Microsoft's (NASDAQ:MSFT) Xbox One and Sony's (NYSE:SNE) PlayStation 4 are slated to hit American retailers in less than a month, and launch details are still shifting. While pre-order stocks are mostly accounted for and both systems are likely to sell out of their launch production, a highly competitive industry dictates that early success is more important than ever. Although it's been known for a while that the PlayStation 4 has better hardware than the Xbox One, recent news that Activision Blizzard (NASDAQ: ATVI)'s Call of Duty: Ghosts will offer better resolution on Sony's platform has the potential for a major impact. What does this development suggest for the future of the Xbox One?
The Xbox 360 and the PlayStation 3 ushered in the age of high-definition console development. While this pitch was used to distinguish the systems and their offerings from the preceding generation of consoles and software, many PS3 and 360 titles came in under the 720p resolution that is used as the barometer for whether or not display output is HD. Many of Activision's Call of Duty titles are sub-HD on both systems, though sales records inate that this deficiency had little market effect. Why should a lack of 1080p resolution games hurt the Xbox One this time around?
To a large extent, the next-gen systems represent evolutions of current-gen features and design philosophy rather revolutions or paradigm-shifting advances. Each system is offering improved online functionality and hardware that should remove many of the roadblocks encountered on current-gen consoles. That the Xbox One cannot run Call of Duty: Ghosts at 1080p is a worrying indication for the system's hardware performance and value proposition. If multiplatform games are available in 1080p on Sony's cheaper device while only 720p on the Xbox One, consumers will have less reason to buy Microsoft's system this time around.
Let's be clear
The first major rumblings that the Xbox One would have trouble hitting 1080p for graphically intense titles came with the news that Ryse: Son of Rome would output at a max 900p. The game is being published by Microsoft and was developed by Crytek, the company behind the CryEngine development suite. That Crytek, a company renowned for its graphical prowess, couldn't reach one of the next-gen milestones was worrying, but not damning, for the Xbox One. Launch software is typically a terrible indication of what is a system is really capable of. Now that the situation is getting clearer, Microsoft might have a real problem on its hands.
As a multi-platform, cross-gen game, Activision's Call of Duty: Ghosts was created with current-gen hardware specifications in mind. Regardless of platform, the game will feature assets, lighting, and physics models that are largely unchanged. This means that the game should not be particularly taxing for Sony and Microsoft's new consoles.
The Call of Duty series is one that has come to be associated with the Xbox platform. Entries have historically sold their highest numbers on the Xbox 360, and Microsoft was keen in its recognition of the franchise's importance early in the generation. The company partnered with Activision to ensure that its console was the premier platform for COD. The games ran best on the 360 and were advertised in conjunction with the system. Call of Duty: Ghosts marks the first time that a game in the series will take its promotional footage from a Sony platform.
While pre-order numbers for the latest COD are trending below those for the previous entry in the series, Ghosts will still be one of the holiday's biggest sellers. It will also help to drive adoption of online services like Xbox Live and PlayStation Plus. The performance advantage on PlayStation 4 could push early adopters to Sony's camp. Call of Duty is key to the online gaming landscape, and having a significant graphical advantage is likely to work in Sony's favor.
A sign of things to come
The average consumer may not notice a substantial difference between 720p and 1080p images. That said, if the Xbox One has a dearth of 1080p games, the deficiency will make its way to the consumer conscience. In the mindshare battle with the PlayStation 4, this type of development could be very damaging to the more-expensive Xbox One.
The PlayStation 4's hardware advantages are becoming evident much earlier than many had anticipated. Microsoft officials had claimed that the Xbox One's "balancing" would allow it to make up for areas in which it may have seemed weak on paper. Now, it's looking like the system's hardware, particularly its ESRAM, is going to be an ongoing source of headaches for developers. For a company with such immense resources, Microsoft's Xbox One's performance leaves a lot to be desired.
Keith Noonan has no position in any stocks mentioned. The Motley Fool recommends Activision Blizzard. The Motley Fool owns shares of Activision Blizzard and 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.