CAN MICROSOFT TURN THINGS AROUND FOR XBOX ONE?
News that UK sales of Xbox One had surged 96 per cent in the week of Titanfall’s release, with seven out of every ten consoles sold alongside Respawn’s multiplayer shooter, should have set champagne corks popping in Microsoft’s Redmond HQ. Any suggestion that this was the turning point for Xbox One’s fortunes, however, was quickly shot down by news that UK sales of PS4 had risen by 72 per cent in the same seven-day period. Yet Sony’s boost was not driven by the long-awaited arrival of a platform-exclusive game release – that would come a week later, when Infamous: Second Son saw hardware sales more than double – but by retailers finally having enough stock to meet demand. Sony can’t make its new console fast enough, while Microsoft’s lies readily available on store shelves.
Microsoft knows only too well about stock shortages. It had shipped just 1.5 million 360s to retailers by the close of 2005, which was nowhere near enough to meet the rapacious Christmas demand. The supply-chain issues of 2005 gave Microsoft a much-needed bounce coming into 2014, however, with Xbox One’s launch figures such that it could lay claim to being the company’s most successful console of its time in the business. Yet the numbers speak for themselves. Microsoft hasn’t updated us on Xbox One’s sales since its financial results in late January, when it said it had sold 3.9m consoles by the end of 2013. Sony, by contrast, shouts from the rooftops about PS4’s performance at retail, most recently announcing that the console had passed 6m sales in early March.
In February, US market researcher NPD Group suggested Microsoft was closing in, with Sony holding only a ten per cent advantage over its rival’s hardware sales that month. But there is a big difference between closing the gap and merely slowing the rate at which it grows. That Microsoft is behind Sony in the US and UK – two markets in which it enjoyed profound leads for much of the 360/ PS3 generation – says a lot about how much needs to change.
Fortunately for Microsoft, much already has. Today’s Xbox One is a very different machine to the one unveiled to such opprobrium last May and even the one that launched in November. The more controversial corporate policies have been abandoned, the console’s baffling UI has been streamlined, and its development tools have been improved. Most significantly of all, Xbox One now has Titanfall. Within Microsoft, there is a clear feeling that a corner has been turned.
“Xbox One’s momentum is fantastic,” corporate vice president Phil Harrison tells us. “The thing that really impressed me was not just the hardware sales, which is obviously one big number that you measure, but the engagement per user is extraordinary. We’re seeing more than five hours per day average usage on Xbox Live. Not only are players buying, but they’re using and really engaging with the platform, and that’s a great sign for the future.”
You’d expect an Xbox executive to accentuate the positive, but Harrison is right to point out that sales figures don’t tell the whole story. PS4 is available in 53 countries, after all, and Xbox One in just 13. Last month, Microsoft announced the second phase of its hardware rollout, with the console to reach a further 26 territories this September. That will surely help, but there’s no telling how big the gap will be by then, and it’s no surprise to hear that Microsoft Studios corporate vice president Phil Spencer would rather things had turned out differently.
“I’ll just say it: I wish we were in every country on day one,” he says. “Accelerating our country rollout is really, really important to us. We built a box that natively understands the country it’s in – the language and television and other things – [so] let’s make sure we do a complete job in bringing the console into those markets. When we do, I think it will have an impact, but I want to do it in the right way. I don’t want to get there early if the box isn’t ready for the market it’s being launched in.” This is the problem. Xbox One, as Microsoft’s PR team likes to keep reminding us, is not just a videogame console but an “all-in-one games and entertainment system”, and its core functionality means it is much more of a headache to launch internationally than Sony’s games-first, player-focused alternative. The features enabled by Xbox One’s HDMI In port also dictate that there is no point launching the hardware in a country where Microsoft has yet to ink deals with cable and satellite providers. The platform holder must also line up enough partnerships with local entertainment companies to ensure day-one buyers can fill up their Home screens with streaming video apps. This isn’t solely an issue of handshakes and signatures on dotted lines, either – it’s an engineering problem, too. A system
designed from the ground up to be controllable by voice has to understand not only a country’s native language, but also be able to parse its every regional accent.
Forget always-on DRM, the used-game ban, and all the other embarrassing PR climbdowns: the real millstone around Xbox One’s neck is, and has always been, Kinect. While Microsoft’s involvement in the US government’s PRISM programme, which saw it hand over user data from emails and Skype to the NSA, raised concerns over its desire to put an always-on camera in living rooms the world over, Kinect’s problems run far deeper than privacy paranoia. For all that Microsoft has insisted its next-generation camera peripheral is integral to Xbox One’s design, the reality is that Kinect 2.0 is finicky in its gesture recognition, unreliable for voice control and still, crucially, waiting for the one game that immediately justifies its existence. Episodic Swery65 curio D4 will not convince the masses of Kinect’s worth.
Kinect Sports Rivals may have a better chance, but it says much that we’re still waiting for the camera’s proof of concept as a gaming device some five months after launch, rather than having it on day one. And especially given that two launch-day games, Crimson Dragon and
Ryse: Son Of Rome, were originally Kinect projects. Where are the games for the peripheral?
“You’ll actually see quite a few more,” Spencer says. “There are a number of games on the ID@Xbox programme that use Kinect, and you’ll see more games in the fall. A lot of games are using Kinect and voice in a very subtle way, which I actually think is a good thing. I think subtlety, in terms of sustainable features, is better than these over-the-top [games where] you have to stand up and yell at the top of your lungs to make something happen. Go get Dead
Rising 3, a great launch title that uses Kinect. Ryse used Kinect. Forza used Kinect. A lot of games out there use Kinect. Sometimes in very subtle ways, sometimes in more overt ways.” Kinect certainly needs to progress beyond subtle, marginal gains if it is to justify its inclusion in the box with every single Xbox One that Microsoft sends to retail shelves. A component teardown in the run-up to the console’s launch put the manufacturing cost of its camera peripheral at around $75; take that out of the equation and Microsoft is no longer faced with the problem of selling a less-powerful system at a significantly higher price than its closest competitor. The console’s massive UK sales increase was driven not just by Titanfall, after all, but also by a price cut, lowering its suggested retail price from a generally unpalatable £429 (at least next to PS4’s £349) to a much more psychologically appealing £399, although bundling it with the most keenly anticipated game of the new generation to date obviously helped. There’s a clear lesson here for Microsoft in both its current and future Xbox One territories, but Spencer won’t be drawn on whether the company will apply what it has learned elsewhere.
“The UK thing was more of a specific instance around currency and other things that were going on,” he says. “It’s a strategy for us to be price competitive, absolutely. We want to have a box out there that people see as good value. What does it mean to be price competitive with what we’re putting in the box, making sure gamers feel like they’re getting good value in the box that they’re buying? Being price competitive over the generation – look at what happened on 360, or frankly any console – is obviously something that we’ll focus on, making sure that we’re putting the best product on the shelf.”
“I WISH WE WERE IN EVERY COUNTRY ON DAY ONE. ACCELERATING OUR ROLLOUT IS REALLY IMPORTANT TO US”