Xbox One Privacy Issue May Lead to Sales Concerns

Xbox One Privacy Issue May Lead to Sales Concerns

Microsoft revealed its third-generation gaming console, Xbox One, in May 2013. Its predecessor, Xbox 360, led all game consoles in sales for 27 straight quarters, making it console king. This month, Xbox’s main competitor, Sony’s Playstation, will release its fourth-gen console Playstation 4 (PS4) on November 15th and one week later the Xbox One will release on November 22nd.

While Sony has advertised game play as PS4’s main differentiator, Xbox One has been marketed by Microsoft as an all-in-one entertainment system. The company is using interactive experience, strategic partnerships and innovative game titles to appeal to more than just hard-core gamers.
Microsoft announced on June 10th the Xbox One will be $499; $100 above expert projections (Swider). This price point is a way to target hardcore gamers and early adopters first, maximizing profit in those segments.

Sony originally planned the same price point, but lowered that to $399 for PS$ consoles sold without a Playstation Eye camera (a motion sensor like the Kinect). This will likely lead to higher sales for Sony in the short-term.

Eventually the Xbox One’s premium $499 price will fall but Microsoft is not worried about lackluster short-term sales. Yusuf Mehdi, Microsoft’s senior vice president of Interactive Entertainment Business, projected in May the Xbox 360 would continue to sell 25 million unit sales in the next 5 years, bolstering any short-term losses the Xbox One could incur.

Microsoft has particularly stressed the Kinect’s motion sensors and the necessity of an internet connection for a full gaming experience. But this emphasis was met by a surprising amount of consumer and government hostility. Both parties have complained the Kinect can be used as a surveillance device and the requirement of an Internet check-in seems a steep requirement to play a video game.

The German Federal Data Protection Commissioner, Peter Schaar, criticized the product saying, “Under the heading, ‘game device,’ Microsoft pushes a monitoring device in the market. The Xbox continuously records… reaction rates, my learning or emotional states. These are processed on an external server, and possibly even passed on to third parties. Whether they will ever be deleted, the person cannot influence.” (Conditt). A premier industry blogger elaborated, “The ‘feature’ in which the 1080p camera is always listening made the new Kinect sound like an Orwellian spy tool”. Such complaints pose a real threat to Microsoft’s sales forecasting.

Microsoft is sticking to the Kinect experience as a main selling point. It believes by changing the dynamics of gaming itself – using Kinect motion and voice recognition – and emphasing data storage in cloud memory will make game play quicker, higher quality and more enjoyable after the adoption phase. But doing so will force consumers to adapt to titanic new changes to their game playing experience; many may not feel inclined to do so.
In response to consumer reaction, “Microsoft has detailed how users can maintain their personal privacy when using the Xbox One’s motion-sensing Kinect camera”. Another blogger noted, “You are in control of what Kinect can see and hear,’ Microsoft has openly explained individual user and family privacy settings can be accessed during Xbox One setup or at any time afterward”.

We’ll find out in the coming months if Microsoft dodged the privacy concern storm or if another wave of consumer outcry is on the horizon.

By Dylan Peer