Xbox's approach to the console space is radically different than what has come before and what its competitors are currently doing. Between a reliance on a Netflix-like content distribution and engagement model in Game Pass and a democratization of access across cloud streaming, Microsoft is looking to the future. Yet, its strategy simultaneously has echoes of the past. In many respects, this philosophy is evocative of Nintendo's Blue Ocean concept.
The Blue Ocean approach is what launched the Nintendo Wii and DS into the stratosphere sales-wise. At a time when the creative, misunderstood GameCube was flagging, Nintendo's leadership pivoted its direction. The Wii and DS were designed to appeal foremost to a casual market. Motion and touch control, along with associated software, was emphasized to speak to Blue Ocean consumers, those who traditionally fell outside of the gaming demographic.
Nintendo's outside-the-box, intuitive design manifested in a pair of devices that spoke to core gamers in part but were targeted squarely at those on the periphery. From kids to the elderly, Nintendo offered an experience that was both accessible and engaging beyond traditional contexts. Atypical titles like Wii Sports and Brain Age fit into the non-gamer lifestyle, and the Wii Remote and DS Touch Screen facilitated these experiences naturally.
Of course, these machines still found success with core players. From Metroid Prime 3: Corruption to The Legend of Zelda: Phantom Hourglass, there was plenty of traditional software too. However, it was clearly secondary as Nintendo recognized its waning market position. The company needed to find new players, and they were found outside of the established audience. The GameCube's failings put Nintendo in a dire state, a problem which required an inventive solution.
In broad strokes, Microsoft's current situation is analogous to Nintendo's in the mid-2000s. While the Xbox One wasn't cause for an existential crisis materially – Microsoft money buoyed that sinking ship – it was an objective wakeup call. Xbox was effectively trounced by PlayStation critically, commercially and optically. The imperative lay at Microsoft's feet to reinvigorate the brand through clever recontextualization.
Like Nintendo, the Xbox solution lies in the creation of a dragnet that attracts those outside the established marketplace. Xbox Game Pass and cloud gaming are great for the core gamer, but they're revelatory for those beyond that demographic. Microsoft is leveraging its capital and infrastructure to lower the walls around console gaming to invite those who would otherwise be unable to play. Even long-running, storied franchises like Halo are being democratized. Xbox is moving toward being a platform with an entry fee as low as $15 a month.
This is a potent gambit in an environment where the number of casual players on mobile and PC dwarf the console space. As PlayStation continues to gobble up market and mind share of those who traditionally purchase consoles, Xbox is looking to those external players. This isn't happening through, say, a mobile Halo title. It's happening by bringing the full experience to these untapped spaces.
It's easy to envision a future in which these players become Xbox's bread and butter. By leveraging its unprecedented level of access, Xbox is effectively building its own Blue Ocean. While it isn't happening on a software development level, it's happening on a service level. Bringing Xbox Game Studios to the cloud accomplishes the same thing that creating the Wii Remote does. It offers an intuitive means of engaging with the content.
Whether this strategy pays dividends for Microsoft is yet to be seen. By shifting its focus, Nintendo identified a very lucrative market that wasn't being catered to. The casual, motion-controlled craze was sparked by identifying what didn't yet exist. On the parallel track, Microsoft could find an equally lucrative market, especially considering how the burgeoning subscription and streaming market is generating enthusiasm but lacking execution. Microsoft can provide that. In doing so, it may be able to carve out its own vibrant future.
The dangerous undercurrent, of course, is that the Blue Ocean dried up. A tenth of the Wii's install base followed Nintendo to Wii U. The very mobile market which Xbox is trying to capture is the one that absorbed Nintendo's player base. It wasn't until the Nintendo Switch that the company really found its way back into the industry's premiere leagues.
Microsoft will likely clear its first hurdle by building this install base in the cloud and through Game Pass. However, it's that second hurdle – the back edge – that will need attention next. Ultimately, the pace at which the industry evolves suggests that someone will eventually catch up to Microsoft and siphon off this hypothetical audience. The challenge will be retention. But, that's an issue for five to seven years from now. In the interim, it's up to Microsoft to fight for its place by engaging those who have been left out.