The biggest strategic mistake of Xbox's Phil Spencer era is not talked about enough

Xbox's content acquisition strategy has been the topic of discussion again recently. 

Honestly, Xbox fans are eating pretty well overall right now. Call of Duty: Modern Warfare 3 just hit Xbox Game Pass, alongside Valorant, with all characters unlocked for subscribers. We also had great titles like Kunitsu-gami: Path of the Goddess and Dungeons of Hinterburg hit the service recently too. The Xbox Games Showcase 2024 from June gave the most exciting and comprehensive look at Microsoft's roadmap yet. Microsoft is also officially working on the next iteration of Xbox console hardware. 

I frame the article this way because I want to acknowledge the hard work that Microsoft has done to deliver for Xbox fans of late, but it hasn't all been flowers and sunshine. Although, the brand has been a bit stressed recently, with some of Microsoft's strategic decisions casting doubts over the long term future of Xbox. Microsoft is bringing its Xbox games to third-party console platforms like PlayStation, which on the face of it could reduce interest in Xbox hardware, and hollow out desire for the brand. 

It's with stuff like that in mind that Xbox fans are often skeptical about some of Microsoft's strategies. Xbox flagship IP Halo has been arguably thoroughly mishandled in recent years, for example. And Capcom and others have had a run of games exclusively skipping Xbox, including Monster Hunter Stories, as well as ports of games like Marvel vs. Capcom. 

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It's wild, since a lot of these games were previously available on Xbox platforms, and the community has rightfully been angered by Microsoft's seeming lack of urgency over some of these issues. And perhaps they're all symptomatic of the same problem we'll discuss in this short piece. However, I rarely see the core Xbox community discuss what is arguably the biggest miss in recent Xbox history, maybe since 2013's notorious Xbox One launch — and that is the near blanket omission of the entire gatcha game genre, potentially alienating an entire generation from Xbox. 

Microsoft had the opportunity to bring Genshin Impact to Xbox, but passed — that's a spectacular miss

People often don't care about games skipping Xbox unless it's a game they want. I'm acutely aware of the idea that I'm one of a few gamers that want Monster Hunter Stories on Xbox, probably. Microsoft is likely acutely aware of that fact, too. 

At EVO 2024, Capcom announced SNK vs. Capcom: SVC Chaos for modern platforms. That is, PC, PlayStation, and Nintendo Switch. Once again — no Xbox in sight. EVO is the world's biggest fighting game tournament and represents one of the most passionate and dedicated communities in all of gaming, and to have another game like this announced exclusively not for Xbox on such a grand stage does send a big message. The fighting game community is not always best served on Xbox. 

Purely for the sake of argument, let's give Microsoft the benefit of the doubt on this one, though. You could argue that fighting games aren't as big as they once were, and probably not driving new users to gaming like they would've done in past decades. As big as games like Mortal Kombat and Street Fighter are, they're a far cry from the likes of Call of Duty and Fortnite at driving engagement. So hey, perhaps it's no big deal about older Capcom fighting games, right? Maybe today, but you never know what the future will bring when it comes to content. I would argue that you should gun to ensure every genre is well-served on your platform, even if the audience is comparatively small. You never know if something will blow up. Few games encapsulate that reality like Genshin Impact.  

Even if we're giving Microsoft the benefit of the doubt over legacy fighting games on Xbox, we can't really do the same for "gatcha" type games, which have become increasingly popular in recent years. And it's something I rarely see the core Xbox community discussing. I can't help but feel like underserving this genre above all others is hurting Xbox's growth right now, and represents one of the brand's biggest mis-steps. 

For those who don't know, Genshin Impact is a wildly popular free-to-play action RPG that is another game essentially exclusively not on Xbox. It is vastly huge, with tens of millions of players, contributing to Shanghai-based MiHoYo's vast multi-billion annual revenues. In fact, MiHoYo had better profit margins than both EA and Activision in 2022, on the back of Genshin Impact's massive popularity and in-app purchase model. And there's little sign of them slowing down. 

Games like Genshin Impact, Honkai Star Rail, and the recently released Zenless Zone Zero are pushing hundreds of millions of downloads across mobile devices, PC, and PlayStation — even on the Epic Store — but they're nowhere to be found on Xbox. They have billions of dollars in revenue, spectacularly passionate fans, and crucially, are very popular with younger cohorts of gamers who might be considering their first gaming console. 

The worst thing is, Microsoft had first pick at Genshin Impact and all of the MiHoYo games that would follow. And sensationally, they reportedly passed on it. 

Gatcha games have absolutely exploded in popularity — literally everywhere — except Xbox

Version 4.8 "Summertide Scales and Tales" Trailer | Genshin Impact - YouTube

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Yep, you read that right. Microsoft passed on MiHoYo's pitch for Genshin Impact on Xbox back in 2020, according to a report from Reuters. The lack of Genshin Impact has essentially handed an entire genre of games to PlayStation, at least as pertains to the console space. And sure, I know the vast majority of the engagement in these types of games is driven on mobile — but if we're not trying to compete at least on the basic most trending titles, why are we even still in the game?

Having stuff like Monster Hunter Stories and classic Marvel vs. Capcom would be nice to have on Xbox, but I concede they're not necessarily critical by themselves. However, games like Genshin Impact and similar titles like Wuthering Waves are absent on Xbox, and they're wildly popular in particular with younger gamers from the Gen-Z and Gen-Alpha cohorts. These generations are heading to college and university for the first time, and may be considering consoles for a better experience playing these types of games. Perhaps they would even consider playing them via devices like the $40 Amazon Fire Stick 4K with Xbox Cloud Gaming for the savings. Were they able to, that is. Fact is, they're not. 

A younger relative of mine recently cited Genshin Impact specifically as guiding their decision to ask for a PS5 rather than an Xbox Series X|S console, and I wonder how many other youngsters are following that line of thinking. 

It's hard to know for sure why Microsoft would've passed on Genshin Impact. Perhaps there were concerns about the genre's heavy insistence on loot box-style mechanics back in 2020, when governments were investigating the business model. Perhaps Microsoft just doesn't like anime a whole bunch. Either way, there's little doubt that Microsoft heavily regrets its decision to pass on MiHoYo's line-up, which is now effectively the exclusive domain of PlayStation in the console market. I do know that Microsoft is also exploring its options to bring Genshin Impact to Xbox some day, too, at least aspirationally so. 

But I think any opportunity to capitalize on the popularity wave of Genshin Impact and its gatcha siblings has probably long since passed. It's just another example of Xbox playing catch up, as a result of lack of cultural foresight or urgency. 

Is it too late to fix the gatcha situation on Xbox?

Microsoft has managed to land some free-to-play wins lately with games like The First Descent, and it has Bandai Namco's Genshin-esque Blue Protocol launching on Xbox potentially later this year — but that's probably of little consolation at this point. As we enter the back to school season and the broader 2024 holiday season, the Xbox Series S would've been an absolutely ideal console choice for millions of youngsters either looking for a compact console for college or their bedrooms — if it only actually had the games they want. 

Microsoft often speaks in interviews about finding those elusive "new to Xbox" users, looking everywhere under the sun to try and find them. It has done some impressive things to acquire those users, like big partnerships with service games like Valorant and League of Legends on PC, partnerships with Epic Games on cloud, and so on. Microsoft has also boosted its Japanese credentials with support from Atlus on franchises like Persona (although I wouldn't say no to the Ys or Trails series, just sayin'). Microsoft finally landed the Final Fantasy 14 MMO too, and it seems to be doing well on Xbox. EA's College Football 2025 seems to have also been a spectacular driver of Xbox console sales recently, and Microsoft did get Palworld as a console launch exclusive, which absolutely blew up at the start of the year.

I want to shout out the wins here, because I genuinely do appreciate the hard work being put in from every corner of the Xbox team — but there's always something missing. Whether it's "smaller" titles like those classic Capcom games, cult classics like Final Fantasy VII Remake, or these huge misses like Genshin Impact. Xbox fans seem to be the ones typically missing out, and that's not okay in a universe where Microsoft has started putting its own games onto competing platforms as well. I feel like some of the backlash to that strategy is warranted, given that there are still content issues at home. Those content issues have needlessly cost Microsoft tens of billions paying out premium dollars after the fact, just to keep Xbox in the race and rectify past mistakes. 

Xbox Game Pass is great, love it. No issues there. I love the efforts in cloud, and the efforts from first party, too. But I do long for a future where I receive press releases from studios for new games that read "and it's coming to all platforms!" only for Xbox to be omitted. But hey, maybe I'm asking for too much, but I can't help but feel like landing Genshin and its gatcha siblings should be a DEFCON 1 situation for Xbox.