With A Dominant PS4 and A Resurgent Nintendo, What Can Microsoft Do To Maintain Its Niche In The Gaming Market?

PS4’s domination continues, and the Switch is far more successful than anyone imagined. Where does that leave Microsoft?

Posted By | On 20th, May. 2017 Under Article, Editorials | Follow This Author @Pramath1605

Until now, the Xbox has been playing second fiddle to the PlayStation 4 in the gaming market- but there has been an argument to be made that being a strong, viable second is not necessarily a poor position to be in. After all, the Xbox One still sells enough hardware and software, albeit not as much as the PS4. In the console gaming market, it is one of the two major brands. Yes, it’s not on top right now, but it’s still maintaining its own place, its own niche. What could be wrong with that? It’s not like Pepsi has to beat Coke to be able to exist in the cola market, right?

Of course, if a new soda brand were to come along and threaten Pepsi’s place – say, Dr. Pepper – then there would be some wisdom in questioning Pepsi’s long term viability in the market. Which happens to be exactly the position that Xbox finds itself in in the market right now. Against the PS4, its position right now is tenuous at best. Some high profile exclusive games have been cancelled, the PS4 has increased its lead in that area in the first five months of this year multifold, and the difference in the install base of the two systems only continues to grow with each passing month. Its hold on its own position was already slipping, due to the PS4 exerting its dominance from a PS1 like state – which still admitted the N64 as a strong second place contender – to a PS2 like state, which took no prisoners. And now, the Xbox One’s market position is under fire from another, second front.

The Nintendo Switch’s success has taken everyone by surprise. Even people who were optimistic about the system’s chances ahead of its launch, like me, didn’t expect it to be doing so well. The most interesting thing here is that the Switch is doing as well as it is right now, worldwide, and over a sustained period of two months and counting- meaning this isn’t success localized to a specific point in time or space. What is even more interesting is that the Switch right now is expensive, and lacks a fully featured games lineup. Which in turn means that when the true big hitters hit the system, and when its price drops, its sales potential will increase beyond what it is right now.

"The Nintendo Switch’s success has taken everyone by surprise."

The problem with this overall scenario is for Xbox, which stands to suffer the most from the Switch’s success. The PS4, owing to its sales lead, as well as its massive games library of exclusives and multiplatform games, has become the de facto default home console for anyone this generation, and that is not about to change. However, the Xbox One at least stood to gain some sales as a strong supplementary console- and now the Switch is edging it out of that niche. Unlike the Xbox One, which has the same value proposition as a PS4, except with less hardware power, and fewer meaningful exclusives, the Switch is an entirely unique proposition, and it buys into an entirely new, fresh, distinct ecosystem of games than the one on PS4. This means that a PS4 owner is far likelier to pick up a Switch than an Xbox One; even an Xbox One owner is very likely to pick up a Switch to supplement their Xbox. In all cases, the Switch’s sales are catch all, increasing its appeal across demographics. If the Switch keeps up its current pace of sales, its total sales will have caught up with the total sales of the Xbox One by the end of its second year on the market. After that, the Switch will have outsold the Xbox One, relegating Microsoft’s console to last place, with the Switch instead becoming the second to the PS4’s dominant first.

The problem for Microsoft, then, is that it is faced not just with a PS4 that is more dominant than ever before, but a resurgent Nintendo- and both are chipping away at its market place. Both have managed to define their places and their niches in the market, and the Xbox’s is growing ever more tenuous as a result. What, then, can Microsoft do to maintain its own place?

Microsoft itself has probably foreseen this series of developments, and it has already started to make moves to a gaming market that isn’t bound by hardware or hardware cycles. Making a continuous ecosystem across Windows 10 PCs and Xbox One is one way that Microsoft is consolidating its place in the gaming market – a gaming market in which it doesn’t need a console to sell well, or even at all, and any sales that it gets are only welcome cherries on a cake that spans an ecosystem of games across several hardware devices.

"It looks like for the time being, Microsoft is doubling down on the hardware market by returning to the identity that defined Xbox in the first place."

However, the move to a hardware agnostic market, if it happens at all, will be slow, and it looks like for the time being, Microsoft is doubling down on the hardware market by returning to the identity that defined Xbox in the first place, and that the Xbox One moved away from to its own detriment. Right now, with the Xbox Scorpio, Microsoft is introducing a high end, obscenely powerful, PC like console- which is what the Xbox and Xbox 360 were. Microsoft is undoubtedly hoping that this return to the brand’s once core identity, and this clear definition and articulation of what Xbox is about, will help it stem the tide that is turning against it, and hold its own. Whether or not that happens is, of course, something that remains to be seen.

Between Xbox Play Anywhere and the Xbox Scorpio, Microsoft has placed a stake in the ground, and is willing to make a stand to define and defend its niche and place in the gaming market, especially against the combined onslaught of the PS4 and the Nintendo Switch. But whether or not this gambit works – whether or not it is even needed (after all, sales for the PS4 may begin to slow down, or the Switch may not be able to sustain its momentum) – is something that remains to be seen. This E3 promises to be a hugely interesting one.

Note: The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to GamingBolt as an organization.

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