Yesterday, Microsoft held an event ahead of the release of the next generation Xbox Series X and (all digital) Series S where they announced the 16 exclusive titles and library of third party titles that brand loyalists can expect to enjoy when the consoles finally launch. What was noticeable was a reliance on Xbox’s original franchises, some which were brought to market at the launch of the first Xbox games console. There was little in the way of exciting newer titles that could compete with the likes of Sony’s Spiderman Miles Morales or Horizon Forbidden West, both expected to be key titles used in bundling deals to encourage uptake of Sony’s next generation hardware.
Microsoft has been notably proactive in the build-up to the hardware launch, releasing visuals of the new hardware, technical specifications, and yesterday’s title announcements, beating Sony to the punch in all instances. This is a strong strategy decision from Microsoft, satisfying consumer desire for information, kindling the excitement for the release and in the process dampening the impact of Sony’s announcements, with the Xbox competitor having to play catch-up at every turn. Having lost the previous generation in terms of console sales share, these marginal gains will all help to close the gap on Sony, with launch reception a key indicator of generational success.
However, proactivity in announcing exclusives is not a comment on the quality of those exclusives. The portfolio announced by Microsoft yesterday was somewhat lacklustre, with the only titles of real note being sequels of fan favourites Halo, Forza and Fable. Microsoft’s exclusive portfolio has historically been a weakness in the battle for console supremacy, with competitor Sony investing heavily in acquiring independent studios, uniting them under the Sony Interactive Entertainment brand and churning out multiple Game of Year award winning titles in the process. Again, this highlights the need for further investment in content by Microsoft, which would compliment the dominance in processing power (the Xbox Series X will feature 12TFLOPs of GPU processing power) and the well-received GamePass service which the company will continue to rely upon as key selling points.
One aspect of the next generational offering from Microsoft that is expected to make significant gains is the Xbox Series S (codenamed Lockhart). This all digital console will come to market at a significantly lower price than the Series X, owing primarily to lack of optical disc drive and a lower processing capability (just 4 TFLOPs, equivalent to a PS4 Pro). With this console expected to launch at between $250-300, Microsoft will find the console successful amongst casual, price elastic gamers, as well as in emerging regions such as Latin America.
Whilst Sony is expected to continue its dominance in the next generation thanks to the established social networks of existing PlayStation and the capacity to produce leading exclusives, Microsoft is expected to narrow the gap which has opened since 2013, increasing from 32% of console sales in 2019 to 33% in 2020. As discussed, the wider service offering and lower cost option in the Series S is expected to be a tempting draw for on-the fence consumers, though the converting PlayStation users will be a significant obstacle without further improvement in the content portfolio Xbox can leverage.
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