Earlier today, Microsoft let the cat out of the bag on its final specifications for Project Scorpio, the new addition to the Xbox console family that's set to launch later this year. It's an impressive-looking machine, and Digital Foundry's Rich Leadbetter certainly seemed swayed by what he saw. That being said, from a market perspective there's a lot left unanswered, including price, showcase software and how the system will manage to grab the attention of anyone outside the hardcore gaming sphere. GamesIndustry.biz tracked down a number of leading games analysts to get their respective takes in the wake of Microsoft's big reveal.
The fact of the matter is, while Scorpio will still look good running games in 1080p, the big draw of owning the machine will be to play truly native 4K games. That puts the console in an even smaller subset of consumers, a niche (4K TV owners) within a niche (hardcore gamers).
"Microsoft once was going to go after a broad consumer base but now they are stuck targeting the bleeding edge of game consumers that want the highest performing hardware and are more concerned with specs than actual games," said DFC Intelligence head David Cole. "In DFC's latest report on upcoming games we noted that more and more developers are opting not to release Xbox One versions of their games this season. Project Scorpio does not give them reason to change that because it is really targeted towards core Xbox fans that are already converted. For Scorpio to succeed Microsoft somehow needs to convince non-Xbox owners to convert."
"Success lies in layering in great new AR/VR experiences while maintaining more or less perfect backwards compatibility with all other aspects of the Xbox entertainment universe"
Lewis Ward, IDC
Many people have pointed out that Scorpio would finally give Microsoft the hardware it needs (apart from Windows 10 PCs) to enter the VR/AR market. And indeed, during GDC the company already indicated that Scorpio would support mixed reality headsets from Acer and others. This could be a compelling reason for some consumers to get a Scorpio, aside from the 4K support. It's basically "catnip for techies," noted IDC research manager Lewis Ward.
"We estimate there's around 100 million UHD-ready TVs in people's homes at this point worldwide but this figure should roughly double by the end of 2018. The 4K TV wave is coming, but it's a slow roll. This is more about future-proofing Xbox One against this inexorable flood, but don't forget that AR/VR experiences will be layered into the mix as well. I think some Xbox fans will buy it not because they can run UHD videos at 60 frames a second but because Microsoft and its partners come out with some compelling VR and AR games and related interactive experiences," he said.
"Success lies in layering in great new AR/VR experiences while maintaining more or less perfect backwards compatibility with all other aspects of the Xbox entertainment universe. Gamers that do not upgrade to Scorpio until version two comes out in 2019 or whatever should face no competitive disadvantage while playing standard HDTV games with Scorpio owners or there will be a revolt that makes the initial Xbox One unveiling backlash look like a mild temper tantrum."
As Xbox boss Phil Spencer said recently, he plans to make sure that games get plenty of time in the spotlight during E3, so you can be sure that Scorpio's portfolio will be fully demonstrated in June. Price, on the other hand, is a big question mark and the answer to that question will go a long way in determining how well Scorpio sells this holiday season.
Wedbush Securities' Michael Pachter commented, "The price will matter, and if it is over $400, it might be a tough comparison to the PS4 Pro. If it is $400 or less, they should start to gain some share... 4K TV owners who are gamers will gravitate to a 4K console. That will become a more meaningful niche this holiday, as 4K TVs are pretty consistently priced under $1000."
"If it sells more than one million units in Q4 2017 I think it will be doing extremely well"
Piers Harding-Rolls, IHSMarkit
A price point of $400 seems somewhat doubtful based on the estimates analysts provided us. RW Baird's Colin Sebastian noted it could be as high as $500 and said that a high price would "limit Scorpio this year to a fairly narrow high-end consumer market."
Piers-Harding Rolls, IHSMarkit's head of games research, remarked, "The high level specs suggest that Project Scorpio will come to market at a higher price point than the PlayStation Pro launched in 2016 at $399/€399/£349. Although the ability to deliver native 4K gaming is a boon to Microsoft and its product positioning, we have to be realistic about its sales potential at a higher price point when for many console gamers - those without 4K displays - the improvements will be less significant.
"We expect Project Scorpio to be most attractive to early adopter Xbox One users and to those who want a potential PC-level VR experience from a relatively cheap alternative to a VR ready PC. If it sells more than one million units in Q4 2017 I think it will be doing extremely well."
A $500 price will look like a bargain, if IDC's Lewis Ward turns out to be correct. "I estimate the basic hardware will cost around $650, so if Microsoft wants any kind of margin at all, Scorpio will have to retail for $700 or more. If you look at the Alienware Aurora, which is a solid VR-ready PC, that currently costs about $1,000. I think Scorpio will come in below that, but how much below is unknowable at this point.
"This is a step function difference in performance though. The PS4 Pro can generally run 4K (UHD) video at 30 frames a second. The Scorpio will run video content and games at 60, with room to spare for special effects and spatial audio. It will succeed at bringing AR and VR to the Xbox One platform, just as it's coming to all Win10 terminals, but even if costs, say, $750, that's still roughly double the cost of today's high-end Xbox One S bundle price. Scorpio will appeal to hardcore Xbox fans with money to burn, as long as it ships along with a solid lineup of 4K-ready content. I'm sure we'll see more on this at E3, but I sure hope they at least unveil something along the lines of 'Halo VR,' or perhaps it'll be 'HaloLens AR.'"
In some sense, however, it could be that the price actually isn't that critical. The Xbox One S is bound to come down in price in the future, and Microsoft can easily position its console offerings as a two-tier market.
"Like PlayStation Pro does for Sony, Project Scorpio delivers a significant performance bump compared to the standard Xbox One, which opens up a two-tier product strategy with associated pricing and audience targeting flexibility. In effect, Microsoft will be able to monetise early Xbox One adopters that are keen to have the latest technology earlier in the cycle compared to previous generations, while also having the cheaper Xbox One S targeting a mainstream audience," explained Harding-Rolls.
"Project Scorpio's native 4K gaming potential also brings it into line with more powerful gaming PCs, strengthening Microsoft's content strategy to interconnect both Xbox console and Windows PC platforms through its Xbox Live and Play Anywhere strategies. Third-party publishers that are developing games for both PC and console are progressively developing 4K level content, so the overhead to develop for this new platform is not as onerous as seems at first glance."
Price considerations aside, SuperData CEO Joost van Dreunen sees the Scorpio push as "a strong move" for Microsoft as it seeks to get back into a console race that has been largely dominated by Sony this generation.
"I think Scorpio has the potential to push Xbox One sales ahead of the PS4 in the US in 2017"
Mat Piscatella, The NPD Group
"Microsoft is a distant second to Sony. Sony has managed to build up an impressive amount of marketing with its ongoing hardware releases and the budding success of the PSVR. This has put Microsoft on the back foot," he said. "By bringing console gaming closer to high-end PC gaming, and potentially integrating those two markets, strengthens its position and credibility. It also sets it up to be a base hardware device for its augmented reality efforts. I am a bit worried, however, about the lack of attention for the more casual market. Understandably, the traditional audience segments have been the most profitable, but it is ultimately a finite universe of gamers."
On the battle with Sony, one particularly optimistic forecast came from The NPD Group's Mat Piscatella. The analyst believes that excitement around Scorpio could enable the Xbox business in the US to outsell PlayStation this year. "I remain bullish on the Scorpio in the US market, particularly in the launch year. I think Scorpio has the potential to push Xbox One sales ahead of the PS4 in the US in 2017. Adoption among the core gaming audience could be significant," he said. "And, while this is a niche audience to target, it's the niche which is necessary to put the Scorpio on the path for longer term mass market adoption.
"Ultimately, however, people buy consoles to play great games. No matter how amazing the tech specs are, if attractive content doesn't show up, the mass market won't adopt. In addition, if we happen to have another E3 2006 style 'five hundred and ninety nine US dollars' moment the outlook gets murkier," he added, echoing earlier concerns about price. "Today's announcement was a necessary, and beneficial, big step. But there's still a long way to go."
Of course, if Microsoft is still adhering to the stance it explained to us at last year's E3, then exactly how well Scorpio ultimately sells could prove inconsequential anyway. For Phil Spencer, as long as you're an active member of Xbox Live, he doesn't care which system you're playing on. "Our model's not really built around selling you a new console every one or two years. The model is almost the exact opposite," he told us last year. "Honestly, I'm not focused on doing things purely to outsell PS4 with our Xbox One. We're doing things beyond that."