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[Video Games] The Xbox One: How Microsoft cost themselves an entire console generation with one bad announcement after another

Shout out to this recent video made by Stop Skeletons From Fighting for providing the reminder of this story and the writeup.

Introduction

Console wars have always been a part of video games, going all the way back to the 90s with the feud between Sega and Nintendo. It makes sense from a tribalism perspective; consoles are hefty purchases so you need to be able to feel secure that you bought the right one, especially if you're a child as you may not have the funds to secure the competition unless your parents were exceedingly generous. Today's post focuses on one such entry into the console war, and how focusing on the wrong aspects cost its parent company the entire generation in terms of PR and public image. This is the story of the Xbox One.

The setup

In 2000, Microsoft would enter the console market race with the original heavy-enough-to-be-a-murder-weapon Xbox. While it would fail to beat its primary competition, Sony's Playstation 2, it would carve out a niche for itself in the Americas, helped by several successful exclusives like Halo Combat Evolved and Halo 2, fantasy RPG Fable, and Star Wars: Knights of the Old Republic. Then again, going blow to blow with the PS2 is no small feat given it's the best selling console of all time as of writing at over a hundred and fifty five million units.

In 2005, Microsoft wound launch the Xbox 360 and this would be a much bigger blow against Sony. In fact, for much of this console generation (generally seen as the 7th generation, or Pokemon Sony and Microsoft) it was the common opinion that Microsoft had won. This was thanks to Sony's Playstation 3 being an overpriced beast of a machine that was way harder to develop for thanks to its processing techniques, while Nintendo had gone for a more casual gaming audience with the Nintendo Wii. Thanks to heavy hitter exclusives (some timed) like Elder Scrolls Oblivion, Halo 3, Mass Effect, Bioshock and Fable 2, the 360 quickly became the juggernaut console of the generation, in spite of having a disaster launch involving the console overheating itself to death with the infamous Red Ring of Death issue. Chances were, if you saw a show on TV with characters playing video games between 2006 and 2013, they were using an Xbox 360 controller or the console could be seen under their TV, like here in Breaking Bad where they play critically acclaimed masterpiece Sonic 2006.

While the 360 hit the ground running (overheating issues aside) with a variety of standout titles, 2010 would see a shift in Microsoft's fortune gaming wise. The company began to shift focus towards the Xbox being a cross-media platform that would allow you to watch television through it and house streaming apps such as Netflix and Crunchyroll. Additionally, the success of the Nintendo Wii prompted Microsoft to respond with its own motion controller application, the Kinect, which launched to mixed fanfare. Part of the problem with the Kinect, besides the software not working really well on the 360, had a poor games lineup and Microsoft hyper-focused on it for the remainder of the 360's lifecycle. Compared to how it started with a variety of impressive titles, the 360's exclusive lineup dried up like a well after 2010, with Halo Reach, Fable 3, Forza Horizon and Halo 4 being the last big exclusives for the platform (and those themselves run into the problem Microsoft have had until recent years where their exclusives can be summarized as "Gears, Halo and Forza").

What especially didn't help was that Sony pulled their heads out of their asses and staged a large redemption arc for the Playstation 3, launching a variety of exclusives and improving the console's price to make back lost ground. While Microsoft started strong and ended with a shrug, Sony started with a few good exclusives (Ratchet and Clank, MGS 4 and Resistance) and kept pumping out titles up to the bitter end (Infamous, The Last of Us and the Uncharted trilogy for example). In fact, Sony did eventually report that the PS3 had outsold the 360, snatching victory from the jaws of defeat.

In 2013, Sony would start the year by announcing the next generation of consoles, the Playstation 4. Nintendo would be a non-player this gen thanks to their entry, the Wii U, not being very good, so this was another generation where Microsoft and Sony would be the big players. Microsoft internally were pushing forward with their ideas from the end of the 360 era, focusing on multimedia entertainment services over the games part of the games console. Rumors and leaks went around that worried players, including a new initiative to have the console require a permanent online connection, and that Durango (the codename for the console) would have measures to try and kill used games by having each physical version of a game come with a one-time only code to permanently link it to your console. When Kotaku gained access to internal documents regarding Durango and the reception from players was frosty, Microsoft game director Adam Orth would set the standard for this era of Microsoft's responses to the backlash:

“Sorry, I don’t get the drama around having an ‘always on’ console. Every device now is ‘always on.’ That’s the world we live in. #DealWithIt.”

Adam would later leave Microsoft after these comments went viral.

The rest of the leaks about Microsoft's plans were also worrying, namely that every console would have Kinect hard-backed into it. While the projected price of $299 was a tantalizing prospect, players were unsure if the console would even be worth it in terms of exclusive games. While Microsoft had built up a powerful brand loyalty in the early 2000s, that well had dried up after three years of Kinect overshadowing over exclusive projects, and the news of Xbox going multimedia only further lessened excitement for the new console.

And then in May 2013, Microsoft would only make things worse for themselves when they actually announced the console.

May 2013: The Announcement

The Xbox One announcement is something I believe should be taught in schools as an example of how not to reveal a new product. Like, this was bad enough that it was able to convince people to spite-buy the competition's product. Pretty much the one thing it did better than the PS4's own announcement was that.. Microsoft actually showed off the console, which Sony had not.

Otherwise, it was exactly as feared through leaks and looking at the direction Microsoft had been taking for several years. The announcement event opens with Don Mattrick, one of the senior vice presidents of the Xbox division, unveiling the console. It's worth mentioning as an aside that Mattrick had been one of the figureheads pushing for Kinect, so this console was basically Mattrick's baby project. But ironically, Mattrick had a history with Xbox prior to joining Microsoft after a career at EA- a history that involved him nearly killing the entire Xbox brand in the crib. Seamus Blackley, one of the founding fathers of the original Xbox project, was nearly denied a chance to present the console to Microsoft shareholders by Mattrick himself due to not thinking the console would do well.

The presentation continues with a lengthy segment about the new upgrades to Kinect, including that it's... always listening to you so that it can process a vocal command to turn on the Xbox One. Keep in mind that this was the same year as the NSA Hacks. Ten minutes into the conference, the Xbox One is finally shown playing media... and it's television. The Price is Right, to be exact. And this sets the scene for the console reveal- there's little to no actual games being shown, as Microsoft had gone all in on using Kinect and cell phone compatibility to make the Xbox One an entertainment hub. A really funny blowback to this came when as part of the conference, people watching the conference on their Xbox 360s would get signed out of the reveal due to the Kinect announcements activating their Kinects. At twenty-seven minutes into the conference, a game is finally shown!

By Electronic Arts, fresh off two consecutive years of being voted as the worst company in America. And it was just the sports games. Which meant that these wouldn't be titles exclusive to the Xbox One. Finally, half an hour into a conference about a console, does Phil Spencer, local saviour of humanity and man in need of a chiropractor after years of carrying the Xbox brand on his back, reveals some actual goddamn video games that are exclusive to the console. We get the obligatory Forza game, a trailer for Remedy's time thriller Quantum Break, and the promise of a whopping fifteen exclusive games coming to Xbox.

And then it's right back to television, including the announcement of a Halo television series with Steven Spielberg's production company attached (that is finally coming out next year?). The final ten minutes consist of a promo for that year's Call of Duty, the one with the dog and the advanced fish AI. The kicker? We don't even get a release date. It's just coming later that year.

To compare, Sony debuted the new game from Bungie, their first new game after leaving Microsoft to do independent. Microsoft debuted a new Call of Duty that included a runtime dedicated to hyping up the good boi doggy.

You know, it's really no shock looking back at teenage me, midway through high school, looking at the news for the Xbox One announcement between classes, and immediately going "Well, guess I'm going Sony this gen." I would later go on to buy a PS4 in 2014 alongside Assassin's Creed Unity and the Metro Redux collection.

The PR would not improve for Microsoft afterwards. Mattrick would opine on backwards compatibility (the ability to play older games on the new hardware, which Microsoft had included for the 360) for the Xbox One by quipping that "If you're backwards compatible, you're really backwards." The methods Xbox was using to control used games (including that if a second player tried to play a game, they would be given an option to pay a fee to unlock the game and get to install it for themselves) went viral as selling points against the now-derisively-named Xbone. The most Microsoft could say about it at the time was that if you signed into your profile on your friend's Xbox, there would be no fee to play your game on the friend's console. Kotaku would later confirm that the plan for the Xbox One would be that it would need to log into the internet at least once every 24 hours. Their final attempt at damage control would be a statement to Polygon that all of the above issues- the always online, used games DRM, etc- were all "potential scenarios."

On June 6th, Microsoft would release a definitive statement confirming the mandatory once-per-day login, and that none of your games would work offline if you didn't do the login. For a games console. But don't worry everyone- you can still access the TV functions and watch Blu Rays on the console. The one salvaging grace was that eventually, it was confirmed that you could turn off the Kinect if you didn't want to use its voice systems.

That would turn out to be relevant, as remember how I mentioned that the same year Microsoft were pushing a voice-based software that was always listening? The day before their E3 presentation, Edward Snowden came forward and revealed that the NSA were listening in on you. Oh, and then it came out a month that Microsft were complicit in the NSA schemes to do said spying.

Whoops!

E3 2013

E3 2013 was Microsoft's chance to appeal to the gamers again after leaving them in the cold with the initial announcement. It was largely OK, focused a lot on some of the big games coming soon and showed that the Xbone, for all its faults, could make some pretty games. Metal Gear Solid V, Dark Souls 2 and more were shown. What's more important is what wasn't shown, as Microsoft dodged around the issues that had plagued the console. There was very little open discussion in the panel about the always online connection, the used games, or Kinect being a new weapon of the government.

The price was released at least. 500 dollars/euro, a far cry from the projected 300 (in fact it was 200 dollars more than the most expensive version of the 360), and very similar to the price of the PS3, a price considered so insane not even a decade prior that it basically won Microsoft the console generation for the first half of it.

Six hours later, Playstation would release their showcase for the PS4. During it, they confirm to roaring applause that the PS4 will not have restrictions on used games, alongside confirming that the system would not involve any of the restrictions that Microsoft were imposing. And they included in it one of the most direct across-the-bow shots at Microsoft in their coverage of how used games would work on the platform. I can assure you as a gamer in 2013, this shit was hilarious and spelled the exact time of death for the Xbox One as a platform. In 22 seconds, Sony had just won the console generation before it even began.

Oh, it was also launching at a hundred bucks cheaper price than the Xbone. Every misstep Microsoft had made, every PR fire they had walked into, Sony capitalized on that and held the door open for every Xbox convert to wander in. You could not write this story without someone calling bullshit on how perfectly Sony striked. And all the while, Mattrick was just digging grave after grave for Xbox, including the now infamous:

"We have a product for people who aren't able to get some form of connectivity, it's called Xbox 360."

Xbox, go home, you're drunk.

The Grand Walkback

Microsoft finally sobered up and demanded a runback. On June 19th, not even two weeks after the E3 press conference, Microsoft walked back their used games policy. No more forced online connectivity, no more restrictions on used games, no more charging to play a game already owned. On July 1st, Mattrick also left Xbox to become CEO of Zynga. The kicker is that per insiders, Mattrick had not given heads up to anyone about this departure and Microsoft had no prepared replacement for his role. He swept in, destroyed the Xbox and its brand reputation, then bounced two months later. Microsoft CEO Steve Ballmer stepped in for a short time then bounced that August as he was already one foot out the door after thirteen years at the company.

That August, Microsoft would also confirm that Kinect was not required and the console could turn off the sensor completely if you didn't desire it or you just didn't want Microsoft to be recording everything you said around your Xbox. I for one did not desire Microsoft sending a hitsquad after me for shit-talking Halo 5.

November finally comes and while neither console had a good lineup, the Xbox One is soundly defeated by the Playstation 4 and it would stay that way for seven years. Never once in the entire 8th Console Generation did the Xbone outsell the PS4. In June 2021, it was reported that the console's lifetime sales were around 50 million units; the PS4 was about to cross one hundred and sixteen million. More humiliatingly, the Nintendo Switch, launched three and a half years later in March 2017, had already outsold the Xbone with 88 million units pushed.

Conclusion

While they soundly lost the generation (not helped by most of the Xbox One exclusives just not being very good) and there was no walking that back, Microsoft were determined to avoid a repeat of the Xbone's disaster launch. In 2014, Phil Spencer was made head of the Xbox division and revisions of the Xbone would go out afterwards that cut down the price and permanently removed Kinect. In 2017, Kinect was formally pulled from production, bringing an end to the motion controller gimmick.

Under Spencer, many of the controversial choices made by Mattick would be removed- alongside that the Xbox One would receive an update to allow for limited backwards compatibility with select original Xbox and Xbox 360 titles (still waiting for them to port Persona 4 Arena Ultimax, please Xbox I'll buy a Kinect if you do that), Spencer went all in on games. Microsoft would buy a levy of companies to bolster their exclusive lineups including Elder Scrolls/Fallout producers Bethesda Softworks in 2020. Their new console, the Xbox Series X, has so far failed to catch up to the Playstation 5 in sales, but has marketed itself as far more pro-consumer when it comes to playing old games on the system, alongside their Game Pass subscription service being a huge financial boon to the company. Ironically thanks to the developer mode you can purchase for the Series consoles, it's actually possible to legally install an emulator and play older Playstation games, while Sony has had more of an exclusionist mindset on preserving their older games and nearly killed the PS3 digital store this past year.

Funnily enough, the Xbox One seems to have confirmed that the console generation has a weird cycle to it of the clear winners of the last gen having a huge moment of hubris that their competition exploits. Sony got too big for their britches with the PS3, only for Microsoft in turn to fall short and give the PS4 the crown.

Could the Series consoles finally be what gives Microsoft their first full win? Sony has the lead now but Microsoft is promising a packed generation for titles in the years to come. It is gonna depend on how those future exclusives line up, but at least for me, it got me back on Phil Spencer's bullshit as I bought a Series X this year. Game wise, while Sony has started with some big hits such as Ratchet and Clank, the Demon Souls remake and Miles Morales, Metacritic ratings show that Microsoft has three exclusives in the top 10 rated games of the year with a 90+ Metacritic rating in Microsoft Flight Simulator, Forza Horizon 5 and Psychonauts 2. Compared to how they were in 2013, the future is looking up for the Xbox team.

353 comments
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level 1

And they included in it one of the most direct across-the-bow shots at Microsoft in their coverage of how used games would work on the platform

Funnily enough, this wasn't even the first time Sony won a console war with an impressively succinct and legendary dunk on a competitor.

Sega mandated that the Saturn be launched earlier than planned in America to gain an advantage over Sony's upcoming PS1, with Sega revealing at E3 '95 the Saturn would launch at $399. Sony, in their later keynote, responded by having their guy go up on stage and simply say "two ninety-nine".

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level 2
Comment deleted by user · 10 mo. ago
level 2

Which is ironic because they then lost the PS3/XBox360 console war in that generation partly because the starting price was $499 and the XBox was $399

95
level 2

I guess sony would make it right whenever they come later

9
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That was fking savage!

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I was working at Microsoft on the Kinect hardware team at the time. I remember watching the announcement from a basement lab in Redmond. Afterward, my boss just looked at us and was like "go home. Come back tomorrow. It'll be a better day".

428
level 2

Christ I feel a bit sorry for you.

188
level 1

Mattrick was a moron really. How you could script a console reveal so badly is beyond me really.

Also, as a non American watching this reveal, I knew right away that the TV functions involving a cable receiver would never work outside of the US, as no on would be supporting them.

Kinnect was also really popular with engineers as it has many great features for tracking movement. Only problem was that the Xbones didn't have a USB connector anymore lol

827
level 2

Kinnect was also really popular with engineers as it has many great features for tracking movement.

afaik it's still really popular as a cheap motion tracking camera with very good libraries.

361
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The features involving a cable receiver were never great in the US either. They promised DVR functionality that never shipped, you could stream TV to other devices but only on the local network, and more recently they got rid of the channel listings so it's literally no smarter than the dumbest TV.

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level 2

That E3 was probably the biggest shitshow in gaming history. I'm firmly team Xbox this generation because of Game Pass, but when Mattrick was around i never even considered an Xbox

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level 2

TV functions involving a cable receiver

i bought the usb thing so I could get my broadcast channels on my xbox, if you can believe it. After xbox started acting weird about wht they were doing with that app I moved it over to my kodi box where it still provides quality broadcast entertainment.

13
level 2

Wait, they don't? Mine has one and it feels like a great oversight for wired controllers at the very least.

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I’m still salty they killed the Kinect. Granted, I only use it for Just Dance, it’s still fun. It was maybe one or two iterations away from being truly great.

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level 2

Only problem was that the Xbones didn't have a USB connector anymore lol

I'm confused by this. Xbox Ones very much had USB3.0 ports. That's how you connected devices like drives and controllers.

Unless you are talking about the Kinect connector which is not USB, but a propriatery connector. The Xbox One S and X didn't come with these ports, but Microsoft did sell an adapter that turned the Kinect port into USB3.0 and power connectors, mostly used for connecting to PC.

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level 2

Only problem was that the Xbones didn't have a USB connector anymore lol

What?

1
level 2

Every console generation, a manfucaturer's gotta get a little too big for their britches. Sony and Microsoft traded off for a bit; Nintendo probably qualifies too but they're off in their own land with the Wii U honestly.

1
level 1

The how to share games video still makes me laugh

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