It was a rugged first year for Microsoft’s newest videogame console, the Xbox One, but the company finally had a November to remember, beating archrival Sony’s PS4 in several sales and user measurements. Credit goes to aggressive discounting and the halo effect of, well, Halo, the blockbuster franchise returning with a rebooted collection of old games and a new title just around the corner.
“It’s been a great year and a great time for everyone in the industry,” a Microsoft spokesperson said. “November set a new record for sales of Xbox One, and Xbox One was the best-selling console in the U.S. and U.K. Response to the holiday lineup of games on Xbox One was incredible, with Xbox One fans buying more games in November in the U.S. than any other (current-generation) platform and enjoying over 357 million hours of gameplay globally.”
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Those sales claims are based on data from industry analysts NPD and GFK ChartTrack, and they represent what must be a a welcome shift in Xbox one fortunes after Microsoft botched its launch, lost its top executive, had to scale back its initial international distribution, shut its ambitious Xbox Entertainment Studios initiative and trailed the PS4 in sales most of the year.
But big discounts in November led to big sales. Those discounts typically saw the price of a base system cut to $50 less than a PS4’s $399 price, with additional games or subscriptions to the Xbox Live online network thrown in for free. The original Xbox One cost $499, including the Kinect sensor array that was supposed to automate the system and make possible many kinds of game and media experiences. But the $100 difference in prices has proved a huge problem for Xbox One sales most of the year, so last spring Microsoft started offering a Kinect-less alternative for the same price as the PS4.
This holiday season, Microsoft get even more aggressive. Among the deals I’ve seen was a bundle that included the Xbox One console, two Assassin’s Creed games from Ubisoft, the latest Madden NFL from Electronic Arts, a stereo headset and a 12-month subscription to Xbox Live, for $499.99. Normally, that collection of hardware and software would cost $639.99.
There could be a price for Microsoft’s discounts. If it’s selling the hardware at a bigger-than-expected loss, which is likely. Game consoles almost always debut at or close to a loss, with the parent company expecting to make back the money by locking in a fan to their platform, and reaping software licensing fees and other revenue. Eventually, over the years of a console model’s life, hardware costs drop to a level where new machine sales make money too. But doing it now suggests a potential much longer horizon to profitability if those game sales don’t spark up.
Speaking of game sales, it’s important to note the other big helper for Xbox One was the arrival of new and old Halo titles. The original version of the game helped jump-start the original Xbox after it debuted in 2001. Now that original game has been remastered for the Xbox One and mashed in with three succeeding titles in what’s called the Master Chief Collection. And Halo 5 is set to arrive early in the new year. Finally, time for Microsofties to celebrate.
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