Xbox and PlayStation both have big problems and it’s hurting video games as a whole

2024 has been a bizarre year for video games so far. 2023 was where we felt the whiplash of one of the best years for video game releases, juxtapositioned with a historically brutal year for layoffs. We gave several games a 5/5, but the industry also lost thousands of talented game developers.

In the last five months, though, it feels like the train is beginning to come off the tracks. The consequences of bad management and business moves are finally coming home to roost. It’s not all been bad. When we look at what’s performed well this year, it’s just not the stuff we’d expect. The games breaking through – Palworld, Grey Zone Warfare, Arena Breakout Infinite, Manor Lords, Animal Well – are smaller titles finding an audience by simply being great or filling a niche.

Even the one hit so far this year from a major publisher, Sony’s Helldivers 2, is more akin to a B-game and not the sort of thing you’d think of when you think of a big AAA PlayStation video game. However, that game is embroiled in its own controversy (which I will get to in a bit).

Conversely, we’ve seen some high-profile games in the AAA bracket flounder. Most notably, Rocksteady’s Suicide Squad and Ubisoft’s Skull and Bones have struggled to find traction. On top of that, though, few others have stood out. Capcom had notable success with Dragon’s Dogma 2, even though that was not without launch issues. But EA, Ubisoft, Activision Blizzard, Square Enix, and other major publishers have not made any real notable splashes outside of live service seasons.

AAA games feel like they’re in a rough spot. That extends to the two major platform brands (besides Nintendo, who has been relatively quiet this year ahead of the Switch 2’s announcement). Xbox and PlayStation have stumbled in the early parts of this year. Both have long been the stabilizing force as the creators of the most mainstream consoles in the market. They’ve previously acted like navigators of the industry, pointing mainstream games in the direction they would go for the next years.

However, if you look around, it’s feeling like we are increasingly lost. Xbox is floundering to get a return from its expensive acquisitions and closed the very talented Arkane Austin and Tango Gameworks earlier this month. Meanwhile, PlayStation lacks the major AAA first-party games outside of smaller-scale releases like Rise of the Ronin and Stellar Blade while also being unequipped to navigate the new platform it’s trying to use as a stopgap.

So, what is going on? How did we get here? And is there a way out of this AAA malaise we are seemingly cursed to? 

Xbox has little to show for a decade of trying

I like Phil Spencer – well, as much as you can like a video game executive you’ve never met. I’ve spoken to devs who’ve worked directly with him, and I’ve only ever heard good things. I do believe the Xbox boss cares about games and wants to make good products. That said, that’s about the extent of the slack I’m going to cut.

Xbox has been in a state of cleaning up the failure of the Xbox One’s launch ever since Don Mattrick left and Spencer took over. For a good few years, it seemed like things were getting righted, too. Halo Infinite was coming, and Microsoft had made smart acquisitions of smaller but great developers – Double Fine, Obsidian, Ninja Theory, and more. Then the company did the unthinkable – it bought Bethesda. They’d have Fallout and the upcoming Starfield, Besthesda’s ‘dream game’.

Then, an even more unthinkable thing happened: Xbox somehow bought Activision Blizzard, a move I don’t think anyone even thought was possible. In the space of a few years, Microsoft, and by extension, Xbox, became the biggest player in all of video games.

As all these acquisitions went on, we waited. And waited. And waited. Then, we waited to see if Microsoft could buy Activision Blizzard. They could! And then we waited. We are still waiting. For all its buying studios to be able to become a first-party juggernaut, the brand still feels as lost as it ever did.

Its big exclusives still fail to make a killer impact with Hellblade 2, a game hyped for years, launching to mixed reaction just this week. Game Pass is a great deal, too, but it’s not clear if it’s making any money (for Xbox or developers). Xbox has been in a perpetual state of rebuilding. It’s been years. There’s only so long we can let them cook before we start to worry about all the food burning.

You can’t build a brand on promise alone

It’s been over 10 years, and the Xbox brand is still living in the shadow of the Xbox One’s initial launch. That is a failure of execution. Alongside critical disappointments that had long been touted as the saviors of the brand, like Halo Infinite, Redfall, and Starfield, are a slew of canceled projects underneath Spencer’s watch. Phantom Thread, Scalebound, Fable Legends, and, of course, whatever Arkane Austin and Tango Gameworks would have been working on next.

The closure of the last two studios, two brilliantly talented developers, feels particularly cruel to the artists who made some very well-regarded video games. Microsoft needs to establish itself, and games like Tango Gameworks’ Hi-Fi Rush were helping with that. Now, just a year later, that development team no longer exists.

It’s not a big secret why these studios were shut, either. Consolidation does that – especially when you’ve just paid $60 billion for a game publisher. Spencer can be smart, know games, and mean well, but in the end, closing successful studios to offset an enormous purchase is business at its most ruthless.

I suspect this decision came from even above him, and it might not be something he agreed with. Even with that being the case, though, Xbox has had a long time and an ungodly amount of money to deliver the goods – and it hasn’t. That is on Xbox leadership, no matter how you slice it.

Despite owning half the video game world, Xbox still hasn’t found lasting success. Even as wildly dumb as the console wars are, you can’t build a brand perpetually on just promises. Heck, even some of the green brand’s mightiest console warriors have jumped to blue. If I was them, though, I wouldn’t get comfortable. It’s simply from one frying pan and into another.  

PlayStation has its own problems

Those switching allegiances are quickly going to find themselves in an awkward position again before too long. While Xbox is stuck in a perpetual state of promise and potential, PlayStation feels like its established foundation, which has been solid since the PS4’s launch, is getting shaky.

While it’s easy to remember the acquisitions and closures of Xbox as they are bigger and fresher, PlayStation has been operating similarly compared to their size. Just this year, Sony closed the historic PlayStation London Studio (cruelly closed by leadership, despite celebrating that very same leadership just weeks before).

On the acquisition side, Sony appears to be in a very awkward position with Bungie too, which it bought in 2022. Destiny 2’s Lightfall reached all-time peak players, but that quickly turned sour, as the expansion was poorly received. Fast-forward and Sony is reportedly (via IGN) considering taking over the board after layoffs and dwindling player numbers hurt the studio (You can read my breakdown of the year of Lightfall if you’d like more context).

Things have looked better for the game recently with the well-received add-on Into the Light, but there is an unbelievable amount of pressure on the upcoming The Final Shape to perform well – especially considering Marathon, the studio’s next venture, is still slated for some time out.

Sony’s complications don’t stop there. Helldivers 2 has been one of the unmitigated success stories of the year. It has already sold 12 million copies. While many wouldn’t have had it pegged as the biggest Sony game for years before release – the smaller production has carved out a space for itself in the ultra-competitive live service market by having a hilarious experience paired with a very interesting, real-time evolving world. For months, it was a slam dunk for Sony – until they did something so very Sony.

Sony’s nearly bungled one of the best things it had going

PlayStation has always been reluctant to open its borders. The platform generally tries to keep everything within its ecosystem. It was a late holdout for crossplay, with Xbox, Nintendo, and PC getting the feature far quicker.

However, Sony has relented on this closed policy, both in Crossplay and in its new frontier – PC. For the past couple of years, Sony has ever so slowly been releasing some of its first-party hits on PC. We’ve now seen Horizon, God of War, and The Last of Us make that leap, with Ghosts of Tsushima out just this month.

However, Helldivers 2 did something different. Not only is it a successful live service game, a first for Sony, but it was also released day and date on PC. That went great, and it’s easy to argue that a big portion of the game’s success was due to that availability. But, again, Sony likes control. In a recent controversy, the game tried to retroactively add a connection to PSN. This has caused all sorts of issues, including account problems, but most importantly, the game is not on Steam now in over 100 countries (for a deeper explanation, read our breakdown of the situation.)

Sony misstepped on PC in an almost inevitable way. Sony values control of its ecosystems – and PC players deeply value the freedom of the platform. It was a showdown that was bound to happen as the publisher misjudged the leverage it had over its new audience.

What do PlayStation 5 owners have to look forward to?

While this issue has been somewhat resolved, it has put a big mark against Helldivers 2 and PlayStation’s moves onto PC and Steam.

That’s not all, though. PlayStation also feels a long way from a major PlayStation-like release. Marvel’s Spider-Man 2 will likely get DLC before too long, but past that, Wolverine is likely a long way off, alongside anything Naughty Dog or Santa Monica is working on. Death Stranding 2 and Marathon are set for next year, but it’s going to be a quiet six to twelve months for Sony while we wait.

Even if they feel like they’re not getting big marketing pushes, Xbox’s just released Hellblade 2 and Avowed is on the way this year. There are also rumors starting to rumble about Gears of War 6. That doesn’t even include releases coming from Activision Blizzard, like a new Call of Duty, Diablo 4: Vessel of Hatred, and World of Warcraft’s The War Within, all slated for later this year. If you own a PlayStation 5, though – what are you really hoping for here in the next 12 months?

The state of play (it’s bad)

If you were hoping, I’d tie this together with some hopeful end note – I don’t think it’s coming. These problems have been simmering for a while, but they were papered over last year due to the quality of games that came out.

I don’t think that’s going to happen this year – at least from the AAA side. Whilst we’ve had some electric releases, a combination of a pandemic hangover, the continued layoffs and studio closures, as well as the consolidation of the entire industry – I don’t even think we’ve started feeling the worst of these effects yet. This continued wound of mass layoffs is still bleeding, and it’s going to continue to hurt talented game developers the most.

By proxy, that is going to filter down to the players. I expect the continued reliance on already established live service games to become even more pronounced and the gaps between major publishers releasing massive AAA video games to become larger.

I don’t like to pin down too many predictions, but having done this for over a decade and knowing developers at these studios, I expect this to be our reality for several years. Microsoft will one day find that elusive smash hit. Sony will figure out what to do on PC. But right now, the two stable hands of the industry are wobbling, which isn’t a sign that inspires confidence as a player.

However, if there’s one takeaway from 2024, it’s that games find a way. We still have had a lot to play – but hits have come from unpredictable places. It’s been surprise hit after surprise hit, with successes coming from games not from major publishers.

If nothing else, this suggests that players will always find something new to play. Those games may just look a little different than the ultra-high-budget tentpoles we’re used to. There will be choppy waters ahead, but great developers will still put out great games, and as we’ve seen so far this year, players will embrace those games wholeheartedly. Hey – I did find that hopeful note to end on afterall.