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Xbox Looks for Do-Over With Gamers as Sales Trail Sony’s

Xbox One
Visitors play on Xbox One video games consoles during the Microsoft Corp. midnight launch event in Los Angeles. Photographer: Patrick T. Fallon/Bloomberg

For Microsoft Corp., this year’s Electronic Entertainment Expo, the video-game industry’s annual conference, looks like a do-over.

Missteps over the past 12 months, from pricing the new Xbox One $100 above Sony Corp.’s PlayStation 4 to a rollout that gamers said slighted them, let the $399 PS4 grab the early lead. With Microsoft and its game unit under new leaders, the Redmond, Washington-based company is pivoting back to attract loyal players with fresh titles and a lower-priced model that goes on sale June 9, the day the company makes its E3 presentation in Los Angeles.

“There’s absolutely a renewed focus on the gamer and our fans for Xbox that have prioritized gaming,” Yusuf Mehdi, vice president for Xbox marketing and strategy, said in an interview. “We are very much coming to this E3 with a great story to share and tell.”

In addition to selling at least 2 million fewer players than Sony, Microsoft has lost $1 billion in future sales, based on how much gamers spend over the life of a console, according to Michael Pachter, a Wedbush Securities analyst who predicts the company will bounce back. Further market-share losses would give Sony greater influence with the companies that create the most-popular games and applications.

That isn’t happening yet.

For this holiday season, there are no huge exclusives for either Microsoft or Tokyo-based Sony. Both companies will be relying heavily on titles available for both consoles, with each having secured some unique content.

Sunset Overdrive

For Xbox One, that game is Activision Blizzard Inc.’s Call of Duty: Advanced Warfare, which goes on sale Nov. 4. Microsoft gets first access to downloadable content and map packs. Sony, meanwhile, will get exclusive playable content for the game Destiny, the first new franchise from Bungie Inc., the studio that made the top-selling Halo games for Xbox.

Microsoft, which plans a media briefing at 9 a.m. local time, also will have Sunset Overdrive only on Xbox for the holidays. A shooting game with wacky weapons like an exploding teddy bear, it’s from the studio that used to make Ratchet & Clank, only for PlayStation.

Sony’s E3 press conference that afternoon will focus on some of the company’s core games, including the Gran Turismo racing title, and new products such as the action-adventure knights tale The Order: 1886.

To differentiate itself from Microsoft, Sony also will probably offer new demonstrations of Project Morpheus, a virtual reality headset unveiled in March to compete with Oculus VR’s Rift, and its PlayStation Now game-download service.


Microsoft, which outsold Sony in the U.S. with the previous generation of consoles, has tried to market Xbox One as a premium, all-in-one entertainment product, a strategy that hasn’t delivered industry leading sales so far.

“The bet that the broader entertainment consumer would buy the console this early in the cycle hasn’t panned out,” said Brian Blau, an analyst at Gartner Inc. The serious gamer is “the person who is going to buy the console today.”

The focus on TV, music and movies put off some gamers who fretted they were no longer the priority. The company tried to impose curbs on trading games and set requirements that the device be connected to the Internet once a day, two demands that were rescinded before the machine’s debut.

Microsoft also never succeeded in convincing gamers that the Kinect motion sensor justified the $499 price relative to Sony’s PlayStation 4. Even a complete exclusive, a rarity these days, on the hottest game of the spring, Titanfall, couldn’t vault Xbox One above PlayStation 4 in sales.

Not Kinecting

Finally, with shoppers worldwide snapping up more than 7 million PlayStation 4 consoles and Microsoft shipping 5 million Xbox Ones into stores, including some still unsold, the company announced last month it would sell a Kinect-less version of Xbox One matching Sony’s $399 price.

With the price cut, Xbox One finally can go head to head with PlayStation 4, according to Pachter, who projects the Kinect-free version will account for 90 percent of Xbox sales.

With neither console likely to offer a blockbuster exclusive this Christmas -- Microsoft’s next Halo doesn’t come out until 2015 -- Xbox executives will have to find a way to differentiate their product from Sony’s.

One month after taking over in February as Microsoft’s new chief executive officer, Satya Nadella named long-time games executive Phil Spencer to head Xbox, a signal that core players are back in the spotlight for the division.

Long Road

With a renewed focus on gamers, Mehdi sees an opportunity to close the gap with Sony, especially with the new console generation not even a year old.

The Xbox One, while trailing Sony’s player, is still outselling its predecessor, the Xbox 360, at this stage, and that’s despite the fact it’s available in fewer countries.

“What we’ve seen in the past is that early in the generation most of the people that buy consoles early end up buying both,” Mehdi said. Sales for the two companies so far represent “probably 5 percent of the total number of units that wind up getting sold.”

Now that the prices are the same, Xbox’s advantage among gamers who want to engage in multiplayer contests should help, according to Pachter.

“The software lineup is pretty consistent across both platforms,” said Pachter. “Once price is neutralized, people will choose based on what their friends have, because they want to play online multiplayer and the multiplayer community is bigger on Xbox. So Microsoft should have an advantage over the long term.”

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