X Factor
Microsoft fires the first shots in the Christmas sales battle.
Neither Nintendo or Sony faces an untroubled path in the coming months, of course. Sony's price point looks even worse in the face of Microsoft's latest cuts, and while there are several other promising titles appearing on PS3 in the coming months, the vast bulk of the company's eggs appear to have been placed in one LittleBigPlanet-shaped basket.
Nintendo, meanwhile, needs to update the market about upcoming first-party software. Without a steady flow of big titles, the core gamers who keep the firm's attach-rate looking respectable will be increasingly tempted by offerings from Microsoft and Sony. The world's biggest installed base becomes less meaningful if everyone is buying software for other consoles instead.
It's Microsoft, however, that has the most to prove this Christmas - and the company knows it. The race against Sony remains Microsoft's to lose, and having watched the Xbox's lead being eroded this year, the industry will be focused on this battle for second place in the coming months for an indication of how 2009 and 2010 will look. Meanwhile, Microsoft itself will want to provide a clear signal that the Wii is not going to "win" this generation totally unopposed in the casual space.
Microsoft started out this generation a year ahead of its rivals, and has gone on to deliver a great software line-up and a superb online service. It has learned many lessons from its first stab at the console business - but it's not out of the woods just yet. Many consumers still haven't forgiven it for the "Red Ring of Death" debacle, and many others aren't yet convinced that the console's appeal extends beyond young, male fans of shooters and racers.
The next few months will see the company competing aggressively with the price point, the software line-up and the feature-set that should finally redress that balance. The Xbox 360 should enter 2009 with a much better trajectory in the market than it displays today - if it doesn't, however, expect tough questions to be asked about the company's whole approach.
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