Microsoft recently announced a dramatic reversal of its plan to change the way we play games on the next generation of hardware. While the plan had promise, its benefits were too esoteric for most gamers to grasp and were so poorly marketed that 95% of respondents to an Amazon consumer poll indicated their favor of Sony’s competing Playstation 4. The episode has emerged as an instructive testament to the power of the market.
Certainly, brand loyalty exists among gamers. Limited budgets require most of us to choose one console in a given generation. Even if you have the money to spend, it can be hard to justify cluttering a room with multiple consoles and a jumble of controllers unless you happen to be single with no children. Gamers want to believe that they have chosen wisely, and thus root for their chosen brand to succeed. Nevertheless, that loyalty runs thin during the transition from one generation of hardware to another.
The Xbox 360 has provided the highest value of any console I have owned, changing dramatically over its lifecycle to become the central entertainment platform in my household. If our television is on, so is our 360. Whether watching YouTube clips with my wife, streaming children’s programing for my sons over Netflix, or sneaking in some Battlefield 3 when no one else is around, I do it all on Microsoft’s console. Since first waiting overnight in the freezing December cold to buy the gadget in 2005, I have accumulated a diverse library of games, both on disc and digitally via Xbox Live Arcade.
Despite all that, despite being a happy and thoroughly satisfied Xbox 360 owner, I must confess to taking a serious look at the Playstation 4 after this month’s Electronic Entertainment Expo.
Even considering a brand switch reflects poorly upon Microsoft. Switching to Sony at this point means abandoning an established online presence, scrapping my current friends list, abandoning exclusive franchises in midstream, and kissing my achievements and gamerscore goodbye. All things being equal, remaining with Microsoft would be a no-brainer for that reason alone. Alas, coming out of E3, things were not equal.
Sony had emerged from the expo, which may be rightly regarded as the starting gate for the next-generation console race, with an apparent lead. Reporting for IGN, Tal Blevins revealed a disparity in pre-order sales:
Early data for console pre-orders from major online retailers in the United States show consumers pre-ordered approximately three PS4 units for every two Xbox One consoles during the period between Monday June 10 to Wednesday June 12. While this is not an indication of future purchase intent, it does seem to suggest that Sony resonated louder with consumers during E3 2013 than Microsoft.
IGN users were unquestionably swayed by Sony’s messaging during this year’s Electronic Entertainment Expo. We asked our readers who they thought was “winning E3” during the show. Over 280,000 of you responded, and Sony took the top spot with 81% of the votes. Microsoft garnered 12% and Nintendo grabbed the remaining 7%.
The enthusiasm surrounding the fourth Playstation surprised even Sony, which responded by upsizing its internal sales projections. Three factors appear to have informed the surge in Sony’s direction. First, the Playstation 4 will sell for $100 less than Microsoft’s alternative, the Xbox One. The latter was announced to require an internet connection to validate game purchases at least once per twenty-four hours. Finally, the Xbox One was announced to impose restrictions on the sharing, resale, and renting of games.
Prior to Sony’s E3 media conference, there was much ambiguity regarding whether the company would follow Microsoft’s lead on these points. To gamers’ relief – and perhaps surprise, Sony opted to retain the familiar model of the current generation, granting full license to share, trade in, and rent disc-based games. The reception of this news, as seen in the video above, erupted as ecstasy.
While Microsoft’s reversal in response to widespread consumer rejection properly reflects market values, there was a method to Microsoft’s madness. Microsoft looked to a future where cloud-powered gaming could prove superior to the static experience found offline. By “cloud,” we mean remotely accessed servers which provide not only additional memory storage, but upgradable supplementary processing ability which can potentially enhance the Xbox One’s capabilities. Considering how much the Xbox 360 has evolved over the course of its lifecycle, the prospects made possible by the cloud challenge the imagination.
Therein lay the commercial problem. It requires imagination to perceive the long-term benefit of requiring an internet connection to run an Xbox One, much as it required vision to launch the original Xbox supporting only broadband network connections at a time when dial-up was still prolific. Conversely, the benefit of the current generation disc-based model proves self-evident.
Microsoft was not able to effectively communicate the benefits of cloud-powered gaming. On the contrary a comment from Microsoft’s Don Mattrick following E3 seemed arrogantly dismissive:
Fortunately we have a product for people who aren’t able to get some form of connectivity; it’s called Xbox 360.
Pointing early adopters, who are those currently paying attention, to your current generation of hardware does not a stellar salesman make.
Cloud-gaming may in fact be superior technologically to the current static variety. However, technical superiority will not necessarily sell consoles. Practical value must be conveyed. HD-DVD was a technically superior format to Blu-ray, and was backed by Microsoft early on. We know who won that war. Perhaps memory of that lesson was evoked, driving Microsoft to the conclusion that its bold new ideas were too clever by half.