What can Microsoft do to turn the Xbox One around?

It's been a rough couple of days to say the least for Microsoft after their follow up conference at E3 for their new Xbox One console. For every promising piece of information or game they revealed it just wasn't enough to ease the dread and outrage everyone felt towards their new DRM and used games policies.

I don't think I've ever seen such a heavy backlash towards a company and its console in all of my days. Just today I over heard several of my friends who were long time Xbox fans state they would not support the Xbox One with such policies in effect. In case you haven't kept up with it, here's a run down of the new policies brought to light:

-The Kinect device packed with the system is mandatory, meaning the system will not function if it is not connected.  It is not yet known what Kinect features can be disabled in user settings.
-It is the game publisher's decision on whether or not a game can be sold used at retail or even to your friends.
-The Xbox One does not need to maintain a constant internet connection, but it does need to "check in" with Microsoft at least once every 24 hours or the system is disabled. Don't have a stable internet connection? Then you're tough out of luck.
-Once you play a game on your system, the authentication is locked to that system. If you decide to get rid of that game, your choice must be permanent as the authentication will be locked to the next device that plays it. After that the game can no longer be passed on and is permanently locked to the new system.
-It is possible to play one of your games at a friends house by logging into your Xbox Live account on their system.  However only one hour of gameplay is allowed before the game and possibly the account itself are locked out of that system.
-Your friend has to have been on your friends list for at least 30 days before any of the above is possible.
-The retail price of the Xbox One is $499.

It sounds like a lot of hoops to jump through to be able to enjoy games with your friends in person. Gone will be the days when you could swap games with your friends for a while. Not to mention the always on Kinect device, which raises concerns about privacy. I can't imagine why Microsoft would want to spy on your living room, but it could certainly be possible.

The final nail in the coffin though was near the conclusion of Sony's Playstation 4 presentation where they directly addressed the DRM and used game concerns gamers were worried about by stating they would not be using a DRM or licensing policy, would allow the selling and purchasing of used games, and allow you to borrow and lend your games to friends just the way things have always been. They also dropped a price point of $399, a whopping $100 less than Microsoft's offering.

Needless to say, a lot of gamers have already made their decisions, and rightfully so. I can't think of any logical reason someone would purchase the Xbox One over a Playstation 4 based on this information, other than some Xbox exclusive titles. But are those really enough to forgo the used game and lending/borrowing hassles listed above? I suppose if you're the type of gamer who plays strictly online and always buys things new you'll be okay, but it's tough luck for those of us that like to game socially in person and who are on a budget.

So where does Microsoft go from here?  I would HATE to be a member of their PR team right now, but I'm going to try and take a stab at some steps they could take to possibly ease the damage dealt to them by Sony.

The obvious answer is to take it all back. But from a business standpoint that is basically admitting defeat or that you've done wrong by your consumers. We all know they have, but by committing to a price drop before the system has even launched and undoing the policies they've already set place it will teach consumers that they can be pushed around, and the best way consumers can do that is by sealing up their wallets tight. From there the possibility of a trend where consumers always wait a few months for a price drop on Microsoft products can be damaging in the long run, because early adopters make for a considerable amount of profit.  For those reasons, I don't think the mighty Microsoft would go back on their statements made at E3.  Not until the system has been available for a considerable time anyway.

So what can they do then? If they can't go back on their statements, the best thing to do instead is to sweeten the deal that's already laid out. Because lets face it, it's pretty sour. To start, I would include 2 years free of Xbox Live Gold service for the early adopters. That in itself would offset the $100 dollar difference in Sony's machine, but since not everyone plays online I would include a pack in game or two as well.

Another option would be to work with game retailers to offer some sort of rebate or other incentives. If they could afford a $100 dollar mail in rebate then they could effectively meet Sony's price without having to downright price cut before the system launches. It would also mend the perception that Microsoft is against retailers that sell used games. That may or may not be true, but their stance on used games certainly makes it seem that way.

As for the policies themselves they should at least decide on more lenient time frames, such as a 3 day period before your game and profile locks itself out of your friend's system. They should also implement a system by which you essentially go online and tell them that you're either visiting a friend with the game or selling it outright. That way the game would be locked out of your system until it is unlocked again from your friend's. It's not much different and still a lot of hoops to jump through for the simple act of letting your friend borrow a game but at least it gives more options to the consumer.

Regarding the Kinect, they need to be clear about their intentions with it and what the user has the power to control and they need to do it fast. It would make a lot of people happy if the ability to completely disable the camera portion of the unit is included in the settings. But the longer they sit on their hands the more the big brother Microsoft is always watching you rumors will spin out of control.

To say the Xbox One is a PR nightmare is pretty generous. They have a long way to go to win back consumers from the Playstation 4 and they can't waste time doing it. Sony themselves have shown us just how long it takes to recover from such dramatic launch missteps. Of course I'm referring to the 599 US DOLLARS fiasco and how many years it took to win back consumer loyalty for the Playstation 3.

I can't wrap my head around how any of the Microsoft upper management could walk away from meetings on these policies thinking they were good ideas that gamers would accept. But I guess that's what happens when you let a bunch of suits and investors who have no idea about gaming culture make the big decisions. I loved my Xbox 360 and I'm extremely disappointed that things have turned out this way for the Xbox One.

Then again, I'm by no means a financial analyst. Maybe these decisions are carefully integrated in a way that they would actually benefit Microsoft in the long run. Though that seems unlikely if no one buys the system at all. But then again, maybe they're banking on the Xbox brand name itself. Xbox is a premium brand that people hold over Sony these days (or at least up until this E3). If they advertise the crap out of it, maybe it will be fine. One thing I've noticed these days is that people don't do research anymore, they buy what they hear the most about. How many people can give you a really good reason for why they bought an iPhone? Nothing against the iPhone or the people who like it, I'm just saying of the many people I've asked none of them could give me a truly compelling answer other than "they're just so cool!"

If Microsoft is banking on the "it's just so cool" factor then they're in for a rude awakening. It's going to be a long road for the Xbox One, mostly down hill, before it can catch on with the core gamer crowd. As much as I despise "console wars" this next generation is going to be an interesting race.

Thanks for reading!