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The Xbox One v. Playstation 4 -- History Repeats Itself

First as Tragedy, Then as Farce

It's been a long time since my last post! To be honest, I've been feeling a bit of generational fatigue, and although I've still been gaming every now and then, the only three games that I've really, passionately played in the last year have been Madden 13, FIFA 13, and MLB 13: The Show. In short, like a lot of gamers out there, I'm ready for some new consoles and some new franchises!

Having followed the early leaks and then the formal announcements of the PS4 and the Xbox One, and now with E3 upon us and the details more or less all filled out, I'm struck by the wisdom of a Karl Marx quotation: history repeats itself, "the first time as tragedy, the second time as farce." It is remarkable, looking at this over the arc of the last twelve years, how much the competition between Sony and Microsoft has consisted of first one side, then the other, making the same mistake again and again: alienating gamers.

Flash back to E3 2006, which was a long seven years ago. The Xbox 360 had been out on the market for six months, and although it had suffered some growing pains, the fundamental business strategy behind Microsoft's second cut at the console gaming market was paying dividends. The 360 was relatively affordable, it was user-friendly, it had great online, and -- most of all -- it was built for gamers. Its best franchises were yet to appear, but we had rich previews of Gears of War (which would be released that November) and the blockbuster, show-changing announcement of Halo 3 (which would come out in Fall 2007).

In comparison, Sony's E3 2006 press conference has gone down in history as one of the most notorious flops in gaming history. A few highlights: $599. Rrriiidddgggeee Rrraaacceerrr! The predictable backlash: gamers were disappointed and vowed to stay away. Sony brushed aside those comments as a few malcontents and insisted that the overall value proposition of the multimedia powerhouse (It does Blu-ray! It does internet!) would make it a huge success. Sony wasn't going to listen to its core consumer -- it was going to tell him, tell her, tell all of us what we really wanted. (In other words, it was going to pull off a trick that only one company -- Steve Jobs's Apple -- consistently and successfully pulled off in that era.)

$599 is ridiculous.

This was what I would call the first manifestation of the Big-Tent strategy. By Big-Tent, I mean this is how the meetings went down at Sony.

Kaz Hirai: You know, no matter what, the gamers are going to buy our console. The Playstation 2 sold 100 million. We own them. Let's not focus on selling 100 million, which we're going to do no matter what. (Reality check: As of two weeks ago, PS3 had sold 77 million and counting, and it took a long, painful road to get there.) Let's focus on selling the second 100 million to families that otherwise wouldn't buy a video game console.

Ken Kutaragi: Alright, I'm going to load up this console with tons of extras. It's going to have a Blu Ray. Let's make something that people will aspire to own. I want people to see this and say, 'I will work harder to be able to afford a PS3.' (Reality check: oh wait, he actually said this.)

The Big-Tent strategy takes as a given that the core constituency will be on your side in the end, and that the groups that the business should focus on capturing are the far larger numbers of consumers who reside outside the base. This essentially is how presidential poltiics work in the United States, where the Democrats start with their 35 percent, and the Republicans with their 35 percent, and the two then wage war over the undecided middle. (At least, that's how it once was supposed to work, not trying to get into a political science discussion here.)

Of course, the problem with the gaming market, as Sony found out to its great dismay between 2006 and 2008, is that the core constituency can decamp for the other guy far faster than it had ever anticipated. Tons of gamers switched over to the 360, the Wii, or the PC while waiting for Sony to screw its head on straight and do something -- do anything -- that was gamer-focused, that paid attention and care to the needs and desires of the people who bought those 100 million PS2s. In fact, it really took until '08-'09, with the release of Metal Gear Solid 4, Uncharted 2, and the Playstation 3 Slim at the $299 price point, to finally bring the core constituency back onto Sony's side. And by then, Sony had lost huge amounts of time, huge amounts of cash, and -- worst of all -- huge amounts of its credibility.

The Playstation 180

They're calling it the PS4, but in my mind, with all the recent announcements, the new console should be called the Playstation 180. Sony has completely flipped the script on the new console, and largely replicated Microsoft's strategy from the start of the last generation. Here's what Sony is doing right:

1) No used-game lockdown -- this was a huge issue for gamers, and Sony got it dead right by giving people what they wanted;

2) The $399 price point -- a very affordable price for a new console and exactly where the 360 launched eight years ago, which positions PS4 to be the mainstream console of choice;

3) Show us the games! -- PS4's lineup has not been overwhelming, but it's light years ahead of Rrriiddgggeee Racer! Having an exclusive, flagship franchise (Killzone) releasing a new game on day one is huge.

Killzone: Shadow Fall

These weren't hard decisions to make if Sony wanted to win gamers over. In essence, the company has learned its harsh lesson, and has made admirable adjustments.

In contrast, Microsoft has been backpedaling in the wrong direction since Sony shifted course in 2009. It is bizarre and evenly slightly sad to see a venerable company, which had finally struck upon a profitable and sound business strategy, changing. And it is even worse when every single change hurts the consumer. Locking the games so you can't sell them used? A $499 price point? These are disastrous distinctions in a world where the vast majority of franchises, especially console-movers like Grand Theft Auto, Call of Duty, and perhaps new IPs like Bungie's Destiny, have gone multi-platform. Why pay an extra $100, and lose the ability to sell a game after completion, for the privilege of playing . . . oh, largely the exact same games one gets on the other guy's console?

This, of course, is the farce half of the march of history. Somehow, somewhere in Redmond, the powers-that-be had a meeting that looked eerily like the Hirai-Kutaragi dialogue I hypothesized above. Of course, they probably added something like, "We're different than them, though. We'll do it better. We'll make it cooler, because we have Kinect and also some flashy stuff like how we can turn the console on just by talking to it." It's this sort of foolishness that ensures that history repeats itself.

Here's to hoping that by 2015-16 Microsoft will have come to its senses, and we'll finally have an Xbox that I can buy.