Jimothy, the short-spined Seattle raccoon, has become a global sensation whose likeness has been immortalized in artwork, clothing, songs and tattoos — and now a video game created in the creature’s hometown.

Tech enthusiast and entrepreneur Chris Pirillo launched an 8-bit NES-style video game called “Jimothy” this weekend in which players can control the movements of the critter as he raids trash cans, crosses streets to the park, sneaks past the paparazzi, and climbs to the safety of a big tree.

Pirillo says the missions are pulled straight from Jimothy’s real life. No doubt the animal is busy these days trying to dodge curious onlookers who are hoping to capture the next photo or video that feeds the masses on social media.

The viral Jimothy sensation took off last week when Kiana Hall spotted the raccoon in Seattle’s Ballard neighborhood and posted a video on Instagram — viewed by millions since — asking the question heard around the world: “What am I looking at?”

An earlier video of Jimothy, captured by a home security camera and posted on Reddit, ignited further curiosity and adoration, and now Reddit is flooded with sightings, memes, artwork, food, crafts, poetry and more. The Mariners put a Jimothy mascot in the Salmon Run. There’s even a Lego Jimothy.

Pirillo told GeekWire the game idea came to him on Saturday afternoon after seeing so many creatives flood his feeds with their own Jimothy fan art. He started to build a not-so-live tracker and realized it was a not-so-great idea. He hopes internet creativity is enough of a fix for the Jimothy-curious.

“This game is as close as any of us should ever get to him,” the game site states. “If you find yourself in his neighborhood: don’t go looking for him, don’t feed him, don’t try to touch him, and don’t crowd him for a photo.”

The game is easy enough to play, with challenges that are reminiscent of classic 1980s games “Frogger” and “Donkey Kong.”

Pirillo’s “Vibe Arcade” is loaded with other games he’s created. Earlier this year he vibe-coded a Resume Analyzer app and a pre-rejection letter generator called Dear Applicant to channel his frustrations with searching for a job.

Pirillo credits AI with changing the speed and ease with which a moment can go viral and be captured in new and creative ways.

“I remember when every big moment had a video game. But by the time a studio could create a video game around a meme pre-AI, the meme’s energy would have dissipated,” he said. “We are now at a day and age (certainly with AI as a tool) where almost literally anybody of any age or tech experience level can bring full-fledged experiences to life in just a few hours. We can simply talk our solutions into existence. It’s astounding.”

Pirillo built the game as a single HTML page, pitting OpenAI GPT 5.6 against Anthropic’s Claude Fable 5. One of the bigger challenges was getting the look of Jimothy right, as multiple AI models kept returning regular-looking raccoons.

Pirillo said he looks forward to sharing more about it all during a free vibe-coding community workshop in Seattle this Saturday.

His final takeaway for anyone looking to get in on the Jimothy hype — or whatever creature emerges next — is to not wait for the moment to pass.

“While it’s never been easier to make something, it’s also never been more challenging to get attention,” he said.

Modern video games are nothing short of amazing. My son and I were playing through the one of the latest Zeldas, which involve a mix of combat and puzzle-solving that’s pretty much the hallmark of the franchise. But the most recent open-world Zelda is simply massive. Made by around 1,000 people at a development expense of $150,000,000, it takes probably 60-80 hours to play through if you’re not rushing, and more if you’re taking it easy. It has layers of game mechanics, and worlds in the sky, on land, and underground. It’s big in every way.

Contrast the games of my youth, which were a lot smaller. Written by a pair of people or maybe a handful, with playtimes in the single-digit hours, and of course fitting in the limited computing resources of the time. But the low-stakes nature of the early phases of the industry meant that software developers could take risks, and many of the games were consequently kinda idiosyncratic in this more innocent time.

I think there’s something to be said for small games. They don’t require a lifestyle commitment just to get through. They can still be fun, without taking all of your time. And honestly, when you’re done with a game quickly, you have more time for other stuff. Granted, some of this spirit lives on in the small indie games of today, but even so, game developers have the big studios’ products in the backs of their minds when they are working on their smaller oeuvres.

We were talking about preserving old games for posterity around Hackaday and on the podcast, and our conversations reminded me of a couple of educational games that, despite their rudimentary graphics, are still pretty good today. Both were electronics related, and both are still playable today thanks to efforts on emulation and software preservation. To get a feel for the 1980’s, give Rocky’s Boots a try. (I like the TRS-80 Color Computer version the best, but that may just be nostalgia.) Most of you grownups out there will get through it in an hour or so.

And if you want a challenge, try Rocky’s harder sequel: Robot Odyssey. If you already have a background in digital circuits, you’ll find it doable. Younger me hit a wall about two-thirds of the way through.

Both of these games stick with me because they taught me something, but also because they were simply quirky in a way that a game can only be when it’s written by a small team of folks who are just having fun programming it. If you pitched “a puzzle game about a raccoon who builds logic circuits to activate robot boots”, the boardroom would look at you like you’re out of your mind. But it’s just exactly the quirkiness and individuality of some of these early games that I cherish the most.

If you find yourself knee-deep in an endless modern game, take a side-quest off into a more naive time, and you’ll appreciate why people are putting efforts into archiving them.

Commentary: The last couple of weeks have served as a capstone to what’s become a bad few years for the international video game industry. Now it appears the larger sector is headed directly into a significant crash, as several unsustainable practices all seem to be approaching a crisis point at once.

The first and most obvious issue is the ongoing component shortage. Due to the rush to build AI data centers, both RAM and solid-state drives have risen dramatically in price in 2026, with analysts forecasting that costs might not settle back down until at least 2028.

Both the PlayStation 5 and Xbox Series X|S are at the point in their life cycle when they’d ordinarily be declining in per-unit costs as the technology matured. Instead, both Sony and Microsoft have raised console prices multiple times this year due to the high demand for parts.

This would ordinarily be a great time to get into video games, as we’re almost six years into the current console generation. Instead, it’s one of the worst. The base PS5 and Series X are about as expensive as they were at launch in November 2020, and building a new gaming PC right now can be costly.

The component crunch also harmed the debut of Valve’s new Steam Machine, which officially launched late last month with a starting MSRP of $1,049. Valve, based in Bellevue, Wash., was forced to offer the new hardware at a significantly higher price than planned due to the difficulty in getting components.

That’s been reflected in its early reviews, with many outlets noting that the Steam Machine’s current price doesn’t match its power. At $700, the Machine would be a great gateway product for PC gaming, the way the Steam Deck was, and a genuine competitor in the console field, but a $1,049 price tag makes it an expensive curiosity for financially secure gadget-heads.

Another bad sign came from Sony’s recent announcement that it would sunset physical media for the PlayStation platform by 2028. This decision, which allegedly took many of Sony’s publishing partners by surprise, has serious knock-on effects for collectors, historians, developers, and most prominently consumers.

Sony has already caught one lawsuit over alleged market exploitation on the PlayStation Store, and that was a few days before it announced it wants to kill discs. An all-digital PlayStation library means that Sony would get to exercise full monopolistic control over pricing and access for every game it sells; licensing agreements mean that anything purchased on a digital storefront like the PlayStation Store is subject to deletion at any time without notice; and players wouldn’t be able to resort to any of the usual cost-cutting measures such as bargain bins, buying used copies, or even trading games with a friend.

That suggests that Sony has decided its best path forward is to continue to extract money from its established audience, rather than to have more options in place for gaming on a budget. There are free-to-play games on the PS5, of course, but most if not all are cross-platform and/or designed as money sinks. Ask any parent whose kids accidentally ran up a big tab in Fortnite.

If Sony has decided to end physical media, then it’s likely Microsoft will follow suit. While Xbox hasn’t mentioned its next-generation console, codenamed Project Helix, for a hot minute, it has been eager to get rid of discs since at least 2013. Some sources, such as Windows Central, allege that Xbox is already planning to do so.

(Meanwhile, Nintendo is likely to do its own thing. While Nintendo has been forced to raise the price of the Switch 2 alongside its competitors, it has offered no sign that it plans to stop selling game cards or Switch cartridges. In an uncertain world, Nintendo can be relied upon to only ever follow its own peculiar instincts.)

This sets up an early look at the environment that surrounds the 10th generation of console hardware. If both Sony and Microsoft stick to traditional timelines, we’re likely to start hearing more about the PlayStation 6 and Project Helix over the course of 2027, with launch in holiday 2027 or 2028.

If they do launch along that timeline, then it’s difficult to see how either system will retail for less than $1,000, since the storage and RAM supplies will still be constrained by that point. That automatically prices most of the potential audience out of the market. Once the starting costs hit the four-digit range, a console stops being a hobby or a toy for children and becomes an expensive extravagance. (As a general rule, you probably don’t want your console to cost significantly more than the TV you’re attaching it to.)

Further, it’s arguable that neither the PlayStation 5 nor the Xbox Series X|S have really hit their potential. Sony has famously squandered much of this generation on a largely abortive pivot to games-as-a-service, while Xbox has often seemed more interested in laying off developers than actually making or marketing games. The 9th generation of consoles has had a few big hits, but it’s mostly despite itself.

Not only is there likely to be limited demand for the 10th-generation PlayStation or Xbox, but neither of them actually seem necessary. The only reason to make them is for a brand refresh, and that’s got nothing to do with consumers.

Microsoft, following its acquisition of Activision Blizzard in 2023, is currently the second largest game developer in the world, while Sony dominates today’s console market. These two companies influence much of what happens in the modern video game industry, and as of right now, both are apparently determined to do the most short-sighted thing possible at any given time.

Sony has decided that only part of its audience actually matters, while Microsoft seems to be saddling Xbox with unrealistic expectations, possibly to justify its eventual sale or shutdown, and is ignoring at least one organized boycott.

Whenever the video game industry undergoes any kind of significant disruption, someone somewhere always asks if it’s the start of another “Crash of ‘83.” This is usually hyperbole, but it’s hard not to see the parallels between then and now: the video game market is flooded, there are few true exclusives left outside of Nintendo, many members of the gaming audience buy as few as 2 games a year, and the end of physical media will end both retail support and much of the casual audience.

This is unfolding as a slow, years-long plummet rather than the comparatively sudden shock of ‘83, but a crash is a crash. It’s avoidable, but it would require a massive, simultaneous course correction from several of the largest entertainment companies in the world.

That being said, it’s unlikely that video games as a medium are facing any kind of existential threat. Nintendo, as noted above, is well-positioned to ride out any potential problems with the larger market, PC gaming is hanging on, and the mobile sector is actually having a sort of quiet renaissance right now. There will still be video games to play in 2030, barring some larger disaster.

If there’s one big opportunity here, it’s that many of the major players in the games industry have either voluntarily abandoned the market for budget gaming or have been forced out by component costs. Some of the biggest hits of the 2020s to date, such as Vampire Survivors, Among Us, Lethal Company, and Balatro, are cheap, retro-styled games designed to run on almost any hardware, from a PlayStation 5 to your 4-year-old tablet.

The best step forward for mainstream gaming, then, might actually be to take a step back, in a similar way to projects such as Panic’s Playdate retro handheld (still going strong 5 years later) or Seattle’s Tin Can, seeing success with its land-line phones for kids and families. Chasing bigger games, higher frame-rates, and more realistic graphics for 30 years has gotten us here, up to the edge of a second major crash, while thousands of people log on every day to play games that could be run on a particularly big potato.

Instead of rushing into the 10th generation, the solution now might be to think simpler and cheaper, making smaller, more focused projects rather than the 5-year moonshot of a typical AAA game. Otherwise, mainstream video games may end up like Western comics: increasingly expensive options presented to a shrinking handful of fervent fans.

In 2007, Microsoft’s Xbox 360 consoles started dying — overheating until three lights on the front blinked red, a defect gamers came to call the “red ring of death.” Microsoft’s response was to extend the warranty on every machine and take a charge of more than $1 billion to fix the problem, making it one of the costliest product failures in the company’s history.

Microsoft could afford it financially, but the bigger factor was strategy. Xbox was a bet on the living room, and for a company minting money on Windows and Office at the time, losing a billion or so was a justifiable cost of staying in the game.

Nearly two decades later, that patience has run out.

“Going forward, this cannot continue,” the new Xbox CEO Asha Sharma wrote in a memo to employees last month, offering a blunt assessment of a business that has spent more than $20 billion over five years, only to see its core revenue fall by nearly half a billion dollars, running at a thin 3% profit margin, by Microsoft’s own internal measures.

With thousands of layoffs expected to be announced across Microsoft as soon as next week, the Xbox division is likely to be among the hardest hit.

The cuts reach across the company — including sales and consulting — part of a restructuring that has become routine around the close of Microsoft’s fiscal year. But for Xbox, they’re an early step in a broader effort to reset the business, rein in costs, and position the division for healthier profits.

Microsoft CEO Satya Nadella has been blunt about it: the company has spent years subsidizing Xbox rather than profiting from it, and that era is over. The videos and livestreams of people playing Xbox games that fill YouTube generate more money than Microsoft makes from the games themselves, he noted in an appearance on the Hard Fork podcast.

“No one can accuse Microsoft of not having invested for the last 25 years,” Nadella said. “And now we have to turn this into a sustainable business.”

Long-term strategic bet

Turning it around means breaking a pattern that runs through Xbox’s history.

Xbox launched in 2001 and lost money for most of its first decade. Microsoft absorbed the losses and stayed in — going up against Sony’s PlayStation and Nintendo — because it saw a strategic prize in owning a piece of the living room, and later mobile. Online gaming also gave the company early experience running services at scale, which fed its cloud ambitions.

Over time, the goal shifted from selling hardware to selling subscriptions.

Xbox Live, launched in 2002, turned online play into recurring revenue. Game Pass, which arrived in 2017, let players pay a monthly fee — the top tier is about $23 — for a library of games, including Microsoft’s own new releases the day they come out. The idea was to get people paying for Xbox everywhere: consoles, PCs, phones and the cloud.

And when growth stalled, Microsoft doubled down. It paid $7.5 billion in 2021 for Bethesda, the studio behind Fallout and The Elder Scrolls, then $69 billion in 2023 for Activision Blizzard (whose games include Call of Duty, World of Warcraft, Diablo and the mobile hit Candy Crush) the largest acquisition in Microsoft’s history.

A series of economic headwinds

In recent years, almost everything about the economics of gaming has turned against Xbox at the same time.

Hardware loses money, and AI is making it worse. Microsoft sells consoles at or below cost, banking on games and subscriptions to make up the difference. But AI data centers are consuming so much memory and storage that chip prices have spiked. That has forced Microsoft to raise Xbox console prices, most recently a $100-to-$150 hike this summer that it blamed directly on component costs.

Xbox lost the console war. By most estimates, Sony’s PlayStation 5 has outsold the Xbox Series X and S more than two to one. A smaller base means fewer game sales and subscriptions to offset the upfront hardware losses. That has left Xbox a distant second for the entire generation.

Revenue is shrinking. Even setting aside the games it gained from Activision, Xbox’s annual revenue has fallen nearly $500 million over five years — while the money going into the business keeps climbing. It has been investing more to earn less.

Microsoft’s most recent quarterly filing shows gaming revenue of $16.8 billion for the nine months through March, down about $1.1 billion, or 6%, from a year earlier.

Game Pass cuts into sales. Handing subscribers a new game the day it launches undercuts the roughly $70 they would have paid to buy it. The service delivers steady subscription income, but thinner economics on the games themselves.

Activision didn’t fix the margins. Even with one of gaming’s most profitable businesses folded in, Xbox earns only about 3 cents of profit on every dollar — well under the 17 to 22 cents typical in the industry. If the biggest acquisition in company history can’t move the margin, little will.

Every spare billion is flowing to AI. Microsoft is pouring more than $100 billion a year into the data centers and chips behind its AI push, trying to capitalize on the boom. Against a risk and payoff that big, a gaming business that barely breaks even feels like yesterday’s strategic bet.

What’s next for Xbox

The cuts have already started. In recent weeks, Microsoft has signaled plans to close or sell some studios, including Ninja Theory, maker of the acclaimed “Hellblade” series.

Shedding staff, studios and marketing will lift Xbox’s profit margins in the near term. What it won’t do is fix the underlying problem: a business can trim its way to a better number only so much before it has to generate more revenue.

Sharma’s plan, so far, is to concentrate on Xbox’s biggest franchises, funding blockbusters like Halo and Fallout while pulling back elsewhere. It’s leaning on Game Pass and releasing most of its games on PCs and rival consoles from Sony and Nintendo, reaching players well beyond Xbox’s shrinking base, even as it holds back a few new exclusives like Gears of War to give owners a reason to stay.

Microsoft is also rethinking the console itself. In her memo, Sharma described a “hardware component crisis” that has left the company unable to make as many consoles as players want, and called for “a new business model and partnerships” for its hardware.

How far the reset ultimately goes is an open question. The Information reported that Microsoft has weighed making Xbox a standalone subsidiary, a joint venture, or a spin-off, though nothing is imminent.

Whatever happens next, it’s clear that times have changed. In 2007, as the red ring of death crisis emerged, Peter Moore, who ran the Xbox business at the time, and his boss Robbie Bach went to then-CEO Steve Ballmer to ask for the money to repair and replace the failing consoles.

Ballmer didn’t flinch. “What’s it going to cost?” he asked, as Moore later recalled.

Told it was $1.15 billion, Ballmer said, simply: “Do it.”

Moore credits that decision with saving Xbox. There would have been no Xbox One, he said, without Ballmer’s willingness to spend more than a billion dollars to protect the brand.

Nearly two decades later, Microsoft is done writing that kind of check.