What Does The $99 Pay-Per-Month Xbox Say About Microsoft?

The Xbox 360 is a video game console.

That’s what we gamers have believed since its launch in 2005. It has been a constant source of gaming entertainment for millions of gamers, through the excellent titles it offers (first-party and otherwise) and the online service that revolutionized digital gaming, Xbox Live.

However, while Xbox 360 has been the gamer’s console, Nintendo’s Wii system has been wooing the casual gaming market with innovative motion controls and a strong first-party lineup. Before their recent financial struggles, Nintendo was rolling in money, and Microsoft could see it. Slowly, Microsoft began to look into the ways to cash in on the new breed of gamer Nintendo was creating. Their focus shifted from games to media, introducing Netflix, ESPN, Hulu Plus, and more into the fold. Now, with their newest product, that focus may have shifted too far.

Today Microsoft unveiled a $99 Xbox 360 Slim with Kinect, to be sold at Microsoft Stores throughout the US. While that price tag may be too good to pass up, there’s a reason: the system also comes with a two-year, $15 a month payment plan for Xbox Live on these systems. The plan is to challenge products like Roku and Apple TV as a media streaming device, only with the added bonus of playing video games.

Wait, what?

I thought the Xbox was a gaming device that included all of the other media, not the other way around. I thought Xbox’ major competition was the PlayStation 3 and the Wii. What happened? When did the media experience become more important that the gaming experience?

Granted, the PlayStation 3 also does media streaming like this, but it’s not trying to compete with the likes of Apple TV. Sony uses the tagline “It Only Does Everything” for its system, sure, but they still recognize that PlayStation is about gaming first, then the rest of the media experience. They’re still releasing regular first-party titles, including Starhawk on May 8th, PlayStation All-Stars Battle Royale in the fall, and God of War: Ascension next spring. Microsoft’s only scheduled retail first-party release at the moment is Halo 4.

What’s going on here? It certainly seems like Microsoft is taking a more casual approach to their console. They’re putting their eggs in other media’s basket, letting things like Hulu Plus and HBO Go sell their systems. It’s a smart business venture, as recent reports indicate that the system is used more for online entertainment than online gaming. However, what does it say to the gamers that have delivered the Xbox to its current state?

It’s essentially the same debate that Nintendo has dealt with since the Wii debuted in November of 2006: what means more to the company, new and casual consumers or the hardcore crowd that’s followed them for years? Microsoft is turning their Xbox into a media console, no longer just for the gamer crowd. That may leave a sour taste in the mouths of hardcore gamers. However, there’s one major difference between the Nintendo debate and this one:

Third-party games.

The reason that Nintendo’s focus on the casual market was so apparent was because third-party support for the system was virtually nonexistent. There were some big third-party games, but not nearly to the level that Microsoft sees every year. Some people believe that games like Call of Duty and Madden might as well be Xbox exclusives, as it’s the only system they’ll play the game on. Last year, Microsoft’s E3 keynote was chock-full of third-party heavyweights like Call of Duty: Modern Warfare 3 and Tomb Raider. While in-house software support may be dwindling, Xbox still has plenty of games coming to it, so much so that no one really notices the parent company’s change in perspective.

Microsoft is running with the idea of making Xbox 360 a “media” console instead of just a “gaming” console, much like how Nintendo focused the Wii on the casual, non-gamer market. They’re going to put all of their eggs into the online entertainment basket, making programs like Netflix the top priority. Microsoft’s probably thinking that the gamer-related audience for Xbox has long been established, and now it’s time for the non-gamers to experience their system. It’s savvy, but it could end up backfiring in their faces.

As long as the gaming experience doesn’t suffer and the quality of titles doesn’t go down, gamers will welcome the expanded media offerings on the Xbox 360. However, if Microsoft completely forgets about the gaming crowd and looks only at the media aspect, they will be in trouble. Let’s hope E3 2012 sheds some light on this, as it’s just five weeks away.