Stadia looks like a flop out of the gate, and its meager, overpriced game selection is a significant factor why. Google overestimated the console market’s appetite for experimental moonshots. Most gamers aren’t making purchasing decisions based on streaming quality, teraflops, 4K, or fast SSDs. Instead, as I wrote about earlier this year, it’s the games themselves — both selection and quality — that matter most. It was a crucial differentiator in the battle between PS4 and Xbox One, essential to the Nintendo Switch’s breakout success, and it will continue to be important for next generation hardware.
Games matter more for reasons beyond their historically strong track record. It’s also because across other facets — hardware, marketing, third party integrations — Sony and Microsoft will be on similar footing next generation, at least to your average consumer. I don’t foresee the major stumbles that marked previous console generations. Price and power, two factors that solidified PS4 as the clear victor this generation, I expect to be a moot point in 2020. Microsoft learned its lesson launching a console $100 more expensive and less powerful than Sony’s. Sony hopefully still remembers the $600 launch PS3 debacle and how undercutting on price helped secure their win for the PS4. Speculation from Digital Foundry and other sources posit the PS5 and Xbox Series X will rely on similar internal components. The result for consumers should be two boxes with similar specs and no more than a $50 gap in price differential.
With Sony MIA, Microsoft had an opportunity to go on the offensive this E3, which made their lack of detail on next-gen hardware, exclusives, and even streaming technology perplexing. But when you looked past console war talking points and read between the lines of their keynote, 2019 marks the most definite sign that Microsoft is splitting away from its competition, with Xbox Game Pass its centerpiece strategy. Other companies have dipped their toe into the subscription market, but given the maturity and boldness of Game Pass, I’m convinced Microsoft is all in.
The evidence of Microsoft’s subscriptions push was all over their E3 presser: onstage speakers and game trailers name-checked Game Pass frequently. The debut of Game Pass on PC and a special “Ultimate” bundle for combined PC and console access got a prominent showing. Two high budget upcoming Game Pass games — The Outer Worlds and Halo Infinite — bookended the show. And there’s no coincidence the first item Microsoft highlights under their E3 page is Game Pass.
E3 was fairly low key this year. In place of big reveals or surprises, we saw a solid suite of games as the current console generation hits its full stride. Two narratives stood out: Microsoft is staying in the game, and we’re getting next generation consoles sooner than I originally expected.
Microsoft’s best presser of the generation
Microsoft’s overall E3 message was one of strength and confidence for both the present and future. Their press keynote reassured Xbox loyalists and anyone else considering a dip into the Xbox ecosystem.
Granted, Microsoft’s keynote on paper shared the same DNA as their last few: trailer after trailer for solid third party games. It’s an obvious move given their competition moved in a different direction at E3 this year: Nintendo stuck to Smash Brothers while Sony focused on first party titles. But this year had especially strong game variety and pacing. The presser got virtually every third party game of interest through next year. Closing with Cyberpunk 2077 — hands down the most buzzed about game at E3 — was a masterstroke.
Microsoft’s E3 presser is a must-see this weekend, and not necessarily for any single game or hardware announcement. It’s because unlike other console manufacturers, they lack any clear long-run trajectory. As the only real wild card for E3 2018, Xbox’s positioning at the show has large implications for its relevancy over the long run.
Conventional wisdom suggests Xbox needs more killer exclusives. Offer the games, and the fans will follow. But at this stage, I don’t see Microsoft capable of making this happen. On paper, they don’t have enough first party studios, and those studios haven’t branched out beyond long-standing IP from the Xbox 360 era.
Nor are Sony and Nintendo standing still. This late in the console cycle, both platforms are hitting their stride. For Sony, the pedigree of The Last of Us II and the hype factor behind Hideo Kojima’s enigmatic Death Stranding sets a high bar. Nintendo is already riding high with a new Zelda and Mario in their back pocket. New Pokemon and Smash Brothers are out later this year with much more to come. Even if Xbox announces four big titles — Halo, Gears, Forza, and a fourth IP surprise — at best Microsoft reaches a draw with Sony and Nintendo.
Xbox is in a slump. Sales are solid, but hype and critical attention are behind rivals Sony and Nintendo. It has reached the point where Microsoft could pull out of consoles altogether over the long run with the Xbox One X their final release. But the recent announcement of an improved Xbox Game Pass subscription service (what I’m terming here “Game Pass 2.0”) changes my outlook.
Going forward, all Xbox new release first-party games (e.g. Sea of Thieves, Forza, Halo) will join the subscription service. Previously Microsoft limited Game Pass subscribers to mostly older titles from previous Xbox generations. Seen generously, this is like Netflix offering select first-run movies as they open in movie theaters, while still maintaining a flat $10 a month price. It’s a huge change from what came before.
By focusing on its subscription service, Xbox could sidestep the fragmented game landscape that they’ve faltered on for years. Console hardware sellers have always been exclusives, but Microsoft’s fall well short of the competition. Big budget moneymakers like sports and multiplayer shooters were a sure thing for Microsoft in the Xbox 360 era. Today they are a dicey investment. Budgets are out of control. Gamers are increasingly turning against loot boxes and other questionable microtransactions. Indies can grow to be a phenomenon (PlayerUnknown’s Battlegrounds, Cuphead, Stardew Valley), yet the market is getting oversaturated.
At a glance, Microsoft had a decent E3. Their presser showcased a huge number of quality games, solid genre diversity, and decent pacing. Xbox head Phil Spencer remains a great ambassador for the brand. And the Xbox One X looks to be an engineering marvel, a cutting edge console in a svelte enclosure.
But Xbox doesn’t exist in isolation. Sony is well ahead in mindshare and sales. Nintendo surprised many (myself included) with the runaway success of the Switch. With E3 over, Microsoft has two chief questions to answer. Why should anyone buy an Xbox One X? And why invest in Xbox over the PS4?
Sadly, Microsoft stumbled on both questions. Like I wrote earlier, by leaning so heavily on 4K, Microsoft has put themselves into a weak position for the holidays.
Microsoft has bet big on Project Scorpio to generate Xbox sales and hype. Their PR cycle projects confidence: Scorpio is a large focus of their E3’s presser less than a month away. They also provided an extensive walkthrough of the hardware specs to Eurogamer weeks ago.
Yet Microsoft is kidding itself if it thinks the market for Scorpio is anything larger than a small niche. Raw horsepower won’t win a console war. In fact it’s the opposite: software, not hardware, would be transformative for Microsoft in the long run.
Scorpio, like the PS4 Pro, is a non-starter for the price sensitive casual market. A Project Scorpio will cost likely $500 or more, double the cost of a baseline PS4 or Xbox One. That’s too expensive, especially given both low and high end consoles share the same game library.
Early signs suggest 2017 will be a conservative year for gaming. The PS4 and Xbox One have little to prove, with an already robust library and huge user base. VR will be fascinating to watch, but mainstream adoption isn’t happening anytime soon. And the disappointing sales of several AAA sequels (Dishonored 2, Titanfall 2, Watch Dogs 2) will make major studios cautious with their output.
Despite all this, several factors may shake up the industry. PC and console gaming have been inching closer together for years; strong PS4 Pro and Scorpio sales should speed up this trend. And Nintendo continues to play a wildcard role. They could transform iOS and Android gaming and revitalize dedicated portable gaming devices.
Microsoft’s E3 announcement of Project Scorpio is big news. It’s the first official sign of consoles moving toward a faster, more iterative release cycle. But the announcement is also a big strategic mistake.
Not because of the Scorpio concept itself. Consoles have advantages with a faster release cadence. There’s more wiggle room for innovation and breakthrough gaming experiences. Game compatibility expands; older platforms aren’t immediately left behind.
Yet I see two big errors on Microsoft’s part. They announced Scorpio too early and are targeting a high end, costly specification.
The maturity of the console market and strong sales clearly rubbed off on the Microsoft and Sony this year. Each had their missteps, but they stayed on message and were the most interesting pressers by each company in several years.
Yet Sony and Microsoft took different approaches. Microsoft knows it’s well behind Sony and wanted to present a wide net for potential buyers. They succeeded; onstage content was bright, fun, and diverse.
Sony had the swagger of being in the lead. While Microsoft went wide, Sony went uncharacteristically narrow and minimalist. PlayStation VR got a mention, but the focus was otherwise all on games, many of them first party exclusives.