The Xbox One-inspired Xbox 360.

JUNE 10, 2013 • The Xbox One will launch this November in North America and Europe, priced at $499, €499 ($661) and £429 ($668). Microsoft Corp. had not detailed pricing or release month when it revealed its new console late last month. The company did receive criticism at the time for a presentation that was heavy on entertainment media content and enhanced voice/gesture interface features, while light on game content for the new system. In the days following, Microsoft also encountered consumer discontent at the revelation that the Xbox One needs to contact cloud servers no less than once ever 24 hours in order to continue operating as a games console, plus details that security features have been built in that permit publishers to restrict whether retail Xbox One titles can operate if purchased used. These issues were not addressed at the E3 event in Los Angeles that focused almost entirely on games for the Xbox One, many of them exclusives:

Battlefield 4 (DICE, Electronic Arts)
Below (Capy Games, Microsoft Studios)
Crimson Dragon (Grounding/Land Ho!, Microsoft Studios)
D4 (Access Games, Microsoft Studios)
Dead Rising 3 (Capcom Vancouver , Microsoft)
Forza Motorsport 5 (Turn 10 Studios, Microsoft Studios)
Halo Xbox One (343 Industries, Microsoft Studios)
Killer Instinct (Double Helix, Microsoft Studios)
Kinect Sports Rivals (Rare, Microsoft Studios)
LocoCycle (Twisted Pixel, Microsoft Studios)
Metal Gear Solid V: The Phantom Pain (Kojima Productions, Konami)
Minecraft: Xbox One Edition (4J/Mojang, Microsoft Studios)
Powerstar Golf (Zoe Mode, Microsoft Studios)
Project Spark (Team Dakota, Microsoft Studios)
Quantum Break (Remedy , Microsoft Studios)
Ryse: Son of Rome (Crytek, Microsoft Studios)
Sunset Overdrive (Insomniac Games, Microsoft Studios)
The Witcher 3: Wild Hunt (CD Projekt RED)
Titanfall (Respawn Ent., Electronic Arts)
Zoo Tycoon (Frontier Developments Ltd., Microsoft Studios)

Ryse: Son of Rome.

Microsoft did discuss new gameplay options using SmartGlass and the Kinect’s voice feature provide additional ways to advance in-game events beyond the use of the controller.

To keep current Xbox 360 Xbox Live Gold subscribers happy between now and the new system’s release, Microsoft is going to give them two free downloadable titles per month between July 1 and December 31, including Halo 3 and Assassin’s Creed II. Another change for Xbox Live Gold is the upcoming switch from Microsoft Points to real currency transactions. Microsoft also said that a new Xbox 360 model arrives this week that mimics the case and interface of the new Xbox One. Pricing and SKUs for the redesigned Xbox 360 remain the same, however: $199.99 for the 4GB console, $299.99 for the 250GB edition, and $299.99 for the 4GB Kinect Bundle.

Later on Monday, Sony Computer Entertainment finally showed off its PlayStation 4 hardware, and priced the console at $399, €399 ($529) and £349 ($544). Sony said it would release the PS4 in time for the holidays. In addition, the company made very clear that PlayStation 4 disc-based games don’t need to be connected online to play, nor require any type of authentication. All single-player games can be enjoyed offline, the PS4 won’t require any online check in, and it won’t stop working if it hasn’t authenticated within 24 hours.

Impact: Pardon us if we observed the spectre of Ken Kuturagi hovering above the Galen Center in Los Angeles: “It’s probably too cheap… If you can have an amazing experience, we believe price is not a problem.” That was one of his comments on the original MSRP of the PlayStation 3. At least back in 2006 there were no iPhones, iPads or Android smartphones to compete with. Despite that, the PlayStation 3 was too expensive at its $499 and $599 price points. Post E3-2006, DFC Intelligence forecasted that with that pricing level the PlayStation 3 would struggle to live up to its predecessor and was in danger of going from “first to worst.”

In a turnaround, Sony is launching the PS4 at a much more consumer friendly $399, and without the offline restrictions that Microsoft has built into the Xbox One. That’s a direct shot across Microsoft’s bow. Consumers are getting a direct comparison between the varying concepts underlying these two new consoles, and can choose whether they think Microsoft’s cloud enhanced games are worth the extra cost and hassle.

The final form of the $399 PS4.

The problem for Microsoft is that game platform proliferation is a fact of life today unlike seven years ago, which makes $499 an even larger risk now than before. On top of that the Xbox 360 was nowhere near as popular as the PlayStation 2 back in its day, which drove much of Sony’s hubris back then. We do completely understand that the Xbox One is bringing a big leap forward in how people interact with their living room entertainment. We grant that high-end first adopters will not be a hard sell for the Xbox One. What we question is whether the mass-market consumer will pony up for this console.

The mainstream consumer has gotten pretty comfortable with the videogame console as a modular appliance that is easily moveable between rooms, or homes. This concept harkens back to the console as a device to play purchased media wherever you need it played. Microsoft is radically altering the concept with the Xbox One, however. The company is completely embracing games as a service for its new system – retail discs are only really good for installing foundational code sets that are updated continually online, the device will stop playing games after 24 hours if it cannot phone home, and the same cloud storage aspect that makes it possible to enlarge and vary environments gets truncated the longer the Xbox One does not have a connection with Microsoft’s servers. Add to that the Kinect probably works best in a large room environment makes us wonder how well gesture mapping will operate in dorm rooms. With the Xbox One, games as a service is no longer a console option but a mandatory diktat. And for those consumers who do climb aboard what happens when the inevitable server glitches arise when all of those new Xbox One devices start clamoring for cloud access all at the same time? Will the console play on or shut down gameplay?

For a long time both Sony and Microsoft have desired to make their consoles the central hub of living room entertainment. Yet what the PlayStation 3 introduction showed us is that the vast majority of people are looking for a great affordable game console. Microsoft is pushing that aspiration to another level with the Xbox One. By contrast, Sony is keeping the PS4 closer to traditional console models in form and pricing. While $499 is not $599, we still think $350 is where a new system needs to be to register on mainstream consumer’s radar. At this juncture, it appears the PS4 hones closer to what the majority of consumers expect out their consoles. The Xbox One should do better than the original Xbox as it will probably sell to a decent percentage of Xbox 360 owners, but right now it does not seem to be a market expanding system.