What The Saint Thinks about the new XBOX “720”
XBOX 720, Pre-obsolete retail console or futuristic online game service?
I’m getting a lot of press calls today ahead of Microsoft’s anticipated Xbox “720” announcement tomorrow asking me what I think about it. Of course many of the senior folks working on the new console are DirectX veterans going back to the earliest days which means two things…
1) They are old friends so I’d hate to “slag” their efforts…
2) If they had told me anything about it I wouldn’t be able to speculate… but they haven’t so I can!
If the rumors about its specs are true I have a strong immediate reaction;
It strikes me that the device is “pre-obsolete”, like buying a new car equipped with a tape cassette player. Microsoft and Sony both seem to suffer from a related mental condition, an obsession with traditional media even when GAMES are clearly and strongly driving their consumer success and is the dominant entertainment media of the new generation. I believe the problem stems from “old people” being in charge of making media devices for kids. They don’t get games, don’t identify with them and the technology associated with gaming is extremely complex so they focus on what they are comfortable with… movies and music. In my experience, it’s always a huge mistake because other “old people” are already comfortable with how their traditional media is delivered and don’t need a newfangled children’s toy to displace it. To that end;
Blue-Ray: Mistake, it makes the device expensive and is completely unnecessary for modern media delivery. Microsoft should have committed itself to 100% online media delivery for this generation. I’d have taken more RAM any day and the choice would have forced Microsoft to learn how to run a pure online game service well without relying on traditional retail channels.
Being able to watch Sponge Bob on yet another device IS NOT a reason anybody clamors to get a new console for Christmas. Console adoption is driven by new HIT games, so when I hear them talking about what a great general purpose media device a GAME CONSOLE is going to be I just get the impression that It’s not going to be very exciting for games. My Apple TV works great, I don’t need another one, I’m already yawning about it.
Exciting!
Obsolete…
In a world with so much connectivity, needing a physical box cabled to your TV is obsolete. I think Microsoft is going to miss the opportunity to trump Apple in gaming by making yet another console when Apple has already shown that a next generation game console probably looks more like an IPAD. Samsung, Apple and Nvidia are all showing the way towards a purely mobile console world. I understand the argument that there is still a valuable market for console games. If I were Microsoft I would have slapped more RAM in the Xbox 360, cranked up the CPU clock, chucked the DVD drive altogether and called that an Xbox 720, then focused all of my attention on making an amazing mobile gaming device tied to an amazing pure online service. That approach would have preserved ALL of Microsoft’s XBOX market share, developer community, profit and content momentum for the Xbox Live service. Instead of making that SMART decision, Microsoft appears to be opting for an entirely new console architecture that will, without a really brilliant backwards compatibility strategy, junk a huge body of popular game content. You would think that after seeing game console companies like Nintendo, Sega and Sony blow themselves up on console transitions, Microsoft would have learned not to expose themselves to platform transition risk when their entire platform advantage is tied up with the strength of their online service.
On the positive side, Microsoft does appear to have learned from Nintendo that owning a unique, proprietary game controller like Kinect can be an important competitive differentiator in the console world that’s worth investing in. Personally I found the first generation Kinect experience to be uninspired, but it was actually innovative for Microsoft to pursue and I hope that the second generation one will be more compelling and differentiating. New unique games driven by new unique input experiences can be a reason to buy a new game console.
Exciting! This is the experience modern gamers want, the freedom to take their games anywhere and play them on any screen.
I’m also pleased to hear that Microsoft has moved back towards a more PC like architecture for the Xbox “720”. I think that there are people at Microsoft who don’t understand that the way to compete with Japanese game consoles is NOT to emulate their business models. Microsoft should always have religiously focused on its online service experience and linked it intimately to Windows gaming. If they had done a GOOD job of bridging console gaming with PC gaming early their game market would be twice as large and they would again, minimize the platform transition risk between new console generations. I think it was a huge mistake for Microsoft to make the Xbox 360 such a proprietary gaming device because the result was that they KILLED their own PC Game market and left the doors open for Apple to capture the consumer PC market with devices that delivered the GREAT online game experience that the PC used to dominate. If the Xbox 360 had been a PC architecture then it’s easy to imagine that the Xbox Live service might have grown up to look more like Apple’s app store market today.
That said, it’s not too late for Microsoft to regroup with a new console and an online service that effectively bridges the platforms… providing they can wean themselves from the physical media market, which they clearly don’t intend to do, if they ship a Blue-Ray drive. The result of not letting go of retail gaming and media is that the two business models will compete with each other and Microsoft will have to make content and user experience compromises to support them both. Effectively Microsoft will be making the XBOX version of the same mistake they made with Windows 8, trying to force a mobile consumer entertainment UI paradigm onto the desktops of an Enterprise productivity OS. Trying to balance or merge both use models just disappoints everybody.
“Why can’t I just get all of my media online?”
“Because then Walmart won’t carry us!”
Hey Alex – I have to disagree with you about support for fixed media. While that’s the direction the industry is going, and may be viable by the next generation, this generation will still have its major (+$500M) hits driven by fixed media – the CoDs, Maddens, FIFAs, Assassin’s Creeds, Halos, and even Destiny’s of the next several years. After that – maybe things go fully digital, but I’d give that at least 3 years, probably closer to 5. And as far as BlueRay support, I see that serving two purposes: competitive parity – and – replacing another device in the AV stack.
Isn’t it interesting that this mentality didn’t stop Steve Jobs from taking this leap years ago? How much money and marketshare can Microsoft afford to lose to Apple worrying about yesterdays retail partners? If Microsoft made a game console tomorrow that only delivered these games online, they wouldn’t miss a single title or sale. It’s just scary to do. I had this same conversation with Gabe Newell when he was fighting with Sierra over Half-Life revenues. He made the leap to entirely online distribution for his hit multi-hundred million dollar title at a time when only 50% of the market had broadband… now he’s a billionaire. It just takes a little courage Jon, the time to do it was a decade ago, Microsoft could have been the leader in the space instead of conceding it to others.
This looks to like a very good example of “the innovator’s dilemma” (Clayton Christensen’s term): a successful company putting too much emphasis on customers’ current needs and failing to meet customers’ future needs.
This happens not because they don’t want to innovate. They actually do. Kodak was a pioneer of digital photography. It’s because such innovative products usually are initially somewhat inferior to mature alternatives and majority of current customers do not want them. Thus, betting on new technologies often means risking losing some portion of their large market share in the current established market.
It is this fear of loosing current customers that holds them back until it’s often too late to switch.
Yeah… It would be a good example of Innovators dilemma if Microsoft had sacrificed next generation features for backward compatibility with existing games, OR if anybody had purchased their Xbox to use it as a media player in the first place, but neither is true. What you have here is an expression of the role Microsoft wishes the Xbox had in the living room, not the one it does have. Microsoft launched the set of features they wish consumers wanted from the Xbox, not the features anybody actually buys an Xbox for. it’s also an indication of senior people who don’t like or get gams dictating strategy.
There is no other explanation for how such a major console launch could get botched that way. Somebody needs to get fired quickly before they run microsofts only successful consumer brand into the ground.
When I saw the split screen stuff I literally face palmed. Why in the world would I ever want to do that? Who ever thought that this is the way to multitask the console in the current world of tablets and smart phones… Instead of something useful, like allowing me to redirect any of the video streams the console can produce to any of my devices (or the reverse, let the console receive a stream from any other device/pc and show it on tv), ms still seems to be in the world where the tv screen is the only screen that people consume media on…
> Microsoft should have committed itself to 100% online media delivery for this generation.
Maybe the gen after next gen, but not right now. We’ve been spoiled living in tech hubs where we whine that our 10MB/s with 250GB monthly cap cable connection is too slow. Meanwhile large parts of the world have much slower speeds, and much lower caps. Look at our northern neighbors, Canada. 25GB monthly cap on their largest provider (at least as of last year). One downloaded game (BR-equivalent) a month will eat all your cap. Emerging markets are even more so.
> I think it was a huge mistake for Microsoft to make the Xbox 360 such a proprietary gaming device because the result was that they KILLED their own PC Game market and left the doors open for Apple to capture the consumer PC market with devices that delivered the GREAT online game experience that the PC used to dominate.
Nah, MS didn’t kill the PC game market. The PC game market killed the PC game market. Specifically the lack of it once you throw in piracy and extra development (breadth of hardware) costs. Once consoles relatively caught up in overall horsepower capabilities with PCs, the main games left in the PC game market were those that essentially required Keyboard & Mouse. And even a lot of those are making the shift to consoles (FPSs, Diablo 3, etc). Having a nice PC game store/identity did slow this down. It just wasn’t MS that provided it, it was Valve with Steam. But even so all it’s down is slow down the main shift of games away from the PC, not reverse it.
In any case, my prediction is that within the next 24-48mo, Apple will finally open up Apple TV to it’s developer ecosystem and likely introduce some kind of physical controller. (Aside from the obvious integration with iDevices as controllers). In one instant they’ll have a cheap game console/media player on the market that already has integrated virtually relevant video content sources, has amazing deep integration with your mobile devices, and has legions of developers experienced with their tools and platform (it’s just iOS mostly) ready to move their huge casual game environment over. The AAA titles will follow soon after.
Yes, there’s a marketing term for the people you’re describing… “Late adopters”… why should Microsoft worry about what “Late adopters” think of their NEW console. That’s why you leave the old one in the market.
Yes, again, had Microsoft provided a app store like market for the PC as WildTangent, RealNetworks and Valve (All ex-Microsoft employee founded companies) did in Seattle in the late 1990’s the PC market would be alive and well as it STILL IS in those app markets. Anti-piracy is indeed one of the most valuable features that an app market provides. Without that security provided by the OS, the PC game market died and the Apple store thrived.
I agree with you, Apple already launched the hit next generation console, Sony, Microsoft and Nintendo just haven’t gotten the message yet.
You’re classifying of pretty much the whole of Canada, Australia, and large parts of Europe as late adopters? Why?
Yup, there are millions of folks around there world who bought their first XBOX last year. When you design a next generation console you have to plan for it to have a 5-7 year lifecycle because your old console is going to be in the market, cheap and loaded with content for 2-3 years after the launch of your new console. The new console is going to be expensive, short on content and usually subject to manufacturing shortages. Not only do you not WANT everyone to buy it right away, you can’t support everyone buying it. You want to design it to “peak” about 3 years into its product cycle to keep your total revenue consistent with the gradual proportionate decline in old console sales and to give you time to migrate your existing audience. The only people you care about year one is the biggest richest gadget nerds buying it for one hot game. Especially if you’re Microsoft and there are better than even odds that you’ll end up recalling most of the first consoles you sell initially at your own expense…
I don’t disagree with the principle. I’m just not sure you can say the only markets you care about at the beginning are big US cities on the west & east coast, Scandinavia, and S.Korea / Japan. Since those are the only places right now where you can count on having fairly fast and cheap internet pipes. That’s a very big limitation for a new console.
It also seems to imply that in the next 3 years all the obstacles you have in the rest of world will be overcome, which is a very risky statement given they’re outside of your control and you need those markets. Given the current push from the pipe owners around the world for tighter bandwidth caps and efforts to get content providers to give them their pound of flesh, I don’t expect that to be resolved in that short of a time frame.
Those markets you are worried about have 3G and some 4G bandwidth and a Blue-Ray drive is only 36Mbits/sec.. 1/3rd the speed of a 4G mobile connection. A Blue Ray disk holds 25GB of data, at 1X speed a game that size would need 11.5 minutes to load. Even over limited bandwidth I think your user experience is going to be better with more SDRAM over any connection you can get. Somehow I suspect that the users you’re worried about aren’t unhappy that their iPhones and Ipads don’t have drives. I don’t think anybody will miss the drive within 3 years.
It’s not just about speed, it’s about caps. I have a mega fast LTE connection in the US right now. With a 5GB monthly cap. That’s not even a standard DVD. Lately I’ve been exposed to a lot of data about bandwidth and caps around the world. Unless the content owners manage to pull miracles out of their butts in the next 3 years, it’s going to be longer before we can assume everyone can transfer 25GB w/o caps and fees to worry about.
Hell some 3G capable areas right now and otherwise pretty technically evolved have caps that are ~100 MB in standard plans. Which is silly, but it’s also the truth. The carriers have seen the power they can have over content companies, and have learned from lessons in the US and in other places to not even offer unlimited data as an option so they don’t get a customer base that learns to expect it. Thus in these place the 100MB cap usually means, 100MB, but YouTube is free (if Google pays), and FB is free (if FB pays), and Netflix can gtfo (since Netflix will never pay), etc.
It’s going to be long hard fight between the likes of Google/Netflix/Amazon/FB vs the Verizons/AT&Ts of the world.
I think the consumers wanting the content will win.
It costs $5 bucks to manufacture a game DVD, Walmart takes 30% of the retail price. $20 buys a LOT of bandwidth.
Based on today’s reveal, I suspect you’re comfortable with your speculations!
WOW… it was worse than I imagined… apparently I was being overly generous… I’m stunned…
As far as bandwidth caps, I should say I’m lucky, over here in the sticks of Eastern Washington with Charter, we stream 12+ GBs a night, through the various online services, my wife on one tv via roku and also using her nexus, me through my ps3 in another room… after tax $54.99 a month. For me, I don’t know that I get any benefit going to Xbox and having to pay yearly for Live when I get online for free through the PS3.
I do not agree with the bluray drive.
people like to buy games as gifts and bug sales go on during christmas the people giving the game away are not going to feel that great about giving a point code card it’s looks as lazy as giftcards. I am sure grandmas are going to love paying $60 for a paper card to download halo and giving it to some family memember if they even know what they are buying.
What are they going to do at holiday time buy more hardware they already sold the damn systems to people what else are they going to be selling? it will not fly that is why all the big games come out around christmas and blac friday.
Also some people like to collect disc and boxes and or like disc.
Just because you do not use it does not mean other people do not. disc and digital should coexist.
and really all I get from people for gifts at xmas is game and that is how it is always it does feel dumb to give and get xbox live points cards even to me and i know what they are and how it goes. points now i can go download the game how boring….
Not including disc would effectly help kill the holiday game biz that has been around since it all started. hardware does not come out every year no kid is going to scream over a points card either.
Oh and I just like to own the disc back when they worked in every xbox anyway but microsoft is screwing that over on a phone it makes NO sense for game carts and they ship god damn phones every year and people dump the things in the trash and get new ones every year. but find out how many games are given away as gifts at holidays.. I am going to say next to zero I have never seen it happen. . So you may be stuck in a bit of a bubble your self on how people use the consoles on the whole big picture. download and disc should be working side by side.
OH but the xbox one and every thing they shown was horrible ans stupid though oh joy I can plug my cable box in and have more crap on the screen covering the video or making the movie/show smaller when I could do it all on the laptop or phone that is not that far away…..
Gifting is roughly 10% of game revenues, manufacturing, inventory costs and rev share with the retailer are 30%-40%, so even if you completely wiped out gifting, Microsoft would see a huge leap in revenue and margin by going pure digital. Fortunately I founded the worlds largest digital game publisher in the 1990’s, so I know from experience that 10%-15% of our digital revenue still came from gifting and we made another 5% selling people a cd they didn’t need if they wanted one.
How are you able to track where those boxed disc/carts have been going at retail is everybody filling out surveys where the game is going and who it is going to? I know nobody has ever ask me where the game I am buying is going for the entire history of my life buying games not once anywhere have I ever been asked “are you giving this game away or keeping it for you?” it don’t happen and nobody logs it in a database or on paper. I have never seen or herd anybody else in front of me in line be asked either,
(I have been aged checked and asked for ID though and that is pretty dumb since I was never aged checked when I was under 18-17 because nobody cared back then and the rating system was new.. another story)”
How do you know between some dude guy picking up the new mario or whatever game for him self just because it is one of the new hot game that happens to ship during the holiday season so he wants to play it right have it now it’s new and some other dude picking one up for his kid because he asked for it? Just because that is when most of the big games ship for most of game history has been the holiday and fall seasons.
I know tons of people that pick up games in nov and shove them away until it is time then wrap them up and give them. (and some are evil and open them and play them a bit because they wanted to try it, then give them) weather they want the game you give them is a another matter I am going to say most people drop hints and get the right game or they buy 2 because they want to play it online with somebody or whatever or you know he loves that game series and most of them are right. ,,,The ones you get from grandmas maybe not a game people would want…
There are professional research firms like pc data, neilson, Jupiter and IDG that run regular studies on these issues and compile reports that they sell to the industry for thousands of dollars. They use multiple sampling techniques to figure it out within a reasonable margin of error. It’s much easier to measure online of course.