How Microsoft Got Here, Where Scorpio Might Take It Next

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I’ve been pretty busy this past week so I’ve only just now gotten to put down any thoughts about Scorpio now since we got a clearer picture of it. This really ties into the post I made in early March comparing the first party game strategies of all the console manufacturers. Scorpio plays directly into Microsoft’s service-based strategy, but I don’t know if it’s going to improve the company’s market share against Sony or if it’s even an attempt to do so.

Microsoft is trying to fight this with beefier graphics, but I’m not sure beefier graphics is what’s going to help. I guess a good way to examine Microsoft’s struggles in this console generation would be to look at what worked for the Xbox 360 before. The problem is it’s not entirely clear what boosted that console the most.

The main problem today is that there are something like three times as many PlayStation 4s in people’s homes than there are Xbox Ones. I’m not looking at the sales numbers right now but I think it’s something like 60 million to 20 million respectively. Whatever it is, the PS4 is definitely in the lead but the Xbox One is still healthy. Scorpio could be seen as a response to the PlayStation 4 Pro as well as constant comparisons between PS4 and Xbox One versions of games showing Microsoft’s hardware to be weaker. If you look back through the history of console games however, the most powerful console has almost never been the market leader.

One of the clearest discrepancies between the Xbox One and PS4 has been exclusive games, which I went over in March. Getting the most exclusives hasn’t really been Microsoft’s main strategy though.

Microsoft’s strategy seems to have always been service-driven. It makes sense because Microsoft’s whole purpose as a company has been to provide services, whether in the form of the Windows operating system or for various business computing services. In gaming that meant changing the console landscape with Xbox Live during the years of the original Xbox. Today it means things like backwards compatibility, Xbox Game Pass, or cross-play between Xbox and Windows 10.

In the early years of the Xbox 360, players noticed a huge service gulf between that system and the PlayStation 3. Xbox Live was miles ahead of PlayStation Network in terms of features. The operating system of the 360 felt so much more convenient than that of the PS3, with things like custom soundtracks and being able to access the system’s main menu while playing a game. The 360 set the tone for what modern consoles should be able to do. By the later years of the Xbox 360 Microsoft could just coast along knowing most people preferred to play games on Xbox Live rather than PSN.  Back then this had me convinced exclusives were no longer as important to a console as the service that console provided. The current generation may nor may not be putting that notion into question.

The PS4 has a more robust lineup of exclusives, but it also caught up with Xbox’s services, coming close enough that the difference between the two is no longer a problem for customers. I think Microsoft’s stumble with its original plan for game ownership on Xbox One also hobbled that system early on, ruining the marketing message of its service in the face of Sony’s simple “we’re making a console that plays games.”

But exclusives may have been what gave the 360 its initial momentum too. Microsoft was bringing western third party developers into the console space with games that appealed directly to the increasingly important North American audience. Many of the biggest games of that console generation were only on the 360 for a while: The Elder Scrolls IV: OblivionBioShock, the first Mass Effect. Meanwhile, the Japanese developers that had defined the original PlayStation and PlayStation 2 were struggling during the PS3 years. Today, pretty much all the western third party games are multiplatform, and the Japanese developers are back, making a lot of games only for PlayStation again like I described in the March post.

Knowing Microsoft, I think it makes more sense to view Scorpio as the next step in trying to make Xbox feel like the better gaming service by adding another hardware SKU for the hardcore user. To speculate a bit, Microsoft could be planning to keep offering more and more powerful Xbox hardware revisions periodically with a single contiguous library of games.  Microsoft executive Phil Spencer has repeatedly championed the idea of that kind of library and I’ve written about it several times here, we just haven’t seen it in action yet.

If that’s the case, then Scorpi is really just the first step in a long-term plan for where Microsoft is taking Xbox in the future. Comments from Sony seem to suggest it still believes in traditional console generations and the PS4 Pro is just a short-term idea. If that’s true and Microsoft goes with a “phone upgrade” path for consoles it could make PlayStation and Xbox look very different a few years from now.

BULLETS:

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