REDMOND, Wash. -- Now representing Microsoft in the next round of the video game battle: Xbox One.
The software giant introduced the successor to the Xbox 360 at an industry event at its headquarters here Tuesday. No price was announced, but the system will join the Sony PlayStation 4 in stores this holiday season.
A renewal of the Microsoft and Sony rivalry will energize the global $27 billion console game industry, says Wedbush Securities analyst Michael Pachter. "Gamers have become fatigued, and they are ready for something different. Publishers have been reluctant to launch new (intellectual properties) late in the cycle, so there is a lot of fresh content ready for the next generation," he says.
Nintendo's Wii U system, launched last November "is a flop so far, and that opens up the playing field for Microsoft and Sony," he says. Last week, Electronic Arts announced that it would no longer be supporting the Wii U. That decision, says Pachter, "is probably only the first of many similar decisions by third parties, but everyone will support the next Xbox and PlayStation."
What is clear is that Microsoft hopes to expand its dominance in living rooms with the Xbox One. In addition to cutting-edge video games, the new system will have larger on-demand movie and TV libraries, bolstered Internet features, including Skype video calling and increased control of live TV programming. The new system also aims to capitalize on emerging consumer acceptance of smart TV and social television experiences with improved online networking while viewing.
Adding to the luster: A new TV series based on the Halo video games, with Steven Spielberg as executive producer, is in the works. A new deal with the National Football League will result in Surface tables on sidelines and real-time interactive video, stats and data delivered split-screen during broadcasts.
"There is more entertainment flooding into the living room than ever before, delivered through a sea of devices," said Don Mattrick, president of Microsoft's interactive entertainment business. "We designed Xbox One to be the first all-in-one device that puts you at the center of it all - making games, TV, and entertainment better and easier to enjoy."
Included with each Xbox One will be an upgraded Kinect controller, with improved voice- and gesture-tracking with its built-in camera, microphone array and infrared detection. Pay-TV subscribers can connect their set-top box and let the TV programming flow through the system and be controlled by Kinect's voice and gesture monitoring.
"We're making the proposition to gamers and developers alike that you can assume every single box has voice and gesture capability, and (developers can) build applications on top of that," says Yusuf Mehdi, corporate vice president of marketing, strategy and business for Microsoft's interactive entertainment business. "We know that the way people enjoy entertainment in their living rooms is going to change a lot over the next 10 years. ... We are architecting (the system) for the living room of the 21st century."
Rumors had the system named "Infinity," including a Blu-ray disc drive and requiring an always-on Internet connection. Xbox One does have the Blu-ray drive; the system is an "Internet native device," says Microsoft chief product officer Marc Whitten. However, movies and TV can be viewed when not connected to the Net, as can some single-player games, "assuming they don't take advantage of something on the Net."
Microsoft sold 76 million Xbox 360 systems worldwide since bringing it to market in 2005; that's slightly more than Sony's PS3 (74 million) but short of Nintendo's Wii (99 million). The designers behind the new system have tried to build this successor for an equally long life.
"We believe our next console will be a 'must-have' product for anyone who wants to take the entertainment experiences they love and make them decidedly better," Mattrick said. "By expanding beyond just the best game experiences to the best TV and entertainment experiences, the value proposition and market for Xbox becomes significantly greater and as a result, will continue to drive growth in the overall industry."
Xbox One will only support games made specifically for the system, as well as used Xbox One games. The new system will build on current smart-TV features found in sets from Samsung and other makers that customize TV menus for each member of the family. But the new Xbox One will "remember the things you did before, watching TV or playing games," Mehdi says, "and start to tailor content around you. ... When you walk up and say, 'Xbox On,' it will automatically recognize you and give you your own personalized, customized home screen."
Xbox Live, which has 48 million members, will evolve beyond online gaming to foster social TV "moments" during special events such as the Academy Awards or major sports events, he says. "The whole idea is get to a premium single box that can do the best of games and entertainment in one system."
Top video game publishers were on site pledging support for the new system. Activision showed the first footage from Call of Duty: Ghosts. EA Sports previewed its lineup of games, including new Madden, NBA Live, FIFA and UFC releases.
To prepare for the increased computing power in Microsoft's new system - as well as Sony's PS4 - EA Sports has created a new underlying Ignite game engine that will transform games, says the studio head Andrew Wilson. Athletes in the games - be they football or soccer players - will be drawn in real time with 10 times as many animations, and four times the artificial intelligence, or brains.
That means a running back will more naturally follow a blocker and hit a hole in the defensive line. Of course, the opposition is smarter and more agile, too. "You start to feel like these (virtual) athletes are making decisions based on human-like intelligence," Wilson says, and moving with fluid, realistic motion. A running back in Madden might, "give a stutter step as he tries to anticipate where his offensive line is and where the defensive line is going," he says.
More frequent, faster influx of sports data - daily performance and injury updates - will make athletes in the games more resemble their real-world models. "Every time you boot up the game, you'll get players that truly interact how they were interacting at that moment in the real world, Wilson says.
As for Microsoft's deal with the NFL, the new multi-year interactive TV rights deal means fans watching at home will be able to augment live game broadcasts with interactive fantasy football stats, displayed side by side on screen during live NFL broadcasts. Via Skype and Microsoft's SmartGlass apps, viewers will get additional video, photos, stats and be able to interact with friends via social networks.
"We want to improve all facets of the NFL experience for fans and the game on the field," said NFL Commissioner Roger Goodell in an e-mailed statement.
Actual NFL teams will begin using Microsoft tablets. Two years from now, Microsoft hopes to see coaches calling plays using Surface tablets.
Also planned: Increased integration of Skype to include fitness and education uses. "The integration of Skype into the Xbox experience will allow friends to see one another's screens (and) to talk to one another while playing," Pachter says. "I think it's a killer app."
Details were sketchy on when the Halo TV series would arrive. But Microsoft has high hopes for the project. "The longstanding success of the Halo novels is testament to the fans' hunger for new stories, and last year's live action (online video) series Halo: Forward Unto Dawn garnered enormous community support and won numerous awards," Mattrick said. "We now have the technology, teams and our newly announced relationship with Steven Spielberg to bring Halo The TV Series to life in ways never before possible."
Mike Snider, USA TODAY