How Can The Xbox One Catch Up To The PS4?
We speak with a handful of analysts about the state of the Xbox One and what Microsoft needs to do to catch up to Sony.
The NPD Group released its industry sales figures for March 2014 earlier this month and the results showed another victory for Sony's PlayStation 4. It was yet again the top-selling console in the United States, outperforming the Xbox One, which shifted 311,000 units during the period.
This news was surprising to some, myself included, because Microsoft made aggressive moves during the month to sell more consoles. The company launched a system-seller game, Titanfall on March 11, and even released a special Titanfall Xbox One bundle that was almost immediately marked down to $450 by many retailers, Microsoft included.
At that lower price point and with a bundled game, shoppers still sided with the PS4, which begs the question: How can Microsoft turn things around? Or do the results of one month--very early on in the platform's lifecycle--not really mean much in the wider picture? To help us get a better understanding of the state of the Xbox One, we spoke with a handful of industry analysts. Below you'll find their thoughts, as well as commentary from GameSpot news editors.
Of note: We approached Michael Pachter of Wedbush Securities, but he declined to participate. In addition, the comments you see below were made before Microsoft announced Tuesday that it would launch the Xbox One in China this September. China is a potentially lucrative market, and Microsoft will be the first of the major three platform holders (Microsoft, Sony, Nintendo) to release a console there. However, it remains to be seen what kind of impact China's various manufacturing and content restrictions will have on the local game industry.
Colin Sebastian - Robert W. Baird
"I think if we didn't have the PS4 to benchmark Xbox One against, the perspective would be a little more positive. For example, unit sales of Xbox One are tracking 60 percent above Xbox 360 sales at a similar point post launch. But in an age where competition matters, Microsoft doesn't want to fall too far behind Sony. In terms of the March data, not a bad month for Xbox One, but the PS4 still has stronger momentum, which we attribute to the price difference, lack of consumer enthusiasm for Kinect, and otherwise similar features."
"Looking ahead, it is difficult to foresee any tipping point that would push Xbox One ahead of PS4. Both platforms have strong software pipelines in the months ahead, and both are adding incrementally to multi-media functionality as the battle for the living room unfolds. If market share matters more than anything else to Microsoft, they will slash the price of Xbox One, or even strip out Kinect; but those are very unlikely scenarios unless the PS4 market share advantage expands meaningfully from here."
Doug Creutz - Cowen & Company
"Titanfall did quite well, but...the PS4 still outsold the Xbox One in March in the US. I would make the following comments:
- Sony is still catching up supply to demand, whereas Microsoft is not. I think we will probably begin to see 'normal' numbers (i.e. no backlog for Sony in monthly numbers) by the end of Q2.
- While there was some effective price cutting going on, there was no major price cut announcement.
- While Xbox One is trending behind PS4, it is also trending ahead of where 360 was at similar point.
- We are still very early in the cycle. The PS4 lead over Xbox One in the US is still relatively narrow.
However, I do think Microsoft is clearly not in the position they hoped they would be in (i.e. slightly behind Sony in US and well behind on a worldwide basis). I think a sharper price cut before holiday 2014 is probably necessary if they want to catch up."
Arvind Bhatia - Sterne Agee
"I think Xbox One still has plenty of opportunity to improve sales. We are just in the first innings of the new cycle, as you know. Technically, both PS4 and Xbox One are not that different so it really boils down to its higher price compared to PS4. I think Microsoft should consider un-bundling Kinect and lower the standard price of Xbox One as soon as possible."
Justin Haywald - Senior GameSpot News Editor
We're early in the life cycle for both consoles, and Microsoft isn't doing poorly by any stretch of the imagination, but in the long term a gap in sales will only continue to hurt consumers' perception of the brand. A significant price cut is probably the most important thing that Microsoft can do to narrow the widening gap between them and the PlayStation 4.
I don't think Microsoft needs to necessarily get rid of the Kinect, but they've failed to make the case that it's an essential piece of additional hardware. And while a strong slate of Xbox One exclusives from third parties would be helpful, publishers have fewer and fewer reasons to develop exclusively for one platform anymore. Timed exclusives aren't enough anymore to really accelerate console sales--as we saw last month with Titanfall.
Adding entertainment options, as strange as it may seem, is actually closer to the right track: Microsoft needs to make the Xbox and its subscription feel like a worthwhile investment. They're already behind in offering the same kind of free games content that Sony gives to PlayStation 4 owners. But imagine if they pre-empted Sony with access to a streaming version of part of the Xbox 360 library (or at least part of the XBLA library) free to Live subscribers. On it's own, that wouldn't be enough, but that's the kind of direction that would make important inroads.
Eddie Makuch - GameSpot News Editor
"I was surprised that the PS4 outsold the Xbox One in March, a month where Titanfall led overall software sales. I thought such a strong and highly marketed game, coupled with price cuts on the Titanfall Xbox One bundle from many retailers to $450, would net Microsoft a victory. But that didn't happen. Still, it is far too early to say Microsoft is in trouble. The PS4 may be off to a red-hot start, but we are only six months into a console cycle that will probably last for the next decade. The Xbox One itself is showing positive signs (sales are up 60 percent over the Xbox 360 at the same point in its lifecycle), so the platform is clearly not hurting. Plus, we're heading into E3 where Microsoft likely has some major announcements in store for the future of the platform. Bet against Microsoft at your peril."
Do you think the Xbox One is in trouble? Let us know in the comments below!
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