Microsoft Banking on Titanfall to Revive Sagging Xbox One Sales
Microsoft Corporation’s (MSFT) Xbox One, which is taking a beating at the hands of Sony Corporation’s (ADR) (SNE) PlayStation 4, is hoping to get a sales boost after the release of Titanfall
Microsoft Corporation (MSFT) introduced Titanfall, a multiplayer game that will be available on its Xbox One and also on the Xbox 360 gaming console and for the PC. This strategy is akin to competitor Sony Corporation (SNE) tying Killzone Shadow Fall to its PlayStation 4 console. Yusuf Mehdi, Chief Marketing and Strategy Officer for Microsoft’s Devices and Studios division, commented: “It’s hard to overstate the importance of Titanfall to the Xbox One release this year. For us, it’s a game changer. It’s a system seller.” According to Metacritic, the game is one of the most anticipated releases this year.
The launch of the game on the Xbox 360 has however been delayed by two weeks.
Whether or not Titanfall convinced customers into buying the more expensive Xbox One over the PS4 remains to be seen. The Xbox One is priced at $499, almost $100 higher than the PS4. Price may prove to be a major barrier in Microsoft’s efforts to outsell its console against competition. The Redmond-based tech giant will provide a bundle offer whereby the much-anticipated Titanfall, which costs $59.99, comes free with the Xbox One console. However this won’t be a boxed edition of the game, rather a download.
Analysts anticipate Titanfall will boost Xbox sales by 500,000 units following the game’s debut. Sales of the game itself are expected to touch four million units this month alone. However, Titanfall’s contribution to Xbox One sales remains questionable since the game does not really use the Kinect’s motion sensors.
Not too long ago, Microsoft lost the console battle against Sony, as the latter’s annual sales touched six million units following the PS4’s release in November 2013, surpassing Sony’s own target of 5.3 million units that was set for the end of the fiscal year ending March 31, 2014.
Global Video Game Industry
Gartner (IT) had predicted earlier that the video game market would grow to $93 billion in 2013, and it expects the market to surpass $111 billion this year. The market for video game consoles is expected to increase at a compound annual growth rate (CAGR) of 10% from 2012 to 2015. However, the sharpest growth is likely to be observed in the mobile games segment, which is expected to grow at a CAGR of 24% over the same period.
Source: Gartner (October 2013)
However, Sony is not lagging behind and has already announced plans to introduce an exclusive game title called Infamous: Second Son on March 21. The fact that the game is expected to sell only 1.5 million titles is not a concern for Sony as its reliance on the game is less than Microsoft’s reliance on Titanfall.
While mobile game developers have been enjoying profitable growth, traditional console manufacturers such as Nintendo Co., Ltd. (NTDOY) have suffered heavy losses in recent years. The market for handheld video games has been declining whereas video game consoles depict only modest growth at best. The creators of Donkey Kong and Super Mario have found themselves out of the market ever since the smartphone gaming business picked up pace.
Microsoft hopes Titanfall will be a game changer, similar to the effect that the original Halo (released in 2001) had on Xbox sales. Since January 15 of this year, when Microsoft announced the launch of Titanfall on the Xbox One, the tech giant’s stock price has been on the rise, climbing 5.9% between January 15 and March 7.
But issues like lower resolution on many titles compared to the PS4 will have to be resolved before it can be guaranteed that the game will lift Xbox One sales.