Nintendo once reigned supreme in the land of video games, then Sega entered the market with their Genesis. A brutal, political battle broke out, and a console war was born. Sega shot first, with a bold television ad proclaiming “Genesis does what Nintendon’t.” Nintendo responded by snagging Street Fighter II as a console exclusive, after which Sega gave players the bloody version of Mortal Kombat. The companies took shot after shot at one another in an environment so heavy with competition that only the consumers benefited – and we weren’t complaining.
PS4 is outselling Xbox 2:1, with the trend predicted to last through 2018.
Console wars themselves have become much more gentlemanly in recent years, with industry juggernauts Microsoft and Sony exchanging compliments in lieu of snubs. Although Sony’s PlayStation 4 console is outselling Microsoft’s Xbox One nearly 2-1, with the trend predicted to last through 2018, Xbox boss Phil Spencer still puts on his PR face and says nothing but complimentary words about both the PS4 and the company that made it. The lack of a brutal slap fight has left the fans to figure out what the issues and differences are, and how Sony managed to take such an extreme lead over Microsoft.
The PS4 offers more space after factoring in operating systems, with 407GB of free storage to the Xbox One’s 362GB. The PS4 also has hardware more powerful than the Xbox One, and Sony focused the system’s software and interface on games while Microsoft was focusing the Xbox One on voice-controlled entertainment, TV and movies, with the option of also playing games. The PS4 was the more affordable option, with the Xbox One’s price hiked due to an initially mandatory peripheral, the second generation Kinect.
(What can Microsoft do to compete again? We’ve got five suggestions for them.)
The PlayStation 4’s success is about more than hard drives and space, and is arguably about more than the PlayStation 4 itself. Gamers simply saw Sony as a company that was much more in touch with their target audience than the competition. Microsoft committed a series of blunders during pre-release discussions of the Xbox One that ultimately alienated potential customers while also driving away existing ones.
To get an idea of the current war, let’s start at the beginning.
Once Upon a Time…
Once upon a time, Sony was the redheaded stepchild of the console market. In 1988, Sony formed a partnership with Nintendo in order to create a CD ROM add-on for the the SNES, which would allow the system to use both cartridges and discs. In 1991 at the Consumer Electronics Show, several Sony executives revealed Play Station, the first ever console hybrid. The following day, in one of the most spectacular snubs in video game history, Nintendo announced it was breaking its deal with Sony, instead forging a partnership with Sony’s competitor, Phillips.
The Nintendo-Phillips partnership was a commercial failure as Sony continued work on their own console, eventually launching PlayStation in 1994. When it was finally released, the PlayStation had capabilities that were miles ahead of the competition, directly competing with Nintendo’s N64 console. Sony was a top competitor in the market for years, revolutionizing CD gaming. In 2001, however, Microsoft entered the war with its own console, the Xbox, effectively marking the beginning of the brutal console war we see today. The PlayStation 2, which directly competed with the original Xbox, not only won the first round – it became the best selling console of all time with over 150 million units sold worldwide.
Xbox 360 became famous for the wrong reason.
A short four years later, the Xbox 360 released in November 2005, more than a year before Sony released the PlayStation 3. In round two, the new Xbox 360 managed to align its worldwide sales with that of the PlayStation 3. Despite catching up sales-wise with its competitor, Xbox 360 became famous for the wrong reason – the red ring of death, the notorious 3-light kill indicator for the system that plagued the majority of the consoles shipped. There was no question of if you would be affected, but rather when you would be affected. Microsoft spent over $1 billion fixing the issue, but by that time the issues were so widespread that the potential for lingering trust issues on the part of consumers was too high. Many felt that the rush to put a new console out before Sony contributed to the hardware demons possessing the system.
Microsoft was not ready to give up. With the pressure high, the company took more time than before on their third console, which ended up being named Xbox One. This console has also struggled, with the Xbox One far behind the more popular PlayStation 4. The truth is that the discrepancy in sales is not a much a testament to specs, or even what Sony has done right, but what Microsoft has done wrong.
The Price is Wrong, Bob
PlayStation 4 and Xbox One were announced within one month of each other, and the Xbox One’s marketing was a problem from the start for many, as the console was pushed as an entertainment box first and a gaming console second. While the intention of this was likely to broaden the scope of potential consumers, the price tag did not match up with this plan.
At E3 the Xbox One was announced as a Kinect-Console only bundle, with no option to purchase the system sans Kinect. Due to the additional mandatory hardware, the Xbox One sported a massive $499 price tag. This caused temporary concern over the price of next-generation gaming – until Sony swooped in and dropped an E3 bombshell: PlayStation 4 would cost $399. Price aside, many were concerned about Xbox One’s new Kinect and its “Big Brother” build – 1080p camera, 4 microphones, the ability to identify and scan individuals when they walk into a room, and memorizing facial features.
“We have a product for people who aren’t able to get some form of connectivity; it’s called Xbox 360.”
When the specifics of the Xbox One were initially announced, accusations of alienating members of the military quickly followed. Assuming the cameras and microphones of the Kinect-only device wouldn’t lead to a ban on the consoles, Microsoft had also announced a region lock. The Xbox One, which was announced as only being supported in 21 countries, later dropped even lower to 13. This meant that even if a military member were able to get an Xbox One from their home country, it would stop functioning in an unsupported country.
Microsoft stated that Xbox One owners were required to “check in” by connecting to the internet at least once every 24 hours – once per hour if you were accessing your library from a different console – or else you’d be locked out of your library until checking in. In addition to the near-constant internet connectivity requirements there was also a harsh limit on sharing and selling used games.
When people voiced concerns over Xbox One’s requirements and restrictions, particularly regarding the internet check-ins, Microsoft’s then-President of Interactive Entertainment Business Don Mattrick responded by saying “We have a product for people who aren’t able to get some form of connectivity; it’s called Xbox 360.” The response was seen as consumer-unfriendly and resulted in massive backlash on a variety of forums and social media platforms.
Microsoft Backpedals, Sony Moves Forward
One week later, Mattrick announced that Microsoft would be lifting the region locks, allowing game sharing, trading, and reselling, and would be doing away with the internet connectivity requirements. Unfortunately, Microsoft was also planning to eliminate one of the most promising features of the Xbox One: shareable digital libraries. It seemed to that even when Microsoft was listening to customers, they were attempting to punish customers.
Pre-order sales numbers for both consoles showed Sony taking a hefty lead over Microsoft, with a cap being placed on pre-orders for the PlayStation 4 by GameStop. The same retailer had previously capped Xbox One pre-orders for several days, although there was speculation regarding the motive, with the cap being removed immediately following the DRM policy reversal. The PlayStation 4’s lead continued through both consoles’ November releases and into 2014. Both the Xbox One and the PlayStation 4 announced 1 million consoles sold in the first 24 hours of release, but the PS4 numbers were for North America only, with the Xbox One numbers for the 13 countries the console launched in.
When asked about PlayStation 4’s lead over Xbox One, PlayStation marketing executive John Koller acknowledged that they were viewed as an authentic brand with an obligation to continue a relationship with their fans.
“Our every day is ensuring that we don’t lose sight of the fact that we need to constantly have a socially engaging platform that allows people to connect [and] share; and the games that are created need to facilitate that,” Koller said. “We need to have the right games at the right time…and listen to our fans. So continually doing that, I think brings a lot of good will.”
In the minds of gamers, Microsoft made the decisions they made in spite of their fans whereas Sony made the decisions they made because of their fans.
What This Means Today
Microsoft made decisions in spite of their fans, whereas Sony made decisions because of their fans.
Gamers just now getting into the current generation console market are likely unconcerned with Microsoft’s two year old blunders. The people just now purchasing new consoles are looking at specs, reviews, bundles, and what the companies are promising today. While the PlayStation 4 does outperform Xbox One on a number of levels, it’s not so drastic that PS4 would bury its competition, with most reviews reflecting this. The two have taken much different paths with bundles, however, with many new consumers looking to get the most beneficial package for the lowest price.
In November 2014, Microsoft briefly pulled ahead in the console race by offering an Assassin’s Creed: Unity bundle for the holidays. In 2015, The Xbox One has come with Halo: Master Chief Collection in two separate waves – one featuring a black Xbox One, the other offering a white version of the console. This was a risky move, considering MCC‘s release was even more flawed than Xbox One’s reveal, with issues persisting for months following its release. PS4 has offered a variety of high interest bundles and consoles, including a limited edition Batman: Arkham Knight PS4, which was announced just after the first Xbox One MCC bundle of 2015.
This appears to be changing as we head into the holiday season, as the Xbox One has a clear and aggressive advantage: it is currently cheaper, with more exclusives, and is already announcing some interesting bundles. Xbox One is also offering limited backwards compatibility for select Xbox 360 games, and possibly even original Xbox titles. This was a move that not only baffled Sony, it is also a feature unlikely to be coming to the PlayStation 4. And with Mattrick leaving and Phil Spencer taking over as the head of Xbox, the attitude appears to be changing along with the product, with a more consumer friendly approach.
“I see nothing but opportunity in front of us. The console space is so healthy right now – and that’s also not a terminal point you can write about anymore, the death of the console! – it’s nice to see Sony doing well, PlayStation 4 and Xbox is selling more than we’ve ever sold before,” Spencer said in a recent interview. “That health is great. I really think about us coming, more about putting the gamer at the centre of our decisions over the next 12 months, and less centred on specific ties to any platform that those people want to play on. It’s such a huge opportunity. We have a unique position being both the Windows company and the Xbox company, that allows us to go do more.”
As far as marketing was concerned, the Xbox One was originally pushed as an entertainment hub first, and a gaming console second – a disastrous move considering the hefty price tag that accompanied it. Sony did the opposite in a move that paid off – for both Sony and gamers. Microsoft was focused on a future no one wanted, while Sony was focused on the present people craved. With Microsoft adjusting its focus by securing some high-demand exclusives, offering limited backwards compatibility, and adopting a more consumer-friendly attitude, the company could be looking at a big boom heading into the end of 2015. While it’s unlikely the Xbox One will catch up with Sony’s PS4, there could be a substantial closing of the sales gap in the future.
Now that you’re as knowledgeable as it gets on the current console war, check out the rest of our Console Wars series including what Microsoft can do to pull itself back into the running. Haven’t joined the new generation yet? See which Next Gen console is best for you.