Just in case you're someone who's inclined to read the title of this opinion piece, skim the first paragraph, and then jump straight to the comments section, this is not a doom-and-gloom message for Microsoft. The Xbox One is selling really well, the Microsoft games division isn't about to go out of business, and the launch of the Xbox One has not been a complete disaster (though it's been a small one). But the Xbox One is in second place, and that's where it's going to stay for this console cycle.
Closer to the next-gen launch, I wrote about why the sales numbers didn't really matter. Both the Xbox One and PS4 broke records out of the gate (mostly because more systems were initially available than at any previous console launch). But we knew back at the start of 2013 that consumers had a more positive perception of the PlayStation 4, and the chart below shows that the gulf in purchase intent between Microsoft and Sony's machine only grew larger prior to the systems' launches.
Those statistics were surprising, since, looking back on "last-gen," the Xbox 360 was always a clear front-runner in the US. But the above chart makes a little more sense when looking at the trajectory of the PS3. Neither Sony nor Microsoft release monthly console sales numbers, but while the Xbox 360 sold more units overall than the PS3 in the US in 2013. However, Sony broke Microsoft's 32-month first-place home console streak back in September of last year.
And those projections have so far proven to be accurate. While both next-gen consoles started out strong in November, the PS4 nearly doubled sales of the Xbox One in January. And with the PS4 now out in Japan and off to a solid start, that gulf between Sony and Microsoft is only going to grow wider. Microsoft still has no set date for bringing their console to Japan, which doesn't necessarily mean they'll be outsold over there, but Microsoft has generally faced an uphill battle in Japan. Even the Wii U is outperforming Microsoft's current Xbox 360 console in total sales, which doesn't present a very rosy picture for future Japanese success. [Note: I still think the Wii U is a pretty great machine, but even Nintendo has spoken out on its much lower than expected sales.]
Some (namely Microsoft and Sony) argue that console sales are a marathon, not a sprint, and getting an initial lead doesn't guarantee success. After all, the Xbox 360 had a year head start, yet the PS3 has matched the Xbox 360 in total global sales. But in any race, not everyone can be first, and for this generation of consoles, that honor is going to PS4. Here's why it happened, and in the end, why it'll actually make the Xbox better next time.
Sony has the potential for more exciting exclusive games than Microsoft.
Sure, Titanfall is getting a lot of hype right now for the Xbox One, but you have to use "exclusive" in a pretty broad sense--the game is also going to be out on 360 and PC. And developer Respawn is keeping their options open for the inevitable Titanfall 2.
But recently, Microsoft hasn't had a great track record with getting games that no other system has. The only notable exclusive for the Xbox 360 last year was Gears of War: Judgment. And we'll inevitably have some more Halo (although the original developer, Bungie, is now working on the multiplatform shooter Destiny). And the long-time favorite Fable series has more in the works (Fable: Legends), but the developer has lost their original creative director, Peter Molyneux.
The best games for both the PS4 and Xbox One at launch were multiplatorm, but the PS3 last year had Beyond, Dragon's Crown, Puppeteer, and award-winning The Last of Us. It's impossible to know what new franchises both Sony and Microsoft will show at this year's E3, but with Naughty Dog, Guerrilla Games, Sucker Punch Productions, ThatGameCompany, and more, Sony already has the advantage in strong-performing internal studios. [Editor's Note: While ThatGameCompany has currently only produced games for Sony consoles, they remain an independent developer.]
Ultimately, Microsoft banked on a future that most people don't care as much about: controlling your entertainment center with the power of your voice. For me personally, that's not a system seller; it's a novelty that only works perfectly 60% of the time and makes me want to use a physical controller every time it doesn't understand me. PlayStation, on the other hand, has focused on games.
And nowhere is that clearer than their subscription services. If you want to play online with either the PS4 or Xbox One, you'll need to pay a fee. But with PlayStation, you also get access to a library of free games. The offerings are significantly better on PS3 than PS4, but for a PlayStation owner, the service almost pays for itself. Compare that to Xbox's Game with Gold, which offers much older titles for the Xbox 360 and still doesn't have any option for the Xbox One.
And PlayStation is rolling out a service that will bring PS3 titles to the PS4. If the price is wrong, this will be a complete disaster, but the right mix of convenience, game selection, and price could potentially convince even more current PS3 owners to upgrade. Meanwhile Microsoft has talked a lot about integrating the cloud into their strategy, but they've has been quiet on any plans similar to Sony's that would give players access to their back catalog of 360 and XBLA games on Xbox One.
The general perception is that the PlayStation is more powerful than the Xbox One. Hardware-wise, they're not that different, but Metal Gear Solid V: Ground Zeroes developer Kojima says his game will look better on PS4. And there's been a lot of argument around games like Call of Duty: Ghosts that run natively in 1080p on PS4 vs. 720p on Xbox One. Of course, the Xbox can run games in 1080p and 60fps, but with multiple titles coming in with lower native resolution on Xbox, Microsoft's machine has been publicly perceived as less powerful. We saw with the original Wii that more powerful hardware doesn't necessarily affect sales negatively--but Nintendo also had an amazing slate of exclusive first-party games for their system (like Super Mario Galaxy, Wii Sports, and Mario Kart Wii). But when the experiences and games are almost identical like on Xbox One and PS4, people will gravitate to what seems like the better system for the money.
And that brings up the biggest deciding factor: price--the PS4 sells for $100 less than its competitor. When the core experience is perceived as being about the same (or slightly in favor of the lower-cost option) the less expensive choice is going to win out. Microsoft has even already enacted a price cut on the system in the UK, and they're bundling free copies of Titanfall in current Xbox Ones. While I'm always happy when consoles include a great pack-in game (and I sorely miss the old Nintendo days when you could expect your system to come included with a game you definitely want to play), adding it in after the fact is basically admitting, "This system is too expensive on its own."
But having a clear second place contender is, ultimately, good for gamers. Microsoft isn't so far behind that they have to drop out, but they're far enough behind that it's a fight to keep up. And that struggle is what made the past year for the PS3 and the start of the PS4 so successful. If Microsoft's Xbox 360 hadn't pushed Sony to do better, the services, games, and pricing that Sony has in place now likely wouldn't be anywhere near as enticing and consumer-friendly--just remember back to how long it took the PS3 to integrate anything as good as Microsoft's multiplayer-friendly Live interface. And now Microsoft has to try and play catch-up, which means we're going to see big things from them in the near future.
And just in case you think I'm somehow insinuating that the Wii U's failure somehow spells the end of Nintendo, they're a company that has weathered far worse failures (see the GameCube and Virtual Boy). And I'd also remind you about a small money-printing machine called the 3DS. We're going to see big changes from Nintendo in the future as well, but that's an entirely separate article.
What Microsoft does now won't have an immediate effect on their place (though it may help staunch the number of people leaving their Xbox 360 behind to upgrade to a PS4). But we'll start to see the small effects of their bigger picture initiatives over the next year. And what better position could we be in as gamers than having a company like Microsoft bending over backwards to try and win more people to their system?
No matter what console you bought (or are going to buy), it's going to keep getting better and better to be a gamer.