Around 2007, Microsoft looked like it was set up pretty well against the PS3. The high price of Sony’s system, saddled with expensive parts like a Blu-ray drive, coupled with early development issues from the complex Cell hardware meant that the Xbox 360 was cheaper to buy and its games often looked noticeably better. The PS3 looked stalled with little relief in sight, and some pundits started digging a grave for the once mighty console king.What a difference a few years make. Blu-ray won the HD format war, PS3 gets a new hardware form, the price is lowered to $299 and acclaimed titles like LittleBigPlanet, Uncharted 2 and God of War III release. All of a sudden, PS3 is predicted to take the lead from Microsoft by the end of 2012 and there are some who think the installed base gap will be permanently erased even sooner.
Some have said that Microsoft has squandered their head start and their lead, not properly following up to put an insurmountable difference between themselves and Sony. But just like Mark McGwire, we’re not here to talk about the past. We’re here to focus on the things that Microsoft could do differently to try and ensure they stay above Sony in the console race.
It might seem unusual in a strategy of expansion to give up on an area, but we think that Microsoft needs to do just that in Japan. They've given it the good college try in Japan, getting a lot of Japanese developers on board and securing exclusives like Lost Odyssey and Blue Dragon. While the system has fared better than its predecessor in Japan, its sales are stuck in neutral for the most part.
When you look at the installed base, Xbox 360 has around 1.5 million units in Japan -- contrast that to 5 million PS3s and 10 million Wiis. More than that, the portable consoles have a level of prominence in Japan that they just don't have in the West, so it's really more like the Xbox 360 is in fifth place.
We're not saying pull out of Japan entirely... just that if there are any resources that can be spent in America or Europe rather than Japan, do it, because Japan isn't getting any better.
With Bungie riding triumphantly off into the sunset, the saga of Master Chief told from beginning to end and the war against the alien Covenant seemingly resolved, some people might say it's the right time to end the Halo franchise. We're not some people.
There is no doubting the power of Halo for the Xbox brand; we would contend that the Xbox 360 might not even be here if the Halo franchise hadn't stepped up and given the console a killer app that made it stand out and helped solidify its reputation as THE console to go to for shooter titles.
So, simply put, Halo must go on; we think Microsoft knows this but it never hurts to state the obvious.
If there's a franchise that comes close to defining the Xbox platform as much as Halo, it's Gears of War. The third-person shooter has hashed out gaming trends like grenade arcs and cover mechanics and it's really helped the Xbox 360 in years where no Halo was present. The fact that the IP is totally owned by Epic then probably gives Don Mattrick grey hairs.
Wedbush Morgan Securities analyst Michael Pachter has suggested that Epic has regretted making Gears of War an Xbox 360 exclusive. Fortunately for Microsoft, Epic says that isn't true and they're happy with their partnership. Now it's up to Microsoft to pony up the money to make sure it stays an exclusive -- it was a major boon to the PS3 when Mass Effect 2 was announced to be coming in 2011 and there's no way that Microsoft can allow something similar to happen with Gears of War.
Kevin Butler is one of the greatest advertising inventions in the history of video games. We make such a bold declaration for a few reasons. One, even people who aren't that fond of Sony or the PS3 like his ads. Two, they manage to be both entertaining and informative. Three, they've been applicable over a variety of PS3 products to a wide demographic.
Anyway, the point is that the Xbox 360 needs a Kevin Butler-like figure. We realise that this is easier said than done -- Sony, after all, flailed around for a while with the PS3 before realising what a home run they had with Butler on the MLB '09 ads. Still, a humorous, unifying force in the Xbox 360's advertising campaign sure could help; not a pseudo-executive like Butler, but something that puts a face on the system in a similar way.
Since the beginning of this hardware generation, Microsoft has managed to maintain a price advantage with the Xbox 360 over the PS3. At the beginning it was quite drastic, with prices of $399/$299 for the Xbox 360 contrasted to the $499/$599 for the PS3 in 2006. There are different hardware bundles running around, but in 2010, it's basically come down to a difference of $199/$299 for the Xbox 360 and $299 for the PS3 -- Sony has closed a lot of ground, in other words.
A lot of people really underestimate the impact that price has in the console war and having a cheaper price can make a huge difference. If Microsoft is serious about securing their place in this console clash, they'll be sure that they match any price cut that Sony may (and is likely to make) next year, or better still, they'll make a preemptive price cut ahead of PS3 to really put the pressure on Sony. Making the 360 even cheaper will also make Kinect far more appealing, which brings us to the next point...
Right now, Kinect is an incredibly hot holiday item. It sold a million units in 10 days and Microsoft says that it'll be very hard to find after Black Friday. No doubt the ads on Oprah and other places have had their effect on the mainstream audiences.
The thing is, many in the core audience are still openly sceptical about Kinect's capabilities. And it seems to be better set up for the casual, mainstream audience. Still, with Sony making the push for Move to be an alternative controller for a lot of their titles, it'd be a good idea to try and make Kinect seem like a cool thing to core audiences too. There are plenty of untapped and unused ideas with the peripheral, including mini-games in a larger title that can use Kinect's motion detection or even titles built around the voice interface.
Almost since the beginning of launching the Xbox platform, Microsoft has seemingly had one goal in mind: drop weight when it comes to developers. We're not sure how this makes any sense, but they closed their sports division, shut down ACES and Ensemble, and let Bungie go their own way and Bizarre before them. At the same time, Sony has built up the largest studio group in the entire world, and the long term quantity and quality of their disc-based products looks a lot better right now than Microsoft's.
There is a potential ready made solution for all of this, however: purchase a major game publisher. One of the first that comes to mind is a company like ZeniMax, which would give the Xbox 360 exclusive access to franchises like Fallout, Oblivion, Doom and Rage. And it would bring some amazing talent, like John Carmack, Todd Howard and Shinji Mikami, into the Microsoft fold. It wouldn't be cheap, but when you've already sunk billions of dollars of investment into something, what's a few hundred million more at this point?