XBOX’s Physical Game Strategy Could Give Microsoft a Major Advantage Over Sony Next Generation

Microsoft could embrace physical games with Project Helix, potentially giving XBOX an advantage as Sony moves toward digital gaming.

We’ll likely see more PlayStation vs. XBOX in the next generation, especially as Sony seems to be going down the digital route. People have been talking about tangible media for years now, but reports about Microsoft’s upcoming system say it could be doing something different. There's a difference between the two corporations that might help Microsoft gain people who don't agree with Sony's direction.

The big deal here is that Sony is rethinking its stance on physical games, because Microsoft might use them as a marketing tool for games that are coming out soon. Maybe PlayStation knew that their strategy was creating an opening for competitors to get into the business.

Microsoft is reportedly in discussions with publishers on Project Helix, its next-gen console, and has notified developers the system will be compatible with physical games. There are also reports that the system may be built on physical media and that users may be able to convert their physical games to digital ones. If true, this could lead to a system that has the best of both worlds.

That would be a nice change of pace for XBOX and a much-needed one too, considering Microsoft’s current standing in the physical games market. Instead of following the same path, the company might look at physical help as an opportunity to capture a larger portion of the market in the next generation. The technique could still work even if XBOX doesn't become the market leader.

The chance comes at a time when some customers remain anxious about just how much the business relies on digital payments. You can own and sell physical games, which digital sales don’t usually allow. If Microsoft makes physical media a big part of Project Helix, it could appeal to consumers who think those possibilities are fading elsewhere.

Microsoft might leverage customer frustration by producing tangible games.

The idea is that XBOX doesn't need to be the biggest physical gaming system brand in the world right now for this plan to work. Microsoft might view hardware support as a means of gaining an edge over PlayStation. If Sony keeps ignoring physical releases and XBOX keeps pushing them, then Microsoft might make its next system the thing for consumers who want both physical and internet games.

But that doesn't mean that XBOX is suddenly going to beat PlayStation. Even a small gain in market share could mean a lot. Sony is now comfortably in front in the console business, but if consumer demands change substantially, Microsoft might make up the difference. Microsoft is also thought to be well positioned to deliver a solution that combines in-store and online buying.

The company may use its existing understanding of physical-to-digital functionality to grow its services to clients. XBOX may not have to force consumers to choose between the formats, allowing users to play physical games while getting some of the benefits of digital retailers. Also, there are indications the push to digital-only games isn’t as popular to publishers as some customers think.

Publishers are worried about the situation, says Digital Foundry. Physical sales can recoup a major part of a firm investment. Sony has previously said that digital games represent more than 80% of the market. But that number is deceiving because it includes titles you can only buy digitally. 

Examining particular high-profile AAA games that launched both physically and digitally shows a mixed picture of player behavior. God of War, Astro Bot, Spider-Man, and Final Fantasy 7 Rebirth all have world-class physical requirements. But studies say that physical sales for several of these games are around 50% of total sales, if not more in some cases.

Even with the digital market growing, there are still good reasons for publishers to push for physical games.

This is why authors could worry about a future with reduced use of real copies. If this option goes away, there’s still a chance people will buy a lot of physical copies of big games. This might affect both publishers and consumers. It’s also important to realize that developers of games are not necessarily forced to release their games on actual consoles.

It’s possible that in principle companies such as Capcom and Square Enix may have decided that the best approach to market their computer games was to sell them solely through online shops. But because of the high demand, many major games are still made into tangible copies.

That makes it simple to see why publishers may not be happy with where Sony is headed. If publishers thought physical releases weren't worth the effort, they would have given up on the format by now. Instead, physical copies are a huge part of the industry for many major releases.

And you can’t expect consumers to buy into a fully digital world. Digital sales have surged substantially, but purchasers could react differently if they are unable to acquire physical games. Some users may still want to purchase digitally; others may be looking to switch to another website to acquire games.

This is where Microsoft’s rumored approach may come into play. Project Helix will give strong physical support while Sony continues its efforts on making the PlayStation 6 more digital-focused. XBOX may be able to provide something its competition does not. And thus a Sony decision might ultimately help Microsoft, which is not what they wanted.

If XBOX lets physical files in, Sony could have to rethink its plans for next gen.

A business presently trailing PlayStation in the race for traditional consoles may lean on a controversial industry tendency to distinguish its next-generation hardware. Sony might already be aware of this alternative. If PlayStation executives fear Microsoft’s physical approach will alienate users, Sony may reconsider or delay some of its ambitions for a digital future.

That doesn’t mean, however, that Sony has officially changed its tune. These allegations are purely speculative, and there has been no official announcement on Project Helix or Sony's response to Microsoft. But the rumor does have meaning in the industry. For significant releases, physical media is still useful. Publishers are still pressing physical copies, and clearly some customers want the option.

The plan might possibly be more attractive due to the alleged potential to turn physical things into digital items. Microsoft doesn’t necessarily see real and digital games as separate things but as two ways of doing the same job. In that scenario, purchasers may receive physical copies and have access to digital features.

If Microsoft chooses to focus on physical support with their next-generation console, it could be positioned to serve this market. Finally, whoever wins the fight between XBOX and PlayStation may benefit customers. If Microsoft’s idea makes Sony rethink its approach, users could have more options, not less.

But the physical emphasis of Project Helix is still unproven. The reports are certainly important but should be taken with a grain of salt until Microsoft makes public its plans for the next generation. If the charges are true, XBOX might have a surprisingly powerful selling point.

Microsoft’s endorsement for the format might turn an increasingly controversial trend in the business into an opportunity at a time when physical media seems to be losing ground. That could force PlayStation to reassess just how far it wants to move toward a future of purely digital material.