Now that Microsoft has done a 180 on its DRM policies for the Xbox One, Wedbush analyst Michael Pachter says that he is much more optimistic about the console this holiday season. Despite the $100 difference in price he believes that with six months until release, Microsoft will be able to level the playing field and now expects the Xbox One to sell as well as the PlayStation 4.
“As far as today’s announcement, we think that gamers will rejoice, and the focus will shift from Microsoft’s onerous policies to the price differential between the Xbox One (at $499) and the PS4 (at $399),” Pachter noted.
“The differential is due to the inclusion of Kinect (a high definition camera with a microphone array) with every Xbox One,” Pachter continued. “Microsoft intends to offer a more robust hardware bundle than Sony will offer, and Microsoft is convinced that consumers will ultimately appreciate the value proposition presented by Kinect.”
“Microsoft has not done a particularly good job of communicating the value proposition to consumers, but today’s announcement will remove an impediment to the company’s ability to get its message across.”
However, if he is wrong and sales fall too far behind the PlayStation 4, he expects Microsoft will be ready to drop the price in 2014.
“We are confident that with six months of focused messaging, Microsoft can fully level the playing field with Sony, and we expect the Xbox One to sell as many units as the PS4. If we are wrong, we think that Microsoft is prepared to lower price next year.”
Pachter added now that DRM has been removed retailers, such as GameStop, will benefit despite the fact the games will be released day one digitally. He doesn’t expect digital sales for exclusive AAA titles on the Xbox One to grow beyond 50 percent.
“Ultimately, we think that no more than 50 percent of game sales will be in digital format, suggesting that GameStop’s used game business could be healthy for many years,” Pachter concluded.