Xbox vs Playstation (REMIX) | Dis-Kinect | 3

0:09It's February 2007, and at the Xbox Support Center in Austin, Texas, a worker sits in her cubicle, headset on, and takes another call. Thank you for calling Xbox Customer Support. How can I help you? Yeah, it's my Xbox 360. It broke again. You guys sent it back to me just two days ago, and I bring my buddies over, we're gonna play Crackdown, but now I got the friggin' red ring of death again. You have three red lights around the power button, yeah? Yeah, three red lights flashing at me. This is the second time, the second freaking time. I waited three weeks for you guys to fix it and send it back.

0:49I'm very sorry you're having that problem today, sir. It must be frustrating. Frustrating? Yeah, it is. I mean, what the heck is going on at Microsoft? My Xbox breaks. You guys fix it. It breaks again right away. Unfortunately, this isn't a problem I can fix on the phone. But if your Xbox is still under warranty, you can ship it back to us for repair. I can't believe this. Well, let's try and make that happen for you as quickly as we can. How long is it going to take to repair? Well, at the moment, sir, the estimated wait time for repairs is five weeks. And as the wait suggests, he's far from the only person needing their console fixed.

1:29A tsunami of calls about malfunctioning Xbox 360s is hitting the call centers. Microsoft spent 18 months ducking the problem. But with more than 10 million Xbox 360s in homes, the problem spiraling out of control, angry customers are now legion and they've encircled microsoft the red ring of death is a pr crisis and one big enough to obliterate the xbox brand for good

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3:38From Wondery, I'm David Brown, and this is Business Wars.

4:10On the last episode, Microsoft cut corners to get the Xbox 360 in stores first. The Nintendo Wii introduced a new audience to gaming, and PlayStation tumbled from leader to laggard. But now, Microsoft's counting the cost of rushing ahead. This is Episode 3, Disconnect.

4:38May 2007, Redmond, Washington. In Microsoft headquarters, Xbox chief Peter Moore is on edge. He's about to meet Microsoft CEO Steve Ballmer, and he fears this meeting could be the end of Xbox. Moore tenses as Ballmer bounds into the room. Peter, what do you want to talk about? Moore shifts in his seat. Ballmer's kinetic energy and bulk is intimidating. Moore rubs the back of his neck. We need to talk about the number of Xbox 360s that are breaking down. It's out of control. Ballmer drops heavily into a chair like he's Mario stomping a Goomba. He leans forward, his eyes boring into Moore. What's causing the problem?

5:23That's the thing, we don't know. It's definitely heat-related, but we haven't been able to pinpoint the cause yet. But the Internet's full of gamers talking about the Red Ring of Death. Our customer support lines are drowning in calls about dead Xboxes. Steve, if we don't deal with this now, the Xbox brand will be ruined. Ballmer crosses his arms. So, what are you proposing? We extend the warranty from one to three years and offer a first-class, no-questions-asked repair or replacement service. I'm talking pickup and return by FedEx. Also, I say we halt production of the Xbox 360 until the problem's identified and fixed.

6:04Ballmer stares at Moore. How much will that cost? We've done a rough calculation. Moore gulps. He knows this is the make-or-break moment. Ballmer leans closer. What's the figure, Peter? 1.5 billion. Ballmer points at Moore. Do it. We'll figure it out. We'll take the hit. Moore blinks in shock. It's a move only Microsoft can afford. It's a financial blow that would be big enough to ruin Nintendo and seriously wound Sony. But yet again, thanks to Microsoft's business software billions, Xbox gets to fight on. Decision made, Xbox moves fast. FedEx vans begin to ferry dead and repaired Xboxes to and from Microsoft repair centers.

6:55It's just enough to cool the fury of the world's Xbox owners. Microsoft eventually finds and fixes the fault. The few tiny blobs of solder that connect the Xbox 360's graphics chip to the motherboard. When the console's on, they get hot. When the console's off, they cool down. And that constant cycle of hot and cold eventually breaks the solder and the Xbox. And with the problem contained, and the PlayStation 3 still struggling, Microsoft turns its attention to find a way to challenge the console frontrunner, the Nintendo Wii.

7:38Early 2008, in Xbox offices in Redmond, Alex Kipman stares at the list in his hands. Kipman's the quick-thinking 30-something head of Xbox R &D. His job is about pushing boundaries. But this list has left him speechless. He looks at it again. And then at the man who wrote it. Xbox's new boss, Don Matrick. You actually want this? You're serious? Matrick nods. He's a Canadian with a floppy fringe who started his video gaming career as a 17-year-old programming games in his bedroom. I'm deadly serious. We need Xbox to appeal to the same everyday people that Nintendo's reaching. Kipman stares back at Matrick's wishlist again.

8:24He wants a camera that tracks players' bodies so they can play games without a controller. He will also need to recognize different people and respond to voice command. And before Kipman can look up, Matrick adds another demand. Of course, the device has to do all this fast. Players won't like it if there's a noticeable delay between their actions at what happens on the screen. Matrick walks out and Kipman sinks back into his chair. Kipman likes a challenge, but nothing on this list seems even remotely possible. It's the stuff of science fiction movies. Kipman spends the next year searching the world for ways to make Matrick's futuristic hands-free controller real.

9:08In Redmond, he finds a Microsoft team working on speech recognition. In Beijing, there's research into facial recognition technology. And in Tel Aviv, he locates a company that uses infrared cameras to track body movements. By summer 2009, Kipman's got a prototype ready. And it's closer to Matrick's wish list than anyone expected. Microsoft names the device Kinect. and Matrick decides it's the future of Xbox. He gives it a$500 million marketing budget. He also orders Microsoft's in-house game studios to make Kinect games that can appeal to the millions of people who never wanted a game console until the Wii came along.

9:53Matrick is convinced Kinect can expand Xbox's appeal and offer players an experience they can't get from Sony or Nintendo. But Sony's plotting a motion control move of its own.

10:13It's June 2009, and at the Shrine Auditorium in L.A., Sony's holding its annual PlayStation showcase as part of the E3 trade show. Anton Mikhailov stands on stage before an audience of thousands. He's a boyish PlayStation researcher, and he's got a strange game controller in his hand. It's called the PlayStation Moo, and it resembles a black tube with a glowing orb stuck to one end. Mikhailov stands in front of a TV that's plugged into a PlayStation 3. On the screen, he sees himself. That image is being captured live by a small PlayStation camera on top of the TV, and it's also being shared on the big screen behind him.

10:56But on the screen, Mikhailov's not holding a controller. He's holding a tennis racket. A tennis ball bounces up from the bottom of the screen. Mikhailov swings for it and misses. He grins awkwardly. It's still hard. He swings again and misses again. The tennis racket transforms into a handheld roadside stop sign. All right, let's try this. He swings the sign and clips the ball, sending it bouncing away. Yes! But while Mikhailov's aim is off, Sony believes the PlayStation Move is the perfect motion controller. It's more accurate at tracking player movements than the Wii. And because it has buttons, Move is better suited to more complicated games than the Xbox Kinect.

11:46But while Xbox is betting big on Kinect, Sony sees Move as just another step into rebuilding PlayStation's popularity. The PlayStation 3's disappointing debut in late 2006 left Sony humbled and prompted the exit of PlayStation leader Ken Kutaragi. Now, PlayStation is grinding its way back into contention. It slashed the price of the PS3 and re-engineered its hardware and manufacturing process to lower costs. It's also invested millions in developing more only on PlayStation games, promised support for 3D TVs, and now it's adding motion control with PlayStation Move. PlayStation's also restructured to become more of a team.

12:38In the Kutaragi era, PlayStation's Japanese engineers would design hardware without any input from its global network of game developers. Now the engineers and game studios work together on new hardware. Individually, none of these steps are game changers. But together, they build momentum. In 2009, PlayStation 3 sails edge ahead and start cutting into the Xbox 360's lead. By early 2010, Sony's sold 36 million PS3s, leaving it just 4 million consoles behind Microsoft. And it's about to up the ante. In June 2010, Sony introduces a subscription service called PlayStation Plus. For$50 a year, PS3 owners get access to a selection of free games that change every month.

13:31With new games costing$60, it's a tempting deal. Two months later, the PlayStation Move arrives, along with ads that attack the Xbox Kinect. PlayStation Move's not only crazy precise, it's also got what we in the future call buttons, which turn out to be pretty important to those handful of millions of people who enjoy playing shooters, platformers, or, well, anything that doesn't involve catching a big red ball. So, I mean, come on. Who wants to pretend their hand is a gun? What is this, third grade?

14:07But the ads and Move are no match for the Kinect's head-turning tech and its half-a-billion-dollar marketing push. In November 2010, Kinect storms into stores and sets cash registers ringing. The crowds streamed into the store at midnight, grabbing the Kinect system and dishing out the cash. The makers of the Microsoft Xbox system say no controllers make it revolutionary. Microsoft sells 8 million Kinects in two months. Kinect re-energizes sales of the Xbox 360, just as the PS3 was about to catch up. The family-friendly Kinect Adventures becomes the best-selling Xbox game ever, and the PlayStation Move is soon forgotten.

14:56For Xbox leader Don Matrick, it's vindication. He gambled on Kinect and won. And so he doubles down on Kinect by putting it at the heart of the next Xbox. But it's a decision that's going to blow up Xbox and give PlayStation an opportunity to break through.

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17:30It's February 2013, and in the Hammerstein Ballroom in Midtown Manhattan, Mark Cerny is about to head on stage. He's a thin guy, wearing glasses and a checkered shirt. The future of PlayStation rests on his shoulders. Last month, the PlayStation 3 finally crawled ahead of the Xbox 360 in worldwide sales. But the next round in the console wars is already underway. Nintendo fired the opening shot last Christmas by launching the Wii U, a souped-up Wii with a touchscreen gamepad. But it bombed. Now, Sony wants to capitalize on Nintendo's woes by revealing its next console. And as the lead architect of the PlayStation 4, it's down to Cerny to sell it to the world.

18:20Cerny strides onto the ballroom stage in a blaze of white lights and begins his presentation. We've listened to the players and to game developers, and that is why the PlayStation 4 is all about the games. The PlayStation 4 is for the players. The message is clear. Sony's learned the lessons from last time. The PlayStation 3 was marketed as an all-in-one home entertainment device and built using totally new tech. But people buy consoles to play games, and developers want consoles that they know how to make games on. So while the PlayStation 4 can be people's Blu-ray player and stream Netflix, Sony's selling it as a games machine, and one built largely out of parts that wouldn't be out of place inside a desktop PC.

19:11And it's a message that connects. The PlayStation 4 is all about the games. It will be for the players, and it will go on sale in November. Cerny smiles as the room shows its support for the PlayStation 4. But now that Sony's revealed its hand, Microsoft won't be far behind.

19:37It's May 2013, and in Redmond, Washington, a convoy of buses exit the highway and move through the rain that's drenching the Microsoft campus. Each bus is packed with journalists who've been flown in to witness the world premiere of the new Xbox, the Xbox One. The bus is stopped near a cavernous black marquee tent to the campus. The bus doors open and journalists race out, dashing through the puddles to reach the tent and escape the downpour. The inside of the tent is a vast auditorium, and at the far end is a stage, backed by a wall of screens illuminated in Xbox Green. The journalists take their seats, but they're not the only audience.

20:22Online, millions of gamers are watching the livestream. When the Xbox 360 launched eight years ago, they had to wait for websites to report the news. Now, they can watch the news conference live and deliver an instant verdict on social media. Xbox boss Don Matrick runs on stage with a huge grin on his face. He's sure the Xbox One's going to blow people's minds. Today, we're thrilled to unveil the ultimate all-in-one home entertainment system, The Xbox One. Team Xbox is on a new mission to become the all-in-one system for every living room. The place where your games, TV, and entertainment come alive.

21:09The journalists frantically post online updates as Matrick and other Xbox executives explain how Xbox One and its new improved Kinect will transform TV viewing by letting them watch TV in the corner of the screen. while playing games and change the channel using voice commands. But as the TV talk continues, those watching online start wondering where the games are. Xbox, go home. Xbox, show some damn games. That the next evolution of gaming is a f***ing voice remote control for your television. Television. One executive leaves the stage and enters the green room as the presentation continues. He checks in with the PR team.

21:56Well, how'd that go down? The PR woman glances away. Not good. Not good at all. Then Microsoft announces that the Xbox One will require Kinect. This news angers gamers who dislike motion-controlled games and those creeped out by the idea of a device that's always watching and listening to them at home. Then, Microsoft reveals that the Xbox One will link the games people buy in stores to their Xbox Live account. Microsoft presents it as a way to access your games on any Xbox just by logging into your account. But it also promises an end to buying and selling used games. It's the final straw. This is a point where we also have a choice as console gamers.

22:47You have a clear choice. Vote with your wallet. Don't let Microsoft get away with this. This is like a campaign, and my candidate is Sony. We need to make them win the next four years. I'm going to post this video, and when I wake up, one of you is going to tell me why any of us should give a flying rat's ass about the Xbox One. That's what you're going to do. That's what we're all going to do. It was a bad, this bad dream, going to bed. It's a bad start, but the Xbox team thinks it can still win people around. A few weeks later, the games industry descends on Los Angeles for the E3 trade show.

23:28Xbox uses its showcase to highlight the Xbox One's games and announces Games with Gold, its answer to Sony's PlayStation Plus subscription service. But when it reveals that the Xbox One will cost$499 because it comes with Kinect, the backlash reignites. A few hours later, Sony announces the PlayStation 4 will cost$100 less and won't block players from trading used games. The news causes even more gamers to rally around PlayStation. Then, Microsoft suffers another blow. Xbox chief Don Matrick quits to join farm filmmakers Zynga, leaving Microsoft's gaming division leaderless in the midst of a crisis with less than six months to go until the Xbox One launches.

24:23In November 2013, the PlayStation 4 and Xbox One go on sale. And with the Nintendo Wii U dying fast, the choice is now clear. It's either Sony or Microsoft. That Christmas, the PS4 outsells the Xbox One by a million units. For the moment, it seems the Xbox One launch is more disappointment than disaster. But as 2014 begins, Sony's sales ignite, and the gap between the two consoles widens fast. By April, the PS4s outsold the Xbox One 6 to 1. Even at its lowest point, the PlayStation 3 was never this far behind the Xbox 360. Players are deserting Xbox en masse, and as the Xbox business starts to crumble, Microsoft once again wonders whether it's time to quit gaming for good.

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26:18March 2014, Redmond, Washington. Phil Spencer exits the elevator and steps onto the fifth floor of Microsoft Building 34. He's a casually dressed 46-year-old Xbox executive. and he's been called here to meet Microsoft's CEO. It's been five months since the Xbox One launched, and it's in deep trouble. The PlayStation 4 is grabbing market share, and the Xbox division is in disarray after months without a leader. And now, Microsoft's got a new boss, Satya Nadella, and no one's sure how he feels about the floundering games division. Spencer enters the corner office and sees Nadella waiting for him in a turquoise armchair.

27:04Nadella's a skinny bald guy with thick-rimmed glasses. Nadella smiles. Thanks for coming, Phil. I asked to see you because I want you to be the new leader of Xbox. Spencer smiles, but wonders if he's only got the job because he's the last senior Xbox executive left. I'd love to do it. It's my dream job. That's good. But I want us to have things above the table. You need to be aware that there is a very plausible future for Microsoft without Xbox. Spencer looks at the floor. The idea of being the Xbox's death doula doesn't sound fun, but he knows games are a minor side hustle for Microsoft. The corporation's annual revenues are nearly as large as the entire games industry.

27:50Nadella leans forward. What I want to know is, can Xbox get back on track? If so, how? Spencer nods. It can. I truly believe that. But we need to do several things. Go on. We need to reconnect with gamers. They're our core audience. I think we lost sight of that with our wider ambitions for the Xbox One. We need to get back to being about games. But why do it at all? How does Xbox contribute to Microsoft's wider strategic goal of pushing into cloud-based services? We're already doing it. Xbox Live is a cloud-based service, and we've been talking about the idea of creating a Netflix for games. I think gaming can be a really important consumer category for this company.