The Xbox One launched today but instead of focusing on early sales, here’s the question everyone should be asking: Can Microsoft repeat the staggering success of the original Nintendo Wii? If it does, Microsoft’s approach—to become the center of the modern digital living room—will look genius in retrospect.
Microsoft hasn’t been shy about its ambitions for the Xbox One (XB1). It wants consumers to look at the console not as merely as a videogame system but rather as an entertainment portal. The XB1 plugs directly into home cable boxes and allows users to watch television and play games simultaneously. The console can also stream NFL highlights, manage Xbox Fitness workouts, and Skype chat. It’s designed to be everything to everyone.
Last fall, Nintendo released the Wii U hoping to accomplish the same thing.
But the Wii U suffered a disappointing launch, failing outright to repeat the successes of its predecessor, the original Wii. From April to October 2013, just 460,000 Wii U consoles were sold. In the same period, the original Wii sold 7.3 million units. The older generation console is rightly acclaimed for its wide appeal—almost anyone could just pick up a controller and play Wii tennis, even if they’d never played a videogame before in their lives—and its 100 million cumulative unit sales. The Wii’s success changed the way that the industry looked at the consumer. Instead of looking to sell videogames to gamers it suddenly became an option to sell entertainment experiences to everyone.
That’s what the XB1 is supposed to do. It will differentiate itself from the Wii family by taking advantage of the well-established Microsoft brand, using a strategy called “One Microsoft.” The XB1 runs a version of Windows, and officials have said they look at the console as a “stage for all of Microsoft.” The XB1 could create a profitable feedback loop through its plan to stream content. In order to stream Netflix or Hulu through the console, users must subscribe to the Xbox Live network for $60/year. That’s a revenue stream that neither Nintendo nor Sony had with their Netflix-streaming apps, and it could provide a crucial advantage for the company.
As industry analyst P.J. McNealy told USA Today, “Microsoft is hijacking the (pay TV) stream with the intent of a win-win for Microsoft and the consumer.”
If Microsoft attracts enough viewers, rather than gamers, its approach could be a winning one.