Almost a quarter of a century ago, Microsoft launched the Xbox – a video game system that would eventually evolve into the company’s gaming division. Soon afterwards, video games became the largest entertainment industry on the planet. Yet as we approach Xbox’s 25th anniversary, we see that this enterprise may become one of the Culture War’s biggest casualties.
In my opinion, Xbox decided to go Woke, and now it appears to have gone broke. Figuratively speaking.
Recent news from Microsoft itself is that the Xbox division is only making a 3 per cent return on investment (exceptionally low for the technology sector). Microsoft’s CEO has publicly stated (if perhaps hyperbolically) that YouTube clips of Xbox games being played are better monetisation of Xbox’s content than sales of the actual games. The head of Xbox has made it clear that the business could be doing better. Several Microsoft-affiliated game studios, such as Peabody-Award-winning Compulsion Games, have been shut down, and more layoffs and studio closures are on the horizon. Xbox’s most iconic franchises – Halo and Gears of War – have suffered from lacklustre recent entries. More layoffs, and more studio closures, are expected by industry analysts.
To understand how Microsoft ended up in this situation, and how wokeness contributed to it, we must remember when Xbox first became a big player in the industry.
The original Xbox console, launched in late 2001, was not very successful. It was only with the successor console, the Xbox 360, that Microsoft became a formidable force in console gaming (before the 360, Microsoft’s gaming relevance was entirely confined to the Windows PC space). The 360 launched at a lower price point, and a whole year in advance of, the competition (Sony’s PlayStation 3), and was also easier to develop games for. At the same time (and partially due to Sony’s preceding console, the PlayStation 2), a certain subset of game franchises were becoming socially acceptable as a mainstream/everyday hobby. This combination of install base growth, mass-market profitability, and continued pressure to improve production values, resulted in the video games market increasing resembling the ‘blockbuster movie’ market: very large development budgets were dedicated towards the creation of mass market-oriented games, with these budgets being provided by risk-averse publicly-traded corporations who aimed to maximise and continually grow shareholder returns over time.
Within this environment, ‘woke’ advocacy groups emerged. They made an enticing claim to large game publishers and developers – if games started containing more content highlighting women as well as ethnic and sexual minorities, these games would have a wider marketplace appeal and thus grow the audience and make larger profits. Said advocacy groups acted like ‘sensitivity readers’ in the literary world – they asserted some creative control over the product in the name of improving representation, avoiding offence and expanding the market.
Xbox was not the only gaming entity to take this deal, but they enthusiastically embraced it, much to their own detriment. Within Microsoft, ‘inclusion standards’ were developed which deterred the creation of conventionally attractive and exaggerated female characters. Traditionally male-centric franchises such as Gears of War were changed to feature more prominent female protagonists. Xbox-sponsored titles along these inclusive lines that ultimately won Peabody Awards by (quoting the Peabody Awards) ‘centring a Black woman’s healing journey’. Despite this on-paper success, there has been a collapse in sales, of both Xbox systems and Xbox games.
This problem has not been confined to Microsoft. Electronic Arts and Sony have both suffered similar situations where high-profile releases (such as Dragon Age: The Veilguard, Concord, and Saros) contained ‘diverse’ content and yet failed to reach the expanded audience that was allegedly always there, just waiting to be represented. Yet the fact that a business with Microsoft’s deep pockets – deeper than those of EA or Sony – can’t perpetually burn money in the name of ‘diversity’ is far more telling.
Proponents of ‘diversity’ claimed that ‘diverse’ content would reach untapped markets and cause sales figures to increase geometrically. We’ve seen how false this is, even in the most lucrative entertainment industry on the planet. Ever since an advocacy group released the results of a significant survey, it has been well-known that the acolytes of ‘diversity’ and ‘representation’ are in fact deeply unrepresentative of the population as a whole. The mindset roughly described as ‘activist progressive’ is shared by only 8 per cent of the US population, and likely no more than 15 per cent in any other Western nation. It is rather ironic that in the name of ‘inclusion’ and ‘representation’ and ‘reaching new audiences’ the most well-funded entity in gaming shrank its market share by making content for a small minority.
The entertainment markets are perhaps where we see populistic and majoritarian impulses assert themselves the most vigorously, more than in elections. The masses will still love ‘blockbuster’ films even if cinephile critics bemoan such ‘kitsch’. The relevance of this in our current moment – where a Preference Cascade of populist-right support is underway despite literally decades of stigmatisation and condemnation from the citadels of high culture – should be obvious. Microsoft’s balance sheet is indicating the same thing that we see in political polling across the West; the people in charge are not giving the people who vote (with either wallets or ballots) what the voters want.
Despite my own ambivalences about right-wing populism, I cannot avoid concluding it is a necessary corrective to Elite Failure.
In the gaming industry, an activist once memorably described gamers as ‘picky babies’ who need to be coaxed into eating their vegetables for their own good. The policymakers of Western societies have taken the same attitude toward their constituents for far too long. The results of marketplace or democratic accountability really should not be surprising in either case. Nonetheless, it is somewhat reassuring that even titanic incumbents – like Microsoft in gaming, or the Labor/Coalition duopoly in Australian politics – can still be held responsible by majorities; those who dream of elite-controlled societies rarely contemplate the incredible damage caused when such elites make mistakes.
Dr Andrew Russell is an economist and philosopher. His substack can be found at www.drcasino.substack.com
