Microsoft in 2006: Hopes and Expectations

While January has been a pretty depressing time to be in the video games industry, with the release schedule sending all but the most desperate into hibernation, it won’t be like that all year. We’ve got eleven more months left in 2006, and all indicators point towards it being one of the most exciting in recent years. For Microsoft, 2006 is the year they want to push forward, hopefully becoming more than the middleman in the industry – of course, things won’t go exactly to plan. We take a look at our hopes and expectations for Microsoft in 2006.

Hopes

February sees the games industry open its eyes after a fairly extended Christmas break. While new releases are still thin on the ground, Sega’s Full Auto is the first post launch title to hit the Xbox 360. Memories of the poor demo are cast aside, with the exhilarating game becoming a surprise hit. EA, fresh from the success of its Fight Night Round 3 Marketplace demo, release downloadable demos for Burnout Revenge and Battlefield 2: Modern Combat.

If February was an appetizer, March through to April is the main course, with quality new releases finally showing what the Xbox 360 is capable of. Leading the pack is Ubisoft’s Ghost Recon Advanced Warfighter, but EA’s triple whammy of Fight Night Round 3, Burnout Revenge and Battlefield 2: Modern Combat make March an expensive month for 360 owners. MotoGP 2006 gives racing sim fans something to cheer about, while the long delayed Elder Scrolls: Oblivion finally hits store shelves, amazingly living up to the hype.

E3 isn’t until May, but new media hits the internet a few weeks prior, with new Gears of War footage throwing posters on popular gaming forums into a frenzy. The opening E3 conferences are hard for Microsoft, with Sony revealing the US PlayStation 3 launch line-up and Nintendo finally shedding more light on the Revolution, but appearances from Halo, MechAssault, Gears of Wars, Fable 2, Mass Effect, Too Human, Banjo and Killer Instinct more than make up for a lack of new hardware. Xbox Live Marketplace demos for a few major games give the general public a taste of E3 from their homes.

On the show floor Xbox 360 games steal the show, with big titles from every big publisher. While the Revolution is winning fans with its controller, the first playable PlayStation 3 titles echo the 360’s appearance at E3 2005. The best Xbox 360 games on show wipe the floor with what is being shown running on Sony’s new system. Microsoft also make a number of new pricing announcements, with the biggest being price cuts to Xbox 360 software and hardware, plus a new Xbox Live subscription that includes unlimited Marketplace downloads.

Price cuts spark a huge increase in sales for the Xbox 360 in the months leading up to the PlayStation 3’s launch in late 2006 – a console that is still priceless after no announcement was made at E3. A backwards compatibility update for the Xbox 360 is released in late June that enables the console run 95% of Xbox games flawlessly. Microsoft promise that eventually all Xbox games will run, and run well, on the Xbox 360.

The last quarter of 2006 is big business for Microsoft. While the PlayStation 3 has launched in Japan and is hitting North America in October, the European release is announced for March 2007. Sales of the Xbox 360 were already strong in Europe, but Sony’s news, combined with the Revolution’s December 2006 arrival, gives Microsoft the next-gen console market to itself for the best part of the holiday buying season in Europe. With stock shortages a distant memory, consoles fly of the shelves, and the HD DVD add-on doesn’t sell too badly either, making the console a very affordable, well featured HD DVD movie player.

Expectations

Shortages, shortages, shortages. Three months after the Xbox 360 launched and retailers still can’t get hold of enough stock to meet demand, with new units leaving stores before the shop assistants have been able to make a fancy shop-front display. Things improve slightly in March, but considering the number of quality releases that month, stock isn’t replenished nearly quickly enough. It’s not until April that Xbox 360s are readily available to buy in every store across the world (released territories).

Good news in theory, but April sees a few E3 rumours floating about, particularly about the Revolution and the PlayStation 3. Launch games, launch prices and release dates are all thrown about, and the hype eats into potential Xbox 360 sales. Sales are solid, but far from spectacular, with would-be buyers holding off to see what Nintendo and Sony have to say at the upcoming industry event.

E3 arrives and simply can’t be won by Microsoft, not in terms of wow factor anyway. Sony hypes the PlayStation 3 up beyond anything that has gone before it and, despite most of their pre-E3 conference videos being CG, enter the show proper with a real buzz. Nintendo wow the crowd at its conference for all the right reasons, with the Revolution looking truly innovative and cheap – launching late 2006 at under £150. Microsoft has to get by with game announcements, and while new games from Rare, Bioware and Lionhead look superb, Halo 3 is a no show, putting a downer on an otherwise strong conference.

Sadly for Microsoft the negative vibe surrounding the lack of Halo media casts a shadow over the strong games on the show floor. Aside from one or two PlayStation 3 games, the majority of Xbox 360 titles look far superior. Only the Revolution can match the quality on show, with a great mix of titles making good use of the new controller, but Microsoft’s E3 is seen as disappointing by a large proportion of the media desperate for Halo 3. Rumours circulating on internet forums about a load of E3 demos appearing on Xbox live Marketplace prove to be totally false, with no new demos in sight. This results in internet speculation over what games Microsoft will have ready for the busy Christmas period, with the most extreme corners stating the Xbox 360 is dead.

Post E3 sales for the Xbox 360 fail to ignite in the way Microsoft had anticipated, forcing a premature price cut to the hardware. Strong hardware sales follow, but the game attach rate falls considerably. Numerous updates released throughout the year have solved some of the problems with backwards compatibility, but in August the final update is made. It’s not all that was hoped for, though, leaving around 10% of titles unplayable and a number of big games still suffer from sluggish performance.

Microsoft’s line-up for the last quarter of 2006 is awesome, despite doubts and Master Chief being notable in his absence. Gears of War becomes the fastest selling game in the console’s short history and Rare’s new titles go down well with fans and critics alike, ending the abuse the company had endured for the months leading up to the release of their new games. A few weeks prior to the release of the PlayStation 3 and Nintendo Revolution, Microsoft cuts the price of Xbox 360 software, ensuring strong sales despite the launch of two new consoles in the space of one month.

The Xbox 360 HD DVD add-on is launched later than expect, arriving in early December. At £130 it’s slightly more expensive than had been hoped, but together with a cut price console, makes a very cheap HD DVD movie player. Sales aren’t good though, mainly due to the general public’s misunderstanding of the drive’s use and Blu-Ray hype coming from Sony.

Summary

Whatever happens, 2006 should be a great year, packed with new game announcements and hardware launches. With Halo strongly rumoured to miss 2006, Microsoft’s success will rest on the strength of their other exclusives, an area that is still seen as the original Xbox’s major weakness. Only time will tell what the future holds for Microsoft.

See our Hopes and Expectations for Nintendo