People are watching quarterly sales of next-gen consoles like each new data point is going to pick a winner (and therefore a couple losers). I said last year and at the start of this year, Sony needs the PS4 to do very well and Microsoft just needs the Xbox One to do well enough that 3rd party developers keep building games and apps for it. Even in that respect, Windows 10 could be the killer app for the living room if they are able to mesh it with the current system (think lots of 3rd party apps).
The quarterly financial results from this quarter really bring it all into perspective. Sony’s quarterly loss – $785 million (3.3 million PS4 sales last quarter). Microsoft’s quarterly profit – $4.3 billion (2.4 million Xbox One sales last quarter). Sony may have better PS4 numbers, but they are fighting to keep their company healthy. Microsoft is making lots of money in other areas (as well as the consumer division), so they aren’t as dependent on winning this round of the gaming consoles. I personally hope that Sony is able to pull through this (as well as Nintendo for that matter). I think that every console is better due to the competition.
As I’ve mentioned in other posts, I haven’t gotten a lot of use out of our Xbox One. I have used it for workouts and it’s been a very capable media and Blue-ray player, but none of the current games (that weren’t available on the PC) have enticed me. That changed with the release of Destiny. Destiny is created by Bungie, the studio that brought us the Halo series of games. They are back with a game that includes a lot of the mechanics of Halo with additional features that make it also resemble a MMO (massively multiplayer online game).
Typically you have FPSs (first person shooters) that include a story component as well as a player versus player (PVP) or cooperative (PVE) multiplayer component. Destiny includes these components as expected. On top of this, they add a character building component typically associated with MMOs or RPGs. In Destiny you pick a class (or type) of character each with different styles of play and special powers. As you level up your character, you gain access to new powers and new gear. The gear includes weapons (3 different classes) and armor (head, arms, chest and legs). You also gain access to additional visual upgrades as well. Basically, you build a totally unique character.
Destiny is available for multiple platforms, so what makes the Xbox One unique? The first thing that I noticed were the amazing visuals (shared with the PS4). The second thing amazed me was saying “Xbox Record That” after killing my first big boss. Later on while checking the Xbox One app on my WP device, I was able to watch the 30 second clip. On the Xbox One, it keeps a 30 second cache of everything that’s going on so that you can always records something great in game. Not only that, but you can easily edit and access it from anywhere. You can also jump to another app than then quickly jump back into the action when you are ready. Overall, I’m enjoying the new game and I’m looking forward to all of the additional content that will be coming out for the game over the next couple years. The Xbox platform itself just keeps getting better as well and I’m now at the point that I would prefer the “next gen” over the 360.
It’s almost a year into the next generation of console gaming. The PlayStation 4 and Xbox One have been on the market for several months and it’s interesting to see how things have gone for the major players. The sales numbers so far show the PS4 with a sizeable lead in the race. With 10 million consoles in the hands of consumers, they dominate the estimated 6 million consoles sold by Microsoft. Sony’s status among gamers is back up really high. What most gamers don’t know is that Sony as a corporation has been losing money in most other areas (with the exception of movies and music), so they needed this win. Though Microsoft has taken it lumps in the tech press (which seems to perpetually hate MS), the Xbox One is still ahead of where the 360 was at this point. So Sony is winning big, but Microsoft is doing okay other than perception.
Microsoft made two big announcements yesterday regarding the Xbox One and the Xbox Live service. The first is the unbundling of the Kinect sensor from the Xbox One console. The second is the removal of the “pay wall” for content consumption apps such as Netflix.
The creation of a new Xbox One SKU for $100 less than the original that doesn’t include the Kinect accessory is purely a marketing move. It provides a price that allows it to compete directly with the PS4 and takes away one club that the tech press has been beating Microsoft over the head with since launch. Choice is a good thing, but I don’t see very much value in the Xbox One without the Kinect sensor. If you devalue the vision and voice control side of the Xbox One, you are really better off with the PS4 (unless you are heavily invested in the Microsoft ecosystem). So even though people have a choice now, I don’t think it’s a very good option. Right now, the full system bundled with Titanfall is the best option. Of course developers can’t depend on having the Kinect sensor and so you can expect to see fewer (only slightly) games include support for it.
The big news here is the removal of the “pay wall” for Netflix (and other apps). A lot of people are interested in only playing single player, but wanted to be able to use the device for Netflix as well. Now they will be able to use the free XBL Silver membership and still access Netflix, Amazon Instant Video, Vudu, etc.. Expect to see the used Xbox 360 market pick up as households grab an extra 360 for play rooms just so they can watch DVDs and stream Netflix. You can also expect a drop in the number of Xbox Live Gold subscriptions. I would expect this drop in revenue to be somewhat offset by the use of other Microsoft services (of which Microsoft is investing heavily in right now). I would not be surprised to see more bundling of these services in the future (i.e. additional One Drive storage, Office apps, etc..). This also makes the Xbox One the best choice for your living room as you don’t need to Gold level account to access just about every media source available (with the exception of iTunes and Google Play).
If you don’t like Microsoft, then this will be seen as Microsoft on the ropes and desperate to hold on to what little market that they have. The reality is that Microsoft under Satya Nadella is being more aggressive in going after the Devices and Services segment. They feel the pressure to deliver more value and choices in order to stay competitive and this is one result of that. Competition is a good thing. This is also why Microsoft haters should be careful what they wish for when they hope for Microsofts demise.
There’s an ongoing battle between the PS4 and the Xbox One to decide the “winner” of the next gen consoles. The numbers so far put the PS4 ahead of the Xbox One by around a couple million devices. Microsoft’s console passed the 2 million mark last month and Sony just announced that the PS4 has sold over 5 million worldwide. Sony has a number of things going for it in the number war. The first thing is that it’s available in more countries. The Kinect’s language barrier has kept it out of several markets. The other thing is that it is $100 cheaper. So things are proceeding about how I expected with Sony taking an early lead.
I happen to have one of the Xbox One consoles and although I think it is a nice gaming console, if I had it to do over again I would have waited (and not that I would have gotten the PS4). I really expected Microsoft to ramp up the software side of things much faster. I’m not sure if this is a matter of focus or if it’s just a hard problem to solve, but clearly they are moving more slowly than I expected. For one, there aren’t a lot of Kinect titles out and this is the one area that they have the advantage. Secondly, they haven’t leveraged their ecosystem enough (their Live service has gotten mixed reviews). Neither system can play a 3D Blu-ray at the moment and I find that to be a pretty big omission (especially since that’s the only thing keeping my PS3 in the living room).
Console and ecosystem quality aside, Sony really needs the PS4 to win this generation. Given the poor performance of their TV business (being spun off as a separate division), PC business (in the process of being sold off) and a lackluster movie business, it’s important for them to bring in some cash. More than that, they are being marginalized as a player in the market and that has a tendency to work against you long-term (being the 2 ton gorilla has its advantages when negotiating). So in a world that is revolving around Google, Apple, Facebook and Microsoft, Sony needs a win to stay relevant and in a practical sense to stay fiscally strong.
Microsoft really only needs to break even this generation (at least the first part of it). They have other businesses that are thriving (enterprise especially). They’ve got plenty of updates planned for the software side of the console and if they can stay in the game, then they’ll find ways to push their services through the device. So even if Sony wins the numbers game, Microsoft can still be considered as having “not lost” if they hold onto mindshare within their key markets (US in particular). With the new push for devices in the home (wearables especially), the software side of things (and the connectivity it will enable) is where the future is going to be won. At the moment, Sony is still executing and for the sake of competition I hope they do well.