Xbox wants to be an entertainment company. Playing it safe won't get it there

On Thursday, Xbox announced XP, a new division for film and television, merchandise, live experiences and partnerships, led by former Mojang president Kayleen Walters. Chief strategy officer Matthew Ball set the bar in the announcement: "Our ambition at XBOX is to be the number one entertainment company in the world." On the fifth episode of Never Entertained, Greg Posner, Simon Pulman, Justin Ruiss and Stephen Lenz asked the obvious follow-up. Does Xbox have the IP to get there? Their answer kept landing in the same place. Entertainment runs on characters people feel something for, and those come from bets that were allowed to fail, which is the opposite of how Xbox has been run for the last two years.

Same review score, different scoreboards

The show opened on the week's two biggest launches. Star Wars: Galactic Racer and Gears of War: E-Day both arrived on 6 October with the same 87 on OpenCritic, and only one of them launched on Game Pass. Pulman's first question was the right one: winning by what metric? Steam concurrents are a partial view of two games that are also on consoles, and on that view Gears was tracking slightly ahead. Budgets matter too. Galactic Racer is probably the cheaper game, but it pays a licence fee to Disney and Lucasfilm for every copy.

Ruiss was the most surprised by Star Wars, mostly on the strength of what friends were telling him, and by the fact that it is a roguelite. Greg's case for it was about audiences rather than reviews. Racing games tend to lose casual players quickly, Burnout was one of the few series that broke through, and Galactic Racer is made by people who worked on Burnout. A nostalgic Star Wars podracing game brings in players who remember the N64 original, and the roguelite structure gives younger players a reason to try it. Lenz took the other side: shooters have a broader reach than racers, Forza and Mario Kart are the exceptions, and over time he expects Gears to go further.

Is this the last Gears made the old way?

Pulman turned the launch into a business question. Microsoft has been cutting across its studios, and in his telling much of the Halo studio has already been disbanded. Will E-Day perform well enough to protect The Coalition, or are more layoffs coming? Greg's read was that this is the studio's swan song, and that Activision is on course to become Xbox's shooter juggernaut, absorbing Halo and Gears over time.

Ruiss supplied the history lesson. Activision used to publish Guitar Hero, Tony Hawk and a wide slate of other games alongside Call of Duty. Then it learned what worked every single year, and everything else faded. If Halo and Gears get folded into the same unit, he expects the same conclusion to be reached again. Pulman named the contradiction that framed the rest of the episode: an entertainment company needs many brands and has to let some of them fail in order to find its hits, and Xbox has spent recent years doing the reverse, doubling down on its biggest franchises and abandoning the rest.

Who is the biggest entertainment company right now?

Pulman put the question to the panel. Greg said Disney. Ruiss gave the answer that changed the conversation.

Pulman's map of the market explains why Xbox thinks it can play. Six to eight large companies are each strong in one area and trying to move into the others. Netflix dominates streaming and has not figured out games. Paramount Skydance has a deep film library and no parks. Sony, Nintendo and Xbox are making the opposite move, from loyal gaming audiences toward film, television and live events. On his scorecard Nintendo is furthest along, two for two financially on its Mario films with Zelda coming. Sony has been hit and miss. Xbox has big ambitions and, so far, Fallout as its one real success story outside games.

You need characters people feel something for

Infrastructure helps, Pulman argued. Knowing how to run parks and live experiences is a big part of why Disney is where it is. But it is not the thing that makes an entertainment company.

The panel's consolation was the back catalogue. Pulman listed Viva Piñata, Perfect Dark and The Evil Within as the kind of dormant IP a Hollywood mind would audit on day one, sorted into ready now, medium term and hard sell. Lenz added most of Rare's catalogue, Banjo-Kazooie among it. Ruiss's pick was Overwatch, a cast of characters he says was born to be a Saturday morning cartoon. When a commenter asked Pulman why anyone would bring back dusty old IP, his answer was that this is simply what an entertainment company does.

Nobody knows anything

The catch is that auditing the catalogue is still a safe move, and safe is the problem.

His example was K-Pop Demon Hunters, the biggest new IP of recent years, which Sony evidently did not see coming or it would not have given the rights to Netflix. Hits come from taking flyers. Pulman's other test for XP is one nobody has passed cleanly: aligning a film or series with the game it is based on. Ruiss pointed out that even Nintendo's releases arrive months apart rather than as a single event.

Or a fight with Sony that Xbox can't win

Greg went further than anyone. His view is that Xbox concluded it could not beat PlayStation at consoles and decided to take Sony on in film and entertainment instead, where Sony is even stronger. Microsoft is a technology company, he argued, and the same thing happened years ago when Disney tried to make games itself. If he were Satya Nadella, his question would be how long he keeps funding XP before asking for a return.

Pulman agreed from experience. Xbox has announced entertainment ambitions several times before, including developing Halo in house, and walked them back. Games and Hollywood have different cultures, and the gap takes far more communication than people expect. Then he added the twist: the studio producing the Zelda film is Sony. In film and television, rivals partner when the property is strong enough, and if Xbox brings something compelling, every studio will compete to work with it. The open question is the model. Most game companies license the rights and take a producer fee and approvals; Nintendo, as Pulman understands it, co-finances and takes real risk. His guess is that Xbox starts with the former. Lenz's dark horse was Amazon, the studio and distributor behind Fallout, with Tomb Raider in the works and an ecosystem he thinks gives it a better shot than Microsoft.

Who gets to stream GTA 6?

A report from The Verge earlier in the week said Xbox had secured GTA 6 cloud streaming rights at launch. Pulman heard it fifteen minutes before a panel he was on, and Matthew Ball pushed back hours later, saying the game will not be streaming exclusively or to PC. Pulman's best guess is that it ends up streaming on both platforms in some form, to a PlayStation Portal from your own console and perhaps to a smart TV on Xbox, but not to a PC.

The context is Xbox's cloud economics. From November, Game Pass cloud streaming gets monthly hour caps, 15 hours on Ultimate, 10 on Premium and 5 on Essential. In Pulman's telling, most subscribers barely use cloud streaming and a small group of heavy users use it a lot, which is what the caps are aimed at. Lenz is convinced there is more to the deal than either company has said, and that Microsoft will find a way to monetize those hours. Ruiss wondered whether it is partly about making Xbox's technology feel relevant again. Pulman's more modest suggestion was a marketing partnership, the first of many commercial tie-ins expected around the game, from guest DJs on its radio stations onward. Ruiss was not impressed by Lana Del Rey hosting one, but approved of Slayer's Kerry King on the metal station.

Whose IP is it anyway?

The middle of the show turned into a game: guess the panel's favourite licensed games, and who picked them. Ruiss brought two, X-Men Legends and Star Wars: Shadows of the Empire. Pulman's was the 1984 Ghostbusters game on the Commodore 64, famously difficult. Greg's was Rockstar's The Warriors, and Lenz's was GoldenEye 007, the game he played for hours with his cousin, uncle and dad. Ruiss had expected the Arkham series and Turtles in Time to be locks; Pulman made a case for Alien: Isolation, the original Turtles arcade game and the recent RoboCop.

Two points from the game outlasted it. Greg's pick worked on him the way licensing is supposed to: The Warriors pulled him into a film he would not otherwise have cared about. And Pulman noted that licensed games are a graveyard of dead IP, much-loved games that vanished when the licence lapsed, which makes them a preservation problem as much as a nostalgic one.

When AI can rebuild a game, who owns it?

The final topic was the same question asked from the other end. Google launched Playground, an experimental tool built with Unity that turns a text prompt into a game, the same week that someone put the original Halo in a web browser. Ruiss made the democratization case: Unity always promised that one person could make a game, and tools like this lower the barrier further without locking creators inside a single platform the way Roblox does.

Pulman was careful to separate the cases. Replicate Halo and try to sell it, and you will be shut down immediately; there are likely infringement problems at the input and certainly at the output. The harder case is a tool that generates things in real time without anyone distributing them, because then the rights holder has to go after the tool itself, which is exactly what is being litigated between rights holders and AI companies now. Lenz pointed to the scale rights holders already deal with: in 2024 Nintendo had more than 8,500 GitHub repositories of the Yuzu emulator taken down. His expectation is that creators will simply move the copying under the hood, keep what is not protected, and ship new games built from it.

Pulman's most practical warning was for small studios. The conventional wisdom has been to build an audience while you develop by talking openly about what you are making. He has seen indie developers do exactly that and get ripped off in real time, their concept cloned with AI and released before theirs. That could change how games are developed and marketed, and he would be sad to lose the next Balatro to it.

What an operator should take from it

Every topic on this episode came back to ownership. Xbox wants to turn its IP into an entertainment business, but the IP that matters is built by taking risks, not by auditing a catalogue. Licensed games show how quickly a beloved game disappears when the rights expire. AI tools make it cheap to copy what something looks like and plays like. The defensible asset is the thing players feel attached to, and the willingness to back new things long enough to find out which ones they will.

For a studio, that has two practical edges. If you build in public, assume a fast follower is watching, and make your relationship with your audience the part that cannot be cloned. And if you own a world, the question is not only whether it could be a film. It is whether players care about its characters yet.

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