How Microsoft hopes Project Scarlett will avoid the mistakes of the Xbox One

Microsoft has fired its first shot in the next-generation console war, outlining how it wants to beat the PlayStation 5 in 2020.

At the Electronic Entertainment Expo (E3) this week, it was revealed how the launch of the next Xbox will be markedly different to the approach initially taken with the current console, the Xbox One.

When that was released in 2013, Microsoft attempted to change how people play games. Trying to push digital-only games on customers who would pay full price but not truly own them, have them always be connected to the internet and forcing them to use the Kinect device - yeah, that didn't work out.

"Xbox One maybe had some goals that weren't always centred exactly on the player," Matt Booty, the head of Microsoft Studios, concedes to Newshub.

"I think what [Xbox boss] Phil Spencer has done since then is make sure every decision we make and everything we do starts and ends with what's good for the player, and what's good for playing games."

Microsoft is trying to be much more consumer-focused, with Booty saying the company hopes to offer "the games you want to play, with the people that you want to play with, where you want to play".

That's the idea behind Xbox allowing crossplay with rival Nintendo long before PlayStation accepted it also had to. Now, Xbox is trying to take that "anywhere on anything" approach further with game streaming options.

"There are two ways we're bringing cloud streaming in; the first is using the console that's already in your house. So if you own an Xbox One, we're going to allow you to take the games you own on it and stream them to your phone, for free," says Booty.

"Then we'll also allow streaming from an Xbox that we're going to put in a data centre. So if you don't own a console, or your console is busy or turned off, we'll allow you to stream any game from the cloud."

That second option will cost, unlike the first, and won't be quite as good as playing off an Xbox or PC.

"If you want the most high-fidelity gaming possible in your living room, then a console under your TV probably makes the most sense - if you want things like 4K graphics on a big screen," says Booty.

"If you want to take your games with you and play them on the go, then streaming might make the most sense. Not having access to good internet in your area, again, then a console might make more sense.

"We want to really be about more player choice, rather than focusing on giving them just one thing."

 Xbox video game controller shown at E3.
Xbox game streaming was showcased at E3. Photo credit: Getty

Microsoft hopes the proliferation of 5G internet will help make game streaming a more viable option around the world.

Then there's the increasingly large range of games on offer. The next-generation console is currently being called Project Scarlett and only one launch title has been announced so far, Halo Infinite.

But it will offer backwards-compatibility and Xbox currently has loads of games in development.

"We showed off 60 games at E3 and 14 of those were from Microsoft first-party studios," says Booty.

This comes after a staggering amount of recent studio acquisitions from Microsoft - it's picked up eight over the last 18 months or so.

PlayStation and Nintendo have hugely impressive first-party offerings Xbox may be trying to match, but the buy-up also signals Microsoft increasing investment into the gaming side of its business to an "unprecedented" level, says Booty.

"A year ago we were talking about how Phil [Spencer] had joined the senior leadership team at Microsoft. So he sits at the same table with the people who run Office and Azure and Windows. He's part of the decision-making group that reports to our CEO, Satya Nadella," he says.

"Satya himself and our CFO Amy Hood are so informed about what we do. We announced the acquisition of Double Fine Productions and Amy is immediately sending emails, saying it's great. She knows about all of these deals we do and she's incredibly supportive."

Booty refuses to compare the situation to rival company PlayStation, apart from saying: "I can't imagine being a game-focused organisation inside of a bigger corporation that is more supported than Xbox."

Sony skipped E3 altogether for the first time ever this year, disappointing PlayStation fans who have enjoyed seeing its showings annually since 1995. Explaining the no-show, PlayStation senior executive Shawn Layden cited changes in the industry.

"[The retailers and third-party partners are] making purchasing discussions in February. June, now, is just too late to have a Christmas holiday discussion with retailers," he told CNET.

"And journalists now, with the internet and the fact that 24/7 there is game news, [E3 has] lost its impact around that. The world has changed, but E3 hasn't necessarily changed with it."

That may be the case, but next year's two-horse console race has already been announced and it's difficult to imagine not having both Sony and Microsoft use E3 2020 as a crucial battleground.

However they try to outdo each other, the fight has been declared and it's going to be a fascinating year watching it play out.

Newshub attended E3 2019 as a guest of Microsoft.