So, I have been having a good think about this Microsoft going completely 3rd party or staying in the hardware business and competing on all fronts. The issue is Microsoft is trying to do everything all at once which is cannibalizing their own hardware and software in the process. The issue is GamePass. GP is the best deal going around in gaming, and MS is willing to bite the bullet to watch it take off, hence why all 1st party games are day and date on the service, the issue with that is you remove all means on selling physical and digital copies. MS need to change this strategy. 

We are all up in the clouds (No pun intended) on what MS is going to say at their business meeting about Xbox. Plenty of speculation across the board. However, what I believe Xbox needs to do to stay competitive while also offering GP and hardware is quite simple.

At MS's business meeting, they need to address the issue that GP is having on their own business model. In my opinion, they should come out and say that moving forward, all 1st Party games are no longer day and date with GP. Yes, I know, GP members won't be happy however, there are ways around this. Firstly, they should make all 1st party games come to GP after let's say a minimal of 6 months. This allows the software at its peak to sell the most amount of units before it becomes part of the service. Xbox can also cover the lost exclusives by filling in gaps with 3rd party games which they are already doing. This should be able to please the corporate suits, as they will see good increases in overall software sales which will bring in more profit. 6months later, a big 1st party game will cross to GP giving the game a second wind while also boosting the service value.

GP is a monster, however if MS continue to do this day and date strategy with the service, they might as well drop the hardware, and go full 3rd party because GP will cannibalize software and hardware sales in exchange for members. Game companies also need the initial sales to gauge their own IPs popularity. Otherwise, if they continue with this structure, and they keep GP active with the best deal, they will need to sell their 1st party games separately on multi-platforms, to gain extra sales these executives want to see from the brand. This will eventually end the hardware business model for them, but in exchange, will work out more profitable.

What are your thoughts and opinions on how MS can compete while pleasing both the company and customers.

Get a time machine, go back in time, and never hire Don or Phil. The only reason the Xbox brand even exists anymore is MS's money but the brand is cooked. It was a frog boiling for years. Now it's crispy.

I think this delay of six month would help slightly, but it could also lead to Games selling poorly, because 30 million customer's wait. I think Game Pass has a huge design flaw. They can't sell a platform with a service that doesn't end in building a library. I don't mean just consoles. Even the Xbox launcher has no chance in competing with Steam or even the Epic Games launcher.

Why do players stick to PlayStations, even if the console is slightly weaker? Just because of exclusives? No, they probably built over 10 years a huge library of games on the platform, they just can't take with them moving forward. I purchased 102 games for my Xbox 360. 42 Games for my Xbox One and just 2 games in three years for my Xbox Series X. Maybe the average customer saves a lot of money with Game Pass, but in my case, I just built my library going forward elsewhere. Game Pass turned almost into a "demo" service for me checking games out, before it ran out two weeks ago. I tried games for a few hours and purchased them on Steam or Switch if I liked them and play them there.

I think what Xbox needs to do are two things. First is to add a claim option, for games you've beaten with Game Pass. Helping players to built a library inside the Xbox launcher and on Xbox consoles even when they let their subscription fade for a few month, they'll keep the games they fell in love with. Additionally they should offer games exclusively inside Game Pass for at least one year. Not offering them for purchase. After that year, they sell them for full price digital only with only 33% discounts once in a while adding value to the service like Nintendo does it for their respective brands. They can sell them like this on all platforms (Nintendo, Steam, PlayStation). Making it possible but costly to avoid Game Pass.

Their current strategy leads just to becoming the biggest third party publisher, while Steam, Nintendo and Playstation platforms are going to grow significantly.

Exactly. Like Steam for PC, the PS library is increasingly baked-in for console owners.

To change console makers would be a huge self-own at this point and this effect is just going to get stronger.

A service like GP and huge game releases with massive sales can't coexist on one platform, or even within one ecosystem. They'll need to choose, and seeing how little they care about the Xbox hardware as a concept, I think full-on software giant is their likely future. Microsoft centrally has been opposed to the Xbox division for ages, citing its continued hemorrhaging of money on the hardware side of things. And their strategic purchases before the recent spree of major studio purchases, would suggest a company very much gearing up towards gaining a foothold on several platforms and in more markets.
Microsoft have always been one of the biggest software companies in the world; but never a hardware contender of significance. Sony, Nintendo, Apple, a slew of phone manufacturers, as well as other players, all have a solid foundation as hardware manufacturers (some across several markets and spaces at that).
From where I'm sitting, it makes no sense for Microsoft to continue releasing static machines that lose them money, and fail to gain entry to some of the biggest markets on earth. Focusing all their effort on software, and potentially multiplying their user-base several times over, would be the smart choice; not to mention the cheaper/more profitable one.
There's no way they didn't realize what GP would do to their own market and software lineup, and there's also no way they never had a contingency when these effects came into play.

Better software. The last MS game I bought was Infinite back in 2021. Meanwhile Sony has GoW, Horizon, spider man, etc. MS doesn't have quality software.

The area we want Microsoft to compete in, and the area Microsoft wants to compete in, appear to be different. Microsoft’s management and shareholders want Microsoft to become the world’s biggest video game company, which is a goal that doesn’t necessarily align with trying to be more competitive in the console space.

I don’t like it, and I don’t think most Xbox fans like it, and I also think long term it will probably be bad for the industry. But that’s the state of things right now.

What happened? I was told putting games day one on a subscription service was not only sustainable but also lead to more sales and that Sony should do the same.

The idea that Xbox will become simply a 'game publisher' I think pays no attention to the corporate needs of Microsoft. Microsoft isn't simply in the games industry to make profit from their games unit, they are in the industry to make profit from the games industry *and* provide synergistic benefits to the rest of the organisation. If they were *just making money from games*, but lost the synergistic benefits, the division would be spun out and no longer have a home at Microsoft, as there'd be no reason to keep the two together.

Ultimately Xbox was released to make sure that a competing vision of computing could not emerge to take over from Windows. It was as much a defensive play as it was offensive. Imagine a Sony Playstation underneath just about every television in the land, with the device being used to wirelessly send a signal to another screen on your desk, where you can do word-processing and spreadsheet activities, on your wireless keyboard, running Sony enterprise software...

These are the sort of futures that can come into being when you let potential competitors play in a related part of the market, and use it to obtain massive profits and dominance. By making sure the fight with Sony took place on consoles and games, they made it an impossibility, or at least much more difficult for Sony to ever come and fight the war on their turf.

Note this is why they launched the Zune as well, and were one of the first trying to take mobile beyond simple talk and text. Music players could be parlayed into getting people within an exclusive Mac environment, same with iPhone, and you can bet at one time Nokia was placed on a board as a potential threat, not just to their mobile efforts but as a future competitor to Windows and so on.

So Microsoft as games publisher has to play in that space, it will never be used to put Microsoft's other prime divisions under the pump. If it is to exist within Microsoft it must be supporting the Windows store, or Windows, or there to be held over consumers.. you can't go "linux/steam" exclusively, as none of our games will be there etc.

...where a *pure* publisher would not have those concerns, and would be more keen to follow the market, and where consumers are going. Microsoft owns game studios to *direct* where consumers go, and to make sure Microsoft's core assets are not displaced by others. Its game studios will never exist *just* to make profit by making games, with no thought as to how much relatively they are boosting competitors that could come after their core services at a future date.

They do not compete anyway. Makes sod all difference if they exist or not.