In a recent webshow episode, gaming analyst Michael Pachter makes some predictions on Microsoft’s future plans in the console gaming war.
In the most recent episode of Game Trailers‘ Bonus Round web series, renown Wedbush Securities industry analyst Michael Pachter stopped by to offer some predictions in the console gaming war.
Pachter has become well known in the gaming sphere for his apt–and sometimes bold–forecasts, more than a few of which have come to fruition.
This time around, Pachter predicts that Microsoft is going to give into popular demand and offer a more affordable Kinect-less Xbox One bundle in an effort to level the playing field against Sony’s popular PlayStation 4 console. The analyst was quoting saying that the company is on the right track with the Titanfall Xbox One bundle as well as the recent price cuts in the UK, but he feels that it’s not enough–Microsoft needs to do more to move units.
According to Pachter, the Kinect 2.0 was a brainchild of ex-Microsoft exec Don Mattrick, who believed that it would “change the world” and usher in a new age of connectivity. Unfortunately many gamers feel the Kinect is a tacked-on accessory that offers little interactivity in terms of in-game content, and the voice controls can often be counter-intuitive and clunky–if not innovative in theory.
“Kinect was Don Mattrick’s favorite child. He believed in it, he thought it was gonna change the world. It’s always been a mechanism to cross sell skype and to cross sell cable access and doing other things.”
Pachter explains that the Kinect has become “almost irrelevant” and sort of redundant because consumers already have tablets and smartphones for things like Skype video chatting, and Microsoft isn’t making a strong enough effort to capitalize fully on the gaming aspects of the peripheral.
“I think that as Microsoft developed Skype, they failed to recognize how rapidly smartphones and tablets have been adopted and I think the overlap of Xbox One households and smartphones and tablets households is probably a hundred percent.
“I think that Kinect has become almost irrelevant.
“…Skype is a really cool app, but FaceTime works. you don’t really need that Skype in your living room… It’s better if everybody is on the couch, but FaceTime works. The voice command is really cool, but you can use your tablet [instead].”
Since Mattrick isn’t at Microsoft anymore, Pachter insists that the company will eventually un-bundle the Kinect from the Xbox One perhaps as soon as 2015:
“The answer is: Don isn’t there anymore. You have a new boss over the Xbox division, who has no skin in the Kinect game, so… Sure they’re gonna unbundle. Not in 2014. They will not change the SKU that dramatically in the first full year. It’s a 2015 event.”
But would a cheaper Kinect-less Xbox One bundle be enough for Microsoft to compete with Sony? The drop in price just to even out the sales (of which Sony’s PS4 leads the charge so far) would help, of course, but Microsoft has put a lot of stake in the Kinect 2.0 including profits and tireless R&D.
Pachter asserts that even if Microsoft cut their price on a new Xbox One model, Sony could easily do the same with a revised PS4. The analyst offered the following hypothetical scenario that could possibly happen next year, complete with projections on how Microsoft will put together their Kinect-less Xbox One:
“[Similar} to the way [Microsoft] introduced the 4 GB Xbox after a couple years, they’ll bring one out and it’ll be something that looks a little dumbed down.
“I think they’ll actually pick the [Xbox One] core model and put a 2 TB hard drive in it, and then the dumbed down one will have a 500 GB hard drive and no Kinect for 400 bucks. That’s the easiest way to do the price cut.
“The problem is that if they cut the price to $400 by spring 2015, Sony goes $349 for ours! Sony right now is in a position to stay ahead of them, and this is what happened with the PS2. PS2 kept taking share by cutting price.
“I think this is a price game. I think un-bundling Kinect is the smartest way to get competitive right away.”
The host Geoff Keighley also weighed in on Microsoft’s strong suits in the console war, of which Titanfall remains a good foundation for the Redmond-based tech giant.
Titanfall itself is a great win for Microsoft, however Pachter pointed out that since the game is also being offered on PC and Xbox 360, many gamers won’t feel the need to pick up an Xbox One just to play it. The Titanfall Xbox One bundle will offer incentive to buy Microsoft’s next-gen console, but due to the fact that it’s not next-gen exclusive, Pachter affirms that it won’t be a huge leap for Microsoft in terms of sales.
The analyst goes in to offer a possible solution for Microsoft: bundling not only a free game but also a free year of Xbox LIVE with the console–but that would be forgoing a good portion of profits from the premium online service.
In any case, it’ll be interesting to see how Microsoft plans to compete with Sony’s PlayStation 4 in the next year or so, and whether or not they will heed Pachter’s advice. As Microsoft has indeed put quite a bit of investment in the Kinect sensor, we may not see it nixed from bundles any time soon, but the company does plan to include games like Forza 5 for free–of course these are download codes and not physical disc copies.
It appears that Sony is poised to stay atop the console realm for now, but this could all change when E3 2014 rolls around. Microsoft has some work to do, but given their resources, they may be able to turn the tables as time goes by.
Be sure to tune in to Game Trailers for the full episode and to hear all of Pachter’s predictions for the ongoing console battle.