Microsoft Corp is set to make a splash this week with the eagerly awaited unveiling of its new Xbox game console, eight years after the last version, as it seeks a larger share of the US$65 billion a year global computer gaming industry.
However, the small device faces some big competition from the PlayStation 4 by Sony Corp and the Wii U by Nintendo Co Ltd in a shifting market.
Gamers are gravitating to online play — suggesting the heyday of console games are over — while Microsoft wants its sleek new toy to finally cross the bridge to the mainstream and become the family’s entertainment center.
“Core gamers are very hungry for a new machine, but the difference between 2005 and now is that the stakes are so much higher,” said Ryan McCaffrey, executive editor at entertainment Web site IGN.com, harking back to Microsoft’s last Xbox release.
“The entire Xbox experiment from Microsoft was for it to be the center piece of your living room,” he said.
To that end, industry-watchers are expecting a raft of improvements from the new Xbox, when Microsoft unveils it at its Redmond, Washington-headquarters tomorrow, from closer integration with the TV and link-ups with mobile devices to access to new and even exclusive content.
Console gaming still takes the lion’s share of a growing gaming market — about 42 percent of the US$65 billion world market, according to Microsoft.
However, playing games on smartphones and tablets, or as an offshoot to online social networks, is gaining ground fast.
Console sales have been in decline for the last four years, chiefly because of aging devices, but the first of the new generation of machines has not reignited the sector.
Nintendo’s Wii U, launched in November last year, had sold only 3.45 million units through the end of March, well below the company’s initial forecast of 5.5 million. Hopes for Sony’s PS4, teased in March, are low key.
The Xbox itself is not a key financial factor for the world’s largest software maker.
Its Entertainment & Devices unit is set to break US$10 billion in sales for the first time this year, but that is half the sales of its Windows unit, and a lot less profitable, averaging less than 15 percent margin compared to 60 percent or higher for Windows or Office.
The company has more than 46 million members who subscribe to its online gaming and digital entertainment service Xbox Live, but that is still a fraction of the people who pay for its software.
However, the Xbox is still a key weapon in Microsoft’s strategic battle with Google Inc, Apple Inc, Amazon.com Inc and others for a central place in consumers’ lives.
“This [the new Xbox] is of massive importance to Microsoft. It is a piece of a larger war for the consumer that it is battling. They want to be fully integrated with the consumer whether it’s in the living room or mobile,” Digital World Research CEO P.J. McNealy said.
“Arguably the battle against both Apple and Google for dominating a consumer’s time share more so than taking on Sony and Nintendo directly,” McNealy added.
That means Microsoft will be aiming for many markets at the same time, from the core and casual gamer to the TV watcher and music fan.
To do that, industry watchers expect Microsoft to integrate the new Xbox much more closely to the TV and cable or satellite box, perhaps allowing users to change channel or buy movies with a wave of the hand through its motion-control Kinect sensor.