This week has been a good one for Sony. They announced that the PS4 has sold over five million (5.3, to be exact) units globally, and thanks to what is known amongst the hardcore as “Resolution-gate” it’s becoming apparent that most multiplatform titles perform better on the PS4 as well. Metal Gear Ground Zeroes has already been confirmed by Konami itself as 720p on the Xbox One and 1080p on the PS4, while games like Tomb Raider: Definitive Edition sport better frame rates and performance on the PS4.
All of this demonstrates the concerted effort Sony has put into turning around the fortunes of the PlayStation line, but of course, it comes at a cost. The dominance Microsoft has enjoyed with the Xbox console has been lost at this early juncture in the new console generation. The Xbox 360 was the defacto machine for gamers North America when it came to popular shooters like Call of Duty and Halo, but right now, the consumers are voting with their wallets, and the results currently favor the PS4. It’s still too early in the generation to hand the grand prize trophy over to Sony; just look at the Wii’s early dominance and how the 360 sales in the USA surpassed it in later years. However, it still raises the question, what can Microsoft do to recapture dominance in the North America?
It’s likely global domination will go to Sony thanks to the marketing momentum they traditionally hold in other regions. But North America is a viable battleground. Microsoft still has a lot of mindshare thanks to its association with FPS games, although clearly that dominance has been hurt by the $100 price difference between the PS4 and Xbox One. All other things being equal—and they’re not—price is still the biggest factor. Performance, of course, is the other. Right now, things are not going Microsoft’s way, with one third party title after another boasting better resolution or frame rates—sometimes both—on the PS4.
The solution seems clear, although it’s not easy to implement; Microsoft needs to find a way to drive the price of the Xbox One down. Right now, the perception—particularly amongst the hardcore—is that Microsoft is offering less powerful hardware for $100 more, which is tough proposition to defend. This isn’t like the 360 launch where Microsoft was the only hardcore machine available for nearly a year. This time, its rival actually launched weeks earlier and in more territories.
At this point, it seems like Microsoft has three options. They can drop the Kinect camera as a mandatory peripheral. If they do, they might need to drop the price by $150 to more reasonably compete with Sony with a $349 Xbox One to the PS4’s $399. They can bite the bullet and keep the Kinect camera and simply absorb the cost of a price cut to $399 where they can still argue the addition of the Kinect camera is added value, even if the hardware is weaker.
Finally, Microsoft could take the more unorthodox approach of passing the savings onto consumers in other ways. For example, Sony followed Microsoft’s lead and made online play subscription based, but there’s nothing stopping Microsoft from reversing this policy and making Xbox Live free. Another interesting tactic would be to lower the price of their digital games. We’re seeing this already with reduction of the price of Ryse, and it was made clear early on in the Xbox One reveal that Microsoft was interested in a primarily digital future. With the rising cost of games, a $40 or even $30 AAA title becomes very compelling, especially if Microsoft snagged digital deals for the likes of Call of Duty or Grand Theft Auto.
Of course, the other thing that Microsoft—and Sony—need to do to make the platform more compelling is to bring out the games people want. We see this with the Wii U already, languishing in sales as people wait for the next Zelda or Super Mario Galaxy that will drive the purchases. Microsoft needs its next-gen Halo or Call of Duty, which many are speculating Titanfall just might be.
The war for North American dominance is far from over. These are just the opening shots. But Microsoft is already backed into a corner, and while it can still win back its home territory, it won’t be the easy victory it was last generation.