E3 was supposed to showcase Microsoft’s Xbox One firing on all thrusters. Instead, it’s become a further referendum on used games, the transition to digital downloads, the freedom to share your own purchases with friends and family, and the price of modern game consoles. This is undoubtedly demoralising for the game developer teams that have slaved for weeks to build demos for their upcoming titles, only to have their work overshadowed by Microsoft’s £429 purchase price and Sony’s PlayStation 4 press conference.
The Xbox One rode into E3 on a wave of consumer dissatisfaction over its TV-centric launch event and unhappiness regarding its just-unveiled used game policies. Thanks to Sony, the situation is now significantly worse; the Xbox One is increasingly defined in terms of what it can’t do. £429 is far too expensive to appeal to the average consumer who might have bought a unit for its feature integration.
The parallels between the Xbox One today and the PS3 launch eight years ago are only getting stronger as launch day approaches. In 2005-2006, gamers pushed back hard against the PS3’s expensive Blu-ray drive and the console’s high price.
Sony’s response was to trot out Ken Kutaragi, the president of Sony Computer Entertainment, to repeatedly justify the PS3’s high price and claim that it would bury the Xbox 360. Obviously, that didn’t happen.
Microsoft is, to all appearances, making the same mistake. In an interview with GameTrailer, Don Mattrick, President of Microsoft’s Interactive Entertainment division, said: “Fortunately we have a product for people who aren’t able to get some form of connectivity, it’s called Xbox 360. If you have zero access to Internet, that is an offline device.”
He then independently raised the issue of whether or not Microsoft would support soldiers on deployment with the Xbox One – and stated that they wouldn’t. “I’ve got to imagine that it’s not easy to get an Internet connection. Hey, I can empathise. If I was on a sub, I’d be disappointed.”
If you’re an American soldier (or British, or any nationality posted abroad in the middle of nowhere), Microsoft empathises. Sony, meanwhile, will happily sell you a PS4. This isn’t a misquote; in a separate interview with Destructoid, when asked what players without Internet connectivity should do, Phil Spencer, Microsoft’s corporate VP, stated: “The 360 ecosystem is a great ecosystem for somebody that’s in a purely disconnected state for long periods of time. We have built a natively connected device with Xbox One and we think the experiences are moving in that direction.”
These comments aren’t so different from Sony’s. This time, it’s Microsoft telling people how they’re going to play, what they want, and how they’re going to get it.
The perceived value gap
In 2005 and 2006, Sony asked gamers to bet on Blu-ray and Cell as key features that would propel the PS3 head and shoulders above the Xbox 360, despite the price difference. From Sony’s perspective, the $500-$600 (£320-£380) SKUs were more than fair, given that the company lost a load of money on every PlayStation 3 it sold.
Consumers, unfortunately, didn’t agree – PS3 sales lagged Xbox 360 sales through 2007 and 2008. In the long run, the PS3 and Xbox 360 finished at about the same place over their life spans, but Sony took an absolute hammering in the early years. Neither company can afford such largesse now, but for Microsoft, the problem is acute. Already facing pressure in Windows, Xbox has become an investor bright spot. Should the console fail to take off at launch, it could feed the narrative that the company is unable to compete in any of its new markets.
The chart above shows console launch prices in US dollars, adjusted for 2012 in terms of inflation. In constant dollars, the Xbox One is still more expensive than the original Xbox 360. Early pre-orders have been strong (Amazon reports having sold almost its entire allotment), but if the Wii U, 3DS, and PS Vita launches showed anything, they showed the folly of relying on launch day sales as a metric for console health. All three systems posted strong initial sales followed by steep declines not long after.
Changing the game
All isn’t lost. There are some specific things Microsoft can do to improve the narrative around its new console:
- Change the game (literally): One of the most interesting capabilities Microsoft has talked up (but not really demonstrated) is the idea that by offloading background rendering to the cloud, you can improve overall game geometry and visuals. Demoing this capability would go a long way to capturing user interest. Being able to demo real games that will use it on launch day would go further still. Don’t just defend cloud rendering and always online – give potential customers a reason to prefer it.
- Showcase partnerships, capabilities: Putting the focus on gaming at E3 was the right thing to do, even if the games themselves were overshadowed by the price announcement. With launch day coming soon, however, it’s a good time for Microsoft to revisit the non-gaming content side of the equation. DVR capability would go a long way to making the Xbox One more attractive as a one-stop shop for entertainment device needs, as would the ability to network smoothly with Windows PCs on a pre-existing network. These options won’t sell the system, but they could justify the higher price tag.
- Find a way to serve the military: This is shameful, and it won’t play well with the press. Find a way to allow military personnel on long deployments to game on an Xbox One. Telling troops that you “empathise” with them is both embarrassing and hands Sony perfect ammunition.
Do I think Microsoft is going to change? Honestly, no. The remarks that have come from the company to date paint a picture of a company that most definitely isn’t listening to outside criticism or commentary any longer. High pre-orders will be talked up as “proof” that gamers are on board with the Microsoft vision, as opposed to a nearly guaranteed outcome given the scope of Microsoft’s game business.
But things could still change. And hopefully, they will.