Transcription
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 1:37 o'clock 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 1:37. 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. But first, this video is sponsored by MSI. If you're looking to upgrade your setup, MSI has just launched their brand new MPG 322 URD OLED X24 monitor. This stunning 32-inch 4K display runs at a 240 Hz refresh rate, delivering flawless high frame rate gameplay. At its core is a fourth generation Penta Tandem QD OLED panel equipped with MSI's new dark armor film, giving you 40% deeper blacks and 2.5 times the scratch resistance compared to standard panels. When it comes to longevity, OLED Care 3.0 protects your panel automatically. Meanwhile, the AI Care Center detects user presence to dim the display when you're not there, further helping to reduce burn-in risk. On top of all of this, MSI's summer sale is going on right now. Click the link in the video description below to find out more.
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 five 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 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, three 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, or 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 pall 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, 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 five 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 Forza 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, 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, 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, Xcloud 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 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, the new stuff is going to be doing some very interesting, uh, stuff with machine learning, that kind of thing. John, it's not a great place, is it? I mean, we've seen in the UK, v- 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 OLED, 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. 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 E-Day 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 gentlemen 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 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 is, 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. Asha Sharma 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 console-like 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-centric 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 Tencent who's number one? I'm not quite sure what's, what's 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. 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, then a higher-end 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 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 low-fi 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 Schreier, 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 cross-gen 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 true 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 hurrah 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, 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. 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 4090, 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 Forza Horizon 6, I'm able to play that game at 72 Hz natively with frame gen up to 144 Hz, which to me feels pretty good. Other people might not like that. Other people might want native 144 Hz. In that case, they'd need higher-end CPU hardware than I have, which is like a 13700K. 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 because 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 13900K, aren't you?
>> Uh, I mean,
>> where it's been an issue?
>> Sure. Personally, I mean, yeah, the 13900K versus a 4090. 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 mobile-based 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 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, share if you enjoyed it, ring bells for whatever happens. Hopefully, instant notification. uh patreon.com/digitalfoundry. Please uh help to support the team and uh get early access to DFD direct, early access to a bunch of stuff. Um high quality ad free video downloads of everything we do. Adree website, tons of great stuff there. Amazing community, too. That's all from us on this one, though. Thanks for watching and supporting Digital Foundry and we'll see you soon.