Microsoft Hopes a Movie About a Landfill in New Mexico Will Sell the Xbox One

Microsoft is relying on a radical new strategy to beat Sony's PlayStation 4.

Apr 29, 2014 at 6:30PM

Last weekend, a documentary film crew working for Microsoft (NASDAQ:MSFT) excavated a 30-year-old landfill in the New Mexican desert. What they found -- ancient Atari games left over from the infamous video game crash of 1983 -- confirmed the veracity of a story many had (until now) regarded as an urban legend.

The city where the landfill is located -- Alamogordo, N.M. -- plans to keep 90% of the discarded cartridges. City officials aren't looking to play them, but rather hoping that they'll attract tourists.

Microsoft is after something a bit less ambitious. It's fallen far behind Sony (NYSE:SNE) in the current console war. To close the gap, it's banking on its unprecedented push into original programming.

The Xbox as the "One" device for your living room needs
Interested observers should have seen this coming -- it's been apparent for years.  First, it hired Nancy Tellem, an experienced network executive. Then Reed Hastings, the CEO of an Internet video competitor, resigned from Microsoft's board.

Next came the Xbox One's unveiling. The focus on TV was obvious and overwhelming, prompting parody videos and a backlash from hard-core gamers who felt left out by Microsoft's new focus. Microsoft even went so far as to trot out legendary film creator Steven Spielberg, who then announced his next big project: a TV series for Microsoft's new console.

Much of the Xbox One's hardware is designed to integrate with a customer's entertainment center: There's an extra HDMI port to interface with existing cable boxes; the Kinect add-on augments traditional TV viewing with voice commands and gesture controls.

All that was missing was exclusive content, and in a few months, Xbox owners will get it. In addition to the documentary and Spielberg's show, Microsoft has plans for half a dozen other series and a slate of future projects.

Closing the gap with Sony
I doubt that someone who otherwise has no interest in video gaming would shell out the $499 required to purchase Microsoft's Xbox One, or even the $179 needed to buy the older Xbox 360, which should also gain access to Microsoft's exclusive content. But a gamer choosing between Microsoft's console and Sony's PlayStation might be more inclined to go with the Xbox.

Quality original programming would be another way to add value, and if the shows are critically acclaimed, could win over some buyers on the margin. Microsoft needs all the help that it can get at this point: Sales of the Xbox One stand at about 5 million, far short of the 7 million PlayStation 4 consoles Sony has sold.

But Sony has original programming planned, too
It should be noted, however, that Sony has plans to add its own exclusive shows to the PlayStation. Less is known about its upcoming content, but The Wall Street Journal reported earlier this year that several series have been commissioned, including a show called Powers.

In this area, Sony might have the advantage over Microsoft -- while Microsoft has been willing to pay to attract creative talent (Spielberg), original programming is part of Sony's core business. In addition to its extensive list of consumer electronics, Sony is also a leader in movies, music, and television.

Sony Pictures Television, the subsidiary working on Powers, created the hit show Breaking Bad, widely regarded as one of the best, if not the best, drama series in the history of television. There's no guarantee that Powers will be the next Breaking Bad -- far from it -- but adding original programming to the PlayStation is one way for Sony to leverage its status as an entertainment conglomerate.

Sony has other ambitions, too, including some sort of Internet-based alternative to standard cable TV. Whether Sony can weave its way through the tangled web of Internet providers and cable networks remains to be seen, but I don't think Microsoft's new efforts have caught Sony by surprise.

From exclusive games to exclusive shows?
Using exclusive content to move hardware is not a new trend. Video game console makers have been relying on exclusive games since the dawn of the industry. Microsoft has Halo and Gears of War; Sony has Uncharted and Infamous. But these are game series, not TV shows. The creation of original programming limited to a particular company's hardware is a radical new development.

It's a strange shift, but in the end, it's possible that the winner of this console war could be the company holding the most Emmys.

The war between Sony and Microsoft could devastate this ancient industry
With Sony and Microsoft moving into original, web-based programming, cable TV is becoming less relevant every day. You know cable's going away. But do you know how to profit? There's $2.2 trillion out there to be had. Currently, cable grabs a big piece of it. That won't last. And when cable falters, three companies are poised to benefit. Click here for their names.

Sam Mattera has no position in any stocks mentioned. The Motley Fool owns shares of Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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