That didn't take long. Around six months out from the launch of the Xbox One at $499 with the Kinect as a pack-in, Microsoft has decided to release the system in a new configuration. Microsoft announced today that the Xbox One will be available on June 9 at $399. The new price point offers the system without the all-new Kinect that Microsoft was positioning as a necessary item when the system was first revealed.
The company will be offering the standalone Kinect sensor this Fall, but the price point wasn't disclosed.
"We've heard that you want more choices from Xbox One. You want a wide variety of options in your games and entertainment experiences and you also want options in your hardware selection," wrote Xbox boss Phil Spencer in the Xbox Wire news post. "To be clear, as we introduce this new Xbox One console option, Kinect remains an important part of our vision."
Microsoft is also backtracking on requiring Xbox Live Gold for entertainment applications. Starting in June, anyone with an Xbox 360 or Xbox One can use apps like Netflix, HBO Go, Twitch, Skype, Machinima, GoPro, Red Bull TV, the NFL, MLB.TV, NBA Game Time, NHL Game Center, and OneGuide without paying for Xbox Live Gold.
Since video apps won't require it, Xbox Live Gold will be getting a boost from the new Deals With Gold program, which will discount games 50 to 75 percent each month. June's discounted titles will be Forza Motorsport 5 and Ryse: Son of Rome. Microsoft is also launching a VIP program for Xbox Live Gold members, offering "free games, monthly deals, and other great benefits." The free Games With Gold promotion continues on Xbox 360 in June with Dark Souls, Super Street Fighter IV: Arcade Edition, and Charlie Murder; the promotion launches on Xbox One with Max: The Curse of Brotherhood and Halo: Spartan Assault.
Under new CEO Nadya Satella, Microsoft has been quick to change direction on Windows and these Xbox announcements are a part of that same strategy; stop taking on water and right the ship. These are good announcements from Microsoft, but they largely bring the Xbox One and Xbox Live Gold into parity with the PlayStation 4 and PlayStation Plus. It points to a big vote of no-confidence in the Xbox One's current path against Sony's console. According to March NPD releases, the Xbox One has only shipped 5 million consoles, while the PlayStation 4 has sold 7 million. Even in the best case scenario, the Xbox One is 2 million behind its rival. While Titanfall probably helped move some Xbox Ones, its launch didn't push the Xbox One ahead.
As the PlayStation 4 began to break away in sales and graphical prowess in multi-platform titles, it became imperative for Microsoft to even the odds. It's telling that many of these changes have been announced heading into E3.
More importantly, this change throws the Kinect out to die. It moves the sensor from being a pack-in with every system to being a peripheral, and developers don't tend to support peripherals in meaningful ways. While the Kinect-based offerings haven't been great so far, the chances of a major Kinect-based game have now dropped to zero. You'll probably see Harmonix' Fantasia: Music Evolved, a new Just Dance, and whatever Kinect thing Microsoft has Rare on this year. You can see Harmonix developers' reactions to the announcement on Twitter, as Fantasia isn't out until Fall 2014.
"Oh, great. Super great," tweeted Harmonix director of publishing John Drake..
"Oh, good," added Harmonix publicist Nick Chester.
Microsoft essentially threw Harmonix under the bus. Selling a game based on an accessory packed-in with every system is a different proposition from selling a game based on an accessory sold separately.
It leaves the Xbox One with some lingering problems as well. Navigating the current Xbox One menu without voice commands is a chore; the system's UI requires a controller and the Kinect to working in tandem to be really useful. Microsoft needs to overhaul its shiny new UI to take on the influx of new users that won't have the Kinect.
There's also the fact that the Xbox One now lacking something to differentiate itself from the PlayStation 4. Without the Kinect, it's just the less-powerful PlayStation 4 from Microsoft. With the Xbox One on price point parity with the PlayStation 4, the need for solid exclusives becomes much more important. The company probably believes it can out-show Sony at E3 2014, but that's still in question.
It may be a smart move for Microsoft and it's a move that people have asked Nintendo to make with the Wii U: leaving the GamePad behind for a cheaper SKU. They may pick up new customers at the new price point, but the full picture won't come into view until after E3. Microsoft has to provide a compelling reason for consumers to pick the Xbox One over the PlayStation 4, and it just threw one of its marketing bullet points out the door.