Opinion : The Xbox One X is a Bargain at $499

The veil has finally lifted off of Project Scorpio. The upcoming console was first revealed at Microsoft’s E3 conference in 2016 and for the past year, rumors of all types have swirled around it. How powerful would it be in reality? Would it truly be able to run games in native 4K?  What CPU and GPU would it use? What would it look like? How much will it cost? Surely, Microsoft is exaggerating its capabilities no? These questions, and many more, have been asked ad nauseam. Now that we know everything about the Xbox One X, as it’s officially named, I’ll touch on all of those questions to some degree. But what I’m really going to focus on is the price and why, at $499, the Xbox One X is a relative bargain.

Not wanting to hold a press conference to solely reveal the Scorpio’s specs and knowing they could be easily disregarded by skeptics, Microsoft wisely left that up to Digital Foundry ; widely regarded across the industry as the experts in explaining such things. In April, Digital Foundry gave us all of the meaty details on the X including the custom “Scorpio Engine”, the RAM, memory bandwidth, etc… While there’s no need to rehash those details, as you’re better off reading Digital Foundry’s material to do so, the summary was that Microsoft had delivered. The Scorpio was indeed the most powerful console ever created by a significant margin, it would be able to run games in native 4K, and they had engineered some truly fascinating details into the box including having built Direct3D 12 into the Command Processor of the GPU (something that would help reduce CPU bottlenecks). If you’re only just hearing about the Xbox One X due to E3 and missed the details back in April, you can start with this article from Digital Foundry : Scorpio Hardware Breakdown

After the Scorpio spec reveal and with many questions having been answered, the conversation began to shift to price point. Surely, given the specs of the Scorpio, its custom engineering, the cooling system, the UHD Blu-Ray drive and more, it would be expensive. After all, the Xbox team had clearly stated many times that it was a premium console for hardcore gamers. With the PS4 Pro costing $399, the Scorpio was expected to be at least $499. Higher price points were circulated as well, with some expecting $599 or more. These discussions were held across many gaming sites, forums, and message boards. Articles and editorials were written. It became generally accepted that the Scorpio would be one expensive machine when it launched.

Over the past few weeks though, leading up to E3, the conversation shifted once more. At some point, $399 became the focal point for the Scorpio. Nothing had changed in the two months since the Digital Foundry reveal. Nobody within Microsoft alluded to such pricing. There was nothing, anywhere, lending credibility to the assumption other than it potentially being priced the same as the PlayStation 4 Pro. Sure, many of us hoped for such pricing, but the realistic ones among us knew better. Now that we have confirmation of the $499 price point, a lot of people have questioned Microsoft’s decision. In particular, the conversation has revolved around being unable to “directly compete” with the PlayStation 4 Pro.

So let’s start by looking at what the Xbox One X delivers in terms of price to performance. At the most basic level, the One X is 40-50% more powerful on-paper than the PS4 Pro which is currently the most powerful console available. However, the on-paper specs don’t tell the full story. The Xbox One X is customized in such a way that pound for pound, it punches far above its weight class. In combination with the design of the new Scorpio XDKs (the Xbox One X development kits), Microsoft is giving more power and capability to developers in the console space than ever before. While Microsoft has spoken about this at length, the full picture is often overlooked. Rather than me trying to convince you of the importance of this, let’s hear what the developers think about the platform. Last week during E3, several developers were openly speaking about their time with the Xbox One X to date. Here are a few excerpts taken from interviews throughout the week:

Playful Corp’s Paul Bettner:

“From a developer’s standpoint, [Xbox One X] is the most developer-friendly console we have ever worked with,” he said. “Not just because the hardware is super over-powered–which it is. I don’t understand how they … it’s like a high-end PC crammed into this tiny little box.”

Monolith’s Bob Roberts:

“It’s a crazy powerful box. Shadow of War on Xbox One X will be the prettiest possible version of the game [on consoles]. We have some devkits which also load a lot faster. While in development it’s extra nice to load a giant world in a matter of seconds so we can iterate faster. But it will also have faster loading times for players, I think that one of the big things in this console generation is that we got a lot more memory, but in a lot of games I played loading times got longer rather than shorter. It’s nice to see them push on this side of the technology.”

Grinding Gear Games’ Jonathan Rogers:

“Bringing a PC game to Xbox, Microsoft makes it really easy because of the… in terms of tools. So it really just comes down to making the gameplay good. And especially on Xbox One X, two hours after we got the dev kit it was running at 4K, 60fps. That thing is very powerful. It was that easy. I think we were expecting it to take a little longer than that, but no, it was a cinch.”

Studio Wildcard’s Jesse Rapczak:

“If you think about it, it’s kind of equivalent to a GTX 1070 maybe and the Xbox One X actually has 12GB of GDDR5 memory. It’s kind of like having a pretty high-end PC minus a lot of overhead due to the operating system on PC. So I would say it’s equivalent to a 16GB 1070 PC, and that’s a pretty good deal for $499.”

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“It’s amazing. It’s basically like Epic settings on PC, we’re targeting 60FPS. We recently introduced variable frame rate, but on Xbox One X with the extra horsepower, you’ll notice less variation in your frame rate even in busy situations”. Rapczak added: “The PS4 Pro also has improved frame rate when compared to PS4. Before the XB1X, it was the best console version of ARK, but it’s hard to argue with that 6 teraflops [laughs]. Having the same frame rate in our game isn’t really possible, there are a couple reasons for that: the XB1X not only has a faster CPU than PS4 Pro, it also has a lot more RAM. I’d say there’s a 50% performance difference”.

So if the console is the most powerful, feature packed console ever created, and developers love it, then why the surprise and/or disdain at its price tag?  In short, the viewpoint on console price for as long as I’ve been gaming (a very long time) has been the same. That is, a console priced over $399 is being sent to its death. While that still may be true in terms of wide market appeal, I don’t believe it holds the same relevance it once did, especially to the core gamers the One X is aimed at. Not only is the overall video game market continuing to grow worldwide year over year but consumer spending in the segment as well, with 2016 representing the highest levels of all-time. Combined with today’s average gamer, who is nearly 35 years old, there is absolutely a market that is willing to spend more on their preferred entertainment.

Products like the Xbox One Elite Controller and PlayStation 4 Pro, though not a direct correlation to the Xbox One X, have given us some foresight into what we can likely expect in terms of market performance. Sony recently announced that 1 out of every 5 PlayStation 4s now sold is a Pro which was well beyond their internal expectations.  More notable (and likely more relevant) in the figures they offered is the fact that 40% of Pro sales were prior PS4 owners upgrading to the new console. Even more impressive, they also confirmed a supply side constraint meaning those numbers could potentially be higher were they able to keep up with initial demand. Meanwhile, the Xbox One Elite controller, priced at $150 when it launched in 2015, was considered “far too expensive” by some to produce any meaningful sales figures. Not only did the controller face supply issues for an extensive period of time after launch due to unexpected popularity, but those sales only continued to grow. By late 2016, sales had increased nearly 50% year over year. A quote from Microsoft’s CMO Chris Capossela during an interview with GeekWire confirms the surprising market reception to the product:

“Here’s the product we totally underestimated. If I could have built 10 times the number I built, I would have. We got that feedback at E3 that it was awesome, but maybe the price was a little too high, and so that influenced how many we produced. On the Monday and Tuesday before Thanksgiving, myself and Kevin Turner our COO, and the guy who runs our stores, David Porter, we go around and visit 30 or 40 different stores. Best Buy and GameStop and AT&T and Verizon and Microsoft Stores, just to see how things look, and the one thing we heard from everybody was, you needed to make way more of these controllers.”

The are many other intangibles that bear mentioning with regard to the Xbox One X’s price point and market presence as well. Several of Microsoft’s larger first party titles have already been built with 4K/HDR capability due to their respective PC versions. One X owners will be able to download the graphical updates for free at launch meaning they already own games that the console will substantially improve on day one. More importantly, for at least the next 2-3 years, the One X will be known as the best console to play cross-platform, third party titles which comprise the vast majority of software sales.  The integrated Mixer functionality and 4K Game DVR should translate to more prevalent creating and sharing of 4K content, something that is quite rare today.  The One X will also be the premier plug and play console with Dolby Atmos support and a UHD Blu-ray drive, features that are very attractive for home theater enthusiasts. And along those same lines, 4K TV market adoption is steadily increasing and doing so at a faster rate than previous HD TVs, particularly in North America and Western Europe where gaming is more prevalent.

In short, the Xbox One X has a lot going for it and it’s seemingly arriving at the right time. There’s no definitive way to tell if these factors will translate to sales of course, but unlike other consoles that have released in the higher end of the price spectrum, the Xbox ecosystem isn’t entirely reliant upon the X. As the Head of Xbox, Phil Spencer, has said countless times, the Xbox One S will continue to be the majority seller for the Xbox brand. Rather, the Xbox One X offers a higher end experience for those who want it. In that vein, it’s not terribly dissimilar from those who like to upgrade their PC every couple of years for better performance. And when looked at through that lens, the Xbox One X represents the most powerful console for its time period that we have seen in a very long time.

With all of that in mind, let’s be honest with ourselves. The Xbox One X being priced at $399 was never a realistic expectation. The Xbox team’s goal was to create a more powerful console than anything that had come before it, a console that could deliver mid to high level PC performance with plug and play capability. And they have. When you factor in the performance, how developers are empowered to utilize it, the plug and play capability, the form factor, and features like the UHD Blu-ray drive and 4K Game DVR, the One X delivers a substantial amount for $499. There’s a segment of the market that has been clamoring for a console that can offer higher level PC performance for years. The Xbox One X delivers just that and the Xbox team should be applauded for developing it. I know I’ll be first in line to pick mine up on November 7th.