As a gaming enthusiast that never gets to play videogames any more, I’ve been following the developments at E3 with some interest.
This year is a big one, the proper launches of the first true next generation consoles (sorry Wii U, you really don’t count.) We’ve had to wait for these for longer than any other generation of console and the consumer demand has been growing steadily.
Of the last generation, the original Wii was the big winner in terms of console sales, although it never really competed with the Xbox 360 and PS3 as true gaming devices in terms of the number of games sold.
For the hardcore gamer, the Xbox 360 was the big winner, especially in Europe and the US. They did so much right: The price point was keener (due to the fact that they didn’t include an expensive technology in the form of a Blu-ray drive that they didn’t know if people wanted); the key exclusive games were truly newsworthy – Halo 3 and Gears of War and the new controller was just a really intuitive evolution of the original xbox s controller that everybody loved.
Within this package, Microsoft were also able to sell us a lot of stuff that we didn’t know we wanted. Xbox Live Gold, Live Arcade games, A wide suite of entertainment apps, Sky Player on the Xbox – brilliant. These things have all increased the influence that the console has had on the living room and made it an essential subscription each year.
So Microsoft should know the secret of success – Give people what they are asking for, at a price they are willing to pay, with some killer games that the fanboys can shout about. If you want to sell them something completely new, then don’t expect them to pay for it upfront, find a way to get it in the back door. It worked for Kinect for example. When they launched their new control device, it managed to be the fastest selling consumer device of all time!
So why have they got it so wrong this time?
They’ve launched the console that people wanted, but then insisted on attaching a piece of unproven technology that most people don’t want. The Kinect might have sold very well, but my understanding is that the attach rate for games was pretty low – just like the original Wii. There is a market for waving your arms around in front of the telly and most people are happy to have a couple of games like that, but the low sales of all the Kinect driven games that followed showed that it wasn’t ever going to be a big volume driver. On a personal note, my own Kinect camera is still stuck in the Garage from when we moved house. The Xbox came straight out, but I’ve had absolutely no reason to take the Kinect out again.
The inclusion of the Kinect wouldn’t be a problem if it was essentially a bonus, but by having it included, they have added about £100 to the retail price in comparison to the PS4.
That seems to be a huge mistake. These two consoles are going to be released at pretty much the same time, they will be perceived to be roughly equivalent in gaming power and so the only difference is that one comes with a £100 bit of kit that only a small proportion of the existing customer base will want – sound familiar? (For Kinect see Blu-ray)
Both this launch and the launch of the PS3 suffered from the same sense of hubris.
8 years ago, Sony were determined not just to launch a new console, but to use that console to win a format war – (a format war that frankly wasn’t worth winning as the physical format is dying quickly and being replaced by downloads and streaming) By focusing on the secondary business objective AND GETTING CUSTOMERS TO PAY FOR IT they lost the primary battle. They probably felt that they could because of their vast superiority in the previous generation – the PS2 is still one of the best selling consoles of all time and trounced the original Xbox – but they very quickly fell into 3rd place because they took their eye off the ball.
The same hubris will be behind what I expect to be the failure of Xbox ONE. Someone at Microsoft clearly has a vested interest in getting Kinect into every lounge in order to make it central to every family, rather than just the geeks upstairs. However by taking that choice away from their customer base they risk a mass exodus to PS4 – this is especially the case considering that the Xbox ONE has no backwards compatibility with the 360, so there is no tangible rational reason for current users to be loyal. The only thing left is “exclusives” and with a fairly average Halo 4 in recent memory and other franchises losing their freshness, I’m not convinced that there is enough to keep people in the Microsoft world.
The only saving grace for Microsoft is that Sony have a tendency to fuck this stuff up. The PSVita was a phenomenal piece of technology with huge amounts of innovation and style, but then they decided to insist upon proprietary memory cards because they wanted to force customers to buy extra cards and for Sony to make the money on them. In the short term this meant increased ARPU, but in the long term it just meant a lot fewer users and is now already a console we talk about in the past tense.
Anyway, rant nearly over. I just don’t understand how they can get this stuff so wrong. I haven’t even started on their decision to not allow used games etc (even though I kind of agree with this one) but everything that the twittersphere is buzzing with is all based in the same problem – that Microsoft have just made the product that they feel best fulfills their business strategy, rather than basing their business strategy around the products that people actually want to buy.