Post E3: Microsoft’s comeback and an early next generation

E3 was fairly low key this year. In place of big reveals or surprises, we saw a solid suite of games as the current console generation hits its full stride. Two narratives stood out: Microsoft is staying in the game, and we’re getting next generation consoles sooner than I originally expected.

Microsoft’s best presser of the generation

Microsoft’s overall E3 message was one of strength and confidence for both the present and future. Their press keynote reassured Xbox loyalists and anyone else considering a dip into the Xbox ecosystem.

Granted, Microsoft’s keynote on paper shared the same DNA as their last few: trailer after trailer for solid third party games. It’s an obvious move given their competition moved in a different direction at E3 this year: Nintendo stuck to Smash Brothers while Sony focused on first party titles. But this year had especially strong game variety and pacing. The presser got virtually every third party game of interest through next year. Closing with Cyberpunk 2077 — hands down the most buzzed about game at E3 — was a masterstroke.

Packing fifty games in under two hours did more than generate hype. The subliminal message for Xbox fans was clear: don’t worry about our first party studios given how many great third party titles are coming out in the next year.

Beyond trailers that sold the present, Xbox’s strongest pitch was about their future. Late in the keynote Spencer revealed five new internal first party studios, including the acquisition of the well regarded Ninja Theory (Hellblade, Devil May Cry). Considering the high quality output from Sony and Nintendo first parties, this was a smart move by Xbox.

What came next was unexpected (though important): Spencer said the Xbox team was deep at work on “the next Xbox consoles” with oblique references to Microsoft’s computing strengths in AI, cloud, and streaming. Hinting at future hardware without more details is unorthodox, but as strong a sign as we can get today that Microsoft is in the console space for the long run. And Spencer’s usage of the word “consoles”, not “console” was no accident. At the very least it suggests Xbox may spin off in a more experimental direction than arch-rival PlayStation.

Next generation consoles are coming soon

Before E3 I would have guessed the PS5 and Xbox One successor would release no earlier than 2021. PlayStation’s statement suggested a three-year end of life cycle for the PS4. Console hardware sales are still strong, albeit on the decline. And Microsoft and Sony released high profile interim consoles in the form of the PS4 Pro and Xbox One X.

However, at E3 this year, we saw impressive looks at titles with noticeably absent release dates and vaguely targeted platforms. Cyberpunk 2077, **Death Stranding*, Halo Infinite and Dying Light 2 all fit this classification. It reminds me a lot of E3 2012, where the talk of the show as Ubisoft’s debut of Watch Dogs. The gameplay demo got a lot of buzz for its sophisticated open world and AI. The end product, however, was a cross generation release, optimized for next gen consoles.

Combine these forward looking teasers with the fact that we’re five years into this console generation; the last two generations ended after six or seven years. E3 also marked the start of next generation hardware rumors, which invariably pop up a year or two before a console debut. All this evidence suggests we’re getting new consoles in 2019 or 2020.

In one wild card scenario, Sony releases the PS5 in late 2019. That’s an aggressive stance given Digital Foundry suggests a box with a big bump in performance this soon would come at a high cost. Sony would either have to take an aggressive loss on the console or charge an inflated early adopter price well above $400. Based on how lower pricing played into Sony’s favor early this generation, that’s a high ask. Nevertheless, Sony should have several strong first party launch titles for a 2019 PS5 debut. The Last of Us Part II and Ghosts of Tsushima could go cross gen (base game on PS4, an enhanced version for PS5). Sony may also enjoy first mover advantage, given I have doubts Microsoft would be ready to release another console in 2019 so soon after the Xbox One X.

A more realistic, conservative timeline sees both the PS5 and the Xbox One successor out in 2020. Several of the games highlighted this E3 without release dates would debut on the new consoles in mostly cross gen form, with a few titles very early in progress (e.g. Death Stranding) withheld for next gen only.

Timing aside, a battle ready Microsoft with the industry’s focus on future hardware makes for a potentially very exciting upcoming few years.