XBOX Cuts; Bundling and the Internet Solvent; Transaction, Coordination, and Sunk Costs

Ever wonder why Microsoft is suddenly cutting its Xbox costs so sharply? Well, here’s the thing — it's all about shifting strategies amid a tough market. According to Ben Thompson, in his latest analysis, Xbox's massive layoffs aren’t just about trimming the fat — they’re a signal that the traditional bundling approach might be losing its mojo. Thompson points out that the internet has become a solvent for the gaming industry, meaning consumers can now pick and choose without needing the big bundles of old. This shift impacts transaction costs, making standalone services like Game Pass less sticky and more vulnerable to churn. But here's where it gets interesting — Thompson suggests that the core issue isn’t just about losing customers; it’s about how companies are rethinking coordination and sunk costs in a digital-first world. The real question now is whether other tech giants will adapt quickly enough before the old ways become relics. So, with all this upheaval, who’s really winning — and who’s just trying to catch up?