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Forget about Console Sales; Look at total Revenue Gained

I read Paul Tassi’s article on Forbes today titled “If Xbox One Doesn’t Gain Ground on PS4 This Fall, It Never Will”.

Let me preface one thing: Paul Tassi is one of the most accurate writers with regards to his perspective in the gaming industry. But it is precisely my high respect for him that induces me to write a blog post disagreeing with one of his perspectives that clash with mine.

Tassi’s article makes the point that games will win determine which console will sell more. Like a list of weapons laying on the table between two opponents, he gives you the list of games between the Xbox One and PS4, believing that this particular line up represents the best chance Microsoft has – from now until the end of 2015 – to gain ground on the PS4. Though to be fair, he uses the words “may” in the following sentence:

It may be the best chance it ever has.

Words like “may” are modal verbs used to prevent someone from the wrath of having the wrong prediction. What I like to do is the opposite. Like a poker game, I’ll make the bet, call what I think to be true, and if I’m wrong, I re-assess. So in this blog posts, I’m going to state what I predict will happen and why I think it’s wrong to assume that this is Microsoft’s last chance to catch up to Sony.

Tassi correctly lists several reasons why this is Microsoft’s perfect time to strike at Sony. All of the things he lists, like backwards compatibility and Windows 10 being introduced into the Xbox One ecosystem, are all relevant. The problem is that his article makes one feel as though Microsoft is pigeon holed into bringing innovation to the Xbox One only during the timeframe before the holiday season. (or, more specifically, before this 2015 holiday season).

I disagree with the assertion that Microsoft has pulled out its biggest “gaming guns” out yet.

Our Amazement

I have never seen so many updates hit a console in gaming history. I have never seen a console – which had already been out on the market and whereby the hardware could not be tweaked “in person” – receive so many upgrades and features remotely after its initial release. We should be amazed at how much “peeling of the onion” is occurring as we see, over time, new iterations in the Xbox One take shape. There is now a striking reality taking place; namely, that our surprise to this year’s tsunami of updates has us believing that it is impossible that further updates in the future would usurp the power of novelty for current ones. This line of thinking is natural, but it is more a testament to Microsoft’s level of progress. Microsoft have us a wave of new things. We now believe the rest of the console wars will take place on the battlefield called “who has better games”.

Games Sell Consoles

It is the natural rule of thumb that if a console has better games for its system, the more that console sells. Sony had a better launch. Just imagine two rockets taking off at the same time. Sony pushed out the best thrust ever; it had stronger hardware at launch – and it always will. Now think of Microsoft like a rocket, but a “transformer rocket”. Imagine it takes off slower, but during flight, it starts to transform into something totally different than what it was. Think of the Microsoft console as the more mysterious console (Esram, cloud based rendering of games, Direcx12, backwards compatability, Windows 10 gaming ecosystem) and you can see why the analogy makes sense. At the beginning of this evolution, people will still be incredulous that more is to come. This causes Sony to sell more units than the Xbox One. As of July 30th – you can see how far PS4 has sold over the Xbox One.

Consoles and Games Aren’t the Only Things to Sell

The problem I have with Tassi’s argument is that he creates the vision that console wars are only about selling the consoles. Is this console war really about who can push more systems?

Or maybe, (as I believe) it has more to do with creating a platform where users of any Windows 10 device can take part of the Xbox gaming ecosystem; where microtransactions abound and advertisements are strategically placed so as to not bug the user but which allow companies a new way to reach customers. Does this revenue stream have existence on planet Sony? I think not.

Even if we took these advancements out of the picture, we still haven’t hit the plateau of Direcx12, cloud rendering, and Esram – all aspects of the Xbox One which are not even close to fruition.

If we are amazed that Microsoft has pushed out so many upgrades, there is no reason to expect this to stop. The Microsoft gaming ecosystem is that of a VDI (virtual desktop interface) where applications and software rule the world. Microsoft understood that the next generation of gaming would need to wrap its head around cloud technology. Sony has not done this and will pay for it in the end.

So when I say that you can expect more updates from the Xbox One, I should re-state this:

You can expect more updates for the entire Windows 10 gaming ecosystem. And you can expect that ecosystem to generate far more profit than whatever profit Sony would make by keeping the lead in console sales – if that even continues to occur.

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