Photo: Ann H

Why did Xbox fail?

Licensing, pricing, Kinecting. You could argue that the third-generation Xbox was, at the time, more advanced than consumers realized. Microsoft simply didn't know how to sell it properly. But there were three big issues with the Xbox One before and after its launch: game licenses, the price tag and the Kinect.

cnet.com - Xbox Series X: How Microsoft learned from its mistakes in the last console ...

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It's 2013 all over again as Microsoft and Sony once again face off in the never-ending battle for console supremacy. If all goes well, both the Xbox Series X and the PlayStation 5 will compete against one another during the 2020 holiday shopping season. But this time around, compared with troubled launch of the Xbox One, it seems Microsoft could be making all the right moves. The Xbox One could hardly be termed a failure. But with an estimated 50 million Xbox One units sold, compared with more than 106 million PlayStation 4 consoles sold, the competition wasn't even close.

So what went wrong?

To understand why Microsoft could get the jump on Sony this holiday season, we have to look back at why the Xbox One fell flat on its face in 2013.

Licensing, pricing, Kinecting

You could argue that the third-generation Xbox was, at the time, more advanced than consumers realized. Microsoft simply didn't know how to sell it properly. But there were three big issues with the Xbox One before and after its launch: game licenses, the price tag and the Kinect. In an attempt to please publishers, who were up in arms over sales of games and piracy, Microsoft developed a game licensing system designed to make it easier for owners to access games they purchased without constantly switching out discs. In return, there were limitations placed on trading in games and sharing them among friends. That idea didn't sit well with gamers, who weren't so keen on losing the freedom to do what they wanted with the games they owned.

Strike one for Microsoft.

Price is also a big indicator of a console's potential success. When it was Xbox 360 versus PS3, the $299 Xbox console outsold the $499 PS3. It also helped that the Xbox came out several months earlier. In 2013, Sony returned the favor by offering its PS4 for $399, which would be $100 cheaper than the Xbox One.

Strike two for Microsoft.

Microsoft was way ahead of the pack when it came to virtual assistants. The company realized the Xbox 360 was the entertainment center of the home thanks to its early adoption of Netflix streaming. So it wanted the Xbox One to control everything, but not like universal remotes bought at Circuit City in 2003. Instead, Microsoft wanted console owners to use their voice to control everything via its Kinect camera and mic. I know, crazy idea, right? A digital device that can control multiple devices by saying a simple phrase? Well, plenty of people weren't so excited about this feature, and it took a lot of complaining before Microsoft finally admitted that the Xbox One would work fine without it, which led to many Xbox One owners tossing the Kinect camera aside.

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Strike three for Microsoft.

Game Pass and xCloud

For the 2020 battle with Sony, it seems Microsoft has learned from its mistakes. In fact, it began laying the groundwork for the battle by seeding a few features that are already outpacing Sony's offerings. Xbox Game Pass, Microsoft's on-demand subscription service that provides access to more than 100 full games, is in the process of trouncing Sony's PlayStation Now with its 2.2 million subscribers by racking up 10 million subscribers for the Xbox service as of April. How did the Xbox service gain such popularity? Simply put: It's an incredible deal. The service's introductory cost was only $1. On top of that, major titles such as Gears of War 5 and The Outer Worlds regularly make their debut on the service. Normally you'd pay up to $60 to play these games, but if you're a subscriber you get them, essentially, for free. Microsoft also looks like it might remedy the console pricing issue this time or, at least, offer an alternative. The name Xbox Series X gives the impression there might be more than one console, and leaks show a second console in the works codenamed "Lockhart". Rumors suggest this second console will not have a disc drive, which Microsoft has done before with the Xbox One S. Considering parts of the PS5 add up to approximately $450 and both next-gen consoles share similar components, a digital-only console might be just enough to get the console price to $399. Even if it doesn't have the bells and whistles of a $499 "pro" version, that's a compelling price point. Then there's xCloud, Microsoft's cloud-gaming service. While it's technically in preview right now, it's already on par with, if not surpassing Google Stadia, which was going to be the cloud-gaming service that would change the industry, but didn't. While xCloud does allow gamers to play on their Xbox Series X and then pick up where they left off on their phone, its real job is to dominate a user's screen time. Whether it's on the couch, on your laptop, or on a tablet or phone, Microsoft wants Xbox to be on your screens all the time in hopes you forget about Sony and its PS5. Now playing: Watch this: PlayStation 5 vs. Xbox Series X: Testing specs inside...

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It's the games, stupid

So Microsoft is coming in leaner and meaner like Rocky Balboa in Rocky II, but the company that has the best games usually wins the war. Since the debut of the Xbox, Microsoft has fallen behind Sony when it comes to exclusive games. PlayStation 4 has dominated this generation with a suite of console exclusives like God of War, Bloodborne, Spider-Man and Horizon: Zero Dawn. This generation Microsoft hasn't been able to compete with the output of Sony's first-party games studios. So what's Microsoft's plan? Buy more game companies. In 2018 alone, it purchased six game studios: Ninja Theory (DmC, Hellblade), Playground Games (Forza Horizon), inXile Entertainment (Wasteland), Compulsion Games (We Happy Few), Undead Labs (State of Decay) and Obsidian Entertainment (The Outer Worlds, Fallout: New Vegas). Two of those studios, Ninja Theory and Obsidian Entertainment, recently developed award-winning games but, more importantly, all six produce a wide range of titles. Prior to these acquisitions, when you talked about exclusive Xbox games, you were likely referring to Halo, Gears of War and Forza. Microsoft also took a page out of Sony's 2013 playbook. Smart Delivery is a feature for the Xbox Series X that allows users to upgrade their Xbox One games at no charge unlike the $10 Sony charged to upgrade PS3 games to PS4 versions. Cyberpunk 2077, Assassin's Creed Valhalla and Halo: Infinite are some of the big titles confirmed to make use of Smart Delivery. As with the case of all the previous console wars, the "loser" tends to figure out where they screwed up and come back with a vengeance. Even if Microsoft doesn't beat Sony this time around, it's going to be one hell of a fight.

cnet.com - Xbox Series X: How Microsoft learned from its mistakes in the last console ...