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Opinion – Xbox One's Uphill Race To Catch PlayStation 4

If Microsoft wants the Xbox One to have a larger worldwide install base than the PlayStation 4, it will face a harder road than it did in the last generation.

Microsoft's Xbox 360 was the defining console of the last generation in North America. A year head start, lower initial price point, and games like Gears of War, Halo, and Call of Duty (which thrived on 360 and its excellent Xbox Live online service) helped it gain a healthy lead in sales over Sony in the U.S. - a lead it never relinquished. Lifetime sales* of the Xbox 360 in North America currently stand at 46.36 million to PlayStation 3's 28.38 million. That's an impressive gap, and it speaks to Microsoft's great marketing, better third-party software sales, comprehensive online service, and aggressive price-cutting throughout the generation. For this reason, I think many U.S. gamers perceive that the generation was an overwhelming victory for Microsoft.

However, the worldwide numbers tell a different tale, one in which the consoles fought it out to a dead heat.

Xbox 360:

46.36 (NA)

25.23 (EU)

1.66 (JP)

7.87 (Other Territories)

81.12 (Total)

PlayStation 3:

28.38 (NA)

32.98 (EU)

9.91 (JP)

11.36 (Other Territories)

82.63 (Total)

When European, Japanese, and other worldwide territories' sales are added in, the Xbox 360 and PlayStation 3 are essentially tied. These particular projections show Sony with a slight lead, but given that sales numbers are a moving target and both systems are still selling, I'm going to call it a draw.

Sony makes up the ground it lost in North America to Microsoft with strong leads in Europe and other worldwide territories, and a dominating margin of victory in Japan.

These margins are inconvenient truths for Microsoft, and seem unlikely to change in this generation. For one, Microsoft seems to have written off Japan. In the early days of the Xbox 360, the company genuinely tried to win over Japanese gamers with exclusive partnerships with Mistwalker (which brought the 360 the excellent JPRGs Lost Odyssey and Blue Dragon) and Capcom (Dead Rising and the Lost Planet: Extreme Condition). Despite these efforts, the console never made a dent in Japan, and in this generation Microsoft seems be far less committed to Japanese market. It's important to note that Japan has been shrinking as a console market, and PlayStation 4 has experienced sluggish sales in the country following a successful launch in February. So, it's likely that Japan might not contribute as many sales to Sony's tally as it did in the last generation - but it's also likely that Microsoft's already small market share will shrink further. Either way, Sony will eventually sell millions of PlayStation 4s in Japan, and Microsoft will be lucky to break seven-digit sales with Xbox One.

Europe and the U.K., which have also been traditional Sony strongholds, are areas in which Microsoft could conceivably do better in this generation. So far that has not been the case, with PS4 dramatically outselling Xbox One in Europe.

However, right now Sony's more advanced worldwide organization and distribution system is giving the company a huge advantage over Microsoft. PlayStation 4 is on sale in 57 countries. Microsoft only sells Xbox One in 13 countries. It intends to add 26 new territories (including Japan), but that won't happen until September of this year. That's a long time for Sony to increase its already commanding worldwide lead.

Here's a snapshot of where worldwide sales for Xbox One and PlayStation 4 stand now:

Xbox One:

2.79 (NA)

0.98 (EU)

0.00 (JP)

0.26 (Other Territories)

4.03  (Total)

PS4:

3.06 (NA)

2.36 (EU)

.47 (JP)

0.67 (Other Territories)

6.56 (Total)

Obviously, with Titanfall now out, I'd expect to see a big bump for Xbox One when the next U.S. NPD data is announced, and Sony's Infamous: Second Son will likely help propel PlayStation 4 past the 7 million mark. But, for right now, this is where we're at: with Sony enjoying a lead in consoles sold of between 2 and 3 million units on a worldwide basis.

Looking at the numbers, I don't expect Microsoft to gain much momentum from its September Japanese launch, but the other 26 territories it's adding at the same time will definitely help its worldwide reach. European sales are already improving due to Titanfall, including a 96 percent bump in the U.K. the week Titanfall launched. I expect it will continue to improve in countries like the U.K., where gaming tastes are fairly similar to those in the U.S. However, if Microsoft is to "win" this console battle, the most likely route to victory is to once again dominate in its traditional stronghold of the U.S. and Canada.

I expect Microsoft to begin to close the gap with Sony in the U.S. Titanfall was the subject of a lot of hype, and (for the most part) lived up to it. It's a fast, excellently built shooter - exactly the type of gaming fare that was the Xbox 360 audience's bread-and-butter in the last generation. Microsoft also has another Halo game in development, which we'll likely see at E3, and has recently secured the Gears of War franchise and reunited it with Rod Fergusson, who was one of the leads on the project at Epic. As before, Microsoft has broad third-party software support, and seems to be intent on paying for some high-profile exclusives like Dead Rising 3 and first dibs on Call of Duty: Ghosts DLC.

One thing Microsoft won't have is a head start. Releasing in November of 2005, the Xbox 360 enjoyed a full year on store shelves before the PlayStation 3 launched in 2006. Additionally, let's not forget that PS3's most attractive model - the version with the 60 GB hard drive, internal Wi-Fi, and HDMI port - was saddled with an exorbitant $599.99 price point. That system didn't truly hit its stride until years three and four, thanks in large part to the more affordable PS3 Slim model.

Sony went to great lengths to make sure PlayStation 4 didn't repeat these mistakes. The system launched a week before Xbox One - and at a lower price point. So far, this strategy has been successful. By the looks of it, Microsoft is already flirting with a price drop, as it has already done a "temporary" discount and bundling of Xbox One with Titanfall at retail.

A price drop - perhaps accomplished by ditching the packed-in Kinect sensor bar to save costs - would definitely help. Better software and marketing will help as well. However, Xbox One is already behind and it won't be enough to just catch up to Sony's month-to-month sales; Xbox One will have to outsell PlayStation 4 at retail for an extended length of time in America to have any hope of overtaking the lead - and that's not factoring in the disadvantages it has in the global market. Microsoft's game plan moving forward should be simple: drop price, fight Sony to a draw in the big European territories, and hope that you can gain some serious momentum in North America. It's not impossible, but it won't be easy.

Thankfully, it's not an all-or-nothing proposition. This last generation disproved the notion that there is only room for one dominant game console. When you add Nintendo's best-selling Wii to the mix, there were three consoles that were solidly successful for their manufacturers. That's a good thing for both gamers and the game industry.


*Note on sales numbers: I want to talk about numbers. I'm going to be referencing numbers from the last generation (Xbox 360, PS3) and the current generation (Xbox One, PS4) frequently in this article. There's no industry-sanctioned site that gives out numbers (this is why companies pay thousands of dollars to companies like NPD for analytics). However, the site VGChartz.com does publish numbers, based on projections and information gleaned from investor calls, press releases, and financial statements. Many people question the validity of VGChartz, so I double-checked the numbers with Michael Pachter, the high-profile analyst from Wedbush Securities. As someone who has access to all the numbers and makes his living analyzing them, Pachter looked at the VGChartz overall console sales data and told me that it was accurate for the last generation.

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