The Titanfall Gamble


Marc Whitten Xbox

The big news in the gaming industry is this past week is the departures of Jack Tretton and Marc Whitten from Sony and Microsoft respectively. Both men were instrumental in the launch of the next-gen PS4 and Xbox One systems last fall. Tretton’s departure has been characterized as an amicable split, as he decided not to renew his contract with Sony.

Whitten had been with Microsoft for 14 years, and was the Chief Product Officer for Xbox. He departed to join Sonos, a wireless audio company. Whitten is the second high-profile officer to leave Microsoft in the past year, previously Don Mattrick left his EAD (Entertainment and Devices) position to take the CEO reigns at Zynga.

While it is not unusual for a CPO to leave a high-profile job for a new challenge at another company, the timing certainly is. This week was supposed to be the victory lap for everyone in the Xbox division, as one of the most-anticipated games over the last few years finally launched, Titanfall. For those who don’t know, Titanfall is a big-budget shooter that combined Call of Duty gameplay with 20-foot-tall robot mechs.

Not only was Titanfall the first big showcase for next-gen gaming, it was an exclusive for Microsoft platforms (Xbox One, Xbox 360, and Windows), something that was frequently touted by Microsoft leading up to the game’s launch.

To say that it was a quite a coup to land Titanfall as an exclusive (for the lifetime of the Xbox One, not just a timed exclusive) is a bit of an understatement. The game is published by Electronic Arts, who are notorious for releasing games cross-platform. To convince EA to release the next big Call Of Duty on half the platforms they typically do must have required a significant investment by Microsoft, likely in development or marketing costs.

Before its release Titanfall was a new and unproven franchise. However for Microsoft the game served as a reply to those who criticized the Xbox One platform. Unhappy with the $500 price? The mandatory Kinect accessory? Wait until you play Titanfall. In the absence of a new Halo or Gears of War game (both could be a year or two away), Titanfall was supposed to be the first killer app exclusive that galvanized the Xbox One platform.

Having already spent a pretty penny to keep Titanfall as an exclusive, Microsoft doubled-down and offered the game for free with the purchase of the Titanfall edition Xbox One console. A month previously Xbox Ones started shipping with a digital copy of Forza 5, but that was developed by Microsoft — it was their game to give away. It’s fair to assume that EA was not giving these copies of Titanfall away for free with the console, they had to be compensated in some form. Microsoft was likely taking a hit for every Titanfall console they sold, with a portion going to EA for a copy of their game.

With Titanfall released to favorable reviews and the Xbox One getting a bump in sales thanks to the game (the console also got a price cut in Europe recently), it became clear the game was a hit, but not the runaway success that EA and Microsoft hoped for. Usually in the days after a Call of Duty or Grand Theft Auto was released, Activision or Take-Two would trumpet their profits (we did $1B in sales in 2 days!), but after a week of release neither Microsoft or EA was gloating. So far it is being hailed as “the biggest game of 2014″, but we’re only 11 weeks into the year, and only several other AAA titles have been released in that time (FIFA, Dark Souls 2, South Park, and Thief).

This past week Microsoft and EA are likely looking over their nuptials and calculating if the marriage was worth it. EA’s shareholders are probably wondering if sales would’ve doubled if Titanfall had been released on the PS3 and PS4 consoles as well. Microsoft is also measuring the return on their investment, in terms of Xbox One units moved.

Going back to Marc Whitten, his departure at this point in time would indicate (at least to gaming fanboys and gossipy bloggers like myself) that the Titanfall gambit fell below expectations for Microsoft. The timing would also suggest that he delayed his departure to Sonos to occur after the big Titanfall launch, as a show of stability for the Xbox brand (which may or may not be on shaky ground). Whatever the reason, we’ll never get the truth because Microsoft would never publicly acknowledge that things aren’t going well for their new Xbox One platform, as such news would affect their stock price negatively.

Going forward we’ll see just how exclusive Titanfall really is. EA has brokered exclusivity agreements with Microsoft before, namely for the first Mass Effect. Eventually EA did what EA does best, and that’s look after its own bottom line by seeking out more profit on additional platforms. It wouldn’t surprise me if there was an escape clause for EA to abandon exclusivity for Microsoft if sales targets for Titanfall fell short.

This blogger has yet to buy a PS4 or Xbox One, making him neutral and immune to attack in the comments.