Can Xbox Get Back in the Game?

Imani Moise (0:05)

When most people think of Microsoft, they think of spreadsheets and PowerPoints.

Ben Fritz (0:09)

Obviously, Microsoft has always dominated in the office. Of course, you use their spreadsheets and their email at work, but it wasn't a brand that really meant anything to consumers.

Imani Moise (0:19)

That's our colleague Ben Fritz. He says that as far back as the 90s, Microsoft had aspirations to expand beyond computers and cubicles.

Ben Fritz (0:28)

Microsoft's bet was that they could build a very strong consumer brand that would give them a presence in people's living rooms and make them relevant to especially young consumers.

Bill Gates (0:36)

You may have been wondering what this great device was here.

Imani Moise (0:40)

In 2001, founder Bill Gates took the stage at a conference in Las Vegas. He was there to show off the tech giant's new attempt to break into entertainment.

Bill Gates (0:48)

So for the first time, let me now unveil Xbox.

Imani Moise (0:56)

The Xbox.

I'm thinking back to the 2000s when there were all sorts of consoles on the markets. You had Wii's, you had GameCubes, and each of those systems had a certain reputation. What would you say was Xbox's vibe?

Ben Fritz (1:13)

Xbox's vibe was like it was really for the hardcore gamers. The Nintendo Wii was for casual players, grandparents played it together, like Wii bowling and stuff, anybody could do it.

The Xbox was for the people who liked to play online, to play shooting games where they try to kill each other, racing games.

Imani Moise (1:35)

Xbox became a leader in multiplayer games, ushering in a whole new era in gaming. For a while, the Xbox succeeded in giving Microsoft its cool factor.

But those glory days have come and gone. And now, Xbox has become a drag on the business.

Ben Fritz (1:52)

Xbox's business is in bad shape. Started this year, their profit margin was down around 3 percent, which basically means that Microsoft could have put its money into a savings account and probably made as much or more.

And now, they're in the midst of a major reversal of strategy under a new leader. She's told her employees, she's told gamers what rough shape they're in, and how she intends to fix it.

Imani Moise (2:19)

At a high level, what does she want to do at Xbox? Like, what's her goal?

Ben Fritz (2:23)

Her goal at the highest level is to get this business back in growth mode and to have it be a respectable part of Microsoft's business and not be sort of like the step kid in the basement.

Imani Moise (2:38)

Welcome to The Journal, our show about money, business, and power. I'm Imani Moise. It's Friday, October 9th.

Coming up on the show, can Xbox get back in the game?

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Imani Moise (4:38)

Xbox used to be the it console for serious gamers.

This was back in the mid 2000s, when Lincoln Park was on the charts, and Monster Energy drinks were flying off the shelves. And in basements around the country, teenagers were huddled around that big chunky black box, with the bright green logo and the wired see-through controllers.