November 15, 2001. With PlayStation 2 dominating the console market, software giant Microsoft - renowned for its Windows operating systems and PC gaming titles - takes its first, bold steps into the console gaming arena with the US launch of the highly anticipated and much vaunted Xbox.
Its release signals the start of an epic rivalry between Microsoft and Sony, two corporate giants jostling for marketplace supremacy like a pair of combatants in a coin-op beat-‘em-up. Console gaming would never be the same again...
A New Beginning
Despite the countless millions pumped into its aggressive marketing campaign, Xbox’s birth was anything but idyllic. By the time it hit the shelves, PS2 already boasted an impressive back catalogue, which included PS2-exclusive, multi-million selling franchises such as the Grand Theft Auto series.
Microsoft’s task was made even harder when Sony inevitably dropped the price of PS2 on the eve of Xbox’s launch - a tactic which helped the machine almost triple its previous year’s sales figures from 6.4 million to 18.5 million, further hampering Microsoft’s early efforts to gain a convincing foothold on the market.
But Xbox wasn’t without its own fair share of merits, not least its excellent online capabilities, built-in hard drive and vastly superior system specs which provided developers with some exciting new possibilities. "Shipping a console with a hard drive was a big step," explains Jaime Griesemer, a designer at Bungie Studios.
"For games that took advantage of it, the hard drive virtually eliminated load times, allowed for much higher resolution content and huge amounts of audio. Also, you can't really do downloadable content without a place to store it. It was crucial to Halo. We couldn't have had those giant levels, thousands of lines of dialogue, no load times and checkpoint saves without it."
Perhaps one of the most significant reasons why Xbox didn’t achieve an even greater level of success was franchise exclusivity, a factor which was to prove a major stumbling block in Xbox’s attempts to establish itself as a viable alternative to PS2. After the staggering success of PSone franchises such as Gran Turismo and Tekken, PS2 had an inherent advantage over its rival.
PS2-exclusive sequels such as Grand Theft Auto: Vice City (which would go on to sell some 14 million copies worldwide) only served to highlight the chasm that Xbox needed to span.
"PS2 built up a massive head start over Xbox by coming to market fully 17 months ahead of it in Europe, and about 14 months in the US," explains Kristan Reed, Eurogamer editor.
"But that's only half the story. What really catapulted the PS2 into orbit was the release of GTA3 in October 2001. At the time, nobody quite realised what a true system seller this was going to be for Sony, but it - and the subsequent release of Vice City and San Andreas - made sure that the PS2 was the console you absolutely had to have."
Microsoft desperately needed a hit, and towards the back end of 2001, it got one. Released to titanic critical acclaim, Bungie’s first-person shooter, Halo: Combat Evolved, would prove to be the console’s flagship title - cementing Xbox’s position as a viable contender to PS2 while showcasing the console’s impressive capabilities.
The game shifted a hugely impressive 6 million units worldwide and, almost overnight, the Xbox was up and running. It was to be a success that would only to be surpassed by Halo 2, which racked up an even more formidable 7.5 million worldwide sales.
Halo’s success proved to be both the Xbox’s turning point and its defining moment. "It certainly established the Xbox as the FPS console," explains Griesemer.
"I think a lot of publishers thought that it was the perspective or the sci-fi setting that sold the game, so there was a slew of sci-fi first-person shooters after Halo hit. Lots of those games didn't do very well because they were borrowing the wrong things.
"Luckily, I think a lot of developers saw the real reasons Halo worked, things like recharging health, the accessibility of the controls, having instant access to grenades and melees at all times, AI that didn't cheat, the checkpoint system that didn't punish you for taking risks and dying, the two-weapon limit, all the ways that we broke with established FPS conventions... So now you even see Halo's influence in lots of non-FPS games."
Other titles such as Project Gotham Racing, Fable and a raft of Tom Clancy games, including Splinter Cell and Ghost Recon, would also go on to provide a core base on which Microsoft could build.
Xbox Live’s influence on the console’s success should also not be overlooked, as it allowed console owners to enjoy viable online gaming experiences for the very first time.
"Xbox Live was a phenomenal success on Xbox," reminisces Microsoft’s senior director for UK home and entertainment, Neil Thompson. "The attachment levels were 40 to 50 per cent, which in anybody’s universe is a phenomenal install basis."
With its excellent voiceover IP and broadband bandwidth capabilities, Xbox Live heralded the advent of a new era for console gaming, stepping into a realm which had until then been firmly reserved for PC gamers.
As Xbox’s popularity soared, an ever-growing number of developers and publishers began to see the benefits of developing games for the console. After an initial struggle to engage the interest of publishers, the Xbox’s positive early unit sales, and the astounding success of titles such as Halo and Microsoft’s drive to support third-party development, began to reel them in.
"Day one, we struggled to get publishers to support us with Xbox,” explains Thompson. "But as we worked with them, changed products and strategies to help them succeed on the platform, they became more pleased to work with us on the platform."
By the end of 2004, Xbox had shifted an impressive 20 million units worldwide and laid down formidable foundations. And with rumours trickling out from Sony that PS2’s successor was suffering from teething trouble, Microsoft now found itself in the unlikely and enviable position of seizing the initiative in the race for next-generation console supremacy...
December 2005. Xbox 360, the world’s first next-gen console, hits the shelves across the US, Europe and Japan. Expectations are high, but after disastrous sales in Japan and stock shortages elsewhere, what was meant to be a glorious launch turns out to be a PR disaster for Microsoft.
However, despite this major hitch, Microsoft’s embarrassment is considerably lessened by news that even more serious problems blight Sony - forcing the electronics giant to delay PS3 release dates and ensure the 360 enjoys an exclusive next-gen Christmas...
It wasn’t long after the 360’s launch that Microsoft made the conscious and somewhat controversial decision to shift its resources to next-gen gaming and all but withdrew its backing for the original Xbox. The effect was compounded by an ever-dwindling list of new releases for the aging machine.
Microsoft’s decision to pull its support from the Xbox market was one that surprised many industry insiders. Kristan Reed, editor of Eurogamer.net, believes Microsoft’s abandonment of the Xbox was premature. "Sadly, it's pretty much already dead in the minds of most publishers. It's basically being killed off well ahead of time."
Neil Thompson, Microsoft’s senior director for UK home and entertainment, disagrees. "In terms of high-def gaming, we felt that the whole of the consumer movement would move into that era quite quickly," he explains.
"We felt that the high-def era was here. You have to get momentum and an install base very quickly. Being out early and getting early momentum on a platform is very important and it’s very tough if you don’t get that.
"Component-wise and technologically, the Xbox was far more advanced than the PS2. At the time we came out, Sony was able to get the price points that we weren’t due to the technology we’d built in. As a result, it proved very difficult for us to compete."
With Xbox 360 forging ahead and establishing an early foothold on the next-gen ladder, it’s now Sony and not Microsoft that finds itself having to play catch up. With PS3 having failed to launch in time for Christmas in Europe and with limited stocks in Japan (only 88,400 units were sold at the console’s weekend launch) and the US, a price tag of around £450, and with Microsoft securing many previously PlayStation-exclusive franchises (GTA, Pro Evolution Soccer, etc.), the second round of the Xbox/PlayStation battle is already shaping up to be a far more competitive and closely fought contest.
Kristan Reed believes that Sony will still eventually win out due to its massively superior fan base, but only just. "Sony can rely on its native audience to make up the shortfall," he argues.
"I do think, though, that the 360 will have a significant lead through 2007 and most of 2008. I think the crucial period will be Xmas 2008, when it will come down to who has the most compelling exclusive games.
"I think this time around Sony will have far less exclusives than ever, with most publishers now happy to play safe and release their games across as many platforms as possible.”
Gearbox Software president Randy Pitchford backs up Reed’s argument, observing, "It's going to be difficult for Microsoft to get over the power of the Sony brand and their confidence and capability to reach customers with consumer electronics and content.
"To be fair, Sony has challenges of its own. It's going to be very interesting to watch things play out. For my part, I have to consider that all of these platforms are going to have customers that are interested in the games we’re making at Gearbox Software, and I have to make sure that Gearbox remains flexible and agile as this generation unfolds."
Despite an overriding industry belief that Sony will continue to dominate the console market for the foreseeable future (all be it to a far lesser degree than before), Microsoft’s Neil Thompson remains upbeat that the original Xbox has laid down a solid platform for his company’s drive to become No. 1 in the market.
"The Xbox did a lot for us," he says. "A lot of people were very sceptical about whether we’d be able to be successful and be able to innovate in this business, and whether we’d have any longevity. I think it proved that we can bring phenomenal franchises like Halo and Project Gotham Racing to the platform, plus it helped us win a lot of friends in the publishing community.
"If we hadn’t been through those experiences with Xbox V1, we wouldn’t be in the position that we’re in now. This Christmas we have over 160 High Definition games from every major publisher in the world, we’ve got the premier online gaming service in the world and in America we’ve just announced that you’ll be able to download movies, TV content, videos etc through Xbox Live.
"All of these innovations only become apparent having gone through a lot of the learning lessons and successes that we had with Xbox V1."
Despite its myriad accomplishments, perhaps the original Xbox’s legacy is yet to be fully unveiled. One thing however is for sure; the machine managed to do what few believed was possible by offering a viable and competitive alternative to Sony’s all-conquering PlayStation franchise.
It also laid down the foundations upon which Microsoft has been able to quickly build a formidable fan base, one that’s already looking like swelling yet further with the release of the 360.
PlayStation may have won round one, but half a decade on, it’s looking like the Xbox franchise is in a stronger position than ever. The battle for console gaming supremacy has only just begun.