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As the voice of authority, being that I actually run a game store that sells and rents games, let's take a step back and look at what has to realistically happen for the Xbox to actually sell, and what has happened before.
Step back to 1994. Sony introduces the PlayStation. In 14 months, it becomes the top selling console in terms of software sales, effectively killing the SNES and Genesis in an unprecedented amount of time. This abrupt killing claimed the lives of many publishers who were stuck with high levels of cartridge inventory when the 16-bit market bottomed out.
How did this happen? Primarily, perceived value of product. PlayStation games were selling for a lot less than 16-bit games, and they had the whole 3D thing on the go. Wipeout was awe inspiring. The market basically said "no way I'm paying that much for a cartridge game when the new PlayStation stuff costs less."
Second, developers abandoned Nintendo and Sega in droves because, quite frankly, they were Nazi's in the most literal sense. They would steal ideas from developers, sell their own games for less than their developers could, cancel third party games in mid stride if they so chose to, and basically conspired against them. They were not liked in the slightest.
Peter Molyneux of Bullfrog fame said it best. "Sony was the first company anyone actually wanted to work with." Sony was actually fair, low royalties, very good development library tools, co-branded advertising, and Sony wouldn't cheat by underselling their own games for less.
The mass exodus to Sony was huge. Everyone and their dog began making PSX games. Nintendo and Sega's response? To get more ruthless with their ideals. "Deal with us only, or suffer!" Well, that was it. The developers weren't coming back. In 1996, so many people wanted to make PSX games that Sony limited the market to 150 titles that year as the installed base wasn't that high and they wanted everyone to make money. (oddly enough, the really bad games that didn't make the cut ended up on the Saturn, which explains the exceptionally bad games for the Saturn that year. Plus, it damaged the image that Saturn had too as all the "exclusive" games on it really bit.)
Fast forward to 1997. Final Fantasy VII comes out. And the advertising blitz for that cemented the PlayStation to eternity and beyond. For the time, the game was so pretty nothing compared.
Now. Just ahead to 1999. Sega introduces the Dreamcast to the North American market, and does fairly impressive numbers. Sold 300,000 consoles in 3 days, plus something like 2.5 games on average per console.
Unfortunately, this wasn't due to the console and games being good, but rather it was the first new console to be introduced in 3 years. This was it since the 64 came out.
Now, the DC was pretty. Gosh darn it was it pretty. Soul Caliber was the new measuring stick. However, the DC wasn't popular. The controllers sucked. My god, they were horrendous. If you like the controllers, you are VERY much in the minority. Next up, the games were the most fragile games ever invented. Unlike PSX games that are extremely durable, DC games are uselessly fragile. And this isn't even going into how most of the games played worse than a similar game on the PlayStation.
In the year 2000, I had to replace over 20% of the DC library due to games no longer working due to the foil coming off the CD. Compare that to less than 1% of the PSX wall. (and by wall, I mean wall. Some 600 games at any given time up for rent). All this when my average DC title went out less than a third the time. Basic math = 20% x 3 times = Excessively high failure rate compared to the PSX.
Despite it's stellar launch, the Dreamcast floundered in sales. Joe Average just wasn't buying.
Third, the PSX had stacks and stacks of games. Granted, the PSX couldn't look as pretty as the DC, and by the end of year 2000, the DC had some very cool games like StarLancer (which I love, BTW), no one cared. They were happy with their PSX's and cheap games, plus good news games kept coming out. And the PlayStation had good controllers. Plus, all the games on the PSX weren't appearing on the DC.
Sega, in desperation to get developer support, set up a developer minimum sales program. So if a game didn't reach a certain minimum in sales, Sega would pay them the difference. This way developers would at least port over PSX games to the DC. Even this didn't help sales.
Now, enter the PS2. The Ubber console. It's a DVD player. It's a PS2. it's a PS1. it's everything everyone wants. It did triple the dollar value of the DC on it's first day in sales, and people bought games for it in droves. For the North American launch, the average consumer bought 4.2 titles on average. Announcing the system a year in advance helped ensure everyone saved up for it.
Everyone and their dog are making games for it. It's sexy. It's powerful. It's got the killer apps. And it dominates the market in nearly every genre. And it's selling at a rate of 1.5 million units a month.
Enter the Xbox. What will it take to beat the PS2?
A lot. And it's not looking promising.
First off, consumer confidence. People know of the PlayStation brand. They associate it with good. And they all think the PS2 is pretty. Joe average consumer is going to walk into a game store and see GT3 and MGS2, and nothing on the Xbox is going to scream "I'm prettier!" Tech talk and mip mapping aside, Xbox isn't going to impress against the PS2. Same argument, Joe average isn't going to think it looks any worse, just they'll look the same.
Second, games. The PlayStation dominated the market when it came out as everyone just stopped making 16-bit games damn near overnight. There was no 16-bit market any more. If you wanted new games, you had to buy a PlayStation. Right now, the PS2 will have over 200 games available by Dec 1 of this year, compared to maybe 25 Xbox titles. Whether you walk into BlockBuster or EB or Wal-Mart, the PS2 "footprint" will be huge compared to the Xbox footprint for games. And retailers are going to push what sells. In this case, the PS2.
Third, advertising. When the PlayStation came out, Sony invented TV advertising of games year round. Prior to that, TV ads were few and far between, and it was generally only for the system at X-mas. Microsoft is going to be spending $500 million over the first 18 months of the Xbox's life. That's almost as much as what Sony will be spending on the PS2 and games. Market saturation of the media will not work. Though everyone will know of the Xbox, it's not going to drive the masses to buy one. "I can buy the new console, or a PS2. Hmm. PS2 please."
Fourth, developer support. Everyone is making PS2 games because it is the market leader. It's huge, and people are buying. Xbox support is after the fact, smaller, and most of it is a result from Microsoft's money being loaned out to developers. The game gap is huge, and will not get smaller.
Fifth. The controller on the Xbox sucks. My god. No one likes it. It's as though someone took a bet that they could make a worse controller than the Dreamcast's. Guess they won that bet. The only nice thing is that the cable in 10 feet long. Course, the PS2's is 7, so it's not nearly as spectacular compared to the Genesis with 3.
Sixth. Perceived value of the product. Now, the DC was $200 when it came out. Most people thought it wasn't worth the money. Why drop that kind of cash on a machine that only plays games? Yet, the PS2 sells by the truckload at $300. Why? Because people think it's worth the money. it's pretty, it's a DVD player, it's a PS1 and a PS2, etc, etc. It's everything they want in a console. The Xbox is a game system that is $300. When it comes out, people are going to ask "hmm... game console that's $300 and no games, or the PS2 that's a DVD player and plays everything?"
One could raise the point the Xbox can be upgraded to a DVD player for $30, but that only pisses people off. If I just spent $300 on a machine, it had damn well better play movies too.
Seventh, game cost. By the time the Xbox comes out, you will be able to buy most older PS2 titles for $25 each or less (you can do that now already on some titles), and new games will be $50. The Xbox has a higher royalty rate. So, developers have a choice. Make games on the xbox cost a bit more, or make less profit. Odds on favorite, most will go for the first. Then, as Joe Average looks at the cost of games, they'll be "hmm... PS2 games ate $25 to $50, and X-Box games at $50 to $55. Wow. PS2 please."
Eighth, installed base. By the time the Xbox comes out, the installed base will be bigger than the Nintendo 64 and the Sega Genesis were at the end of their lives. This is not some small lead. Developers will by this very virtue, make more PS2 games than Xbox games. And the system with the most games gets the most consumers.
Ninth. The ugly stick factor. While the PS2 is the premier of sexy, being a little monolith and the best controllers ever, the Xbox is ungodly huge, has the crap 80s stereo styling, and the controller bites. Paying $300 for an ugly toy is not cool.
Tenth. Developer faith. Developers believe the PS2 will win the war. And as such, are making more PS2 games now. Even if the Xbox absolutely rocked the peep show at launch, it wouldn't matter as it would take over a year for the software market to turn around so that Xbox titles were outnumbering the PS2 titles. Developers go where they feel the consumers are going to be, and consumers go where the games are. Period end.
Wow. That's a whole lot of hurdles the Xbox has to overcome, and simply can't. The Dreamcast had better support and looked a lot better than the PS1, plus it cost less than the Xbox and was backed by a large campaign that was equal in size to what MS will be spending in the first few months, and it died. Joe Average will not buy an Xbox because there is no reason too as the PS2 is kicking ass. Plus, it looked nicer with it's small case design.
Now, not all is doom and gloom for the Xbox. It's got two things going for it. One, 64MB of RAM. In theory, they could make a much more detailed world and have more things moving about on screen at once.
Unfortunately, it's a difference no one is going to see unless they are told about it.
Second, built in networking. Now, this is nice. However, Sony has disproved the myth that you can't sell add-ons. Look at the Dualshock controller and memory card. Both add-ons that "would never sell enough to be supported as they weren't included with the system." Both have a near 100% saturation.
The hard drive is a weird one. It's nice that it's built in, but it's not very big. 10GB? God help you if you decide to buy a lot of games. You'll be always having to go in and uninstall game files off your drive. At least with Sony and their 40GB drive does it right.
Fourth, some exclusive content. Sadly, none of it looks to be killer app. Halo was cool when it was first shown ages and ages ago. "look! A jeep!" and such were all very new ideas back then. Now, it's been there, done that. Assuming that Halo is a good game when it comes out, it will be just that, a good game. And most of it will be "wow. Looks like Quake 3" and "hey, I played this six months ago in a game called Red Faction."
And add to this, the Xbox comes out at the same time the MGS2 feeding frenzy will be in place. "hmm... Xbox with some games, or that MGS2 and a PS2 to play it on." Add to this the sheer number of games coming out on the PS2. To someone who already has a PS2, an Xbox represents 6 new PS2 games they could buy instead. The 6 PS2 games will win.
In the end, Joe Average consumer currently does not care about the Xbox, and come November history has proved they will not care. Some care about the Gamecube as a holdover from the N64 days, and they currently outnumber the Xbox fans. In fact, the only people to care about it are people who buy everything, people who hate Sony, and people who are on welfare who magically believe by the time the Xbox comes out, they'll be able to save up for it. Note: these same welfare people were the same ones saying they would buy a PS2 when it came out, and buying a Dreamcast the year before.
To become the market leader, you have to have a better mousetrap with better marketing, and the market leader has to give you the market. Sony has not surrendered the market, and wins by default. This console race was over before it started.
The Dreamcast was in every respect a better contender, and failed to become a sustainable machine.
UPDATE: 11/16/01
It seems this essay has once again proven to be quite popular. Rather than
edit it (and have people say I'm changing the past), I'll just add the changes
here. Please note I originally wrote the article in the spring of 2001.
First, the hard drive. In the
end, MS went with a
clean install every game as a cache. Yes, we know that now. At the time,
we didn't. Promotional material was conflicting.
Second, advertising. I should clarify
that MS with it's $500 million in spending over the first 18 months is less than
what Sony and Nintendo each spend. It should have read that Xbox ads will
not dominate, but at the very least appear almost equally as often.
And in the end, the Xbox launched. The
masses cared not. People who hated Sony and those who bought everything
ended up buying it. Most of the games were average at best.
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