Microsoft is working hard to integrate Xbox and Windows game development more closely into the future. Windows Central understands that traditional Win32 will be the preferred development environment for the next mainline Xbox consoles, with Xbox One/Series X|S "ERA" environment gradually phased out. Where that leaves our existing library of Xbox ERA games remains to be seen, but it seems emulation is one avenue Microsoft is exploring for backward compatibility and game preservation.
Welp, the Age of Xbox OS is done.
Seems like they are going fully into the PC side of whatever planned hybrid strategy there is. The next line of devices will likely run some form of Windows 11/12, probably customized to some extent for a gaming-friendly frontend (probably also disabling certain utilities by default and axing certain utility/DLL packages deemed not required...but downloadable through updates if people want them).
These things 100% aren't being subsidized in
any way if that's the case.
Remember when they said the next hardware would have features people would want it for? That’s it. You’ll have access to your Xbox and Steam libraries on one device. Boom.
But it's no longer a "console" in the traditional sense. These are going to be primarily PC devices, just heavily customized in the frontend & integration for console-like gaming.
Basically, they're gonna be Windows PCs with frontend/UIs heavily borrowed from Xbox OS's UI, console-like form factors and (MS would like to achieve) ease-of-use.
Hell, the next line of systems may not even carry the Xbox branding at this rate! At least not directly; maybe they'll be called WinX Club.
Personally, nothing much changes from what I was speculating the next line of Xbox systems would be. They're just depreciating Xbox OS in favor for Win32, which admittedly is a surprise I guess. Also means they likely can't gate access to Steam/GOG/EGS etc. through Game Pass, so no soft-subsidization model. Also guess they don't care too much about losing business on the Xbox Store, since that'll probably get phased out too next gen (as in, integrated into Microsoft Store somehow).
Which I suppose also shows both how bad the B2P market has likely become on Xbox, and MS not being interested in that since they're focused more on being a publisher and pushing Game Pass. They probably feel PC Game Pass is enough, and they might find a way to let console Game Pass owners (non-Ultimate) transition over to PC Game Pass without too much issue.
I mean. it would be great if Steam had an Xbox Game Pass tab and vise versa. where you can check and play the games of game pass by connecting your Xbox ID to steam and vise versa to play your steam games or talk to your friends from the steam tab.
I wouldnt be against the idea to be honest.
Xbox console would sell lots too if they could merge steam games on Xbox console by opening a lite version of windows when opening a Steam game on the console.
MS aren't interested in doing any of this for Series X and S because the sales market for that hardware is tapped. It's not an appealing product they can really galvanize sales of and the tech might be too old (therefore expensive) to justify keeping as a main commercial product too much longer.
They'd rather get as many Series S & X owners possible to buy the new hardware, where they can reset expectations, and more easily get it in lockstep with what plans they've got for Windows in mind when it comes to gaming. In a way this is MS's version of what Nintendo did in consolidating their home console & portable lines into one with the Switch. The lesser of the two is always the one to be more strongly eliminated.
In Nintendo's case it was the traditional home console line (even tho Switch is a hybrid, most consider it a handheld/portable first or primarily); for Microsoft, it's Xbox console and things tied to it (like Xbox OS). They can't successfully support both in terms of gaming anymore, so better to get rid of the weaker link and carry as many of its benefits to the surviving one (Windows) as possible.
That's what this all is looking like to me now.