The Gaming Empire Strikes Back
If you haven’t yet seen the online mini-series ‘Power On: The Story of Xbox’, I highly encourage you to do so (You can watch it for free on YouTube among other places). Particularly watch the last chapter ‘TV or not TV’. It is a brutally honest assessment of the failures of the Xbox One console. I give Kudos to former Xbox head Don Mattrick for having the courage to show up for the episode to explain what his intentions were. The reason I bring up this chapter specifically is that the focus in 2013 was heavily on being the future of television. Somehow, Microsoft failed to see that Smart TVs would eventually be able to do everything that the Xbox One was trying to do (minus the games) at a much lower cost.
Microsoft in 2013 was easily and deservedly the subject of Sony’s derision and mocking. Sony didn’t even have to try too hard, although the Playstation 4 sharing game demo was brutal. All Sony had to do is essentially say “Hey, we aren’t doing all that stuff, we are just a more powerful gaming machine at a cheaper price”. Ironically, Sony is an entertainment company, so if anyone was poised to dominate gaming and entertainment in one box, it would be Sony. Microsoft also somehow managed to make some of the same mistakes that Sony made with the Playstation 3 with the Xbox One.
Playstation 3 price mistake: $100 more than the competition released a full year later than the competition.
Xbox One price mistake: $100 more than the competition and less powerful than the competition (among many others)
Moment of Hubris from Sony with Playstation 3: “We want consumers to think to themselves ‘I will work more hours to buy one.’ We want people to feel that they want it, irrespective of anything else.”
Moment of Hubris from Microsoft with Xbox One: “Fortunately we have a product for people who aren’t able to get some form of connectivity, it’s called Xbox 360.”
Flash forward to 2022, and Microsoft is a long way from being the company being kicked around by Sony in the video game arena. Sony will still probably win the number of consoles sold, but Microsoft isn’t really playing that game anymore. They are going after a much bigger focus of growing the audience target via Xbox Game Pass subscribers. They are already over 25 Million, and have their focus on reaching Netflix levels of subscriptions (currently at around 210 million) and beyond. They are also no longer looking to chase after entertainment because the video game industry is now much bigger than all other forms of entertainment combined. It used to be that games had to chase after movie licenses for sales. Now movie and TV studios are making more movies and TV series from video games licenses, and good ones at that.
With their recent purchases of Bethesda and Activision Blizzard, Microsoft will very soon be the Disney of gaming. Similar to how Disney owns Marvel, Fox, and the Star Wars franchises on top of their own original content, Microsoft will have similar dominance in gaming. Microsoft’s vision is not just to be the leader of gaming, but also to fundamentally transform what gaming is, and what it can be. I believe that Game Pass will be the gateway drug to gaming that is so compelling with so much high-quality content, that it will eventually be difficult to part with it (much like Netflix is now). Microsoft is in the best position to take gaming to this level. Google and Amazon have the money and the cloud gaming infrastructure, but they do not have the 20+ years of gaming scars that Xbox wears proudly in their mini-series. As a gamer, I am very excited about the future of where gaming is going.
