Microsoft wants control of your living room, and the Xbox One is the company’s tool for making that happen.
One of the interesting things about Microsoft’s May 21 unveiling of the Xbox One was the relative lack of actual game footage on display. Chances are pretty good that Microsoft is saving a lot of that for the upcoming E3 video-game conference. Instead, the executives onstage seemed determined to pump all the console’s other features, from a Skype app to a dashboard for choosing movies and television. They talked up the hardware running it all, including an eight-core x86 processor and an upgraded Kinect motion controller.
But they rarely, if ever, used the term “gaming console.” There’s a big reason behind Microsoft’s decision to downplay its video-game platform as, well, a video-game platform: console sales in the United States dropped 21 percent in 2012, and sales of new video-game cartridges didn’t fare much better. More people are liable to pick up a tablet or smartphone for their gaming fix than a controller. And while next-generation systems from Microsoft and Sony could reinvigorate the market later this year, Nintendo’s attempt at a game-changer—the Wii U—crashed and burned so spectacularly in the marketplace that it’ll probably end up as a business-school example of everything you shouldn’t do when conceptualizing a new product.
In light of that, it’s probably smart for Microsoft to market Xbox as an all-in-one device for entertainment and thus expand its potential audience. Sony’s early marketing for the PlayStation 4 positions that device as the Next Big Thing for hardcore gamers, and it’ll back up that assertion with truckloads of marketing cash; by aiming for a broader demographic, Microsoft can reframe the competition and potentially earn more cash.
But repositioning the Xbox One as an all-in-one platform comes with its own challenges. Other companies want control of the living room, as well: Apple has its Apple TV (capable of streaming television episodes and movies from iTunes and other sources), various manufacturers have jumped aboard the Google TV bandwagon (such as it is), and other IT vendors are producing set-top boxes that offer some combination of Web browsing and streaming content. For those consumers who don’t care much about gaming, it could be difficult for Xbox One to make many inroads against other entertainment “boxes” at lower price-points. (Although Microsoft hasn’t officially announced a price-point for the Xbox One, it’ll surely be more expensive than many options on the market.)
In any case, Microsoft has fired its proverbial shot across the bow of the rest of the entertainment industry. The only question is what all those other players—especially Apple and Sony—will do in response. It could be a corporate deathmatch for the ages.