On August 6, 2014 Microsoft announced that the Xbox One would be exclusive to Amazon India. Pre-orders would begin from September 1 with a September 23, 2014 release date. To many in the industry, this seemed like a perplexing move when you consider a bulk of the Xbox 360’s sales were thanks to a massive offline retail presence.

Nonetheless, Microsoft was confident of its chances with then Xbox India head Anshu Mor claiming that the Indian audience for consoles was distinctly online. On paper, the logic seemed sound. After all, the likes of Xiaomi have built an empire in India through online sales alone.

Fast forward to now, and it appears that the Xbox One is nowhere. There’s little to no visibility for the Xbox One S, One X, or even the ridiculous Xbox One S All Digital Edition outside of Flipkart and Amazon. Furthermore, it’s next to impossible to find most Xbox One games. India is, for all accounts and purposes, a one console country. So what happened? Naturally, we reached out to Microsoft India for comment and were met with silence, which has been somewhat of a recurring theme throughout the Xbox One’s lifecycle in the country. Failing this, we’ve spoken to a host of retailers, distributors, and executives as well as sources familiar with Microsoft India’s plans, many of whom opted for anonymity fearing retribution, to piece together what occurred.

The Xbox 360’s India ‘success’

Before we get into the Xbox One’s presence (or lack thereof) in India, it’s important to elaborate on what Microsoft was entering into this generation with. The Xbox 360 fared decently. Despite Wikipedia’s claims of 250,000 Xbox 360 consoles sold during its lifespan in India, the common consensus amongst those in the business peg it at around 150,000 units sold from its launch in 2006 to 2013. This was in contrast to the PS3’s 350,000 units sold. Not too shabby for Microsoft’s first outing in the country — the original Xbox never made it here officially, but pretty poor when you consider the costs incurred.

“Before launching the Xbox 360 in India, the thinking was that if the country had a population of one billion, at least one percent would go ahead and buy an Xbox 360,” said one distributor. “It’s how Microsoft justified getting celebrities on board and a massive marketing multimillion dollar budget.”

Yes, the likes of Akshay Kumar and Yuvraj Singh as Xbox 360 brand ambassadors didn’t come cheap. Throw in a barrage of custom demo units for retail (around 1,200), plus out of home, online, and print ads aplenty, and it was obvious that Microsoft had broken the bank to get into the Indian living room. According to those close to the company, they never made their money back, writing off the Xbox 360 era in India as a net loss.

And while the Xbox 360 library had a stellar first-party line-up, most Indians were, at the end of the day, buying it for Kinect which was introduced late in its lifecycle or FIFA. To put it into perspective, games such as Gears of War 2 had a day one quantity of 1,600 units while yearly FIFA entries were almost double if not more. It’s something Microsoft themselves admitted in the run up to the Xbox One’s launch, FIFA and Kinect were its biggest drivers.

Xbox One India launch

Instead of concentrating on the audiences that helped the Xbox 360 remain competitive, Microsoft India thought it made sense to tackle another segment altogether — digital natives.

“We know our audience is natively digital,” said ex-Xbox India head Anshu Mor in an interview in August 2014 leading up to the Xbox One’s India launch. “They’re already talking, buying online, not opposed to placing orders online. They make all their decisions online. They might walk into a store and buy something but if it was online they’d be just as happy. They’re more digital than anyone else.”

To push this forward, the company partnered with Amazon India, hoping to get consumer insights that would help it drive sales forward.

“[P]eople are buying at offline stores, I have no idea who they are,” Mor explained during the Xbox One’s pre-launch phase. “I don’t know if they came back. My customer understanding is zero. Amazon through the sellers is doing the sales part of it, their insights and how they drive it is much higher and important.

“When was the last time you walked into a store where you had bought a particular game and someone tells you, ‘hey you bought a game, here’s another you might like since you bought that.’ Good stores might know their customers very well, but its important for us to tell customers in this category about the portfolio and what they like based on what they’re doing.”

With this thought process in mind, gone were expensive hoardings and TV commercials, Akshay Kumar and Yuvraj Singh were traded in for AIB — a comedy group, and an offline presence was swapped for bombarding Amazon India’s homepage.

Initial sales were strong with reports of 300 units sold during the pre-order phase itself. However it didn’t take long for it to be discounted with increasing frequency. Most notoriously, the Xbox One price was slashed by almost 20 percent from its MRP of 39,990 barely a month since launch during Amazon’s Diwali sales with free games and Amazon gift cards thrown in.

All in all, less than 1,500 Xbox One consoles were sold in the first four months and that too after rampant price cuts and offers. In comparison, the PS4 sold 4,500 in its first two weeks and continues to dominate the market. Right now, total lifetime to date Xbox One sales in India across all variants including the original Xbox One, Xbox One X, Xbox One S, and Xbox One S All Digital Edition is estimated to be close to 50,000 with the sum total of PS4 consoles in India across all versions being around 400,000.

Xbox One in India – what went wrong?

To begin with, the Xbox One India price of Rs. 39,990 was perceived to be exorbitant. Despite having the same price as the PS4 and shipping with a free game, most users didn’t see the value of buying an Xbox One officially. For the same amount of money, the US got the Xbox One Assassin’s Creed bundle with Kinect, Halo: The Master Chief Collection, Diablo 3, Kinect Rivals, Alien: Isolation ,and Dragon Age: Inquisition. The situation in the grey market wasn’t too far behind with the console going as low as Rs. 27,000 with a game. Even when you factor in situations when Amazon discounted official stock by 20 percent, it was still around Rs. 5,000 more. This simply made it a bad deal for many. You’d think that restricting sale to a single retailer would allow for lower distribution costs and in turn result in a lower cost for end-users, this was not the case outside of panic discounting.

Furthermore, Microsoft overestimated the willingness of consumers to drop close to Rs. 40,000 on a device they haven’t tried out. Granted the Xbox One was available at events like Comic Con, but public demonstrations weren’t widespread for many to check out and consider purchasing. So much so that the company enlisted the help of the retailers and distributors they once shunned for Xbox One public demos in the hopes of pushing sales.

It didn’t help matters that Microsoft’s positioning of the Xbox One in India was at odds with what was being done internationally. During this period, Xbox boss Phil Spencer was trying to focus the Xbox One’s messaging around the games rather than Kinect with the likes of Sunset Overdrive, Rise of the Tomb Raider, and Halo 5. Meanwhile the Xbox One in India was being pushed as video conferencing device to gamers instead of well, a device that could play games.

Speaking of games, the early years of the Xbox One in India were fraught with software prices that were far from competitive. Most first-party games at launch in India were poorly priced. Dead Rising 3 and Forza 5 were selling for Rs. 4,199 (around $69 then) with Forza Horizon 2 and Sunset Overdrive having a Rs. 4,299 (almost $71 at the time) price tag. Even FIFA 15, which was to be the console’s saving grace had a then steep Rs. 4,000 ($66 then) price.

At a time when most third-party publishers stuck to a Rs. 3,499 price (around $58 then), it made the Xbox One’s exclusives seem expensive in comparison. It got worse with 2015 Xbox One exclusives like Rise of the Tomb Raider, Forza 6, and Halo 5 having a Rs. 4,699 price (nearly $74 at the time) with Microsoft stating perplexingly that each game has its own individual price for India despite sporting a uniform $60 tag internationally.

Not just an India problem

In fact, Microsoft faced similar issues in neighbouring markets like China. The Xbox One was the first console brand to launch in the country with 100,000 units shipped to stores on day one, Daniel Ahmad, an analyst at Niko Partners tells us. Niko Partners is a firm that tracks the China and Asia games markets extensively.

The aggressive approach didn’t help due to a disc region lock which was later resolved and high pricing.

“Microsoft severely overpriced its console in China, with Sony able to undercut them by around RMB 1,000 at launch,” he says before stressing on the importance of hardware pricing in nascent console markets.

“Sales over the long term have not kept up with PS4 in the region, mainly due to the higher price of the console, a lower number of games on the market, and lack of overall support and marketing. Microsoft has used its [email protected] program to discover Chinese talent and bring those games to Xbox,” Ahmad says.

“Hardware pricing is the biggest barrier to entry in China and both Sony and Microsoft have introduced console bundles to increase the value of each purchase and reduce the overall cost to gamers. This strategy has been particularly successful thanks to the promotion of Chinese games within these bundles.”

While India has seen a steady trickle of bundles, sources in the supply chain say that outside the PUBG bundle released for the Xbox One S and Xbox One X, there’s been little demand for other offerings. As for [email protected] for Indian developers, besides Raji and Zenith, both of which were made in collaboration with international talent and had publishers that weren’t from India, Microsofts efforts in this department have been scant despite its executives teasing possibilities aplenty.

Xbox One India distribution – what happened next

From September 2015, Microsoft Priority Retailers were selling the Xbox One offline. Fourteen months after the September 23, 2014 Xbox One launch, Amazon India’s competitor, Flipkart, started selling Xbox One consoles as well. Four days later, India’s third biggest e-commerce platform, Snapdeal followed suit.

Wider distribution to other offline game stores finally happened in 2016, nearly two years after its official release. Interestingly, Microsoft never made an announcement regarding its foray into brick and mortar and only confirmed it after it was brought to their attention that several stores were selling the console with an official Microsoft sticker. Demo units were few and far between too.

Xbox One S and Xbox One X in India

What followed was a string of odd moves and radio silence from Microsoft on all things Xbox. This included making Quantum Break and the Xbox Elite Controller Flipkart exclusives at launch without telling consumers. There was silence regarding bringing Dead Rising 4 to India (fearing competition from Battlefield 1 and Call of Duty: Infinite Warfare was the rationale), and dropping a physical release for Sea of Thieves at launch altogether.

Much like the original Xbox One, the Xbox One S hit India long after its international release in October 2017 starting at Rs. 29,990 promising Scalebound which was well and truly cancelled by then. The response to the Xbox One S at the time was muted at best.

The Xbox One X fared a bit better with Microsoft deeming India fit to receive the souped up console two and a half months after its international release in February 2018. At a price of Rs. 44,990 it was the company’s most expensive console launch to date. However sales were brisk and the initial shipment of a hundred units sold out in the first week itself. Though any hopes of a turnaround were short lived. It was too late. There simply weren’t enough games to support it.

Xbox One games in India

By 2018, there were few Xbox One exclusives hitting the shelves physical or otherwise, and outside the biggest third-party releases, a slew of titles never made it to India officially. These include the aforementioned Dead Rising 4, Sonic Mania, Valkyria Chronicles 4 (though the complete version saw an India release), Metal Gear Survive, and even the upcoming Monster Hunter World: Iceborne is skipping retail in India.

While one could argue that these would be fringe titles for a console known for its shooters, Fortnite didn’t grace the Xbox One till June of this year. Before this, the only way you could play Fortnite Battle Royale in India without changing Microsoft Store regions is by buying the Fortnite Deep Freeze Bundle for Xbox One which has the game on disc. Post-apocalyptic shooter Metro Exodus saw a PS4-only release at retail, ignoring the Xbox One altogether.

“Every platform is important to us and that includes Xbox. The response has been good to popular third-party games like Red Dead Redemption 2, Assassin’s Creed Odyssey and so on,” claims Allwyn D’Souza, head of corporate communications for E-xpress Interactive, India’s largest games distributor, in an email to The Mako Reactor. He’s not wrong, popular third-party games remain popular regardless of the fortunes of the console they’re on. Though if you were looking for anything relatively niche and you own an Xbox One, you’re out of luck if the current spate of missing Xbox One releases are any indication.

Xbox Game Pass may make the Xbox One relevant in India

Amidst all this hubris, there seems to be one value proposition that could keep the Xbox One afloat in a country where Microsoft’s moves appeared confused for most part, the Xbox Game Pass. Several retailers speaking to The Mako Reactor have seen success selling the Xbox One S when bundled with Xbox Game Pass. It turns out the audiences enthralled by the offering is the same that gravitated towards Kinect during the Xbox 360 days, parents and kids.

“The Xbox One S with Game Pass has sold well for us,” says a Chennai-based retailer. “Parents like the fact that they don’t have to buy games for their kids, though they prefer not to use their credit card online after the subscription expires. They keep coming back asking if they could get Xbox Game Pass prepaid codes like we have for Xbox Live.”

Similar sentiments were echoed by store owners in Delhi, Mumbai, and Bengaluru making it seem like Microsoft has missed a trick by not working on in-store Xbox Game Pass prepaid codes akin to Xbox Live subscriptions.

Although most retailers feel their optimism is short-lived as Microsoft do not control the pricing of the Xbox One X or One S. Many have observed that they’re almost Rs. 10,000 cheaper online due to rampant discounting from Amazon and Flipkart making it impossible to compete.

“For the three months in a year that Microsoft is able to protect prices were the only three months I was able to sell Xbox One consoles,” says a store manager from Delhi. “Customers see the console and want to buy it, but when it’s cheaper online, they don’t bother. Or just go for a PS4. We stopped stocking Xbox. If someone wants it, we let them know we can’t sell lower than MRP, if they still want it, we order one from a sub-distributor and ship it to their address.”

When pressed further, most admitted that the minimum order requirement of at least 50 Xbox One S consoles per store is another hindrance.

The future of Xbox

With the present being a state of flux for the Xbox One in India, that hasn’t stopped it from gaining some momentum. Between initiatives like Xbox Game Pass, xCloud, and a yet to be revealed next-generation Xbox codenamed Project Scarlett, the future of Microsoft’s gaming efforts looks a little less murky.

“Consoles has embraced multiple business models this generation that previously weren’t possible on last gen,” says Ahmad. “We’ve also seen consumers embrace these models as they provide more value over a standard $60 game purchase. F2P with Fortnite, subscriptions with Game Pass and other models have helped grow the industry and we are using a higher revenue per user number this gen as console gamers spend spend more over the generation/lifecycle.”

Interestingly, while India is a one console market right now, Microsoft’s focus on technology may just even the odds.

“We think there is room for all three to succeed,” Ahmad says. “Microsoft is looking to reach a large audience on day one with its cloud service, reduce the barriers to playing games with sub subscriptions and Game Pass whilst also providing a high end experience on console for those who want it. Cloud Gaming will enable billions to play HD console games on any device. It’s taken the PS4 almost seven years to reach 100 million whilst the Xbox One has yet to hit 50 million. With cloud gaming, any device can stream console games, which means both Sony and MS can have a potential audience of two billion from day one.”

Until next-generation hits however, what Microsoft does (or does not do) to tackle its current predicament in India will be intriguing to see. Hopefully past lapses haven’t eroded consumer confidence permanently in one of its potentially bigger markets.