Xbox vs Playstation (REMIX) | Pay to Win | 4

0:09It's early 2020 in Activision Blizzard's head office in Southern California. The company's CEO, Bobby Kotick, is in a standoff with Xbox executive Sarah Bond. No, absolutely not. Not good enough. Bond runs through her options. The new Xbox goes on sale in November. Bond needs Kotick to agree to release Activision's military shooter series, Call of Duty, on the console's launch day. Every year, Activision releases a new Call of Duty game. and every year it becomes America's best-selling console game. Without Call of Duty, the new Xbox will be dead on arrival. Bond stares Kodik down. 70-30 is our standard revenue split.

0:55Kodik doesn't flinch. In the face-off between the PlayStation 4 and Xbox One, Microsoft lost market share. And he doubts Xbox can recover the ground it's lost, especially without Call of Duty. And that gives him serious leverage. Nope, not happening. You're not pocketing 30 % of our sales. Call of Duty isn't your standard game. Sony knows that. That's why they're giving us a bigger cut of the sales on the PlayStation 5. If you want Call of Duty on the next Xbox, reduce your cut. Bond narrows her eyes. Sony's sold 100 million PS4s, but there are still 40 million Xbox owners out there. She can't see Kodak passing on that many potential sales.

1:42She calls Kodak's bluff. Seriously? Are you really threatening not to release Call of Duty on the next Xbox? Look, I didn't put Call of Duty on the Nintendo Switch, and there's 80 million of them out there. So, yeah, we could skip Xbox and just release it on the PlayStation 5. How do you think that'd work out for Xbox? Bond knows exactly how that'd work out. terribly. You'd still miss out on millions of Xbox sales. Or maybe people would buy PlayStations instead, or join the 100 million people already playing Call of Duty on their phones. Kodak leans forward. And to be clear, our developers won't start work until we have a deal.

2:28So don't think about it for too long, or our team won't have time to put Call of Duty onto the new Xbox before it launches. A few days later, Xbox caves and gives Activision a bigger slice of the revenue. But Microsoft doesn't want to be in another tug of war with Kodak, so it goes bigger, much bigger. It wants to swallow Activision Blizzard whole. A deal like that would be the biggest acquisition in video game history and give Microsoft control of several of the most profitable franchises in the industry. So PlayStation's going to do everything it can to blow up the deal.

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5:45On the last episode, Microsoft tried to reinvent TV with Kinect, only to spark a backlash against the Xbox One. The PlayStation 4 topped the leaderboard, and Spider-Man joined Sony's team. Now it's 2016, and Xbox boss Phil Spencer is hoping to strike back with a new game plan. This is Episode 4, Pay to Win.

6:17It's March 2016, and in the offices of Microsoft's Lionhead Studios in Guilford, England, more than 100 developers are crafting the next Fable game. Since its debut in 2004, Fable's fusion of Monty Python and Tolkien has become one of Xbox's best-known franchises. But the Fable game they've spent four years and$75 million making breaks with the past. It's called Fable Legends, and it's what the games industry calls a live-service game. Players don't pay for Fable Legends up front. They play for free, but are incentivized while playing to spend small amounts for extra content, like clothes for their game characters, or maybe a potion that gives them an edge over other players.

7:05When done right, the live service model can generate hundreds of millions of dollars in sales every year. And that's what Fable Legends is supposed to do for Xbox. But despite the years of work, it's months behind schedule. One animator checks the all-staff email that's just landed in his inbox and turns to the guy sitting next to him. Hey, you seen this email? They want everyone in the cafeteria right away. The animator and his colleague head downstairs to the cafeteria. As the place fills, the animator looks at his colleague. So, I guess this is it, right? The final curtain. His colleague smiles.

7:47Hey, we should sneak out now. That way we'll get to the pub before the rush starts. They're only half joking. Lionhead used to be one of Xbox's star studios. But Microsoft no longer seems sure what it wants from it. And with the PlayStation 4 racing ahead of the Xbox One, everyone at Lionhead is worried about cutbacks. But the gallows humor stops the moment the Xbox's European Studios chief arrives. He's flanked by HR executives, and from their body language, it's clear something bad's about to go down. Fifteen minutes later, everyone at Lionhead is out of work, and they're not the only ones. That month, Xbox consolidates eight studios.

8:32It's a course correction for the brand, and after years of chasing casual gamers with Kinect, Xbox is undergoing a reboot.

8:45Just over a year later, Redmond, Washington. In Microsoft Building 87, an engineer steps into the quietest room in the world. It's a floating chamber, suspended on a bed of giant springs. Huge wedges of sound-absorbing foam jut out from every surface. In this room, the background noise is minus 20 decibels. It's the least sound ever recorded, and so quiet, it's disorienting. The engineer approaches a small table in the middle of the room, surrounded by microphones. On that table is an Xbox, but it's not the model on sale in stores. This is the new Xbox One X. It's a$499 high-performance model that supports gaming on 4K TVs.

9:34It's the console version of a muscle car, American, overpowered, and lots of fun. But with so much strength under the hood, Microsoft needs to ensure the noise coming from its cooling fan won't drown out people's TVs. The engineer switches on the Xbox One X and leaves the room to monitor the results. But the Xbox One X is already late to the 4K party. Sony got there last year with its own high-performance console, the PlayStation 4 Pro. Not that Microsoft's worried. All that matters is having the most powerful console on the market. At its core, the Xbox One X is a branding scheme. A dog whistle to let dedicated gamers know that the Xbox brand is all about them again.

10:24But Xbox isn't just offering new hardware. It's also launching a new kind of subscription service. Hi, I'm Larry Herb, Xbox Live's Major Nelson. Today, I am excited to show you Xbox Game Pass on Xbox One, the new subscription service that offers unlimited download and play of over 100 great Xbox One and Xbox 360 backward compatible games. Xbox Game Pass is like Netflix for Xbox and Windows gamers. For$10 a month, subscribers get a library of games that would cost thousands to buy new. and it makes the small selection of games that PlayStation Plus subscribers get each month look miserly. In six months, 1.3 million people join Game Pass.

11:10But there's a downside. Game publishers fear Game Pass will devalue games altogether and reduce their sales. Some refuse to support it point-blank. Others demand top dollar for older games. But Xbox pays anyway because it believes its subscription service is the future. Xbox boss Phil Spencer wants to move beyond the console wars. He's got a new vision for the brand, one that decouples Xbox from the console under the TV. Three billion people worldwide play video games, but only 200 million households own a console. Consoles were once the primary battlefield, but now they're a small segment of a much bigger market.

11:57Spencer's long game is to engage all the world's players where they want to play and on whatever device they own. And Game Pass is the first step towards that. But to keep people subscribing to Game Pass, Microsoft needs to feed their hunger for new games.

12:22It's June 2018, and the game industry trade show E3 is back in L.A. At the Microsoft Showcase presentation, Xbox Chief Phil Spencer walks on stage in a denim jacket and gaming t-shirt. He barely suppresses a sly smile. Spencer stops in the middle of the stage and delivers an announcement designed to boost Xbox's appeal. Exclusive games are what originally turned so many of us into Xbox fans. So I'm proud to introduce the creation of a new Microsoft Studio, The Initiative. There's polite applause. Spencer moves on. Next, I'm excited to welcome Undead Labs to Microsoft Studios. This wakes the audience up.

13:08Undead Labs makes the popular State of Decay series, where players try to survive in a world overrun by zombies. But Spencer's not done. We've also acquired Playground Games. The audience knows Playground, too. It makes Forza Horizon, Xbox's series of streetcar racing games. But Spencer's still not done. And for our fourth new studio, Ninja Theory. The crowd erupts. Ninja Theory's known for making games with high production values and artistic themes. Then, Spencer holds up five fingers. And yes, we've got a fifth studio to announce. Compulsion Games. The Xbox fans in the audience roar in approval.

13:58They may not know the small Canadian studio Microsoft's just bought, but they understand that it and the other four new Microsoft studios will bulk up Xbox's game-making capacity, and more acquisitions are on the way. Within 12 months, Microsoft will buy three more studios. It's a rebuild of Microsoft's ability to produce exclusive games for the Xbox, after it cleaned house just two years before. This time, it's got the studios it believes can make the great games of tomorrow. Spencer's also putting Sony on notice. Xbox plans to eliminate Sony's game-making advantage. But Sony's not fretting. It's got time on its side.

14:46It'll take years before Xbox's new studios deliver games good enough to draw sales away from PlayStation. Spencer knows this, so he launches a direct attack on Sony with help from an unexpected ally, the makers of Fortnite.

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16:44It's summer 2018, and in Cary, North Carolina, Joe Kriner's growing frustrated. He's a business development executive at Epic Games, one of the biggest independent game studios on the planet. And today, he's got a beef with Sony. At his desk, he bangs out another email to PlayStation executive Gio Corsi. Gio, I can't see a scenario where we don't get what we want. That possibility went out the door when Fortnite became the biggest game on PlayStation. Fortnite is Epic's new game. It throws 100 players together at a time to fight to be the last one standing. And now, it's the latest front in the console wars.

17:25Fortnite's a monster hit. Worldwide, 120 million people play it on their phones, tablets, computers, and consoles. And they all play together. Well, not all of them. That's because Sony won't let PlayStation owners play online with people who own rival consoles. So now, Xbox, Nintendo, and Epic are pushing Sony to let PlayStation owners play with their Xbox and Nintendo-owning pals. and Epic is determined to force Sony to surrender. Let's make this a huge win for us all. We can offer incentives. Maybe a joint announcement where we go out of our way to make Sony look like the hero? Epic's not changing its mind on this, so let's just agree on it now.

18:14Kreiner fires off his missive and hopes it's enough to convince Sony to back down. In Foster City, California, PlayStation executive Gio Corsi opens Kriner's email and strokes his goatee. Xbox wants Sony to embrace cross-platform play, but that's no surprise. The PlayStation 4 is the best-selling console. It's where the players are. And that's a good incentive for folks to buy a PS4 instead of an Xbox One. From Sony's viewpoint, cross-play will do little but make life easier for Xbox. Corsi hammers out a reply to Epic's latest missive. Crossplay is not a slam dunk. Many companies are exploring the idea, but not a single one can explain how Crossplay improves PlayStation's business.

19:04Open to your thoughts on this. But the problem won't go away. An Xbox stokes the fire. Microsoft and Nintendo announce they will let owners of their consoles play Fortnite together. The move cranks up the pressure on Sony and hurts its stock price. After five months of resistance, Sony folds. It allows cross-play in Fortnite, but only if Epic compensates PlayStation for any lost revenue. While PlayStation's forced Epic into giving it better financial terms, Sony's surrender is still a PR victory for Xbox. But the next battle round is coming up. as both Microsoft and Sony ready their next-generation consoles for launch.

20:00It's 2019, and in a Chicago apartment, the Xbox design team opens a large cardboard box and removes a dozen charcoal-black foam blocks. The young man who lives here watches awestruck. These objects are the top-secret mock-ups for the next iteration, named the Xbox Series. The team spreads them across the living room floor as the man inspects them all. That one looks just like the current Xbox One. Huh, that one reminds me of a pizza box someone stepped on. Now, this one's interesting, kind of like a record player or something. But then his eyes settle on the design the team calls the tower. It's a minimalist 12-inch tall brick with a 6-inch square base.

20:51The man grins. Now, that one's cool. It's like a tower PC, but much sleeker. The Xbox designers smile. Every gamer they show these mock-ups to falls in love with the tower design. But one design isn't enough, because Microsoft is launching two new consoles. The Tower will become the design of the Xbox Series X, a$500 model aimed at players with 4K TVs and a hunger for high-performance gaming. But Microsoft also wants to bring next-gen games to people with tighter budgets, so it's creating the Xbox Series S, a$300 lower-spec model that has no disk drive. And like the tower, the Series S is designed to blend into the background of people's home entertainment setups.

21:43But Sony doesn't want the PlayStation 5 to blend in. It wants it to stand out. Its Japanese designer approaches the console like a sculptor. He chips away at the usual boxy designs of game consoles to create something that could fit in at an art gallery. It looks like a black slab sandwiched between two undulating wafers of white plastic. And when placed on its side, it seems to float in the air. But consoles can't get by on looks alone. They also need games.

22:23August 2020. Three months before the Xbox series launch. In his Seattle home, Xbox chief Phil Spencer smiles as Bonnie Ross appears on his computer screen. She's the boss of 343 Industries, the Microsoft studio that makes Halo games. And she's usually upbeat, but today she's got bad news to deliver. Phil, I think we should delay Halo Infinite. We need another year to make it great. Spencer's smile collapses. Microsoft's pegged its hopes on Halo Infinite to win back lapsed Xbox fans. Is this because of the reaction to the trailer? The trailer for Halo Infinite came out last month. It was supposed to whet appetites.

23:08Instead, the chatter on social media is dominated by talk of the game's flat visuals and underwhelming action. Ross nods. Partly, but we're behind schedule too. Hell, we started the year behind. COVID and working from homes put us even further behind. Right now, the team isn't proud of the game's quality. I also worry about the team's well-being if we stick to the schedule. Spencer is crestfallen, but in his heart, he knew Halo Infinite wasn't ready. Is there another option? Maybe a partial release? Launch now and add the rest of the features via updates over the next year? I don't think a half-finished game is going to convince people to buy the new Xbox.

23:52Yeah, yeah, you're right. That won't work. Huh. Okay, um, how does a game improve if I give you another year? We polish the visuals. Make the boss fights more exciting. Recapture the old-school Halo vibe. You know, where the player gets to storm in and rescue Marines and then leads a whole platoon that's busting through enemy lines. Spencer sits up. That's a game he'd love to play. That sounds fun. Okay, okay, you're right. Better a great Halo game next year than a disappointment now. You got your extra time. The delay strengthens Sony's already strong hand. Thanks to the PlayStation 4's huge success, Sony's already got momentum on its side.

24:41Now, PlayStation 5 will be the machine that has the better lineup of games on day one. But it's not just the launch date choice where PlayStation's got the upper hand. It's also got plenty of tempting exclusives scheduled for release soon. It will highlight the shortage of games on Xboxes. Games like Horizon Forbidden West and Gran Turismo 7. Sony's also striking deals with independent publishers to keep games like Final Fantasy 16 off Xbox. Spencer is now feeling the heat. He needs to act fast, not just to challenge Sony, but also to keep Game Pass subscribers happy. He needs a bigger arsenal.

25:24In September 2020, Microsoft pays$7.5 billion for ZeniMax, the parent company of the game publisher Bethesda. The deal arms Xbox with eight new development studios and ownership of big-name franchises like The Elder Scrolls, Doom, Fallout, and Wolfenstein. It also kills Sony's attempt to secure Bethesda's much-anticipated sci-fi role-playing game, Starfield, as a PlayStation exclusive. And the threat of these games, now being Xbox only, changes the equation for those trying to decide which of the new consoles to buy. It's a bold and hugely expensive move that solves the Xbox's game drought. But the pandemic's blowing up everyone's plans.

26:14It's November 12, 2020, and in cities across the world, iconic buildings are being lit up in blue to mark the arrival of the PlayStation 5 just 48 hours after the debut of the Xbox Series X and S. But with COVID restrictions still commonplace, There are few witnesses to the live show and fewer consoles to buy. Disrupted supply chains and microchip shortages are causing a bottleneck in supplies. And there's no quick fix. It's late November 2021, and in a studio apartment in Nashua, New Hampshire, YouTube guru Jake Randall's live streaming on YouTube. His 8 ,000 viewers are getting excited because his latest tip is that at noon today, Walmart's website is going to have PS5s to sell.

27:04Walmart uses a Q system. At the time of the restock, you want to start refreshing about 30 seconds before. So at like 11.59 a.m. Eastern and 30 seconds. If you start refreshing even a minute before, Walmart will block you. It's been a year since Sony and Microsoft launched their new consoles. But demand still vastly outstrips the limited supply. And that spawned a cottage industry of retail sleuths like Randall, who help people find where the next console shipments will land. But retailers like Amazon, Best Buy, GameSpot, and Walmart are only selling to customers who belong to their membership programs.

27:44But guys, remember, the free trial of Walmart Plus will not, will not allow you to buy a console. You have to do a paid membership, but luckily, you can just do a one-month option instead of one year. And then there are the profiteers who buy every console they can and then resell them for two or three times the price. There's also an army of scammers online conning people into paying for PlayStations and Xboxes that don't exist. But even being in the right place at the right time is no guarantee of success. At noon Eastern time, Walmart's website starts selling PlayStation 5s. They sell out within the hour.

28:27For the console manufacturers, it's a frustrating situation. Sony's sold 13 million PS5s so far, and Microsoft's sold 8 million Xbox Series consoles. Millions of people are bored and stuck at home and desperate for entertainment. Never has the demand been so high and the supply so low. But while Sony is focusing on fixing the supply challenges, Xbox is about to make another acquisition, and one that will threaten to end Sony's video game dominance, once and for all.

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