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Xbox One versus Xbox 360: How Microsoft nimbly pivoted to execute a successful launch

Above: Microsoft's Xbox One console

Image Credit: Microsoft
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Microsoft has the most expensive gaming console on the market. It includes a camera that not everybody wants. And the company executives fumbled the message early on. But none of that has stopped the Xbox One from selling extremely well.

The latest Microsoft console is in a heated race with the PlayStation 4. Sony has the early lead, but that’s not due to a lack of competition from the Xbox One. Gamers are happily dropping $500 to have a chance to play games like Dead Rising 3, Forza 5, and the upcoming Titanfall mech shooter.

But is the Xbox One really — as Microsoft claims — the company’s best console launch ever?

Yes, it was. And we’re gonna take a look back and see just how much better as well as what Microsoft did to earn that result.

The first two months

In their first two months on the market, Xbox One outsold Xbox 360 by a 2-to-1 margin.

Sales from launch through Dec. 31:

Xbox 360 (2005): 1.5 million (worldwide)
Xbox One (2013): 3 million (worldwide)

The Xbox One launched exactly 8 years after the Xbox 360. Both consoles also rolled out in similar territories. The comparisons between the two launches are pretty equal. It’s just that Microsoft made changes elsewhere that helped it sell an extra 1.5 million more systems this time around.

What Microsoft did better

The hardware

Early on, the Xbox 360 was known for its big, white design and its “Red Ring of Death.”

The Red Ring of Death is the colloquial term for the red light that appeared on the front of an Xbox 360 (instead of the standard green) that often indicated a catastrophic error. This was a major problem for the Xbox 360 through its first few years. Apparently, something about the 360′s design caused parts to overheat, and this caused an inordinate number of systems to fail and require replacement.

The problem was so bad that Microsoft ended up extending the warranty for the Xbox 360 from 1 year to 3 years, and it had to eat much of the cost in replacing those units. With that financial and public-relations trauma in its past, the team responsible for the Xbox One knew that it had to build something reliable.

“The Xbox One launch — there were a few glitches and issues with disc drives not working quite right — but Microsoft addressed them quickly, and they weren’t pervasive,” said Ward. “I think you have to give them credit for releasing a box that is pretty strong — not perfect — but the error rates were lower.”

Consumers are going to put the Xbox One to the test, too. Microsoft didn’t just design a new gaming machine. The Xbox One is a media hub that is supposed to run all of the audio and video content in a gamer’s living room.

“Microsoft designed the Xbox One to stay on for 10 years straight,” said Ward. “You’re gonna plug it in the wall. Leave it there, and it’s going to be on or in standby mode permanently. So out of the gate, they designed it with electricity use and wear-and-tear in mind.”

Gamers can completely turn off their Xbox One, but it’s a setting they have to change. By default, the system goes into a standby mode where it can update games and apps. It’s also always listening for the “Xbox, On” command so it knows when to boot up.

That philosophy convinced Microsoft to focus extra time on making sure that the solders and connections between chips were solid and could withstand constant use.

The result is a console that has some small growing pains, but nothing like the failure rate of the Xbox 360. The reliability of the Xbox One is something that early adopters were probably worried about, and the lack of recurring issues likely helped convince people the system was safe to buy.

Also, like the PlayStation 4, Microsoft decided to go with a number of off-the-shelf PC components that are easy to manufacture and are readily available. This helps keeps costs down while Microsoft is also able to produce a huge number of systems.

With easier production, Microsoft was able to ship more Xbox Ones to retailers around the world, which was able to satisfy more of the demand.

The policy reversal

One of the biggest moments in Xbox One’s history came months before the product went on sale.

In June, the company shocked the industry by reversing a number of its policies that would have implemented restrictive digital-rights management. For months, the company attempted to explain how the Xbox One would require an Internet connection and how gamers could install their discs to their system and then boot up games without having to put the old Blu-ray back into the drive.

Microsoft struggled with the messaging because the new features meant that used and rented games were about to get cut out of the picture. Gamers didn’t want that. Shockingly, Microsoft listened.

The reversal, known more commonly as the Xbox One-80, quickly eliminated a number of concerns that gamers had. It enabled the Xbox One to sell on its merits as a game-playing device.

“The DRM story has not been a big issue or hindrance, and I don’t think it’s affected consumer purchasing behavior in any major fashion,” Eilers Research managing director Adam Krejcik told GamesBeat.

This pivot was one of the biggest and most-abrupt policy changes in the history of gaming, and many analysts agree that it was absolutely necessary for Xbox One to compete with the PS4.

“Xbox One would have performed much worse had Microsoft not done the Xbox One-80,” said Ward.

The thing about the Xbox One’s planned always-on DRM is that it was a stab at something very different for the gaming space. With the Xbox 360, Microsoft tried to make the very best gaming console. The Xbox One, on the other hand, was its attempt to come up with something that would alter the way games were sold and owned forever.

It shows that Microsoft is more serious about the gaming market than ever, but it also shows that it can act nimbly when consumers are unhappy.

The future of the Xbox One

As with any console, two months don’t represent a whole lot. At the same time, a good launch can have far-reaching effects.

With the Xbox 360, Microsoft got a 12-month head start on the PlayStation 3. By the time PS3 was debuting and getting through its lackluster launch software, Microsoft’s last-gen machine was already offering up one of its first huge exclusives: the sci-fi third-person shooter Gears of War.

This time around, Xbox One and PlayStation 4 hit at virtually the exact same time, but Microsoft is looking to offer one of the first big exclusives with another sci-fi shooter — Titanfall — from publisher Electronic Arts.

“The big issue I see right now is a lack of ‘killer games’ on next-gen,” said Krejcik. “There are a lot of good games available, but nothing yet that is making consumers want to go out and specifically buy hardware for that one specific title.”

While launch games like Dead Rising 3 and Forza 5 earned Microsoft praise for quality launch titles, it’s really Titanfall that industry observers like Krejcik are looking to as a potential must-have.

“We will be watching EA’s Titanfall closely to see how this might boost Xbox One sales,” he said.

Titanfall earned early buzz when developer Respawn (composed of former Call of Duty creators) debuted it to the press in the first half of 2013. The small studio said it was focusing on launching the game on Xbox One and PC and that it would consider a PlayStation 4 port down the line, but Microsoft — perhaps sensing that Titanfall could act as the Xbox One’s Gears of War — made an agreement with EA to keep the shooter off of PlayStation platforms.

Microsoft isn’t afraid to make big moves like that. If the Xbox One is to repeat the sustained success of the Xbox 360, Microsoft will need that willingness to make big bets combined with its surprising agility when it comes to making sweeping changes.

 

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