Rob Fahey Wednesday 22nd May 2013 Share this article Share

Companies in this article Microsoft Microsoft Corporation

E3 is only three weeks away. That might be important - it might, in fact, be central to Microsoft's thinking. Perhaps the company thought that, with the annual gaming jamboree fast-approaching, it could bundle all of the excruciating corporate newspeak and market positioning nonsense into a brief one-hour press conference and then - with appropriate lip service and homage paid to the twin gods of broadcast TV and American sports - it could rapidly move on to an E3 focused almost exclusively on games, delighting the core audience so much that they'll utterly forget a coming-out party that seemed to imply a jumped-up cable box that merely plays games as an afterthought.

"Here is a company which is so arrogantly confident in its dominance of the core gaming space that it believes it no longer has anything to prove"

I sincerely hope that's the case - that Microsoft is keeping its powder dry for E3. It's an odd and probably deeply misguided communications strategy, since the firm completely held the specialist press' attention for the days surrounding its unveiling event and could have used that to set the tone for E3. Instead, whatever wonders it pulls out of the bag at E3 must now act first and foremost as damage control, a job made tougher by sharing the airwaves with what will no doubt be a massive charm offensive on Sony's part. Still, while such a muddled reveal isn't a great start, the firm did tease 15 exclusive launch window titles, eight of them new IPs - an E3 focused with laser precision on that line-up would cover up early stumbles nicely.

That assumes, of course, that Microsoft understands and accepts that what happened this week was a stumble. There's a more pessimistic interpretation, one to which core consumers have been quick to leap - that Microsoft genuinely believes in the way it positioned Xbox One (a daft name, but we got used to "Wii" so I suppose we've proved that daft names aren't much of a stumbling block). That here is a company which is so arrogantly confident in its dominance of the core gaming space that it believes it no longer has anything to prove - that it can take for granted the support of core gamers and early adopters, instead focusing its energies from the outset on television, movies, sports, music and, er, Skype.

If that sounds familiar, it's probably because - like me - you watched the Xbox One reveal with strong flashbacks to exactly the kind of hubris and arrogant assumption which dogged and ultimately crippled Sony's launch of the PlayStation 3. Rather than seeking to enrapture and engage the tens of millions of core gamers upon whose support a successful hardware launch might be built, Sony simply assumed that they would support PS3 no matter what - a line of reasoning which led to a ludicrous price point (they'll get second jobs to afford one, remember?) for a system openly intended as vehicle for the nascent Blu-ray movie standard and both designed and promoted as a home entertainment hub rather than a games device. Core gamers, in the end, demurred in large numbers, preferring Microsoft's upstart Xbox 360. There's always a choice, and having usurped Sony's market dominance only a few scant years ago, you'd think that Microsoft would recall that brand loyalty - quite rightly - doesn't run all that deep.

"The tone and content of Microsoft's announcement should also rankle, and deeply concern, shareholders and analysts"

The tone of Microsoft's event rankled gamers, for good reason - the reveal of a game console which focuses so heavily on how good it is at controlling television shows and movies shows basic disregard for the reasons most people watching the reveal online have to actually buy game consoles. Do not, however, fall into the trap of thinking that Microsoft's reveal only slighted gamers in order to delight the business community. In reality, the tone and content of Microsoft's announcement should also rankle, and deeply concern, shareholders and analysts.

Television is in trouble. It may not look like that from some angles, given the immense critical and audience success of shows like Breaking Bad, Mad Men or Game of Thrones, but the business model on which television has based itself - especially in the United States - is creaking at the seams. With the decline in the value of advertising (caused by the rapid fragmentation of the audience - only huge events like the Superbowl, which guarantee a large, unified audience, have held their value for advertisers), everything in that industry now boils down to the cable subscription model. If you want to watch a TV show, you end up paying an exorbitant amount of money every month to subscribe to dozens if not hundreds of TV channels you'll never watch.

Consequently, two things have happened. Firstly, a whole generation of consumers has bowed out of the legitimate model entirely. Despite the efforts of media firms to crack down on piracy of TV shows, the tide has not been stemmed in the slightest; TV episodes find their way onto pirate services within minutes of broadcast and are watched in that manner by a vast swathe of consumers. No legal or technical adjustment short of the most insane and wicked invasion of the privacy of every citizen - honest or otherwise - is going to stop that from happening. What has helped, though, is the emergence of a new business model, with companies like Hulu, Lovefilm and the daddy of them all, Netflix, stepping into the breach. Netflix is now, by hours watched, the most popular and successful TV network in North America. It's started making its own high-budget, high-profile TV shows. If every cable network in the US isn't terrified of it, then they've not been paying attention.

It's against this background that Microsoft has seemingly decided that the most important thing about the new Xbox One is how well it plays with your cable box. Of course, it'll play Netflix as well, but so does just about every device you own. The core of Microsoft's strategy to "dominate the living room" seems to be that its box will be good at streaming content from providers to whom you pay a subscription fee entirely independent of Microsoft's ecosystem, and whose content will, incidentally, work perfectly well without an Xbox One in the equation. Without an Xbox One you won't be able to wave your hands to control it, but then again, nobody I know who owns a Samsung Smart TV actually uses the hand-waving control system anyway, other than to show house guests how broken and annoying it is.

"A business strategy which in five years time will probably look about as wise as launching a game console that plays VHS tapes"

It's for this - a business strategy which in five years time will probably look about as wise as launching a game console that plays VHS tapes - that Microsoft has chosen to alienate and annoy its core consumer base at what should have been a triumphant coming-out party. Microsoft achieved absolutely remarkable, wonderful things with the Xbox 360; Xbox One should build on all of those things and be a system that gamers simply cannot do without. Perhaps it is that system, and perhaps we'll see that at E3, but we didn't see it during the reveal.

Meanwhile, all the murkiest rumours about Xbox One refuse to be dispelled. It cannot have escaped Microsoft's notice that consumers and press alike are deeply concerned over the system's online requirements and its policies with regard to used software. Yet rather than smiling graciously on stage and saying "of course not!", earning brownie points and clearing the air with a single phrase, or even explaining their approach in clear, humble terms, earning at least some respect, Microsoft executives ignored the issue in their presentation and subsequently equivocated in interviews, ducking and dodging around questions regarding second-hand software (or even the ability to lend games to friends without incurring a charge). We still don't know exactly what the firm has in mind, but it's safe to assume that it's going to be a pretty flagrant violation of consumers' existing rights and behaviours - because if it wasn't, then they wouldn't be dodging the question, would they?

If consumers felt left out in the cold by a party which was supposed to be about games but ended up being all about TV and live sports, then spare a thought for developers. After the developer love-in that was the PS4 announcement, where Sony laid out the red carpet to invite creators of all shapes and sizes to come and play in its garden (formerly walled, now surrounded with something more akin to a picket hedge), you might have expected Microsoft to give some kind of nod in a similar direction. Not so. The only third-party bodies on the stage were from EA (who showed FIFA) and Activision (who dutifully showed up to stun the world by confirming that they're making another Call of Duty game). The broad, thriving community of independent developers and creators who have turned out so many of the great games of the past half-decade didn't even warrant a wink and a nod. Like so many other things, that can be fixed at E3, but the contrast in tone to Sony's invitation will not go unnoticed. (The missed opportunity to have Steve Ballmer run on stage reprising his "developers, developers, developers, developers!" routine is also disappointing, of course.)

Do I sound unimpressed? Well, I was seriously unimpressed. It's only the first hour of Xbox One, but it suggested a company that's curiously both mired in arrogance and somewhat directionless. I don't know who the Xbox One reveal was meant to appeal to, other than the TV executives whose egos it massaged. Worse; I'm not sure that Microsoft knows who they're meant to be appealing to. The company is desperate to head off Apple in the consumer space, and Xbox One right now feels less like a competitor to Sony's heavily games-focused PS4 and more like a pre-emptive shot at a hypothetical future version of the Apple TV.

"Xbox One feels less like a competitor to Sony's heavily games-focused PS4 and more like a pre-emptive shot at a hypothetical future version of the Apple TV"

That's unfortunate, because it brings to mind something rather uncomfortable. Xbox 360 was a fantastic system - probably the best thing Microsoft has ever done in the consumer space, and unquestionably one of the best games consoles ever created. Xbox One should remind us of that, but instead it's hard not to think of other products Microsoft has created since the 360 - products like Zune, Surface, Windows Phone and latterly, Windows 8. Products which have, even when they've been rather good (as Windows Phone is), completely failed to ignite interest from consumers. In fact, in terms of consumer entertainment products, Microsoft has had one hit - Xbox 360 - in the midst of a litany of failure (it's fair to note, though, that Sony has its fair share of dodos as well, Vita being only the most recent). Xbox One needs to replicate the factors that made Xbox 360 into a success. This week, we saw none of that; we saw a console that felt less like an Xbox and more like a Microsoft Product, with all the baggage that brings. We can only cross our fingers and hope that with the dull rubbish out of the way, Microsoft is now preparing an E3 showing that will really light the touchpaper for the next console war.