Not really. The video game industry has, for a long time, had winners and losers. Xbox just happens to be among the current losers, so to apply what's going on there to the industry as a whole is a vast overgeneralization. Companies falling from overspending against their rev isn't new. I'm sure many recall the fall of Sega, Atari, Infogrames, NEC, SNK, THQ, Midway, Acclaim, and many others.
Today, companies are making tremendous profits in the video game industry. For example, in the last fiscal year Nintendo made 360 billion yen profit off of 2.3 trillion yen revenue. Another example, Konami made 75 billion yen profit on 420 billion revenue. In the US the most profitable was EA in their last public annual earnings report that scored 1 billion in profits on 7.4 billion in revenue.
I'd actually say Microsoft is probably the worst company to look at as a sample of the video game industry for this kind of question:
1. They have the means to much more heavily subsidize their projects than any of the other companies.
2. Their mode of competition is imitate a market leader and outspend them. Spending well above their means to eat up entire studios, and outbid competition on staff hires.
3. They are a failing imitation brand that refuses to differentiate themselves with any meaningful lateral innovation (in the way Nintendo did multiple times).
This makes them very unlike other brands and devs in the industry.
In the past, Microsoft has been able to bail Xbox out with its substantial war chest, and finance its "spend above your means to compete" strategy. (and while I can't speak on the veracity of this report, if true) This Asha scaling back stuff is a "shareholders want to pull the plug on this Xbox spending strategy" type thing, rather than a reflection of the strategies in the rest of the industry.
I describe myself as a little dose of toxic masculinity.
