---
title: 'DF Direct Q+A: The Big "Xbox Reset" Memo Discussion - What Happens Next?'
source: 'https://youtube.com/watch?v=zCBaZ1Wl6O4'
video_id: 'zCBaZ1Wl6O4'
date: 2026-07-28
duration_sec: 3053
---

# DF Direct Q+A: The Big "Xbox Reset" Memo Discussion - What Happens Next?

> Source: [DF Direct Q+A: The Big "Xbox Reset" Memo Discussion - What Happens Next?](https://youtube.com/watch?v=zCBaZ1Wl6O4)

## Summary

The Digital Foundry team discusses the leaked 'next 100 days Xbox reset' memo from Asha Sharma, detailing Xbox's declining revenues, hardware component cost crisis, and potential layoffs. They analyze the implications for Xbox's future strategy, including exclusivity, hardware partnerships, and the upcoming Helix console.

### Key Points

- **Xbox Reset Memo Overview** [01:56] — The memo from Asha Sharma and Matt Booty outlines challenges: 3% accountability margins, declining revenues by half a billion dollars over five years despite $20 billion investment, hardware component costs doubling, and hints of layoffs.
- **Studio System Concerns** [03:47] — Oliver notes the memo discusses expanding the studio system but not adequately funding franchises, suggesting potential cost-cutting, studio closures, and layoffs in the coming months.
- **Microsoft's Profitability vs. Xbox Division** [07:14] — John argues Xbox is still profitable but held to unrealistic standards by Microsoft's parent company culture, which demands extreme profitability rather than sustainability.
- **Hardware Component Crisis Blame** [10:06] — John criticizes Microsoft's AI push for inflating component costs, directly impacting Xbox hardware affordability, and notes that a $1000 console is not viable.
- **Helix Console and Affordability Challenges** [12:10] — Rich and Oliver discuss the next-gen Helix console targeting 2027, facing extreme affordability challenges. Oliver suggests Microsoft may adopt a Windows-like model with third-party hardware partners for lower-end devices.
- **Price Sensitivity and Market Impact** [18:08] — Rich notes that PS5 price increases led to a 50% sales drop in the UK, indicating a threshold beyond which mainstream users won't pay. John adds that affordability is decreasing across all consoles.
- **Exclusivity Strategy Shift** [24:08] — Oliver explains that new leadership under Asha Sharma is pivoting back to console exclusives and making Helix a mainstream proposition, moving away from the multiplatform strategy.
- **Steam Machine Spec Locked** [28:44] — Oliver and John explain that Valve cannot easily upgrade the Steam Machine's specs due to supply chain contracts and engineering commitments; it will launch as designed.
- **God of War PS6 Theory Debunked** [34:43] — Oliver and John dismiss the theory that the new God of War is a PS6 launch title, stating it's a PS5 game with likely a PS6 enhancement patch later.
- **CPU Performance Variability** [38:43] — Rich notes that CPU demands vary greatly per game; even a Ryzen 5 5600 can be CPU-limited in some titles. Frame generation helps but adds latency.
- **Series S as Switch 2 Savior** [45:17] — Oliver confirms that Series S and Switch 2 often share similar compromises (RAM, GPU compute), making Series S a useful reference for Switch 2 ports. DLSS gives Switch 2 an image quality edge.

### Conclusion

Xbox faces significant challenges from rising hardware costs and declining revenues, but remains profitable. The shift back to exclusives and efforts to make Helix more affordable may help, but the industry-wide affordability crisis poses a threat to all console makers.

## Transcript

Hi everyone and welcome to the latest
edition of the DF Direct Q&A show. Lots
to get through this week. Lots of
questions, lots of answers, but we've
got to start off by talking about the um
next 100 days Xbox reset memo that Asha
Sharma sent to team Xbox employees
globally uh yesterday at the time of
filming this. Joining me to talk about
that and to answer a bunch of questions,
John Lenman. Hi.
>> Hey, Rich. It's uh lead o'clock
according to my phone. Hard to see I
guess in this light. There we go. It's 1
1337 o'lock over here in Germany which
is a very good time and perfect for
talking about all things tech.
>> Yeah, absolutely. Uh hello Oliver
McKenzie. How are you?
>> I'm good. I struggle to understand
24-hour time as a North American, but I
think that's uh 137. Is that right,
John?
>> Yes, correct.
>> Yes. Okay.
>> Okay, then. Well, as I said, lots to
talk about. Um, uh, so let's crack on.
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Right. So, we do have to talk about this
next 100 days Xbox reset because after
the sugar rush high of the Xbox showcase
2026, we're now sort of brought back to
reality with an in-depth uh briefing
from Asha Sharma and Matt Booty about
the challenges facing the Xbox business.
And there's some good stuff in there,
but there's also a bunch of stuff that's
very, very worrying. 3% accountability
margins, which I assume is a profit
margin. uh year-on-year revenues over
the last five years declining um by half
a billion dollars despite a $20 billion
investment not including Activision
Blizzard King. Um the hardware component
crisis uh storage has doubled uh
compared to what was paid last fall or
autumn as we call it in the UK. those
costs have doubled again and they're
expecting another significant increase
as they're planning for the holiday 2027
season. Uh interesting wording there. Um
memory costs following a similar
trajectory they say. Um there seem to be
concerns about the nature of the studio
system and there's the hint of layoffs
to come which is which is not great.
Platform infrastructure not built for
the battle ahead. They say our systems
are overly complex. Um becoming too
reliant on vendors to operate our
systems and we must become self-reliant.
Um yes, crazy stuff in there. Um Oliver,
where do you want to start with this?
Because it's um obvious that something
has got to change, but at the same time
um w they've kind of got to invest at
this point to to make things better. And
I'm not sure of the extent to which uh
losing a ton of personnel making cuts is
part of that voyage.
>> Yeah. I mean at the moment it's not
totally clear exactly what they mean by
this kind of statement because they
basically go through um in terms of the
studio system. They talk about expanding
their studio system when they needed a
large pipeline of content and they're,
you know, fortunate stewards of many
industry leading leading franchises, but
they have not adequately funded them in
some instances. And they're also saying,
well, we need to balance the priority
between our like top tier titles that
are going to make a lot of money for us,
the exclusives hopefully, and their
investment priorities for the next 5
years, which suggests doesn't say, but
suggests, hey, maybe there's some cost
cutting on the books to come. And some
reporting from, you know, high-quality
journalists out there like Tom Warren
has suggested that uh there is
potentially some cost cutting to come in
the form of studio closures, layoffs,
things like that in the next month or
two. Um which is very ominous and a
concern because obviously Microsoft has
staffed up hugely to build out this
portfolio of studios and they are in a
position where maybe some of those bits
are paying off, some aren't. And in this
industry also you have to consider like
some studios that might have recently
delivered product might not be on track
to deliver a new game for five or six
years. That's also a concern because
games take so long to develop and so
much time and money to develop. But that
is something that doesn't not
necessarily look that good in a balance
sheet in the near term. An uncertain bet
to pay off in half a decade. Who knows
what the world looks like in half a
decade. Who knows what that bet looks
like in half a decade. Perhaps they make
some choices on that basis. But yeah, it
overall it strikes a little bit of a
somber and concerning tone because they
are talking about, you know, hey, Xbox
Game Showcase was great and our fans and
creators are are more excited than ever
and we brought back uh Game Pass to a
more reasonable price point and lots of
positive points in the mix there. But
then they're also talking about, hey,
listen, uh hardware prices are like
doubling every like 3 months. You know,
that's not promising. And then they're
talking about maybe launching a console.
They specifically mentioned the 2027
holiday season and being in a position
where they're in a bit of a pickle and
they need to find some kind of new
hardware arrangement to make that work
because they're already launching a
high-end console. They're going to need
to find a way to bring that console
experience to as many gamers as
possible. They have a number of ways to
get there, but that's certainly a
concern as well. So yeah, overall I
think this statement is
hinting and pushing and certainly some
of the third party reporting has
basically gone as far as to as to
confirm they're going in the direction
of layoffs. Exactly what that looks
like, what studios will be impacted, you
never know. And often times this is
dictated a lot by the internal economics
of what teams have shipped, are close to
shipping, what could we cut, and also
what do investors think. I think that's
probably the thinking that they're going
through at the moment. And I would be
really curious to see what kind of
studios might be impacted. But it it
does seem unfortunate at this point to
be kind of an inevitability as as kind
of cruel as that is to developers to
have to face something that basically
says, "Well, you're going to be laid
off, but keep on working, but you won't
know when you're being laid off or when
people may be laid off and your whole
studio might be closed." That kind of
attitude towards developers is probably
not helpful. Also, I kind of wonder if a
statement like this might do a little
bit more harm than good. Kind of leading
a pal over over everything for for some
time now.
>> Mhm. John, we got this really crazy
situation here where on the one hand,
Microsoft is uh you know, running
FanFest, you know, making inroads into
trying to reconnect with the community.
Um trying to sort of um build bridges
there and at the same time we have this
harsh reminder that it is a part of
Microsoft seemingly has to pay its way.
Microsoft is making gigantic amounts of
money hand over fist. I think you
pointed out earlier Xbox is still
profitable, but the the line is going
down and that seems to be uh
a potential justification for harsh
realities to come.
What what what do you think they're
going to do? Well, I suspect they're
going to do kind of what they're laying
out here and based on the rumors of
potential layoffs, we're going to see
that as well. And I'm disappointed to
hear that because fundamentally, as I
pointed out, Xbox has a business seems
to be well, they've struggled, right?
And they are ear, you know, earning less
per year than they were previously. The
line is not going up, it's going down,
but they remain profitable all the same,
right? And Microsoft is breaking
records. They are insanely profitable.
200 plus billion dollars in in revenue
uh in the last 12 months. It's clearly
not an issue of sustainability because
the company is is doing extremely well.
Instead, it feels like the Xbox division
is simply being held to the typical fire
you see from these large western
companies where uh being profitable is
not enough. You must be extremely
profitable, right? So, I guess most of
my frustrations here lie more with
Microsoft as a parent company and larger
tech company culture, especially those
in the US, than anything else, right?
Because I feel like if Xbox were to
continue on down this new trajectory
with the plans that Asha set up without
resorting to additional layoffs and
studio closures, they actually could
continue to course correct and in time
return towards an increase in
profitability. The line should be able
to go up once again. Uh and it's never
fallen into the red either. So there was
no danger of that there, at least not
yet, especially now that they are making
these adjustments. So I don't like this
idea of any of these large companies
making this choice to
lay off additional employees in this
economy. Things are extremely dire right
now and we do not need more of this. It
doesn't matter whether it's Xbox, Sony,
whatever. Like all these companies,
>> the layoffs, it needs to stop at some
point. people are not going to be able
to even spend the money necessary to
participate in these ecosystems that
they want to build. And that extends to
these complaints over the hardware
component crisis. Uh this is where you
want to post the Tim Robinson meme in
the hot dog suit, right? Like who's at
fault here? Guess what? Microsoft, the
corporation, played a huge role in this
inflation in component costs. Their push
for AI is directly connected to this. So
yeah, Xbox as a hardware division has to
deal with this, but this is their own
fault. This is Microsoft's fault. This
is OpenAI's fault. All these other I
almost said stupid companies, but uh I'm
very frustrated with the state of of AI
and tech centers and and everything that
this is uh and everything that this is
doing to our beloved industry, right?
And this creates this problem where
there's more layoffs, fewer people have
have jobs, less money, cost of goods is
going through the roof. Nobody's able to
afford this stuff. I don't even know how
how you proceed at this point. They're
talking about launching this new machine
with these high component costs, and
it's going to be a very challenging
thing at this point because, you know, a
$1,000 box just isn't going to cut it in
this day and age. I think Sony's finding
out the hard way now. They've increased
the PS5 price once again, sales have
started to fall and I think that will
continue. And
>> Mhm.
>> I I all of the plans that they've made
that Xbox has made, Sony's making for
the future, this is all based on a
reality that didn't exist when R&D began
because these consoles take so much
time. uh the component crisis wasn't
necessarily part of that or if it was it
was a different level of component
crisis but costs are really reaching a
dangerous point. So I think that they
are making some good moves as far as
Xbox is concerned but some of the the
bad moves that they have to make feel
like it's born out of just being a part
of a company like Microsoft and this
like unwillingness to have a vision for
the long term that tech companies seem
to suffer from. It's all about the next
quarter rather than the next 10 years.
>> Yeah, absolutely. Um I mean the name of
the memo is the next 100 days, the Xbox
reset, and they're talking about how
they've had declining revenues over the
last 5 years. And uh what I take to mean
from that which I kind of find
surprising is that obviously their move
into multiplatform publishing uh you
would think they made a lot of money
there. You know, particularly when the
likes of Forts Horizon 5 are selling
like 5 million units on PlayStation 5,
but it doesn't seem to be enough. And
maybe this is part of why they've
decided to refocus
um on stuff like exclusives. you know,
the whole um uh uh it does look I mean
they're talking about planning for the
2027 holiday season. AMD in the past has
talked about being ready for that 2027
date for the next generation console. So
Oliver, it looks like based on what
we're inferring here from point number
three in the memo is that it does look
like Helix is going to be arriving next
year. Um and it faces extreme challenges
from an affordability perspective. Um,
so there's stuff here about um new
business models and partnerships for
hardware and I'm curious what's that
what that is going to take. I mean uh
something I've suggested in the past is
um something that actually Microsoft has
done in the past and might still be
doing it for all I know Xbox all access
where you pay for game pass and you pay
more because you're basically um buying
higher purchase so to speak of a console
at the same time. partnerships for
hardware. That's quite interesting as
well, though. It kind of suggests that
um the rumors of Helix being um
something that other people could
create, possibly the likes of Asus or
whatever, may well be a thing.
>> Yeah, it certainly does suggest that. I
would kind of think that maybe Microsoft
would pursue something like the strategy
that they do with Windows computers,
albeit with a little bit different
proportions because obviously Microsoft
makes Windows computers. They make
Surface devices. They sell lots of
Surface devices, I'm told, and that is
part of their strategy. and may also go
to third parties to deliver, you know,
maybe the bulk of the units to the
market, specifically units that are
intended more for uh mid-range or
low-end um low-end consumers, low-end
platforms. Uh they do partner with third
parties. So maybe they could adopt the
same strategy when it comes to Xbox and
ship their Helix device, their Magnus
based device, but also rely on third
parties to deliver lower-end devices to
wider swaps of the market, have more,
you know, distribution and retail
channels, things like that possibly. I
mean, that's one one way they could go.
Um, and they could launch lower-end
devices because obviously Helix itself
uh Magnus at least is a chiplet based
design. So you can imagine combining
that CPU IP with lower-end GPU IP like
different blocks, different chips,
different different chiplets to make a
lower-end device or a different CPU
block altogether. Who knows exactly how
that will go, but I think that's
probably something that AMD could
deliver for Microsoft if they wanted to
do so. Um, there are other routes they
could go though, like obviously you
suggested a some kind of like
subscription model that's popular
historically in the cell phone space,
although I think in North America and
Canada, we don't really do that anymore.
I don't know about other areas of the
world, but like it used to be very
common to get a phone in a 24-month or
36-month contract. That would include
basically the purchase price of the
phone, possibly subsidized in there, as
well as the price of the cellular
subscription and maybe some associated
services as well. So that's one way they
could go with things. Another way they
could go with things is just just to
leverage the cloud. Now that's one
possibility, but in my own personal
experience, Excloud is not that good at
the moment. Like I was just using, you
know, on my iPad the other day and it
had some obvious frame rate presentation
problems, some frame frame rate
inconsistency problems, frame
presentation inconsistency problems.
They make games look very awkward and
not very pleasing to the eye. So um
certainly like I think all the console
vendors and their cloud delivery
services need some improvement but
Microsoft's uh perhaps is not strong
enough to be a major pillar of their
business I would suspect although who
knows what their data looks like in
terms of usage but I I think real
hardware is still an important still an
important element of this uh of this
whole business. So yeah there are
multiple avenues they could go down. I'm
not convinced any one of them is
particularly good and they're all going
down them because of the high price of
hardware which is going to affect even
their kind of lower-end devices. Right?
You're not going to get like a series
like device I would suspect for $300
American it's going to be more like $600
American I would I would think at the
very low end of of things. So yeah it's
not a very good position for Microsoft
at the moment but these are pressures
that all console vendors are facing.
>> Mhm. Yeah. I mean, when you first launch
a console, it is the core users, the
core enthusiasts who buy it, and they do
tend to be able to to pay more money.
The question of $1,000 for a Helix
console, somewhat different, though.
And um, you know, based on the prices
we've seen of current gen, I don't think
that's completely out of the question.
There was an interesting point made by
the forks Kerry there talking about how
from a value perspective viewed through
the lens of PC purchase uh Helix could
actually be very very um uh valuific
gamers there. I am curious as to whether
they will make a lower spec device um
and that chiplet um design that you've
pointed out there in theory they could
produce one with you know lower memory
lower capabilities
then you need to ask the question why
don't we just stick with the hardware
that we have uh because it it's you know
it's certainly decent enough but you
know it the new stuff is going to be
doing some very interesting uh stuff
with machine learning that kind of thing
um John it's not a great place is it? I
mean, we've seen in the UK v ver
verified data that since Sony increased
its prices um on PlayStation 5, the
amount of units sold through has dropped
by 50%.
>> There is clearly a threshold where
people are just not going, you know,
where a more mainstream user, I would
say, is not going to be paying a huge
amount of money for a games console.
Yeah, this is an interesting this kind
of ties into what I mentioned earlier
with the increase in layoffs everywhere
is like the affordability is decreasing
on all new consoles at this point. Um, I
don't think this is this is good for the
industry at all at the moment and I
wouldn't be surprised if we see people
start to move back towards older
platforms at some point or just stick
with what they already have. So, I don't
know. I feel like right now launching
any new machine is going to be extremely
challenging to the point where I'm not
sure it's a good idea. I I really don't
know where we go from here, right? Like,
>> well, it's going to depend on how
innovative, as they say, um their
approach to actually being able to sell
this thing is. I think it's basically a
a confirmed thing that's happening right
now. That's what kind of what they're
suggesting here. They've just got to
come up with the means by which it
actually is enticing to users.
Otherwise, the whole enterprise fails,
right?
>> Yeah. But they're going to have to find
a way to get that price in check, right?
Like, no, there's no way to there's no
way to slice this. A $1,000 box is not
going to sell well enough to support a
whole ecosystem. So, as she kind of
noted in interviews, they're going to
have to find some interesting ways to be
able to financially make this work. I
don't know what that will look like. Um,
I hope they can find a way to do it and
I really hope they have some interesting
ideas for how to market this because the
only hope I would say I have with this
kind of device is that uh phone prices
continue to sit in that range and higher
and people are much more willing to
upgrade them. So, if they could find a
way to make it a more multi-purpose box,
which is what we believe they are doing,
and then sell it in a way that's
compelling enough, uh, it could solve
problems that people have that might
make them more willing to shell out. I
don't think it's like mass market
sellout necessarily, but it could
definitely make it more palatable, but I
do think they're going to have to find
some other ways to make this like more
affordable, including I think we talked
about subsidizing it via something like
Game Pass or some other kind of method
for getting the immediate cost down to a
reasonable level. And I think at this
point, Microsoft's the only one that
really maybe conceivably should be
launching a new platform. It feels like
like I think a PS6 right now would just
be a stupid thing to launch. There's too
many units out there of PS5 and it's
going to cost an obscene amount of money
and I don't think they're going to
change anything significant about it. Uh
Nintendo just launched the Switch too
and it's already creating issues for
them in terms of component costs. So,
they're going to be sticking with that
for a while. But the Xbox Series
consoles, uh they've sold enough but not
as not nearly to the same level as the
competition. Um, but they also have the
PC as like a main platform. So, I man,
this is this has got to be a very
difficult problem to solve. But then
again, like I said, they're still Xbox
is profitable, man. They're still
profitable. They're still releasing tons
of games. They have so many developers.
Like, I don't see the doom and gloom
around any of this stuff. I still feel
like Xbox is perfectly strong as its own
thing. even if it doesn't take over the
business, I I feel like it should be
okay to make, you know, good money, if
not the most money, right? And I hope
that that is able to continue.
I read a a story actually about how um
AMD's David McAfee, he's basically the
guy in charge of Ryzen and and Radeon,
um expecting or hoping,
I guess he probably would have some
better idea than most of us. Uh he's
expecting DDR5 RAM prices to recover
slowly. Um maybe a couple more years
until it's kind of back to where it
should be. So maybe there is a kind of
short-term pain window for launching in
2027 if things are likely to stabilize
in 2028. I don't know. Um but but let's
move the discussion on take some
supporter questions here because the
concept of exclusivity has certainly
been uh a hot topic. Um Scud asks, "On
the topic of Xbox exclusives, I'm
generally in favor of everyone getting
to play everything. I don't really care
about console loyalty, console wars, but
when they said Gears of War eay was
going to be an exclusive, it made me
happy. I own an Xbox regardless of the
impact on sales. I think they're
literally just trying to make people
happy that they bought in. So, job well
done because it worked on me. Do you
think that's the main strategy here? Uh,
I think so. And based on what we're
seeing on those numbers, um, you know,
clearly the exclusivity gambit hasn't
really changed the direction of travel
for them. But moving on, teasing
hilarity says, "And hello again, fine
gentleman of the foundry. Do you think
the return of Xbox exclusives will be
enough to save Xbox, especially when at
least some of them will also be on PC?
Pretty much all of them, isn't it? I can
see a lot of people being upset after
being upset rather than psyched for
Xbox. Archon 2825, dear valued
Foundryman with Microsoft pivoting back
to console exclusives. How does that fit
into their overall strategy? On one
hand, they want to be the world's
leading publisher. On the other hand,
from what we know, they seem to be
targeting a niche hard hardware platform
with Elix. Even if it's a phenomenal
device, it won't be a traditional
console with tens of millions of units
sold. Given how expensive AAA game
development is today, don't they need a
massive install base to sustain this?
Thanks for your insights and keep up the
great work. Uh, exclamation point. Um
Oliver, the the last point in
particular, I mean if you are making a
high-end device like Magnus Helix, it's
it is kind of going to be um a lower
volume device and that doesn't seem to
be compatible with this concept of
console exclusives. Um how do you square
that circle? Well, I would square the
circle by saying that it seems like
there were a lot of decisions that were
made by prior leadership that seem to be
pushing in the direction of a fully
multiplatform Microsoft shipping low
volume high-end console hardware as kind
of a concession almost to existing uh
Xbox fans that was designed to be
high-end that was designed to showcase
kind of a premium Windows AMD experience
but was not designed to hit a mass
market price point or saturate the
channels with tens of millions of units.
Asharma has come in and seems to have a
different perception of that to the
extent that there was like a low-end
Xbox Helix device in development. I'm
sure there was some kind of low-end
experience being offered at least, but
perhaps it wasn't a high priority.
They've made it a high priority is my
reading. And they're trying to make
Helix a mainstream proposition very
quickly. Um that's whether that's
through chasing uh a larger audience
with lower spec devices or through
subscriptions or through cloud or
whatever. not quite sure, but they're
trying to make that experience
accessible to a lot more users. And part
of that uh lies in kind of enabling this
whole exclusive concept where they can
have exclusive games. They don't need to
ship everything on PlayStation. And
indeed, they're backing away from making
everything available on PlayStation, not
just day and date, but kind of for
eternity as far as we know with some of
these games. So, I think that's
basically the answer is there's been a
change in the strategy and I think
they're trying to ship trying to turn
what Helix was into something more
consolelike and more console priced. Uh
whether that works or not, I'm not
totally sure. It does seem like these
changes in direction of Microsoft, you
know, you don't really see major changes
in direction from like Sony or Nintendo.
They kind of just ship good consoles
every six, eight years, whatever, and it
works out well for them, and they ship a
wide variety of high quality first-party
software. Microsoft is the odd one out,
kind of making changes, making huge
deviations from the business model every
generation, and it's not working out so
well for them. And Asha seems to be
saying, well, let's go towards a more
traditional model.
>> Right. Okay.
We're talking about pretty much a big
reset there, which is what they've
titled the memo there, John.
>> I mean, yeah, I guess it's
I I don't know how how many more times
to go around in circles on this, but
like everything points to them that it's
still a division that makes money and
produces good stuff. And
I guess they're making moves here to
sort of regain some of the hardcore
fans. And if they can balance that while
still making money, I guess. I mean, I I
don't know what else to say about this.
It's really kind of a wait and see
approach. I don't feel like things are
as dire as they've been painted out to
be is what I'm is my point. Right.
>> Like everybody acts like, "Oh, it's the
end of Xbox." It was never the end of
Xbox.
>> Like there was no evidence of that. Like
them changing the way they release games
doesn't matter. They're still a giant
publisher producing a ton of great
stuff.
Um so they're just going to do slightly
differently. Now
>> I think um the thing is that we've kind
of gone to a multiplatform strategy
which um according to the numbers
according to this memo didn't work and
but that was instigated off the back of
a um a console ccentric focus which um
Microsoft the parent company was
seemingly not happy about which brought
about the multiplatform uh pivot in the
first place. So, and at the same time,
we've still got this stated aim of them
wanting to be the number one
entertainment company. Although, um they
describe themselves as number two, but
who is number one? That's that doesn't
seem to be, you know, what is the metric
for what for being the most successful
entertainment company? Do you include TV
in that? Do you include, you know,
Disney, etc.? Is it Tensson who's number
one? I'm not quite sure what's what's
what the situation is there. Um, I
guess, you know, at the moment it's kind
of like we we're just starting to see an
insight into what's going to be
happening at Microsoft and um, uh, I I
guess there must be a plan. It doesn't
seem to be immediately obvious to me how
they're going to do it, but there it is.
I think we should move on. Okay, we got
this question here from NG. Hello,
Foundry Lads. Exclamation point.
Longtime Patreon, first time poster
here. My question is fairly
straightforward. Given that Valve won't
be able to sell the machine at um the
Steam machine at the price point they
originally had in mind, what's stopping
them aside from the sunk cost in the
design current design from saying sold
it. It's going to be expensive due to
memory costs. We might as well release a
slightly pricier but significantly more
powerful version. I'm thinking along the
lines of a full Zen 4/5 plus RDNA4
pairing instead of the quote unquote cut
down versions they currently plan.
Cheers. Exclamation point. I mean, on
the face of it, that seems to be like an
entirely sensible approach in in many
respects, right? Um, but I think that
the bottom line is that um uh first of
all, any kind of increase to an already
expensive console um or or or PC is
going to be felt. Secondly, I think the
the broader point here is that the
hardware specification when you're
making a device like this, you know,
you've got to set up the supply chains,
you've got to sign the contracts. It's
it's a lock. You can't really go back to
say, you know, AMD and say, "Hey, those
um hundreds of thousands of components
that we've ordered, they're not quite
good enough. Can you give us some better
ones?" That's not really the way things
work in um in the way consumer
electronics are made. So, bets were made
at a certain point where they thought
presumably that they could produce a
very affordable machine. And if you
consider the makeup of the machine, it
is, you know, it it strikes um the sweet
spot in terms of where Valve sees its
audience, you know, looking at the Steam
hardware survey. Um but the concept of
going back and you know, swapping out
components,
easy in theory, very very difficult in
practice. Uh do you agree with that,
Oliver?
>> I do. I do. I mean, they just have so
many commitments, I'm sure, in terms of
supply, terms of contracts that are
drafted with AMD for specific
components, things like that. Um, and
device engineering is just really
prohibitive because you have have to
like redo the motherboard, the power
delivery, the cooling, the acoustics
drivers possibly, um, even things like
HDMI behavior, things like uh,
validation
uh, across a wide range of games, right?
QA across the whole Steam library of
titles. There are so many concerns here
um just on that end and then on the
other end you have cost which is like
you know if the key concern is RAM and
storage than a higherend device with
more RAM and possibly more storage is
not really going to do anything to allay
these concerns about price. And uh you
know uh Valve picked the Steam machine
uh spec for an actual reason not just
hitting a price point. They picked it
because they thought it could run, you
know, games, current generation games
quite well at like 4K 60fps. Again,
depends the implementation. We'll have
to see how that actually goes. But they
actually did set out a spec of like at
least let's hit a good experience on a
60 at 60 Hz on a 4K display. Um, and we
think this spec can do it in current
generation console software. So, I don't
really think they need necessarily to
upgrade the spec unless their views have
shifted on what it should achieve. And
if they were to do so, I suspect it
would be need to be delayed by at least
a year. I'd have to expect based on the
size of Valve and based on their kind of
commitments and they would be tearing up
a lot of paper that would probably be
pretty expensive from their perspective
as well. I don't think it's a good idea.
And so, yeah, I think that the device is
just it's going to come out. It's
probably going to come out fairly soon
because they've sketched out a release
date in the first half of this year. And
it's probably going to come out, I would
suspect, in substantially unaltered
form. And that's probably best for all
parties involved.
>> Yeah, John, I'm just thinking that every
time a new piece of uh gaming hardware
is announced, people never think it's
powerful enough.
>> I mean, yeah,
>> and they always want something better.
>> That's kind of the rule of thumb, isn't
it? Right. And yeah, as you correctly
noted, these things take time to
engineer. You can't just it's this isn't
this is not like a PC where you can just
say uh I'm just going to swap in this
card instead of this card. Like all the
deals and designs and everything that
happens behind the scenes that stuff
takes a lot of time and work to get up.
So like no they couldn't change this
without delaying it at least a year like
you said Oliver. And so I don't think
that would actually change anything.
They just kind of have to go their their
choices here were either launch it at a
higher price or just cancel it. And it
seems like they will go for go ahead
with launching it.
>> And I think the Steam Deck proves that
if you can do this in a way that feels
super optimized and polished,
>> people are willing to accept some
trade-offs in terms of performance. I
still think the Steam Deck offers a
better portable PC experience than any
default like Windows-based handheld for
instance. uh just due to the nature of
you know Steam OS and the way that works
like that is a huge selling point even
if the hardware itself under the hood
isn't quite on par. Um, and I think
that'll be the same thing here where
this should conceivably perform like a
proper console where you hook up to the
TV, everything sort of works and it's a
smooth experience versus say hooking up
a Windows PC to your TV that you built
yourself, which is just never going to
be as polished as this could be. And
there is an appeal there. But Valve is
also not in the same market as the
console makers. Like Steam is a PC
storefront. They sell it across so many
devices, right? Like this is just one
more way to access Steam as it was with
the Deck. So, I think they're happy
selling a low volume, higher priced sort
of like machine like the Steam machine,
uh, which will probably get, you know,
some attention but not become a giant
mainstream success either. And I think
they're okay with that.
>> Absolutely. Um, let's move on here.
Question here from 1040 STF. I was
really impressed by the God of War lowfi
footage shown during the last state of
play, but I noticed also noticed as did
you gents that some aspects featured
fairly flat lighting. Part of me can't
help but wonder if that's because the
game is actually a flagship PlayStation
6 launch title artistically designed
with a more advanced ray tracing mode in
mind. Or maybe even path tracing if
we're dreaming big. That would also
explain why it didn't feature any
release date window despite appearing to
be fairly far along in development. How
plausible do you think that theory is?
Um Oliver, well they they've shown it
running on PlayStation 5 or PS5 Pro,
whatever, and that's what we're getting
and they're saying it's coming soon. So
it's coming soon, right? Um presumably
before PlayStation 6. So my take on this
is basically that, you know, that's it.
That's what you're getting. That does
not rule out any kind of enhanced um
PlayStation 6 version, mind you. In
fact, it's pretty much a given really.
>> Yeah. I mean, it's going to come out on
PlayStation 5, I would expect, uh, in
the next, I don't know, year, year and a
half or so. I mean, certainly some
journalists like Jason Shrier, I think,
was suggesting. It is a 2027 title of
some variety. I mean, who knows how late
in the year that is necessarily, but I
also would expect, I mean, I would
almost be certain there's going to be a
PlayStation 6 version. Whether that's
just a simple enhancement, whether
that's something more substantial, who
knows? We'll have to see um whether
that's just a patch on the existing PS5
version of the game. We have no
logistics on how that will work on PS6
necessarily. So, we'll have to see how
that goes. But, um I mean I would have
to imagine here that if you're going to
build a game like this around RTGi that
often times it's best to scale that to
all your target platforms. And actually
PS5 as your base platform is not
especially low-end in terms of like
shipping an RTGI system. I think you
could probably do it. So, I would just
expect that they would probably ship I
don't know. I mean, they they could ship
an RTGI mode on PS6, but it would
require a lot of artist time, a lot of
artist work, a lot of uh you know, tech
stuff they might not have had experience
with before necessarily. Um, so I
wouldn't expect a dramatic improvement
for PlayStation 5 rather than
PlayStation 6 necessarily in this title.
And I certainly would expect it to be a
cross-platform title of some variety.
Probably launching first on PlayStation
5 with some kind of enhancement, I'm
sure, planned for PlayStation 6. when it
does launch.
>> Yeah, entirely in agreement, John.
>> I don't really see any issues with the
footage. It looks like what you'd expect
from Santa Monica, and I suspect it is
just a PS5 target. I mean, their
lighting has always been somewhat
conservative, I would say. Um, that was
true of God of War 2018, and it was
doubly true of God of War Ragnarok,
which was a crossgen game as well. And I
felt like this was improved in that
regard over Ragnarok, which is what you
would expect to see from a native PS5
game. I think companies always do design
their games to be more scalable these
days. You do consider that it may launch
on other platforms in the future. That's
probably the case here, but I'm not sure
that they would go back in and like toss
just RTGI on something when it's been
lit by artists the way it has been
already, right? Like I think this is
just this is what the game looks like.
Take it or leave it.
>> So which I think it looks good. It
doesn't it's not like cutting edge, but
it's a it's a handsome game, I would
say.
>> And image quality seems pretty good and
60 fps. Like we're kind of at this point
I've seen in this generation where most
games either go for all of those
advanced techniques and image quality
suffers or you stay with more tried and
trueue rasterized techniques or just a
little bit of ray tracing and you can
typically get better image quality out
of it. So this seems to be going for the
latter.
Uh let's move on. Justin Valero asks,
"With the relaunch of the 5800 X3D,
where are we on gaming CPUs? Are we at a
point where mainstream CPUs are quote
quote unquote good enough currently?
What hits the right balance where one is
not CPU limited on mid-range/high-end
GPUs since the current consoles running
on Zen 2? Yeah, first of all, quick note
about the 5800 X3D. It's back. AMD is
bringing it back. um they've had some uh
issues in the way it's packaged, but
they have indeed managed to bring it
back. Unfortunately, they're going to be
charging $350 for it. So, it's kind of
like a last harrah for the AM4 platform,
but it's also one that's that, you know,
it's it's far more than I paid for for
mine um several years ago, which uh uh
isn't isn't good. I mean, let's not even
mention that I got a 5700 X3D from
AliExpress for £130.
uh it's almost as good. Uh where are we
on gaming CPUs? Um the problem is is
that every single game has a completely
different CPU level where you can start
to be CPU limited and it's far more
prevalent than you may think. Uh we um
just looked at um the uh Halo campaign
evolved preview. Um that was CPU heavy.
Maybe that improved by launch. Um we are
looking at 007 first light at the moment
and when there's a lot of crowds uh even
something like a Ryzen 5 5600 is is less
than 60 fps. So it's actually performing
worse than the Zen 2 processor there.
Basically there's a completely different
sort of balance between GPU versus CPU
on every single kind of game at the
moment. But the the demands on the CPU
are rising. Um that's that's for sure.
um you can mitigate it by you get the
most um uh amplification in frame rate
by using frame generation um when you're
CPU limited um however obviously that
has an impact on latency so there's no
you know there's there's no easy way of
saying this this CPU is enough for you
right I mean um I've even been CPU
limited path tracing on Cyberpunk 2077
with a with a 5090 crazy as that might
sound uh 4K DLSS performance mode there.
>> Crazy stuff. I mean,
>> the thing is, you can't really make a
single recommendation here when you're
getting such drastically variable
results. What I will say is that, you
know, I played um I played the Halo
Preview with a 5600.
I could see I was CPU limited, but you
know, still in the 50s. That's kind of
okay. I mean, similar to 007. The Zen 2
parts though, I think they're starting
to uh to show their age somewhat. Um,
anything to add, Oliver?
>> Well, the only thing I would add is that
in addition to the games themselves
having a variable level of performance
on given CPUs, there's also people
having a different expectation as to how
games should run, right? Like some
people are really interested in high
frame rates. Doesn't matter the
graphical fidelity. Just pump me up to
like 360 Hz. That's what I want. Other
people like myself are much more like,
well, I'm okay at like 100 FPS, 72 FPS,
60 fps. Indeed, in a title like um in a
title like Forts of Horizon 6, I'm able
to play that game at 72 Hz natively with
frame gen up to 144 hertz, which to me
feels pretty good. Other people might
not like that. Other people might want
native 144 hertz. In that case, they'd
need higherend CPU hardware than I have,
which is like a 13700 K. But in general,
I would say that if you're, you know, if
you kind of think of games as being like
roughly comfortable around console spec,
I'd want something that's firmly better
than console spec, just like a Ryzen
7000 series processor or an Intel 12th
gen core. Most of those should be able
to get you into okay territory in most
games, good territory in most games. Um,
and then if you really want a premium
experience, then go towards the like
9,000 X3D processors or even 7,000 X3D
processors. I think those are really
good options. But um it's hard to offer
a blanket statement cuz I could offer
that statement and then you'd be like,
"Well, my number one game is Oblivion
Remastered." Then I'm like, "Well, okay,
now we have a different set of
performance expectations to navigate
around, right? Because we have this game
that is just miserable on CPUs. You need
the very fastest you can get and even
then you might not be happy. So really
going to depend on the person, going to
depend on the game, going to depend on a
lot of things, I suspect."
John, have you come up against any sort
of games recently where I mean you're on
a 13900 K, aren't you?
>> Uh, I mean
>> where it's been an issue.
>> Sure. Personally, I mean, yeah, the
13900K versus a 1590. Sure. Yeah. Being
CPU limited is not uncommon and that's
often usually where I am limited. Um, I
that's why I do actually like frame
generation. I know I know people hate
frame generation, but I really do. It
does feel like free fluidity
uh that doesn't, you know, it's great.
It overcomes issues with CPU
limitations, but I actually think for
this generation, we're in a pretty good
spot for CPUs. Uh, I think it's balanced
out where both PCs and consoles alike
have what I would say are good enough
CPUs for most applications, especially
if you're okay with like just 60 fps
versus I feel like most of the CPU
bottlenecking starts to happen when you
want to hit those really high frame
rates above 60, then that's a problem.
But for both consoles with its Zen 2
CPUs and you know your average PC CPU, I
feel like you can generally play your
average game in a very good state and
it's a lot better than it used to be in
that regard. So, I mean, I don't really
have any complaints. I think we're in a
in a pretty good spot right now. I think
CPUs still matter. you can still
bottleneck them easily enough, but it's
it's not a huge problem for most games,
and it's something that I think you can
generally get a good experience both on
PC and certainly on consoles, which are
significantly better in that regard than
than the last generation. And it's not
even close.
>> Yeah.
>> Well, looking back at that last
generation, I'm just surprised that they
managed to get so much performance even
to get to 30. I know
>> effectively mobilebased x86 cores that
weren't particularly good
>> the Jaguars
>> quantify.
>> Okay, let's move on. Got this question
here from anxiously chrono figure to
round off the show. Hey DDF crew, do you
think Xbox Series S was M was Nintendo's
secret savior? I mean, since devs have
had to target this low-end device,
moving to Switch 2 development must have
been easier for them than it would have
been otherwise if only the quote unquote
twin consoles existed. Cheers. claration
point. Um Oliver, you've done a lot of
Series S versus uh Switch 2 comparisons
and um what can you say there? There
does seem to be certain commonalities
between some of the cutbacks that are
being made for Xbox Series S that now
find themselves into the Switch 2 ports.
>> Completely. Completely. I would say that
in a lot of cases, we basically see very
very similar trade-offs being made
between those two platforms. Um in a lot
of titles really. One title that comes
to mind recently, although I didn't
cover this one, is Final Fantasy 7,
where it seems like Switch 2 and Series
S use basically identical settings,
except that one is using DLSS and one
isn't, and I can tell you who the victor
will be in that one, but I think you can
probably guess yourself. You know,
there's a lot of commonality between
those two machines. Obviously, in terms
of GPU compute, that's one area of
commonality. RAM is another area. You
have 10 GB um on Series S of which 8 GB
is accessible to developers. Switch 2
has 12 and 9 GB accessible to
developers. Pretty similar formula
there. Um and yeah, you do see fairly
similar compromises often in Switch 2
software as series software. And often
times when we're trying to project
performance for games that are coming up
that aren't released yet, but might have
a Series S version, we're often looking
to that Series S version. And so in in
the case of like 007 First Light for
instance, I was plumbing through that
Series S version trying to tell a story
about, hey, how will Switch 2 run?
Because I know that Switch 2 and Series
S often share an enormous amount. Um,
and yeah, in some cases, we actually do
see Switch 2. I mean, maybe this
undercuts my point a little bit. We do
actually see Switch 2 exceed series ass
not just in terms of image quality but
in some cases like for the release of
Star Wars Outlaws for instance there
were enhanced rate traced reflections on
switch 2 greater coverage of rate trace
reflections in the Switch 2 version than
Series S. Um, I'm not sure if that was
the specific platform optimization and
maybe more just a factor of like, well,
we had more time and we made slightly
different choices, but it's interesting
to see those kinds of divergences in
software. And especially with DLSS
nowadays, we do tend to notice that um,
being a significant advantage on switch
2, like in the case of the Resident Evil
9 port, right? uh Resident Evil Reququ
that title looked much I'm sure John can
concur with me here looked much better
on Switch 2 than Series S in terms of
image qualitys.
>> Sorry,
>> it ran worse though.
>> It did run worse. It did run worse
unfortunately. But yeah, lots of cases
like that. Lots of cases like that.
>> John, what do you think?
>> I mean, I'm sure it helped. I'd also say
the rise of handheld PCs, like the deck
helped as well. uh you know developers
are were interested in ensuring a wide
range of PC hardware could handle their
games and modern engines seem to be
pretty scalable anyway. So I think it's
just we're at a point where games are
just scalable enough that it's not the
same kind of problem that it used to be.
And I think when you put a little bit
more extra effort into it, you can come
up with something special. But I think
it's also possible just to get decent
ports without, you know, a huge amount
of investment and time and resources as
well. So, Switch 2 is is good for that.
And yeah, DLSS definitely does a lot of
heavy lifting in terms of improving
image quality and which I think is kind
of what we were hoping for. And it has
it has indeed played out that way, which
is great.
>> Mhm. Yeah, I think it's uh certainly
been helpful. I mean, because there
would be like a reference experience
where certain nips and tucks have been
made that the developers are comfortable
with. But at the same time, I think that
it probably you would have seen similar
things happen for for Switch 2 anyway
organically just by the fact that it's,
you know, going to sell a lot of units
and developers want their games to look
great on it. And, you know, they've got
some good um technology to work with
there, specifically DLSS. I still really
do want to see the um Tiny DLSS at a
higher resolution versus CNN DLSS at a
lower resolution.
uh played out somewhere because honestly
it seems to be the case that the the
titles where DLSS is most impactful is
where developers have put in the
computational cycles into the higher
quality of version of DLSS paying for it
with lower resolutions and it seems to
to to look good and and work well.
Resident Evil and Pragmata game, you
know, several games presenting better on
Switch 2 than they do on um Series S,
even though there may be a frame rate
penalty there. So, you know, I kind of
think it it's it's helped, but I think
people would have put in the effort
anyway, uh basically. But even so, we've
seen some good stuff. Um that was the
final question, therefore the end of the
show. So, please do like, subscribe,
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