsoft CEO Satya Nadella gave testimony during the FTC vs. Microsoft hearing that’s been making headlines since June 22. As reported by The Verge, he was asked about exclusives and pointed fingers at the PlayStation maker.

“If it was up to me I would love to get rid of the entire exclusives on consoles, but that’s not for me to define especially as a low-share player in the console market,” Nadella said. “The dominant player there [Sony] has defined market competition using exclusives, so that’s the world we live in. I have no love for that world.”

These are some curious remarks. While console exclusives are nothing new and have been used for decades by every major console maker to lure people into ownership of a particular device, Microsoft in particular has been on a tear in recent years, scooping up developer after developer. Take Arkane Austin, the critically acclaimed studio that was building a PS5 version of its vampire shooter Redfall before the Xbox creator bought them up and turned it into a console exclusive. Similarly, MachineGames’ Indiana Jones game was being developed for multiple platforms before Microsoft pulled the plug on that. Bethesda Game Studios’ Elder Scrolls VI and Starfield are also Xbox exclusives, now that Microsoft owns the developer. However, it’s Call of Duty’s standing as an exclusive that stands at the center of Sony’s objections to the proposed acquisition.

Kotaku reached out to Microsoft and Sony for comment.

Read More: Sony Might Have To Reveal What It Pays For Exclusives, Court Says

The hearing concludes today, with closing arguments expected this afternoon. A July 18 deadline for Microsoft to close the deal looms ever nearer, with the company potentially on the hook for a $3 billion breakup fee if that doesn’t happen.

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Nintendo Switch Console Helped FBI Locate Kidnapped Child

The FBI used a Nintendo Switch console to locate an abducted 15-year-old girl, who had been missing for 11 days back in August 2022, Forbes reports.

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In a horrendous case involving kidnap and sexual exploitation, a teenage girl was found and rescued only after she logged online with her Nintendo Switch.

The unidentified Virginian teenager is a homebody, said family and friends, and unlikely to run away. However, she met a stranger—then 28-year-old Ethan Roberts—on the online chatting platform Omegle in January 2022, when she was just 14 years old. The two talked for a few days, then moved their conversation to Discord and Snapchat. Roberts sent nudes of himself to the girl and requested explicit images of her as well, to which she complied. Later, Roberts traveled 2,000 miles from his apartment in Tolleson, Arizona to the young girl’s hometown. Their encounter culminated in Roberts kidnapping the girl and bringing her back to Arizona. Roberts coerced the teen, “insisting” she meet strangers on Omegle to sell them nudes via Snapchat between August 3, 2022 and August 14, 2022, according to court documents viewed by Kotaku.

When the girl went missing on August 3, folks in Virginia put up fliers to locate her. Keitra Coleman, a volunteer with the local nonprofit Hear Their Voices (which helps find missing and exploited children, domestic violence victims, and people experiencing homelessness), told ABC15 they were on the case.

“We immediately reached out to her family and spoke with her grandmother and her stepdad, and that next day, we were out there ‘boots on the ground.’” Coleman said. “She went through a lot in those few days [and] reminded me so much of my daughter.”

Unfortunately, no one was able to pinpoint her location—until the girl booted up her Nintendo Switch to watch YouTube videos and download a game. A friend saw that she was online and informed the authorities. With Nintendo’s cooperation, the FBI culled the Switch’s IP address, uncovered her location, and moved in to arrest Roberts. Retired Arizona DPS Director Frank Milstead, who was not involved with the case, told ABC15 that police agencies often use digital device tracking info to apprehend suspected criminals and find missing people.

“It’s probably nothing anybody even had thought of at this point,” Milstead said. “The fact that somebody else down the road—another child—was bright enough to go, ‘Hey, look, my friend is online, and she’s been missing, and I need to tell somebody.’ Everything’s connected to Wi-Fi [and] LTE (long-term evolution devices). A cell phone, an iPad, a watch, whatever it is—you can use those things to locate people. The bad guys need to know that the police are watching and that you’re leaving a digital footprint everywhere you go. We will find you.”

In an email to Kotaku, an FBI representative said this case is proof that no one can escape the agency’s wide reach and expansive resources.

“Thanks to the local police department’s quick response and FBI Norfolk’s ingenuity, we were able to locate the missing victim through her gaming account and reunite her with her family,” the FBI representative said, linking to a press release on the incident. “As the world evolves, so does the FBI and how we solve cases. This is just one example of that. And while criminals might think crossing state lines will help them get away, this case also serves as a reminder that because of the FBI’s wide reach and partnership with local law enforcement—these predators will be caught, and they will pay the consequences.”

Kotaku reached out to Nintendo for comment.

Roberts was indicted on four counts, including online enticement of a minor, transportation of a minor, and receipt of child pornography. He made a plea deal and has been sentenced to 30 years in federal prison this past April.

Update 07/17/23 2:25 p.m. ET: Added comment from FBI.

 

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Nintendo’s Console After Switch May Release In 2024

Nintendo is reportedly planning to release its much desired follow-up to the Nintendo Switch in the second half of 2024. Sources aware of the Zelda publisher’s next-gen console reportedly told VGC that it would be portable, like the Switch, but most details are still snugly under wraps.

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Nintendo itself has been exceedingly coy about the future of its hardware, often bowing out of specifics when asked. Earlier this summer, for example, when investors asked if the Switch, which came out in 2017, was approaching its end-of-life, president Shuntaro Furukawa focused on the longevity of its software instead of suggesting it would ever be replaced by a different console.

“Never before in hardware has software sold at such a pace,” he said. “Like last year’s Pokémon Scarlet and Violet and this year’s The Legend of Zelda: Tears of the Kingdom; Nintendo Switch titles sold more than 10 million units in the first three days of their release.”

Despite selling over 125 million, the Switch install base has slowed its growth over the last 12 months. The hardware has also struggled to keep up with some big new releases like Xenoblade Chronicles 3 and Pokémon Scarlet and Violet, though 2023’s The Legend of Zelda: Tears of the Kingdom showed the current Switch can still deliver a GOTY-worthy blockbuster with beautiful visuals and good performance.

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Could the Switch Pro come out in 2024?

VGC’s suggested release window lines up with a Nikkei report from earlier this year pointing to a similar timeline based on Nintendo’s current negotiations with part suppliers. And Nintendo previously said during a May earnings call that the company wasn’t planning any significant new hardware refreshes before the end of its 2023 fiscal year in April 2024.

Despite how guarded the company is, sources tell VGC that Nintendo is working on a console that might have “an LCD screen, instead of the more premium OLED, in order to bring down costs,” and that “will also accept physical games via a cartridge slot,” VGC writes. Sources did not clarify whether the potential new console would be backwards compatible with Switch titles, a massive boon to everyone who has invested hundreds of dollars into their current Switch game libraries. Nintendo did not immediately respond to Kotaku’s requests for comment.

Based on the details given, this round of next-gen Nintendo rumors seems pretty different from what fans have been anticipating up until now. In 2021, Bloomberg reported that Nintendo already created 4K Switch Pro development kits (Nintendo publicly declared these “[false] claims”) and passed them out to certain developers, which certainly makes the prospect of buying a hardware refresh with a worse LCD screen annoying.

Read More: Report: Games In The Works For 4K Nintendo Console That Doesn’t Officially Exist

Whatever Nintendo is working on, you probably won’t get it this year. Sorry about that.

 

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Atari’s New Replica 2600 Console Can Play Classic Cartridges

Today, in the Year of our Lord 2023, you can pre-order an Atari 2600 replica that Atari calls the Atari 2600+. Slightly smaller than Atari’s original 1977 console, and using modern connections like HDMI and USB-C, the Atari 2600+ will accept many original and recently released cartridges. And yes, it sports the same faux wood panels and red-button/joystick combo of the original machine.

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The company currently named Atari—which after decades of mergers, buyouts, and shenanigans is a completely different corporate entity from the original—has sort of been in a messy situation in recent years. Its AMD-powered 2021 Atari VCS microconsole failed to achieve anything of note, and the company has been facing ongoing financial struggles. Its 2021 issuing of new 2600 cartridges was neat, though you would, of course, still need to have an actual Atari 2600 lying around in working order. That might be a bit easier now, as starting in November, you’ll be able to plug one of those carts (or some actual vintage ones for the original Atari 2600 or Atari 7800 consoles) into the Atari 2600+ for $130.

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Atari has released a PDF documenting the 2600+’s compatibility with classic cartridges; it looks fairly compatible, though we counted three “fails” and quite a few more games that were “untested.” The new 2600+ will ship with a “10-in-1 game cartridge” containing well-known classics like Adventure and Missile Command, among others. The company is also starting to sell brand-new cartridge games, starting with a a new platformer called Mr. Run and Jump and an “enhanced” edition of the classic maze shooter Berzerk, both of which will run on the classic 2600 console or the upcoming 2600+.

Purists may note that the 2600+ runs on a typical smart TV CPU, so the new device is clearly just using software emulation instead of more sophisticated (and expensive) field-programmable gate array (FPGA) technology that could potentially reproduce the 1970s machines to a more exacting degree. Software emulation runs the risk of introducing input lag, but then again, so do HDMI displays, which the 2600+ also requires. If you want more authenticity you’re probably already spending more for a MiSTer.

Read More: What if Pong, But Really Long?

So yeah, the Atari 2600 is back once again, plays those ancient carts you’ve got somewhere in the attic, and certainly looks the part. Shame it can’t play “Long” Pong though.

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Xbox Doubles Down On The Most Affordable ‘Nex-Gen’ Console

Ever since Baldur’s Gate 3 exploded in popularity after its August 3 release date, the fact that it’s not coming to Xbox Series X/S the same time as PS5 has reignited the controversy around Microsoft’s console strategy and its commitment to a policy that seems like it will become increasingly unworkable in the years ahead.

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Baldur’s Gate 3 supports local co-op splitscreen, and developer Larian Studios has been very public about its struggle to get that feature working on the less powerful Series S. Microsoft requires games to launch with the same modes on both Series X and S, and despite Baldur’s Gate 3’s popularity, no exceptions were made for the critically acclaimed Dungeons & Dragons RPG until now.

Larian director Swen Vincke said the studio had arrived at a solution after meeting with Phil Spencer, Microsoft Gaming’s CEO, at Gamescom this week. “Series S will not feature split-screen coop, but will also include cross-save progression between Steam and Xbox Series,” he tweeted, with the games now confirmed to arrive before the end of 2023.

Spencer was asked about the apparent Series S conflict in a Eurogamer interview earlier this week. “I don’t see a world where we drop S,” he said. “In terms of parity, I don’t think you’ve heard from us or Larian, that this was about parity. I think that’s more that the community is talking about it. There are features that ship on X today that do not ship on S, even from our own games, like ray-tracing that works on X, it’s not on S in certain games.”

It’s unclear if Spencer means that split-screen gameplay in Baldur’s Gate 3 isn’t a requirement on Series S. Kotaku reached out to both Microsoft and Larian Studios to clarify the situation. What is clear is that the company doesn’t plan to abandon Series S support for games in the near future. “We’re going to learn from this experience as well because we don’t love that [Baldur’s Gate 3 isn’t on Xbox yet],” Spencer told IGN in a separate interview. “But I don’t think it’s something that’s a fatal flaw in the system. It’s partners prioritizing their time, us listening and being a good partner to them.”

An elf ponders if the Series S will be able to play The Elder Scrolls 6.

Image: Larian Studios

The Series S has been raising questions from the very start. As Bloomberg’s Jason Schreier pointed out on August 24, even prior to its 2019 release there were concerns from game developers that the difference in performance could make realizing their full “next-gen” ambitions more difficult on Xbox. Anecdotal reports from Gamescom are that developers there have been privately sharing frustrations about the challenges presented by the Series S as well.

Spencer noted to IGN that games like Diablo IV work fine across both platforms, and reiterated that Microsoft wants to open up gaming to more people, and sees the Series S’s low price as a cornerstone of that strategy. At $300, the less powerful console is the same price as the Nintendo Switch and $100 cheaper than the disc-less PlayStation 5. Over the recent holiday period, it was briefly marked down even further to $250. And the option to subscribe to Game Pass means Series S owners can access a huge library of games, including new blockbusters like Starfield, without shelling out hundreds more.

The popularity of the Series S for players might also be what makes it that much harder for Microsoft to leave it behind. “I also wouldn’t expect and don’t think it makes sense for Microsoft to drop Xbox Series S support or have some titles only ship on Xbox Series X,” tweeted Niko analyst Daniel Ahmad. “The primary reason being that Series S makes up a significant part of the Xbox Series X|S install base and people did indeed buy it to play ‘next gen’ games.”

Don’t expect big price drops

As laudable as the goal of an affordable next-gen console is, we’re already nearing the three-year anniversary of the Series X/S, traditionally the halfway-point in a console’s lifecycle. If there are already rumblings of some games struggling to support certain features on Series S, it seems likely to get worse by 2024, especially for timed exclusives getting ported directly from the PS5. That would be the same year in the Xbox One’s lifecycle that Microsoft released the Xbox One X mid-generation refresh that aimed to offer 4K resolution and higher framerates. A similar new console has already been ruled out this time around, however.

Spencer told Bloomberg in June that he doesn’t feel an “imperative” to release a more powerful version of the Series X, and reiterated that at Gamescom. We’re focused right now on the increased storage Xbox Series S,” he told IGN. “But no, like I said, we’re kind of at the end of the beginning in my mind. So I think we need to let devs settle on this hardware and get the most out of it.”

Art shows off the new all-black Xbox Series S with expanded storage.

Image: Microsoft

Sony, meanwhile, appears set to launch a PS5 Slim within the next year. While it’s not clear if that console will have meaningfully different specs than the existing ones, it would still be a significant iteration on the hardware, especially if reports of a standalone attachable disc drive for the PS5 are also accurate. Microsoft hinted at the new console in a Federal Trade Commission court hearing in June, and footage of what’s believed to be the case at a manufacturing plant in China recently leaked as well.

Whatever new console or hardware refreshes arrive in the years ahead, Spencer warned players not to expect prices to significantly drop like they have in previous generations. “You’re not going to be able to start with a console that’s $500 thinking it’s gonna get to 200 bucks. That won’t happen,” he told Eurogamer. “It’s not the way it used to be where you could take a spec and then ride it out over 10 years and ride the price points down. It’s why you see console pricing relatively flat.”

In fact, prices have been going in the opposite direction. Microsoft raised the price of the Xbox Series X/S abroad, following in Sony’s footsteps from a year prior. Even the Nintendo Switch, released over six years ago, remains the same $300 today that it was then. The Mario maker has now sold over 125 million units. So far at least, Microsoft doesn’t seem on track to hit even half of that. It’s currently at 21 million according to a presentation slide that leaked earlier this summer, with hardware sales slowing down instead of speeding up.

Starfield could change that when it arrives on September 1. Director Todd Howard says he plays it almost exclusively on his Series S and it works just great on the cheaper console.

Update 8/24/2023 11:59 a.m. ET: Added new information about Series S version of Baldur’s Gate 3.

   

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The Best Retro Console Creators Are Making A Nintendo 64

A silhouette shows Analogue's new N64 compatible console.

Image: Analgoue

Analogue, maker of retro consoles for games from the SNES to the Game Boy, are back with their most ambitious project yet: a Nintendo 64-compatible machine called the Analogue 3D.

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The company hasn’t announced a price point or release date beyond “2024,” but with no official N64 Mini from Nintendo and the pitfalls of emulated N64 games ported to Switch Online, it could end up being Analogue’s biggest launch ever. That’s bad news for anyone who remembers the painful wait to try and get a pre-order for the Analogue Pocket, but great news for everyone with a collection of old N64 games who wants to be able to play them at the best quality possible.

The Analogue 3D promises to output video at 4K resolution and support a wireless controller made by 8BitDo via Bluetooth. Because Analogue’s devices are FPGA-based, the games are played at the hardware level, reducing the lag and output issues from emulated solutions most people are familiar with on PC, smartphones, and even Nintendo’s own products.

“Even Nintendo can’t get it right with ports, software emulation is about 90 percent compatible with tons of issues,” Analogue founder Christopher Taber wrote in an email. “This is where emulation takes a real cliff dive. Analogue 3D solves all of it.”

Because Analogue’s devices are only intended to play original cartridges, there’s no official support for copyrighted ROMs. That’s something the company has always been very emphatic about, even as fans have found ways to jailbreak the devices and eventually side-load games without using the original cartridges.

Instead, the Analogue 3D is, on paper at least, aimed at players with an existing library of N64 games who want to be able to experience them again in a more perfect format. Given the timelessness of the console’s multiplayer games, including Mario Kart 64, Super Smash Bros. 64, GoldenEye 007, and Wave Race 64, I’m sure there are plenty of retro connoisseurs out there who would jump at the chance to see their nostalgic couch-coop sessions looking good on 4K displays with no compromises on performance.

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