Analysis: Why Microsoft Won E3 2008

With E3 winding down and with all of the major announcements already made, the gaming press inevitably turns its attention to scrutinizing the performances of each of the major hardware makers. This year’s show was definitely more muted than previous events, with far fewer bombshell announcements than we are used to seeing from the major developers and manufacturers. Nintendo, Sony and Microsoft were playing it close to the chest this year, announcing a small number of new products and perhaps waiting to see what the competition was going to do.

Despite the relatively uneventful showing this year, we feel that there was one company whose performance outshined its competitors. Despite having a small number of new exclusive titles to announce, Microsoft literally stole the show this year, convincing both gamers and the mainstream press that the Redmond software giant is a force to be reckoned with in both the gaming and home entertainment space. Even the New York Times chimed in to declare Microsoft the winner, declaring that the Sony and Nintendo shows failed to provide a real “wow” moment.

Microsoft wants to get into your living room

With almost no exclusive titles to speak of, and with high-profile projects like Alan Wake nowhere in site, how is it that Microsoft still came away as the big winner this year? It’s because unlike competitors Sony and Nintendo, Microsoft was able to broaden the appeal of their gaming hardware, rather than narrow it. While Nintendo and Sony were chasing the ultra-casual and super-hardcore gaming demographics, Microsoft delivered a package that can broadly appeal to all types of gamers.

First was the announcement that Microsoft has extended its partnership with DVD rental company Netflix to offer digital downloads through the Xbox dashboard. While this news underwhelmed some who pointed out that it is already possible to download and stream movies through the Xbox 360 using a Vista-enabled PC, the move nevertheless solidifies Microsoft’s presence in the living room. Netflix is a strong, recognizable brand, and will help to bring familiarity and legitimacy to digital downloads at a time when many consumers are still largely unconvinced. We predict that Microsoft will produce stronger rental numbers than Sony will with their similarly-positioned proprietary system.

Then, of course, there was the major announcement that the Sony flagship series Final Fantasy is headed to the 360. While the loss of one major exclusive title is hardly enough to significantly decrease sales of the PS3 console, the move delivered a strong psychological blow to the company and long term brand loyalists. If Final Fantasy can be ported so easily to the 360, many observers wondered, is Metal Gear Solid 4 next? Neither Sony nor Konami had a firm answer for that question, but the Square Enix decision makes it easier to imagine that we may see an appearance by Snake on the 360 hardware at some point during the current generation.

While rival console maker Sony has promised a great deal of future potential with their ambitious Home project, Microsoft has managed to actually demonstrate a viable new dashboard that looks superb. Better still, the new changes will be ready by September, long before we expect to see Home offered to the public. The new design doesn’t just look cool: it adds new features like custom avatars, “party” mode for viewing movies (we can’t wait to try this out for ourselves) and avatar integration with XNA games. After the lackluster deployment of new firmware update and an ambiguous release window for Home, Sony clearly has some catching up to do in the interface department.

Finally, Don Mattick made it clear during the company’s press event that Microsoft is taking steps to target so-called casual gamers with lighter, more family-oriented games. A whole bunch of announcements followed: You’re in the Movies, Viva Pinata 2, Banjo and Kazooie 2, and Lips all look like sure-fire hits with the more casual crowd. Heck, with such a weak showing by Nintendo this year, it wouldn’t be surprising if some curious platforming fans pick up Banjo and Kazooie just to see what all the fuss is about.

With the oldest console of the bunch, this was Microsoft’s conference to lose. That they were able to surprise everyone and do exactly the opposite is a testament to the strategic vision of the folks in charge of the games division. Love them or hate them, nobody can deny that Microsoft had a very strong presence at E3 this year.