For years, the Xbox vs. PlayStation battle was pretty evenly matched, with fans of each console firmly entrenched on their respective platforms. But today it isn't a fair fight, with Sony's (NYSE:SNE) PlayStation 4 literally bullying Microsoft's Xbox One off the playground.
Since November, PlayStation 4 has been outselling Xbox One two-to-one with 10 million units, compared to 5 million for Microsoft (NASDAQ:MSFT). Where Xbox had gone head-to-head with PlayStation in the last console generation, it now struggles to keep up with the competition.
Xbox has always been a halo product for Microsoft, the one consumer product that people really want, even if the business itself loses hundreds of millions each year. That was fine when Microsoft had a hit on its hands. Now it's increasingly looking like an also-ran.
What went wrong for Microsoft? Here are five reasons it's getting crushed in the living room:
Positioning the Xbox One as a Media Center
When Microsoft unveiled the Xbox One at the 2013 Electronic Entertainment Expo, the word "game" was hardly mentioned, whereas movies, television and Skype came up several times. Microsoft was betting that Xbox One adoption would center on these features, thus leaving games as a footnote for the console. This was clear with the first Xbox One commercial, released in September 2013, which highlighted watching the NFL on Xbox One, without a mention of video games.
Microsoft hired former CBS exec Nancy Tellem to helm the Xbox content division and announced a live-action version of "Halo." By contrast, Sony's PlayStation made no pretense of being anything other than a great gaming platform. Microsoft has since backpedaled on that approach, but the growing number of PS4 owners hasn’t helped regain lost ground.
For gamers, the right price point can make or break decisions between consoles. In the case of the Xbox One and the PS4, the $100 difference pushed more gamers to the Sony console. Not surprisingly, many didn’t want to spend an extra $100 for the mandatory Kinect motion sensor included with the Xbox One.
After Microsoft introduced a $399 Xbox One without a Kinect, its June sales reportedly doubled, giving Xbox a bit of hope as it attempted to catch up to PS4.
Xbox Live Gold
Even if you didn’t plan to use the Xbox One for gaming purposes, most of its functionality was locked behind its premium service, called Xbox Live Gold. Xbox One users looking to play online, watch Netflix, stream Hulu and use social networks, all required a subscription to Xbox Live Gold, with prices ranging from $25 for three months or $60 for a year.
Microsoft eventually changed its policies in May, opening those services up to Xbox Live users regardless of whether they subscribed to the Gold service.
One of the most apparent flaws of the Xbox One was its weaker graphics performance. With a portion of its power dedicated to powering the Kinect, developers were left with fewer resources to work with. This resulted in several cross-platform games running at a full 1080p resolution on the PS4 with many games on the Xbox One scaled down to 900p and 720p resolutions.
Microsoft eventually freed up those resources by unbundling the Kinect, but the graphics resolution differences have continued to be a punchline in discussions about the two consoles.
Ultimately, Microsoft’s biggest failure with the Xbox One was its own inconsistent narrative on the console. From the announcement of Xbox One, it was going against everything gamers wanted. The Xbox One looked like a decent media center, but it introduced a number of nasty restrictions on selling used games and required an always-on connection. Sony capitalized on this by making its presentation at 2013 E3 all about the gamers, while poking fun at Microsoft’s unpopular Xbox One features.
Microsoft eventually backed down on all those features, which received negative backlash, but the damage was done. Sony controlled the narrative and won over a significant number of "hearts and minds" by turning players’ attentions toward the gamer-centric features of the PS4.
The damage caused by the Xbox One’s debut was so significant that Microsoft pulled a complete 180 at 2014 E3, focusing its entire presentation on upcoming games for the console.
While Microsoft continues to struggle against the PlayStation 4 around the world, it may find hope in China, which approved the sale of 5 million Xbox One units in the country on Tuesday, PC World reported.