Impact of Xbox Changes

Microsoft announced a couple of big changes this week. First, that the Xbox One would soon be sold in a version that does not include the Kinect, and second, that an Xbox Live Gold subscription would no longer be needed to use many of the applications that currently require one, such as HBO Go and Netflix. What does it all mean?

The Kinect-free Xbox One is a huge pivot for Microsoft. It seemed after the release (and moderate success) of the Kinect on Xbox 360, that not only would Kinect be a part of Xbox One, but that it would be an integral one. Unfortunately the same problem from the 360 applies to the One, some 7 months into production, the Kinect has yet to provide enough of a home run to matter in terms of games. Microsoft is falling behind Sony very quickly, and since a general price cut is probably not feasible at this point, the next best option is to remove an expensive component and offer it cheaper.

The general response has been “Microsoft just screwed Kinect developers”, but the real question is, do those exist? Sure there have been fitness and dance titles, similar to what was offered on the 360, but there still has not been that breakthrough for more traditional games that has made people want to use their Kinect more. At the moment it’s mostly a novelty along the lines of the Nintendo Wii.

That’s not to say it doesn’t add some value. The camera can be used to automatically recognize and login a player. Voice commands would not work without it, and those are some of the coolest parts of the Xbox One media viewing experience. Future improvements on these features will likely be limited now that non-Kinect systems will start dominating the landscape.

It’s entirely possible that in two years the Kinect will be something just original adopters have, and is a novelty that serves little purpose. It is not a flop, in either incarnation, just something that struggled to gain momentum.

The other decision, to stop requiring Xbox Live Gold for so many apps is an interesting one. It has likely been hard for Microsoft to sell the Xbox Live One as a media center to non-gamers because of the attached $60/year (or so) cost of Xbox Live Gold. For those who don’t game, there is literally no reason to require Gold. Most of the services, like Netflix, HBO Go and Amazon Video, already come with their own costs. People paying $450 for a One, who aren’t gamers, could just go buy a Roku, Chromecast and Apple TV all total for have the price of an Xbox One.

This decision probably won’t affect Microsoft’s bottom line much. The number of non-gamers who have Gold is probably rather low. And this potentially opens them up to selling more consoles, and therefore getting more people into their ecosystem. This seems like a total no-brainer really. And with the lackluster lineup of games to this point1 Microsoft probably sees a need to push the media center angle a lot more. This will make that much easier.

These two moves really demonstrate a certain level of desperateness for Microsoft though. After massive amounts of backpedaling last year, things still seem rocky. These two moves seem like the sports equivalent of “win now” while giving up a ton of future prospects. The only silver lining is that Sony proved you can lose a generation war and make a comeback, but the Xbox One, for now, is in trouble.

  1. It seems surprisingly bad 7+ months in to see how crappy the game landscape it []