microsoft xbox case study

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Published on July 7th, 2023

What We Can Learn About Strategy from Xbox in the Gaming Industry

Even if you don’t play video games yourself, someone close to you probably does, considering the video game industry ($220 billion) generates far more revenue than the film industry ($100 billion). The lost years of the Covid pandemic drove growth, as did the many ways to play games these days—on consoles, PCs, mobile devices, streaming services, and online platforms.

Little wonder that Xbox’s owner, Microsoft, has been fighting in the courts, first in the US and now in the UK, to win final approval to acquire Activision Blizzard, publisher of Call of Duty and Candy Crush.

It’s a big purchase that amounts to $68.7 billion, but Microsoft is the world’s second most valuable company, surpassed only by Apple. Still, regulators don’t like the prospect of Microsoft buying Activision. If the acquisition goes ahead, it’s no stretch to imagine Xbox urging Activision to stop making its game available on consoles other than Xbox. Not on PlayStation. Not on PCs. Less stuff on streaming. A monopoly will protect its exclusive content and force everyone to buy another expensive console to play great games. This is the classic model of iPod+iTunes—tightly integrated inside a walled garden. Apple is a device+service company.

But that reading is wrong. And I think that’s why the US regulator has already approved Microsoft’s deal. It’s now up to the UK regulator to see if it recognizes the same logic.

Sony, owner of PlayStation, has already signed an agreement with Microsoft. Everything by Activision—from Call of Duty to Candy Crush, from Warcraft to Hearthstone—will be available on PlayStation for the next 10 years. We may think Microsoft is making a one-time concession to pacify regulators. But the reality is that Microsoft has been self-disrupting its traditional Xbox model for a decade.

Case in point: Xbox Game Pass already allows people to play over 400 games on PCs, cloud devices, on top of the Xbox console. Anyone can play Call of Duty these days by subscribing to Game Pass and streaming it through Xbox Cloud Gaming without downloading anything onto a PC or owning a console.

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What that means is that Microsoft has become the master of self-disruption. It stays one inch ahead of everyone. It sells Activision games at their usual price of $60~$70 each. But it’s also making them available from day one to Xbox Game Pass subscribers, which is what the company did with the previously acquired ZeniMax.

Now, let’s the math. Spending $180/year on Xbox Game Pass is the same as buying three games individually. But with Game Pass, you can play all the Xbox games on a PC, the classic console, and even a mobile phone.

The question to ask is—why would Microsoft do all this?

I didn’t understand it either. That is, until I came across an excellent presentation by Microsoft CEO Satya Nadella described in the equally excellent analysis by Stratechery .

The Xbox business is obviously part of the Microsoft stack. Microsoft sees foundational technologies that it will control and expands on them to deep tech services like cloud computing. Where services like Microsoft 365 and LinkedIn sit is also where Xbox Game Pass resides. What it doesn’t mention in this presentation is devices—there’s no content about tablets, laptops, or the Xbox console. That’s because they are important only as a reference design, not as drivers for volume sales. It’s similar to how Dior competes in Milan fashion shows featuring its haute couture look, but makes its money on ready-to-wear items in the mass affluent boutiques.

For Xbox, it has moved away from the concept of device+service toward technology+content everywhere, in the context of Microsoft’s own evolution as well. So what’s the lesson to be drawn for all of us?

It’s this: Don’t wait until your old business model dies before you invent a new one. The traditional playbook of exclusive games still works fine for Sony. And the Xbox console remains a viable business. But Xbox is constantly edging in with its new model—trying it, timing it, refining it. Why? Because you should have the capabilities already developed. You wouldn’t necessarily scale the model big, but make sure you’re ready so that when the day comes, when the environment flips, you know how to capitalize on it.

Thank you for reading!

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How Xbox Research accomplished worldwide virtual playtesting with Parsec

After successfully leveraging Parsec’s seamless gameplay experience to playtest Halo Infinite, Xbox Research used it to generate meaningful user research from the next Age of Empires release.

Talent is global. That’s the reality regardless of industry, but it’s especially true when it comes to game development. Studios no longer feel restricted to having resources centralized in a single, physical space. We now see games of all sizes delivered by talented teams distributed across the globe — and the reason for that is the cloud.

Last year, Unity announced a partnership with Microsoft Azure to bring our Create Solutions to the cloud and develop our cloud infrastructure to better meet the needs of this new global distribution. Part of that commitment has meant enhancing your game development experience and working together to make it easier to build and distribute your games on Windows and Xbox platforms.

As we work to fulfill this goal, we continue to witness a cloud revolution in game development. We’re seeing core on-prem applications like Version Control Systems (VCS) and workflows like CI/CD move to the cloud to supercharge DevOps agility. We’re experiencing a rapid proliferation of cloud-based 3D asset management, pulling assets out of on-prem content silos and making them available across teams, projects and organizations. Development teams can even use the cloud to collaborate with instantaneous, real-time visual feedback , no matter if they sit on different floors or different countries.

Fundamentally, studios embrace cloud game development to automate tasks, drive efficiency, and leverage the rich diversity of global talent to deliver higher-quality, more innovative games.

To that end, let’s see how Xbox Research leveraged Parsec, Unity’s leading cloud-based remote desktop solution, to scale their virtual playtesting to people across the world by providing nearly zero-latency, high-fidelity connections to physical Xbox machines located in Redmond, WA.

The challenge:

Every year, over 9,000 gamers are invited to come through Xbox Research’s playtest and usability labs located in Redmond, WA to play games and provide feedback on real-world gameplay, clarity, accessibility, and appeal. Without that feedback, games don’t launch. When the COVID-19 pandemic hit, they were no longer able to bring gamers into the labs. For a business that was always at the cutting edge of game research, this new reality delivered a big blow.

Xbox Research’s mission is to “ enable the magic of gaming for every person on the planet,” and they have an unwavering commitment to making games more accessible. With the bulk of playtesting limited to locals both willing and able to come to their physical labs in Redmond, much of their geographically diverse testing group was excluded. And because any decline in the diversity of participants can impact the quality of feedback, the team had to find a way to continue testing their games with distributed gamers.

They needed a solution that had the high performance and high fidelity required to remotely demonstrate the truest gameplay experience. They tried many alternatives, but none were able to mimic local gameplay, which was essential to both delivering the greatest control and receiving the most accurate feedback.

“Parsec was a total lifesaver – it gave us a completely new way to test our games outside the confines of our physical labs to deliver the high-quality, local gameplay feel required for our research,” said Daniel Gunn, Director of User Research for Xbox Research. “We wouldn’t have been able to continue remote playtesting at the same level of quality without it.”

The solution:

After successfully leveraging Parsec to playtest Halo Infinite , Xbox Research deployed Parsec to start playtesting with the next Age of Empires release. The initial round of tests proved that Parsec’s seamless gameplay experience produced meaningful user research.

Xbox Research didn’t see any evidence of reduced testing quality or quantity after using Parsec for remote playtesting for a year. Their reports looked as if those studies had been running in person as usual. And now that Parsec has enabled them to once again test with gamers around the world, Xbox Research can focus on scaling virtual game testing. Without the limits imposed by on-prem hardware, they’ve been able to conduct tests with up to 60 concurrent gamers on Microsoft Azure Virtual Machines (VMs).

Using Parsec has taken us beyond where we ever thought we could go with playtesting and usability,” said Brian Walker, Principal Research Operations Lead for Xbox Research. “We’re leading the game industry with our ability to do this level of remote testing at scale, and it’s all enabled by Parsec.” 

By the numbers:

• Xbox Research was established in 2000
• Number of workstations running Parsec concurrently: 120
• Number of playtests (of different games) running concurrently: 20+
• Number of testing participants per month: 150+

How Xbox Research accomplished virtual playtesting with Parsec

Scaling to meet demand: In-person playtesting on dedicated hardware has firm limits in time, space, and numbers. Only so many people can fit in one test space at a time, and budgets can limit access to machine hardware. Virtual playtesting enables Xbox Research to reach gamers regardless of geography so the team can run as many consecutive tests as they need to at a lower cost. During their initial effort using Parsec for Teams Enterprise and Microsoft Azure to create VMs for playtesting, Xbox Research was able to keep methodological control over their testing and meet the demand of the game studios. Gaming without limits: For remote playtesting to provide statistically viable feedback, gameplay needs to feel the same in a gamer’s living room anywhere around the world as it would in the Redmond lab. Xbox’s rigorous research methodology requires a predictable and consistent gameplay experience across geographic divides with near-zero lag and latency – which Parsec delivered with flying colors. With Parsec for Teams Enterprise, Xbox Research can connect with multiple markets and gamers of all abilities knowing the user experience is virtually identical.

Secure connections: Keeping intellectual property safe is a primary concern of game developers. Leaks and piracy threaten the success and reputation of billion-dollar franchises. With Parsec for Teams Enterprise, Xbox Research has fine-grained control over what both internal team members and guests on the system can access and when. Additionally, Parsec connections are peer-to-peer and end-to-end encrypted, so game studios can run content securely.

”Playtesting is such a complicated beast, given the interactive content and the hardware requirements,” said Walker. “Parsec made remote playtesting efficient, reliable, and more secure.”

Moving forward: Integrating Parsec more deeply with Microsoft

Xbox Research’s success is real-world proof of Parsec’s value for real-time 3D applications. So much so that the Microsoft Studios developer ecosystem has continued wider adoption of Parsec for Teams Enterprise, partnering with Microsoft Azure. Through the Azure Marketplace, creative teams can deploy VMs preconfigured with Parsec in five minutes or less.

Parsec is going to allow us to scale in scenarios we’ve never been able to before,” said Walker.  With Parsec, we can spin up an Azure virtual machine lab anywhere in the world. This is our future.”

Ready to playtest your games from anywhere? Try Parsec for free .

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Microsoft Xbox: Changing the Game? – Case Solution

The Microsoft Xbox team was faced with the issue of which strategic choices would give it the best edge against the upcoming Sony PlayStation 2. Initially called "Project Midway" within Microsoft, the console project has the objective of countering the possible threat posed by the expansion of the original PlayStation into a broad entertainment platform with the birth of PlayStation 2. Seamus Blackley, chief instigator for the Xbox within Microsoft, and his colleagues had an appointment with Michael Dell, CEO of Dell Computer with the purpose of convincing Dell to manufacture Xbox videogame consoles running Microsoft software. It is the intention of the team to produce a machine somewhere between a standalone videogame console and a PC tailored to play video games. However, it is still unclear where along the spectrum from a dedicated console to PC Microsoft should position the Xbox.

​Andrei Hagiu Harvard Business School ( 707501-PDF-ENG ) Nov 30, 2006 (Revision: Feb 6, 2007)

Case questions answered:

Case study questions answered in the first solution :

• How does Microsoft go beyond the Microsoft Xbox to drive strategic growth? Please consider the following elements in your case analysis: Strategic Challenge, Industry Analysis, Rivalry, Threat of Substitutes, Threat of New Entrants, Bargaining Power of Buyers, Bargaining Power of Suppliers, Overall Industry Analysis, Firm Analysis, and Competitive Advantage.

Case study questions answered in the second solution :

• Evaluate NEC’s and Sega’s strategies for challenging Nintendo in video games.
• Evaluate Nintendo’s decision to delay introducing a 16-bit video game system. Was this a good decision? Use quantitative analysis to the extent possible.
• How attractive is the videogame console industry in 1999? How do game publishers increase the size of PIE in the industry?
• Should MS allow any developer to publish games? Should it charge royalties to developers? Who should produce the Xbox machines? How should the machines be priced?
• Imagine you are Michael Dell in September 1999: do you take the Xbox deal?
• Imagine you are the CEO of Electronic Arts in 1999 (a major producer of games). Do you hope Microsoft succeeds in this market? Why? Is there anything you can do to make sure it does (or doesn’t) succeed?

Not the questions you were looking for? Submit your own questions & get answers .

Microsoft Xbox: Changing the Game? Case Answers

You will receive access to two case study solutions! The second is not yet visible in the preview.

Introduction – Microsoft Xbox: Changing the Game?

With the advent of high-tech portable and mobile devices, portable gaming is now a viable threat to the traditional video game console industry. Despite portable devices’ technological inferiority, consumers are spending a greater percentage of their disposable income on portable games and gaming systems.

Portable gaming, working as a disruptive technology, is forcing Microsoft and the traditional game console industry to compete with low-priced games on portable devices.

Strategic Challenge

Declining demand for video games.

Demand for portable gaming has grown exponentially over the past few years. Revenues from portable games were only half a billion in 2008, $5 billion in 2010, and are expected to be $16 billion in 2016. The overall mobile application market nearly doubled in 2009 and continues to exhibit high growth rates (Flurry).

Moreover, revenues from the video gaming industry have been decreasing since it hit its peak in 2008, down by 17% in 2011 (Exhibit 1). When considering overall market share, traditional video games are losing ground to portable games (Exhibit 2).

Flurry Analytics measured that iOS’s and Android’s revenue share of the game software category grew to 8% in 2010 from just 1% in 2008 (Exhibit 3).

Drivers of Growth in Portable Gaming

Portable gaming has sustained its growth and has successfully maintained a competitive advantage against video games due to the technological advancement in portable devices, more portable gaming options for casual gamers, lower development cost, lower time to market, and the implementation of various pricing strategies.

Advancement of Portable Devices

While portable devices are technologically inferior to consoles and video games, manufacturers are continuing to improve their graphics and CPU power. These devices are now becoming a platform for independent programmers and companies to develop games for all types of consumers.

While most of the game offerings for mobile devices are currently sub-par to the offerings available for the console industry, improvements in specifications for portable devices are creating an opportunity for simple and more advanced games. Games that traditionally could only be played on video game consoles, such as Electronic Art’s Mass Effect, can now be played on portable devices.

Convenient Options for Casual Gamers

The growth of portable gaming has been meteoric in the past few years due partially to more options for gamers on their portable devices. Portable gaming is a convenient alternative to video games for consumers who are interested in playing “casual” games on devices they already own without the need for additional equipment.

While game selection for portable devices was limited in the past, the boom in these devices has catalyzed developers and communities to create more gaming options. Consumers now have more options to purchase and play games on multiple platforms, such as Android, iOS, and Facebook.

Development Cost and Time to Market

Video games played on the current generation of consoles require an average budget of $15 to $20 million and have average development times of 1.5 years. The average game played on portable devices costs $6,500 and only half a year to develop (Meloni). The lower investment in both time and funds attracts many developers to the portable gaming market and creates a cost advantage over video games (Meloni).

Pricing Strategies

Portable games are also priced using a plethora of strategies to target a variety of consumers. Portable games can gain revenue by charging a one-time fee, which can range from $0.99 to $50.00 per application. Games can also be free for the user, and the developer earns profits through in-game purchases and advertising revenues.

Developers also have the choice of offering a limited version of the game for free and then charging for the full version of the game (Meloni). The ability to use different pricing strategies allows developers to target customers who are not willing to spend large one-time purchases on games and then use a variety of gimmicks to earn revenues.

Focal Firm: Microsoft

Microsoft’s current video game console, the Xbox 360, has sold over 67 million units since its release in 2005. Despite rampant success worldwide, Microsoft has no device designed to challenge competitors in the portable gaming industry.

Therefore, it will face difficulties in the near future as the gaming market share shifts from traditional video game consoles to handheld gaming devices, phones, and tablets. Microsoft must act quickly to develop a sustainable plan to compete against the growing portable gaming devices market.

Industry Analysis

The following industry analysis uses Porter’s Five Forces framework to identify which industry components capture value and the overall attractiveness of the industry.

Rivalry: High

Three main players concentrate on profits in the US video game console industry: Nintendo, Sony, and Microsoft. With a console generation, users incur high switching costs when moving from one company’s console to a different console.

Therefore, it is important to lock the customer in initially and make them loyal to the brand. As competition among these rivals increases, there is increased pressure for the firms to drive their product prices down and decrease margins.

The entire video game console industry is now threatened by the advent of portable gaming devices. Nintendo and Sony both have portable gaming devices, such as the 3DS and PS Vita, respectively, while Microsoft has no such device.

Microsoft, therefore, has lost its chance to become a first-mover in the current generation of handheld devices. As more users switch to portable games, Microsoft will be faced with a declining market share.

Threat of Substitutes: High

Video game consoles must compete with the growing market of online and handheld gaming devices. According to a study conducted at Duke University, the market share of gaming consoles is expected to decline to 45% by 2013, while the use of mobile games is expected to double to almost 20% (Exhibit 7).

From 2009 to 2010, game console sales dropped 13% to $6.3 billion, indicating the negative effects these substitutes are beginning to have on game console incumbents’ revenue. As the number of mobile devices increases throughout the market, more casual gamers are turning away from their stationary home consoles and playing more mobile games (“WRAL Tech Wire”).

Unfortunately, there are also innumerable substitutes outside of the video gaming industry that compete with console producers for the consumer’s leisure time.

Threat of New Entrants: Medium

Designing and manufacturing a new console requires not only economies of scale but also expensive physical and human capital. These high investments deter firms from entering the game console market because it can take years to develop the necessary gaming technology.

Despite these relatively high barriers to entry, companies that already have an existing technology design infrastructure could feasibly develop innovative console offerings.

Bargaining Power of Buyers: Low to Medium

Fortunately for game console producers, consumers do not have much choice when switching to a different home entertainment console (only three main players – Sony, Nintendo, and Microsoft).

However, with an increasing number of users playing games on portable devices, price-sensitive buyers may choose to play cheaper games on handheld devices instead of purchasing an expensive console.

Additionally, consumers typically only buy one console per generation and, therefore, lack strong buying power associated with purchasing in bulk.

Bargaining Power of Suppliers: High

Nintendo, Sony, and Microsoft all outsource their console manufacturing to third-party vendors, such as Foxconn and ASUSTeK (Mann). As such, the suppliers garner significant power because they control the day-to-day production of the consoles.

Since quality is a very important factor, Microsoft, Sony, and Nintendo must ensure that they choose an appropriate, responsible supplier. Additionally, there is the threat of forward integration by these manufacturers since they have the production capability.

Overall Industry Analysis

The game console industry is good for incumbents because there is profit potential. New entrants, however, will face struggles when trying to capture value within this industry, especially within the first 10 years of entering, due to high capital investments in the beginning.

Therefore, the industry is moderately attractive for existing firms but relatively unattractive to new entrants. With the growing threat of portable gaming as a disruptive technology, incumbent firms now face competition from mobile phone developers as well.

Firm Analysis

Competitive advantage.

In terms of technical specifications, there is little to differentiate the Microsoft Xbox 360…

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Dreams within: why storytelling was key to the launch of Xbox Series X|S

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By Awards Analyst, writer

December 7, 2021 | 7 min read

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Edelman UK & Ireland and Unit 9 won ‘Innovative Experience of the Year’ at The Drum Awards for Experience with its work for Xbox. The launch of the Xbox Series X|S, and the accompanying Game Pass offering from Microsoft, was the brand’s most important event in seven years. Here, the team behind this winning entry explains how it executed the successful strategy.

After a seven-year silence in the region, Xbox was finally ready to launch its powerful Xbox Series X|S and a package of games with it. Along with this, its parent company, Microsoft, was launching Game Pass - a subscription service that ties together console and PC offerings with added mobile game streaming capability. This service brought a new consumer-friendly approach, with a low price point.

Xbox tasked Assembly with delivering the Xbox Series X|S launch, which would involve communicating the accessibility, innovation and excitement that the console, games, subscription service and mobile streaming would bring. A complicated ask, especially considering Xbox’s diminished status in market.

On top of this, traditionally successful methods of launching, in particular large-scale live events and product demos, for the media and gamers alike, were understandably out of the question in 2020.

That being said, the demand for gaming has massively increased in the global lockdown, and with new audiences came uncertainty and opportunity in equal measure. How could Xbox and parent company Microsoft re-establish themselves cut through and show themselves as market leaders in this unpredictable lockdown market?

Xbox’s ask boiled down to two key objectives:

Execute a unique, multi-faceted product launch and communications strategy that would deviate from the norm and make Xbox stand out to new audiences and the media.

Engage and excite a core audience with a spectacular launch moment, with the normal rule book thrown out the window.

With a wealth of experience in the games sector, we knew that a long-term approach was needed in order to land the best of feature stories across multiple audiences. Businesses, consumers, tech media and enthusiast gamers, as well as key content creators, wouldn’t respond well to one off press releases. It was vital that we educated consumers gradually about the Xbox Series X|S key differentiators and built relationships.

From prior experience we also knew that analysts, regularly called in at launch to provide points of view across a variety of media outlets, would be relied upon heavily too, so educating them even ahead of everyone else and incorporating them into our core strategy was a must.

We also knew that the best way of communicating the strength of games products was by letting users experience them - with this not being an option, we needed an impressive platform to showcase the key games content and power and USPs of the Xbox Series X. From this platform, we would use advocates and content creators to engage a core audience remotely, allowing them to evangelize it to a broader consumer base on our behalf.

Introducing, ‘Dreams Within’ – an audio-visual showstopper installation, 14ft high and featuring four 4K projectors replicating the iconic design of the console, that could showcase the console's power from a distance. This fell within the global Xbox Series X tagline of ‘Power Your Dreams’ and would be the centerpiece for a livestream that drew upon our extensive experience working with owned Xbox content channel Xbox On, which delivers regular streams that connect with the core audience.

Storytelling

Our first task was to lay the groundwork for Xbox’s brand narrative, with a targeted advocacy and media strategy. In particular:

• Educating analysts and building relationships with the media was a must. This would involve buy-In from senior execs globally for off-the-record briefings, as well as full interviews at launch.
• Media training for the Xbox’s UK market leadership would be vital in order to carry this messaging at launch.

The ‘Dreams Within’ activation

The Dreams Within installation would demand many elements of planning, including the buy-in of our closest third-party partners, publishing the games that would feature in the livestream and that would connect most with consumers, and choices made as to how to artistically showcase the product's USPs in the most eye catching and beautifully crafted way, all in absence of consumer testing within the physical installation itself.

Stage 1: The Briefings

We arranged background briefings with the Xbox CFO, who would then educate analysts and business media. This provided a foundation on which they could base in-depth stories, ensuring they would deliver every key news beat of the campaign.

Consumer media outlets then received briefings from other relevant Xbox execs, having trained up local Xbox leadership to deliver our key messages. Each outlet was then engaged with an on-the-record Interview with a relevant executive at launch to land depth stories across our key media targets. These included the BBC, The Economist, The Guardian, Wired, Eurogamer, GamesRadar, Edge Magazine and Press Association.

Stage 2: Social Strategy and Partnerships

Working in partnership with both Twitch, taking over its homepage the day of the stream, and Twitter, across three custom media buys including a dedicated auto-response and speed-test, we guaranteed share of voice and engagement from gamers across the UK. The livestream was teased ahead of time on social channels, with a media alert announcing it three days before to a wide spread of media. Images and video from the event were sold into media on the day of launch.

Stage 3: The Livestream

We delivered a six-hour livestream, broadcast from the Xbox On Twitch channel, that counted down to the launch of the Xbox Series X|S. This livestream then culminated in the visual and aural show in and around the Dreams Within Installation.

We armed the 14ft high monolith with four 4K projectors and a specially recorded binaural soundtrack and situated it on the roof of One New Change with St Pauls Cathedral in the background, creating a spellbinding, state-of-the-art digital scene that transformed the London skyline into a truly magnificent spectacle.

We executed the biggest Xbox launch on record, with Xbox Series X|S selling out in minutes, and a record level of engagement at launch.

• 20M+ views of livestream
• 1M+ interactions on ‘Dreams Within’ content across social platforms
• #DreamsWithin trended on Twitter in the UK
• 26 earned media articles about or containing ‘Dreams Within’ content, with a combined reach of 282m
• 18 pieces of interview-driven content at launch

This campaign was a winner at The Drum Awards for Experience. To find out more, including which competitions are currently open for entry, visit The Drum Awards website .

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How blockchain helped a gaming platform become a game changer

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The better the question

How can blockchain transform a gaming platform into a game changer?

A blockchain solution gives Microsoft Xbox an infrastructure that helps them manage and provide a better partner experience.

T he $120b video game industry employs some of the brightest creative and technological minds. While this marriage of creativity and technology was bringing enjoyment to the masses, Microsoft Xbox’s royalty process meant that game publishers faced some unique challenges due to legacy technologies limitations.

The gaming industry serves over 2.7 billion consumers worldwide. This is enabled through partnerships between gaming platforms such as Xbox and thousands of publishers, developers, authors, designers, production houses and distributors. These relationships are all key in maintaining a high-quality product and attracting the best talent and creators to the platform.

Microsoft Xbox’s legacy system for securing and managing royalty processing was cumbersome, taking 45 days to access validated financial information about royalties earned.  Along with paperwork, this was not giving the best experience to many game publishers, especially the ones with small businesses and limited resources.

EY and Microsoft wanted to help the gaming industry play fair, so the team asked themselves: could blockchain be a game-changer for the gaming industry?

The better the answer

A blockchain solution that integrates with publishers and creators

Together, EY and Microsoft Xbox are implementing smart digital solutions to help game publishers and creators do their best work.

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Microsoft Xbox and EY worked together as one team to help deliver a transformation. Microsoft and EY teams’ joint capabilities and suite of digital solutions became a game-changer, helping Microsoft Xbox reduce the manual effort and the operational hours associated with processing royalties for publishers through automation of the royalties processing, starting to transition off the legacy system.

Smart contracts encode game creators’ IP rights

The first step in refreshing Microsoft’s legacy systems was to onboard royalty contracts onto blockchain in the form of digital contracts. The legal terms were then encoded in the blockchain network in the form of smart contracts. By opting in, industry participants can review and validate that onboarded digital contracts are the same as the royalty contracts in a confidential manner.

An automated solution that brings down operational costs

Building on the foundation of contractual transparency, the team focused on providing improved transparency to the game publisher for the royalty processing — a major pain point for Microsoft Xbox. The existing system of processing and distributing royalties was plagued by loads of reviews and tedious manual processes.  Automation of the system sped up the process, reduced the effort and provided more transparency to participants, while at the same time maintaining a high degree of privacy and confidentiality between Microsoft and the game publisher.  A user-centric interface adds a simple, well-designed interaction layer to the royalty distribution system for game developers.

Near real-time purchase records show game creators what they have earned

While smart contracts were used to accurately and transparently process the royalties for Microsoft Xbox’s partners, the next step was to securely and transparently share the information with them in near real-time, cutting access to royalties from 45 days to 4 minutes.

Providing near real-time access to data greatly improves the process’s effectiveness, and insights that lead to a more enriching experience for the partners,” Tim Stuart, Xbox Chief Financial Officer at Microsoft.

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As consumers purchase Xbox games, other merchandise and digital content, the smart contracts apply the encoded contractual logic and instantly calculate the royalty. This information, when ready, is then sent to each participant who has a node, creating an immutable record of transactions and royalty obligations in a secure and confidential manner. Not only does this provide creators peace of mind, it allows them to record financial transactions daily, it can also vastly improve their forecasting and reporting capabilities.

Providing near real-time access to data greatly improves the process’s effectiveness, and insights that lead to a more enriching experience for the partners.

Xbox Chief Financial Officer at Microsoft.

The better the world works

A transparent blockchain ecosystem that empowers creators

Microsoft Xbox’s new blockchain network is better for business and better for game creators.

The technology solutions implemented in this project — including instant transactional details — led to profound benefits for Microsoft Xbox and its partners. It seamlessly connected these parties and enhanced their experience.

The blockchain solution integrates closely with game creators to give Microsoft Xbox an infrastructure that helps them manage and reward game publishers and creators. Creators now have more trust in the process and can focus on creating new games.

“By implementing a blockchain-based network and streamlined royalty processing, game publishers and Xbox benefit from a more trusted, transparent and connected system from contract creation through to royalty settlements,” Luke Fewel, General Manager, Global Finance Operations at Microsoft. The new solution enables a 99% improvement in processing time and is fully integrated with ERP for automated invoicing and recording accounting entries. It enables near-100% real-time royalty statements for game publishers, 40% plus operational effort reduction and eliminates reconciliation needs.

This technology will help transform the future of entertainment.

By implementing a blockchain-based network and streamlined royalty processing, game publishers and Xbox benefit from a more trusted, transparent and connected system from contract creation through to royalty settlements.

General Manager, Global Finance Operations at Microsoft.

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Game on: An interview with Microsoft’s head of gaming ecosystem

When Satya Nadella took the helm at Microsoft in 2014, some Wall Street analysts urged the new CEO to sell the company’s gaming business, which it had entered with the launch of the first Xbox console in 2001. Rather than divest, Microsoft doubled down and recently shifted from a console-centric approach toward a “ubiquitous global gaming ecosystem” focused not just on gamers but on game developers and publishers. Investments in cloud gaming, the Game Pass subscription service, and cross-platform play have enabled this ecosystem to develop, with an eye toward helping gamers participate anywhere, anytime, on any device.

In support of the strategic shift, Microsoft formed its Gaming Ecosystem Organization (GEO) in 2020, which looks after the needs of game creators across all of Microsoft’s software and services, including Xbox, Azure, and Microsoft 365. To learn about the relatively new division and its ecosystem approach (including Game Pass membership and an array of game development solutions, which address gamers and game creators, respectively), McKinsey executive editor Lang Davison sat down with GEO head Sarah Bond, Microsoft’s corporate vice president for game creator experience and ecosystem at Xbox. Insights from the discussion shed useful light on the potent digital ecosystems  powering today’s increasingly borderless economy —and draw lessons from gaming that go well beyond the industry itself.

Let’s start with play. Why do playing and gaming matter in the world?

To play is fundamentally human. If you can experience something through play, it creates camaraderie. It’s fundamental to who we are. You think about games like hide and seek or tag—they’re very basic, right? But they have been with humanity since the dawn of time.

And the gaming industry is unique and special because it’s the only entertainment medium in the world where you can connect with someone you have never met; you don’t necessarily speak their same language, you’re not in the same time zone, you don’t have the same abilities—and [yet] you can achieve something with them. You can actually do something together.

And then, on top of it, the technical components that you need to enable that connection actually test every limit of tech. You have to be able to render a realistic world. You have to host billions of events simultaneously, in real time. You have to connect people. You have to be able to scale your workload up and down. So gaming is this incredible social force because it can enable shared achievement—not individual achievement or celebrating something that your friends can “like” or ”share.” And that social experience combines with a technical base that is unlike anything else.

Is that why Microsoft is putting an increasing focus on gaming?

There are a couple of reasons why Microsoft is putting so much emphasis on and investment in gaming. First, Microsoft’s mission is to empower every person and organization on the planet to achieve more. And gaming is the most prevalent and fastest-growing form of media on the planet. And it’s the only form of media where you can virtually walk in another person’s shoes and actually experience something from someone else’s perspective. For us, participating in gaming is an opportunity to have both that social impact on the world and to participate in the business opportunity that’s associated with it.

The other reason is that the future of gaming is completely interlocked with the cloud. Gaming represents an extremely complex workload. Most people don’t think of it that way. They think, “Oh, it’s a game.” But a technical failure has real consequences. If a video doesn’t load quickly, you restart the video. In gaming, you could lose all your progress, which can be hours of effort. Gaming pushes the edge of computing capabilities. Gaming is interactive. It’s multivariant. It takes years and years and years to build a really engaging game.

As a game developer, when you launch something, it doesn’t end. You’re constantly updating it, adapting it, integrating things into it. At Microsoft, that helps us technically because when we develop technologies that meet the high demands of game developers, we can scale that work into other industries. Because if you could solve it for gaming, you can solve it for pretty much anything.

What sorts of things are you referring to?

I’ll give an example of something that happens in gaming that translates into another industry. When someone is playing a game, and they’re interacting in the game, we have something called live operations.

We look at people’s interactions, what they do, how long it takes them, whether or not they purchase, and then we optimize the game for that constantly. Well, that same observation can be used in an amusement park: if you have an app on your phone as you’re running around in an amusement park, the app can be customized for you [in] real time. So we take the tech that we build for a game and we help somebody have another great, real-world, entertainment experience.

The future of video entertainment: Immersive, gamified, and diverse

Can you say more about the structure of the gaming ecosystem?

[The gaming industry] is fundamentally a two-sided business with thousands of actors on one side, the developers and creators of the games, and millions of actors on the other side, the players, who are completely interlinked.

So a developer will create a game. They release it to the world. The players interact with it. Based on that interaction, the developer will continually iterate it. The player might also share something out from the game. That leads to another interaction. And it’s a continuous loop. So it is an ecosystem that is reliant on the system reinforcing itself to grow.

Are there other participants in the ecosystem?

Let me try and explain the actors in the ecosystem. So, you have creation of content which spans from the smallest indie developers to really large teams, or what we call triple-A developers.

Then you have people who publish the content, that actually drive the monetization engine around that content, that bring it to retail, that do digital versus physical, that promote it. Then you have storefronts, which used to be predominantly physical retail but increasingly, over time, are moving to digital.

You have Xbox, PlayStation, and Nintendo on console, but then you’ve got PC actors like Windows Store, Steam, or Epic. And then you have actors on mobile like iOS and Android. And then you have the tool chains that people use to make the games.

How does Microsoft think about and describe its role in the gaming ecosystem? Is that part of a broader vision, so to speak, for the ecosystem as a whole?

Our vision for the gaming industry is that anyone should be able to play any game, anywhere they want. That’s not how the industry works today. [Right now] the industry is split up by platform. It’s split up by type of game. It’s not actually possible to play seamlessly across devices.

That’s more a legacy of the way the industry has always been. Now, especially with the advent of the cloud, with tool sets like game engines, it doesn’t actually need to be that way. But what we realized is that to kick-start that flywheel, we had to change the way that games were made. That is where you can have impact that sustains.

For people to play any game on any device, developers need the tools to build games that are playable on any device. So we went through and looked at all the tool sets. 1 Tool sets are the tools and services game developers use to build games.

You mean you looked at how well existing tool sets supported and enabled ubiquitous gaming?

Right, things like cross-network multiplayer. That’s the ability for you and I to play together, even if we’re on different networks. You need to enable cross-save, so that if I start playing my game on a PC, and then I decide, oh, I’ve got to take my son to the soccer game, and I might play a little bit on my phone, then my saved state has to transfer across devices. You need cloud APIs so that the way that the game is being delivered to you, whether it’s running natively on your device or it’s being rendered from the cloud and being streamed to your device, changes dynamically based on your local conditions, and the UI [user interface] changes, understanding what screen size you’re on.

Those tools don’t exist in the legacy tool sets that game developers are using today. So, for us, the way that we’re enabling the future is by making it possible for creators to build that way, to help unleash their creativity. And that kick-starts the flywheel that meets the players’ needs.

And the platforms you provide are at the center of that, right?

The definition of a platform, I believe Bill Gates once said, is that everyone who uses the platform has more economic success from the platform than the platform holders themselves. And I think about that every single day, about our gaming platform. How are we creating more value for the world? The number-one thing is to make it easier for a game creator to create.

Making games is super hard. For a triple-A game, three years’ [development time] is great; six years happens frequently. So, if we can reduce their cost of development and their running costs, that is a huge value to [the game creators].

And then, making sure their games can be played everywhere is a huge value. There are three billion gamers in the world today. There are about 200 million who own a console. Depending on how you count it, there’s over a billion people who play on PC. If you can make one distribution mechanism so a developer can reach all potential three billion players with one instance of their game, their [development] costs go down as their reach goes up.

The Game Stack platform supports game creators. What about gamers themselves—do you think of Game Pass as a platform, too?

Xbox Game Pass is a subscription-based library of more than 100 games. It’s playable on console. It’s playable on PC. It’s playable on Android and now on iOS devices through the browser.

When we created Game Pass, we were looking at it as a product, if I’m honest about where we were. Players would say they want a library of games, they want it to be more accessible. So, that’s how we built it and we quickly saw that it was, in fact, a platform.

[That’s because Game Pass] wasn’t just acting on behalf of the player. It was also acting on behalf of the developer. And that created an ever-accelerating flywheel because once developers became eager [to put their games on Game Pass], then more players would play the games, which would drive monetization, which developers used to make more games, and it kept going and going.

You created what you thought was a product that turned out to be a platform instead. That must have been a bit of an aha moment.

The realization that Game Pass is a platform was a big moment. Fortunately, we were already running the Xbox platform, and we’re part of a company that runs the Windows platform and the Azure platform. Our experience made it easier for us to see patterns and to figure out what to do. Fundamentally, Microsoft is a platform company and Xbox has always been a platform. [Game Pass] was an acceleration on top of what we had already created—platform inside of a platform, or maybe a platform beyond the original platform might be a better way to describe it.

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So the gaming platforms and the Azure platform become mutually reinforcing.

It may not seem like it to the outside observer, but there are enormous amounts of synergies between what Microsoft is doing in the cloud and what we are doing in gaming. Because what we’ve really done with Xbox Cloud Gaming—because we’ve put both the Xbox Series X and S into Azure—is to provide the capability to play a game rendered completely from Azure that can be played on any device, regardless of its local compute.

That [capability] takes our platform, which used to be tied to a specific piece of hardware, and it makes it playable anywhere. It dramatically accelerates [the platform’s] reach. It makes it dramatically more valuable for players because you can play anywhere.

And [that capability] makes [our platform] dramatically more valuable for developers because they can build a game that’s playable anywhere. So, it takes that core value proposition, which used to be linked to buying a $500 device, and it has unleashed it to be playable on any device on the planet.

And at the same time, it helps Microsoft make the most of its distributed network of servers, right?

Exactly. One of the things that many people don’t think about is if you’re going to play a game from the cloud, it’s very different than any other type of service that has to be rendered from the cloud because games require bidirectional data transfer. It sends you the stream, but you have to send a data stream back with what you’re doing on the controls. So your proximity to the server is actually really important to reduce lag and increase game responsiveness. Far more important than if you were streaming a video and much more important than if you were doing, for instance, a traditional back-end enterprise process. [Since] we have data centers in regions all over the world, it’s possible for us to deliver that experience at a level of fidelity that is truly unique.

What organizational changes did you have to make to support all this?

We’ve only had a team in Xbox dedicated to creators for about a year. [It’s called] the gaming ecosystem organization. And it has about 600 people. We are located in China, Korea, Japan, Latin America, here in the US in Redmond, Washington, in Europe—all around the world. We focus on all the relationships we have with game creators across Microsoft and across all Microsoft products. And we also develop and ship the development tools that creators use as well. [We formed GEO] about a year ago to have a team that thinks about creators as customers, in and of themselves.

So you were expanding your concept of who your customers were.

[Yes. We had to] be really thoughtful about who our customer is. It’s very easy when you’re in a consumer product to say that the end user is your only customer.

But for us, because we’re creating a product that’s a platform, thinking about game creators as a customer and how you create that flywheel where they want to be part of your ecosystem—that was a big step.

The second realization we had, though, was that game creators are extraordinarily unique because they are digital natives. Most game creators are extremely technical. So, to help them address their needs required a level of focus and dedication beyond what it might mean to address the needs of a less technical industry or group of individuals.

Because the attitude of a game creator is going to be that, if you don’t have the tool that they need, they’re going to code it themselves. So, having a relentless focus on that group was really important in order to meet them where they were and to develop the things that they needed. [Once we’d done that we could] take the insights from that development and spin it to all creators, beyond game creators, across Microsoft.

Beyond forming the GEO itself, were further organizational steps necessary?

[We needed to] reshape our culture. If you’re going to build products for everybody in the world, you need to represent everybody in the world. We needed to have a diverse team and a presence in countries where we wanted to have content both in terms of people who write the code and people who engage with developers and creators in those regions.

And that’s been a big part of our evolution. Even our leadership team now has gone from one that, within Xbox, was composed of people who had largely worked in gaming to [a team with more diverse experiences]. I came from T-Mobile. We have someone from Facebook, someone from Netflix, we have people from Amazon, all bringing together diversities of business models and experiences to actually create a global platform.

If you’re going to build products for everybody in the world, you need to represent everybody in the world.

And I would say we’re part of the way on the journey there. We’ve made progress. We’ve got further to go.

You mentioned your previous job. What led you into gaming?

Sometimes people ask me why I’m in gaming just because it’s not an industry that has a great reputation for diversity and inclusion. And that’s exactly why I’m in it. It’s the most popular form of media when you look at it by revenue. Seventy percent of people under the age of 25 say they’d rather play a game than watch a video. But [the gaming industry] isn’t one that is fully representative of all the voices in the world today. Working at Xbox and at Microsoft, where we have a global gaming platform, I have an opportunity to change that. When we democratize development tools, we make it possible for everybody to have an equal chance for their voice to be heard, for them to tell their story.

And that provides more opportunity for someone to play that story, to build that empathy for that experience, which in turn changes perceptions and the way that we see our world.

This has been great, Sarah. One further question, if I may. What would executives from other industries learn from your experience in gaming?

I think there are two major lessons that you could take from the gaming industry and take to other industries. The first is that you should think about engagement driving monetization, not monetization driving engagement. What you want is someone’s attention.

You want to create something that delights them, that they want to play. And the money flows from that, not the other way around. And so, if you put these barriers up before people and you say, oh no, you’ve got to pay me $70 before you can even start, well, while you will have a business model there, it isn’t the winning business model. The winning business model has to be compelling in and of itself. And the monetization flows from that.

The second thing I would say is just the enormous power of making it possible for anyone to create something. You look at the world of user-generated content, you look at things that are going on in Minecraft or you look at the creator economy—and while a megacorporation or a large, very well-capitalized team can always create something, it will never have the creativity that comes from making it possible for anyone to create something.

So, the thing that I think is fascinating when you watch the gaming industry is, almost every year, there is a game that comes out of nowhere from a team that [was relatively unknown]. And it becomes one of the biggest games in the world.

You know, two recent examples, and people sort of can’t believe this now: Fortnite was a pretty small team. It came out of nowhere. Similarly, PUBG came from a small developer in Korea. It came out of nowhere. So, you need to learn to scan for those things, to look for them, but also be comfortable with enabling them because there’s real value in enabling that creativity and building a business model that empowers it.

Sarah Bond is Microsoft’s corporate vice president for game creator experience and ecosystem at Xbox. Lang Davison is an executive editor for McKinsey Global Publishing based in the Seattle office.

Comments and opinions expressed by interviewees are their own and do not represent or reflect the opinions, policies, or positions of McKinsey & Company or have its endorsement.

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How Microsoft Became Innovative Again

by Behnam Tabrizi

Summary .   

How did Microsoft revive its culture of innovation? For years, the company has been written off for playing defense on its position in the tech world. But, as signaled by its partnership with OpenAI and its challenge to Google’s search supremacy, it has gone back on the offense. The about face was, at its core, a cultural shift, driven by CEO Satya Nadella. He drove this by inviting an existential moment when he stepped into the job, reconsidering the company’s purpose. Then, he laid out strategic changes that would enable the company to think more like a startup, and made business decisions that committed the company to this new direction.

For years now, observers of tech have written off Microsoft as a 20th-century phenomenon, fat and happy from its Windows monopoly. The tech giant hadn’t had a breakthrough innovation in decades. It was rich enough to be a fast follower, but too big and bureaucratic to lead in any market. Jeff Bezos was known to gesture east and admonish his Amazon colleagues not to become complacent like their Seattle neighbor.

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How gamers with disabilities helped design the new Xbox Adaptive Controller’s elegantly accessible packaging

Twist ties that bedevil. Thick plastic requiring scissors to break open. Tape that gets wrapped around fingers. Those cursed strips known as zip ties.

Packaging can be annoying for any consumer (see: wrap rage ). But for people with disabilities, it often creates yet another challenge in a world riddled with them, an unnecessary obstacle that leads to frustration and a delay getting to the object inside.

Recognising that reality, Microsoft’s Packaging Design team faced a unique challenge in creating a box for the new Xbox Adaptive Controller , designed to accommodate gamers with limited mobility. The box for the device,   available for pre-order now  for $129.99 AUD from Microsoft Store, needed to be as accessible as what was inside. It had to enable gamers with limited dexterity, who might be using just one hand or arm, to easily open the box and remove the controller. And it had to be as high-quality and aesthetically appealing as any other Xbox packaging.

It was the first time Microsoft had created packaging designed specifically for accessibility, and getting it right was critical.

“The product team was putting so much diligence into getting the controller right that to not have a package that was thoughtfully and mindfully designed for the end user would have felt like a real miss,” said Kevin Marshall, creative director of Microsoft’s Packaging Design Studio.

“With this product in particular, we felt a heightened responsibility. We wanted to create a package that was clearly designed with the end user in mind, and we wanted it to feel like it was just part of our ecosystem,” he said. “We wanted it to be empowering, but we didn’t want it to stand apart from any package we create.”

Solomon Romney, a Microsoft Stores retail learning specialist in Salt Lake City, Utah, was among the gamers who tested the packaging as it was being developed. The extra attention to accessibility, he said, creates a positive experience from the start.

“It’s great that we’ve created this controller for people to use, but if they can’t even get it out of the box, we’ve sort of fallen on our face with this whole process. This makes such a huge difference in how someone gets our device out of the package,” he said. “I still think about it and think, why isn’t more packaging like this?”

Mark Weiser, the Microsoft designer who created the packaging, started by looking for examples of other accessible packaging. He found little that excited him, and even the accessible products Weiser looked at weren’t often packaged in ways that made them easy to open.

It benefits everybody to have a package that opens a lot faster, with less hassle.

Weiser worked closely with Xbox design researcher Scott Wang, who consulted with gamers and disability advocates as the Xbox Adaptive Controller was being developed. Their feedback helped shape many of the device’s features, including the packaging. Weiser had already decided not to use twist ties, but the gamers Wang spoke with provided other key insights, including one main stipulation — no teeth. They told Wang about using their teeth to open everything from cereal boxes to beer bottles. If nothing else, they said, the box should not require teeth to open.

The gamers also said they’d prefer more simple steps to open the box than fewer but more complicated steps. Being able to access the controller from multiple points was also important. And the gamers identified a feature that became a key part of the package’s design — loops that enable users to easily open the box and remove the controller.

Weiser added a loop on the outside of the specially designed retail shipping box so users could easily remove the sealing tape. Another loop opens the interior box holding the controller, which has a hinged opening rather than a lid that could require two hands to remove.

Yet another loop is integrated into the quick-start guide sitting under the controller. A user who can’t reach into the space under the controller and slide it out (another accessibility feature) can use the loop to remove it. And since the controller has grippy feet to hold it in place for gamers who might play on wheelchair trays or tables, the loop on the guide eliminates the possibility of the controller sticking to the paper tray under it. An additional loop on the paper encircling the controller cables makes them easy to remove.

Other accessibility features include folding the warranty and compliance guide on the long edge to minimise the amount of arm movement required and centering the controller in the box to provide greater stability.

The designs and materials used for the other components were also carefully considered. The retail box is made of a rigid paperboard that provides additional device protection and offers less resistance than other papers when opened. The pulp tray under the controller is open at the front for easy device removal, which required extra technical and design attention. Paper is the medium of choice for Microsoft packaging, as it’s more environmentally friendly, and plastics are avoided unless absolutely necessary.

Since Weiser was creating the packaging as the controller was being developed, he needed to adapt the box as the device evolved. Even small changes to the controller required him to reevaluate how the box interacted with it — for example, ensuring that the two large buttons added to the top of the device wouldn’t be clicked repeatedly if the box was jostled. The final packaging involved more than 100 iterations of its various components, Weiser said.

“It became an incredibly deep and broad scope of work,” Marshall said. “That’s part of the fun. That’s part of our learning process. We learn by doing. We learn by building, and on this particular product, there was a lot to learn.”

As he was developing the packaging, Weiser tested it with multiple Microsoft employees who have limited mobility. One of the employees, Weiser said, was doubtful he’d be able to open the box, given his usual difficulties with packaging. But to his surprise, it opened more easily than expected.

“It was really great to see him be excited about it,” Weiser said.

The Microsoft team also tested the packaging with several gamers in the United States and the U.K., including Mike Luckett, an avid gamer from Colorado who has limited mobility in his fingers from a spinal injury he sustained in a motorcycle accident. Luckett provided feedback on typical packaging pitfalls, from paper cuts caused by perforated or corrugated edges to the plastic covers some controllers come in, which he finds “incredibly frustrating” and difficult to open.

“I’m excited that Microsoft is taking the opportunity to try to understand individuals who have less ability to open a traditional package than able-bodied users,” he said. “Having this easy-to-open packaging doesn’t just benefit us in the disabled community. It benefits everybody to have a package that opens a lot faster, with less hassle, so you can game faster.”

Romney was shown three prototypes of the packaging. Born without fingers on his left hand, he tested the models using that hand only. Based on Romney’s feedback, the loops on the packaging were created in an oval shape to accommodate gamers who might not be able to navigate a smaller circular loop. Romney appreciated the loops and the overall ease and elegance of the packaging.

“The whole thing sort of blossoms open in this really beautiful, fluid way,” he said. “The package just sort of opens and hands you the controller. What’s wonderful about it is the effortlessness.”

I think as a case study of inclusive design, the Xbox Adaptive Controller is going to make a brilliant example of how you do it, and how you include your audience and design with a population, rather than for a population.

Romney said the experience has made him think about packaging differently.

“We have customers in our store every single day who buy product. I look at our laptop boxes and how they have to be opened. How many steps, how much packaging and how much of a barrier do each of those pieces become to someone with a mobility limitation?”

Romney thinks the Xbox Adaptive Controller packaging has the potential to set a new standard.

“I think it’s going to change how we look at things in the industry, in terms of how we make boxes. And I think it has to,” he said. “I think as a case study of inclusive design, the Xbox Adaptive Controller is going to make a brilliant example of how you do it, and how you include your audience and design with a population, rather than for a population.”

For Marshall and Weiser, the packaging project was challenging, time-consuming — and ultimately rewarding.

“It was a really powerful experience,” Marshall said. “I don’t think you realise, until you’re required to think differently, what you take for granted. As a designer, when you see things through a completely different lens, it’s paradigm-shifting.”

Said Weiser: “We put in a lot of extra time on it, but it was a pleasure to be able to work on this type of project. It’s great that we’re focused on this as a company.”

Discussions are underway about how Microsoft might use the learnings from the Xbox Adaptive Controller packaging. Marshall hopes the deceptively simple-looking box can serve as a springboard for future efforts.

“It’s certainly changing how we’re looking at packaging. We’re excited about moving forward from this point with a new lens and looking at what we can do,” he said.

“We’re really excited to take this journey on.”

The Xbox Adaptive Controller – complete with accessible packaging – is available for gamers in September of this year, and  available for pre-order now  for $129.99 AUD from Microsoft Store.  Learn more about the Xbox Adaptive Controller here .

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Call of Duty: Modern Warfare II and Call of Duty: Warzone case study

At Xbox, our commitment to our players and the industry is to reduce the impact that gaming has on the environment. There is a growing awareness among players regarding gaming energy costs and the environmental impact of video gaming. There is also a heightened interest among game publishers in enhancing their environmental stewardship. We want to share a curated selection of examples where a game has introduced energy efficiency optimisations in such a way to be imperceptible to the gamer when immersed in the gaming experience. There are myriad ways to deliver energy saving ideas into a game, ranging from menus or lobbies, to what happens when the title is left idle, or even during gameplay itself under specific conditions.

Call of Duty gets console and PC Eco Mode

In the Season 5 update of Call of Duty®: Modern Warfare® II and Call of Duty: Warzone™, the Infinity Ward studio incorporated an optional 'Eco Mode' using many of the resources and guidance provided in our Xbox Sustainability Toolkit. This innovative feature was carefully designed to strike a balance between maintaining sharp graphical responsiveness and fidelity while addressing the energy efficiency concerns of both console and PC gamers.

Call of Duty: Warzone is known for its demanding nature, featuring lobbies crowded with over 150 players and cutting-edge graphics that can put a strain on even the most high-end hardware. This level of performance demand often translates to significant power consumption.

To tackle this challenge, the Eco Mode was introduced as a solution. This mode not only helps players reduce their electricity bills but also ensures that their hardware operates at optimal temperatures. In this article, we will delve into the details of this power-saving feature, offering insights into how it was developed. Our hope is that these insights will inspire other game developers to implement similar energy-saving solutions in their titles. Special thanks to Rulon Raymond, Rohit Ravishankar, and Mehek Jethani at Infinity Ward for their partnership.

Front end menu and gameplay changes

As previously mentioned, the Eco Mode in Call of Duty: Warzone is designed to conserve power without degrading the gameplay experience. Players spend a lot of time in the multiplayer lobbies and these menus can be intensive to render at the highest quality, so this became an excellent starting point. Thanks to the data provided by the Xbox team, we observed that some of these menus were utilising a lot of console power (and more than the industry average of comparable games). Therefore, we wanted to give players the options to configure the rendering settings.

This Eco Mode setting offers three options: Off, Minimal (Default), and Full, each of which adjusts the game's variables to reduce power consumption. The settings affect the game in these ways:

• Off: Same behavior as all previous updates with no power savings.
• A small 3D scene resolution reduction when in-game menus are active because this was always locked at 100%. We now drop scene resolution to 66% in minimal
• The frame rate is capped at 60hz
• Collectively this yields an average power saving of ~20%
• A large 3D scene resolution reduction when in-game menus are active. We drop the scene resolution to 50% in full Eco Mode
• The frame rate capped at 30hz
• Collectively this yields an average power saving of ~50%

It is important to note that this feature will only function within the front-end menus of the Multiplayer lobbies in Modern Warfare 2 and in all lobbies, including DMZ, in Warzone.

In-game changes

Continuing from the optimisations made within the menus, Call of Duty: Warzone also made some modest but impactful changes during gameplay. We recognise that the multiplayer pause menu is opened semi-regularly during gameplay and we saw this as an opportunity to introduce energy saving features. However, to ensure the player experience is not impacted, we kept all other updates ticking over, such as hit damage and sound etc.

• Minimal: A reduction in the scene resolution to 66%, matching the multiplayer/battle royale lobby behaviour
• Full: Freezing scene rendering when the multiplayer pause menu is opened in active gameplay

Measuring the impact of changes

We were able to measure changes in real time thanks to the Power Monitor for PIX tooling supplied as part of the Microsoft GDK. We also worked with a new PIXGetPowerMetrics API feature to sample power values in code and this delivered the following power load and GPU load results. The graphs show how the two eco mode settings (minimal or full) reduce the game's high frame rate feature and therefore lower the GPU power and overall power:

The results shown above were taken whilst idle in a Team Deathmatch private match lobby. These results can also be summarised in the following way:

In all scenarios mentioned above, you can see by the screenshot comparisons below that graphical fidelity remains fairly consistent as you step down each time. We then reviewed all artistic and graphical changes with our artists and designers to confirm they were happy with the visual impact and associated trade-offs, and then once the team were all unified, we committed the features as final.

Each player can decide which scenario best suits them based on their hardware set up and energy saving desires, but if a player decides to opt-in to the full power saving eco mode, then the scene resolution is almost imperceptibly different.

Adoption rate by gamers

Approximately two months after these features released in the game, Infinity Ward shared the player adoption and retention by gamers. In other words, how many gamers opted in or opted out. The results are enormously positive demonstrating that over 90% of console players remained in the minimal power saving mode, and of the ~10% who chose to opt-out, approximately one-quarter of them opted-in to increase the power saving. PC gamers demonstrated more inclination to opt out of energy saving, however over three-quarters remained in the lower power saving mode, and ~10% of those who opted out chose to increase the energy saving feature.

This project has generated an exciting conversation internally, focusing on how best to fine tune our gaming experience and what comes next. We are certainly considering our 'Eco Mode' as a living feature for future title in the Call of Duty franchise.

Enabling or disabling the Eco Mode or adjusting its profile in Call of Duty: Warzone is a straightforward process. Using the Xbox Sustainability Toolkit to help measure global power changes, our friends in Xbox have been able to measure and verify that the global average power consumption for Call of Duty®: Modern Warfare® II immediately decreased by approximately 3%. This choice will have no adverse effects on the in-game performance while simultaneously conserving power, saving gamers on their energy bills, lowering gaming device temperatures, and lowering the carbon footprint of gaming. It proves to be an excellent choice for gamers.

Further reading

• Halo Infinite case study
• The Elder Scrolls Online case study
• Fortnite case study
• The game developer Energy Efficiency Essentials

Additional resources

• Harvard Business School →
• Faculty & Research →
• February 2003 (Revised August 2004)
• HBS Case Collection

Flextronics: Deciding on a Shop Floor System for Producing the Microsoft Xbox

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