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Gamescom 2014: Microsoft’s Biggest Announcements for the Xbox One

Microsoft (NASDAQ: MSFT  ) recently made a flurry of announcements regarding the Xbox One at the Gamescom trade fair in Cologne, Germany.

With new exclusive games, bundles, hardware, and software features, Microsoft made it clear that it doesn't plan to give up on the Xbox One, which currently trails behind Sony's PS4 and Nintendo's Wii U with 5 million units sold. Let's take a look at Microsoft's top announcements, and how they could shape the future of the Xbox One.

Source: Flickr.

Exclusive new games
One of the Xbox One's biggest weaknesses is the lack of exclusive games. Of the top 10 best-selling titles on the Xbox One, only two -- Forza Motorsport and Dead Rising -- are Xbox One exclusives. The best-selling game on the platform, Electronic ArtsTitanfall, was also released for the Xbox 360 and Windows.

Microsoft will launch the multiplayer beta of Fable Legends on Oct. 16. The game, which takes place in the Fable universe, is a multiplayer dungeon crawler where four players play the heroes while another controls the dungeon as the villain. Another unique game is Remedy Entertainment's Quantum Break, which promises to "interact" with a companion TV show when both arrive next year.

There are also plenty of shooters on the way. Sunset Overdrive, the eagerly anticipated third-person shooter from Insomniac Games, will arrive on Oct. 28. On Dec. 29, the Halo 5: Guardians beta will open to gamers who purchase The Master Chief Collection in November. Halo 5 will arrive in the fourth quarter of 2015, and should be a guaranteed blockbuster, considering that Halo 4 previously sold 9.1 million copies on the 360. Next January, Evolve -- a new shooter from Valve's Left for Dead team -- will offer an Xbox One beta.

Sunset Overdrive. Source: Insomniac Games.

But the biggest revelation was that Square Enix's Rise of the Tomb Raider will debut as an Xbox One exclusive in late 2015. Considering that the Tomb Raider reboot in 2013 sold 4.8 million units across five platforms (with 2.2 million on the PS3), the sequel should give the Xbox One a nice holiday boost next year.

Yet the one game that was curiously absent was Gears of War, which sold over 20 million copies over four games for the Xbox 360. That's because Epic Games, the original developer, sold the rights to Microsoft's Black Tusk Studios, which still hasn't announced a release date for the next game.

Big new bundles
Microsoft will also launch two new bundles to boost hardware sales. The first one, an all-white console packed with Sunset Overdrive, will sell for $400 without the Kinect on Oct. 28. The second one, a Call of Duty: Advanced Warfare-skinned Xbox One with a 1TB hard drive (double the size of the existing one) and the game, will sell for $500 on Nov. 3, also without the Kinect.

The Call of Duty: Advanced Warfare bundle. Source: Microsoft.

Those bundles are great values for gamers, but it continues Microsoft's tradition of taking losses on the Xbox One to gain market share. IHS iSuppli reports that the Xbox One, without the Kinect, has a teardown cost of $396. This means that Microsoft is practically selling the Xbox One at cost while taking another $50 loss by giving away games for free. While Microsoft's ultimate goal is to take a cut of software sales and Xbox Live subscriptions, this strategy can be costly in the long run.

Sony doesn't significantly lower the price of its bundles to sell PS4s. It will release its white Destiny PS4 bundle on Sept. 9 for $450 -- the same price as the console plus the game. The only "perks" that the customer gets is a glacier-white console and a month of free PSN access. Of course, Sony can afford to offer only meager extras with its bundles, considering that it has now doubled Xbox One sales with 10 million units sold.

Old features become new again
In addition to the new 1TB hard drive, Microsoft is adding new features like DNLA streaming for home media and media playback from USB devices like flash drives and external hard drives.

While Microsoft is promoting these features as "new" ones, they're already standard in much cheaper devices. Chromecast, Roku, or even a Raspberry Pi can serve as DNLA renderers with the right tweaks. The Roku and Pi can play media off USB devices, and all three devices support most major codecs. It's ironic that although Microsoft originally promoted the Xbox One as an all-in-one media center, it lacked basic playback features that $35 to $50 devices could easily pull off. The reason, presumably, was to persuade customers to purchase media from Xbox Video and Music instead.

But at least the Microsoft is rectifying its past mistakes. More importantly, the PS4 still lacks DNLA support and doesn't allow users to play media from USB devices for the same reason -- Sony also wants users to subscribe to its Music and Video Unlimited services.

The Foolish takeaway
In conclusion, Microsoft is clearly addressing the biggest problems with the Xbox One.

Microsoft will offer better exclusive games over the next two years. It will take losses to offer attractive bundles to gain market share. It will finally open up the Xbox One as a true media center instead of one designed to sell content. But these strategies could lead to more losses for the Xbox division, which many people -- including Bill Gates and Stephen Elop -- have suggested selling or spinning off.

So what do you think, fellow gamers and investors? Will Microsoft's plan for the future generate higher Xbox One sales, or is it too little, too late for the underdog console?

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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 14, 2014, at 11:09 AM, XRavishX wrote:

    Too little too late? It's far too early to even be making questions like that when the system isn't even a year old yet. The final question makes it sound like the XB1 is a long-standing veteran that just couldn't get anything correct but is now, finally, trying to get things right.

    The truth of the matter is that the system is still young and they lost many potential buyers at the get-go not because of lack of features, games, or bad policy. It was because of bad promotion. Media attention is a double-edged sword and the media is more garnered to catering to what the masses want to read and providing opinions on facts rather than presenting the facts and opening up discussion. That coupled with the fact that Microsoft's PR was horrendous led to many being disenfranchised with the company rather than trying to figure out what their actual goals were. Their goals, in my opinion, would have set the XB1 apart in terms of a gaming system in a very positive way had it be promoted and talked about properly. So, marks down for MS for not being able to articulate properly what their vision was.

    In any case, I'm pretty excited about the new improvements and they can't come soon enough. I'm looking forward to all the video support since the machine is used at home more as a media center than a gaming machine, though not by a far margin. It would be far more convenient to play movies that I have stored on my computer directly to my XB1 rather than having to switch settings all the time (I currently have my computer hooked into my receiver and TV via HDMI in order to watch movies).

    Value-wise, I think that the XB1 provides more to consumers than the PS4 especially when bundled with the Kinect. It's amazingly responsive to voice commands, which are my absolute favorite way of opening apps and games and playing and pausing etc., provided you don't have other people in the immediate area carrying on conversations. It's pretty good at blocking out accidental and intentional commands when there are a few people talking. With these new improvements, I'm thinking that more people will see a larger value as a system that was supposed to be the ONE place you went for your media. I think it's just beginning to live up to its name.

  • Report this Comment On August 18, 2014, at 8:50 AM, chris9465 wrote:

    the xbox is dead....only thing i saw watch gamescom was the xbox one funeral parade....

    the entire idea for the xbox one was bad and its only getting worse.....MS thinks a 12yr old game is going to save this farce? master chief isnt rescuing your idiotic butts from the fire.....KINECT DRM used games 24hr check ins domed this thing in May of 2013....

    after that everyone i knew bailed on the xbox one and sales figures prove it......10 million sold vs 5 million shipped......

    if you were one of those early adopters and bought a now discontinued (mine as well be) kinect version for 500 only to watch all these kinectless bundles come out after the now have a useless door jam and those who waited get 1TB hard drives and a game installed....COD i hate sledgehammer games they suck!!! this is nothing more than ghost recon rip off with Frontline graphics....and frontline sucked!

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Leo has covered the crossroads of Wall Street and Silicon Valley since 2012. Follow him on Twitter for more updates!

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