Head start: the Xbox 360 and the next generation

by Ben Kuchera

Playing defense
It would make sense for Microsoft to be on the defensive. The Xbox 360 is about a year old, so the company isn't going into the holiday season with the buzz that Sony and Nintendo are enjoying. But having that long of a head start also carries with it some advantages: hardware will be plentiful on store shelves, and Microsoft had all that time to hone the online and UI experiences with the 360. At this stage, the console is a mature product just hitting its stride, a nice position to be in given what both the Wii and the PS3 are going through.

Microsoft is confident enough in their position that they invited me to New York to see how the Xbox 360 stacks up against the PS3 when both are hooked into the same 1080p display and using the highest-quality connection possible. For the 360 that means the VGA cable, which is currently the only way the system can output 1080p; the PS3 is hooked up via HDMI. When I walk into the room, I'm amused at their choice of display: a Sony Bravia XBR2 1080p LCD. It's a gorgeous display, and I remark on it.

I'm there with Aaron Greenburg, the Group Marketing Manager for Xbox Live, and Scott Henson, product unit manager for Microsoft's game technology group. They're open and surprisingly unguarded. In addition to the nice display are a 360 with an HD DVD drive and the 60GB PS3. Both are also online, and there are a stack of games between them. "We're selling Bravias on the side," they joke, and I'm invited to take a look around the setup, with the air of a magician telling me there's nothing up his sleeve. They want to be sure I'm happy with how each system is hooked up and that I don't think one system has the advantage in cabling or anything else. "We want to compare apples to apples," they tell me.

It's an odd situation. I know that the point of this meeting is for them to convince me of the 360's supremacy, but they leave the meeting up to me to control in terms of what we put in or how we play the games and movies, and I see them listening to me as much as I listen to them. Evan Parker, the PR person in the room, also makes notes on what's said more than once. I feel like I'm being interviewed and watched almost as much as I'm interviewing and watching them.

Aaron Greenburg and Scott Henson of Microsoft

Henson motions to the stacks of games and movies. "Where would you like to start?" he asks me.

I grin. This is going to be fun.

The hard drive problem

First, we talk about the hard drives on the respective systems and I tell Greenburg and Henson that they're messing up—a 20GB hard drive is simply too small, especially with the video marketplace on Xbox Live. With demos sometimes coming in at over 1GB and rental movies that are over 5GB, you simply don't have a lot of space available. The PS3's 60GB hard drive is much roomier, and both the 20GB and 60GB Sony drives aren’t proprietary; you can slide them out and put in your own drive if you feel like upgrading. In contrast, the 360 hard drive maxes out at 20GB and costs $100, a ridiculous price for such a small amount of storage.

The Microsoft team defends the drive by talking about how you can delete a television show and redownload it later to save space, but it's clear that these solutions are a workaround. It's a problem, and if Microsoft wants to really get people into buying more content through the 360 and Xbox it's something they're going to have to fix. And I'm not going to be happy if I end up paying $200 for a 40GB HDD.

"So when is the bigger hard drive coming out?" I ask.

"It's a matter of when now, and not if?" Greenburg replies.

They seem more amused than anything. Of course Microsoft is going to release a new hard drive in the future; they'd be throwing money away if they didn't. I can't get a clear answer out of either of them, but I didn't think I would. It is clear that this is an issue they've discussed, and they seem to get a sense out of how much we need a solution to the problem. One of the biggest headaches with the 360 experience is that tiny, tiny HDD, and as file sizes get bigger and more stuff is put up online for purchase, it's only going to get worse.

They need to release a bigger drive as soon as humanly possible, and they have to make sure it's priced so it won't make gamers cringe. If they can get people into a roomier storage solution, they'll be able to sell the customers more content down the line. It's an investment in digital distribution, and it should be looked at that way instead of simply an upgrade they can make money on when they sell it at retail.

Microtransactions and you

There is a lot of money to be made by selling things online, and a few companies are already on board with selling new cars, game levels, and even new guns and upgrades to your vehicles in games. But there is a limit, and EA has recently angered a lot of gamers with their new habit of putting up what amounts to cheat codes online for pay, and "tutorial videos" for Madden that also cost money. EA knows how to cash in wherever there is money to be made and gamers to annoy. I bring up these things and get the expected answers.

"Vote with your wallet!" I'm told. Fair point, but the fact that these things are being sold at all makes the microtransaction system itself look pretty bad. It's hard to be the classy online system when you're charging for what amounts to a video showing you how to hit buttons, or a shortcut to more money and a bigger gun.

"Our rule is if it's free on another system, you shouldn't have to pay for it through Xbox Live," Greenburg tells me. Good, but soon people are paying $60-70 for the game, $6 a month for Xbox Live, and another $10 to get all the money and equipment they need to beat the game the first day. It’s just greedy, and it's certainly not the way I grew up playing games.

"This is a new market," Greenburg says, but they seem to think by admitting it's a new market this means I should give them a little slack to figure out these issues. I think just the opposite: you should think very, very carefully about what you charge for and what you give away for free. There needs to be some strong rules about what developers can charge for. No matter what company puts their for-pay content on Xbox Live, Microsoft has to sign off on what is being sold.

Anna is a bot
It's time to put the systems in the room to the test and check out how the games look and how the Xbox 360 and PS3 handle upscaling. "If you really wanted to be mean you would have run these tests in 720p or 1080i," I say, referring to the issues that Sony is having with those two resolutions. I appreciate the fact that they wanted to show the PS3 looking as good as possible, and I'm surprised this is something they didn't bring up earlier. They realize what I'm talking about, and Scott Henson opens a small package and shows me what's inside.

"Is that it?" I ask. He nods.

"We call it Anna. This is the scaling chip that's in the 360," he tells me.

It's odd to see it—a tiny little chip—but this may be one of the secret weapons the 360 has against the PS3. The PS3 has no internal hardware scalar, which means games that are 720p native can only be shown in 720p or 480p; there is no scaling up to 1080p or 1080i. This causes people with older HDTVs to have issues with the available resolutions, and keeps them from playing the games in anything but 480p. It's a vexing problem for a system that's supposed to be HD, and this issue is one of the most challenging that Sony faces. I ask the Microsoft guys how important it was for them to include a scalar in the 360.

"It was a critical design decision; we wanted the 360 to be high-definition, not just 1080p or some other standard. That's why we included component cables in the box; there is no HDTV that doesn't have a component in," said Greenburg.

This is where the magic happens

They assume that Sony didn't include a hardware scalar to keep costs down, but get a little cagey when I ask how much it costs to put Anna into the 360. "This isn't a $1,000 scalar," Henson says, "but it's a good one."

It was apparently designed at the same time as the GPU, and the effortless scaling with different televisions was something that was important from the early design stages of the system. I ask if they think this is something that Sony can fix in software.

"It'll be hard," Greenburg answers, "and compatibility testing would be tough with existing software. I think as they update the hardware they'll add a hardware scalar."

I've had the same thought before, but it certainly doesn't make me happy as a first-generation consumer. It will be very interesting to see how Sony ends up fixing this, or if they think it's a problem at all. For the time being, most games will be 720p native, so the majority of HDTV owners will be able to play them. This is an issue that you may or may not care about. Or maybe you have a 1080p set already and this doesn't bother you. It's hard to know just how many people this affects, but you should be aware of which resolutions your television can handle when choosing which system to buy.

Does the lack of hardware scaling affect how games look? We put in a few titles to see.

Resistance: Fall of Man vs. Gears of War

I've played both Gears of War and Resistance: Fall of Man extensively; I gave Gears of War a full review and reviewed Resistance with the PS3. Still, I wanted to see each game on this display to see if a 1080p resolution changed anything.

The first thing it changed was the resolution. When Resistance started, it dumped down into 720p due to the lack of a hardware scalar. Henson turned on the menu of the Bravia to make sure I saw this. I didn't say anything, but the point was made. The game looks great on the Bravia; it's very much a "Call of Duty with mutants"-type of a vibe. I enjoyed the game when I played it, and while it looks great, the graphics are a little on the sterile side. It does have some amazing draw distances later in the game, and is a sharp-looking title. We play for a few moments and chat about the game. Next they put in Gears of War.

The same menu is brought up, and I see that the 360 is upscaling the game into 1080p. Anna is doing a good job, as the game looks fantastic on that display running at that resolution. I find Gears of War a more impressive game graphically; it uses every trick and special effect you can think of to give you some stunning scenes. Of course, this is also a second-generation game and Epic had a very close relationship with Microsoft through the development process—a level of support most developers don't enjoy. It's not a fair comparison at the moment in terms of looking at the power of both systems; we're going to have to wait until the PS3 gets some second-generation games in a year or so. I raise that point.

"Right, but by then we'll have Halo 3. We'll be on the third–generation games. We hope to always be a little bit ahead," Henson counters.

It's clear they hope to use that year-long head start to its fullest. We put in Call of Duty 3 on both systems. Again the PS3 drops the resolution to 720p. We play a bit of the game, and honestly I can't tell a lot of difference between the two versions of the game. The 360 does look a touch better upscaled into 1080p, but it's a subtle difference. They both look great, with only a few differences in coloring. If it wasn't for the resolution advantage of the 360, I don't know if there would have been any real way to tell the difference between the two systems.

They offer to put in Madden, but I decline. I've seen the videos of the game on both systems; I know it'll be about identical.

"Graphics are a wash," Greenburg says, as we compare games. I have to agree; between the multiplatform games there just isn't a difference. I can't wait to see what Sony has coming down the line, but I get the uncomfortable feeling that they will always be a generation behind what the 360 has done. The question is whether or not developers will max out what the 360 can do and if PS3 will be able to pull ahead.

The importance of that scalar is hard to overestimate. It gives the 360 a built-in advantage over the PS3 and it's something Sony needs to work on as soon as they can. Whether it is a software or hardware solution, they're running at a disadvantage on anything but a 720p-native HDTV in terms of games. Movies, on the other hand...

Mission Impossible 3: the search for an equal resolution

We popped Mission: Impossible 3 in the 360's HD DVD drive, which is external, and we also put in the Blu-ray version for the PS3. Both systems were hooked up at the same time, so we could flip back and forth effortlessly to compare the video quality. In this case, both systems were outputting in 1080p, so there was no advantage in terms of resolution.

We watched the same scene on both systems—the part with the gunfight on the bridge—and flipped back and forth as we went. They freeze-framed a few scenes for me, and tried to explain the difference, such as more detail in the blacker areas on the HD DVD. While the Blu-ray image looked a bit sharp to me when paused, I was hard pressed to tell the difference between the two; the image quality was beautiful across the board. I couldn't tell if they were amused, proud, or horrified when I would frequently get confused about which system's image we were looking at as we flipped back and forth. I gave up trying to take notes on the minute differences between the two and admitted that they were so close it was almost indistinguishable.

I was more intrigued with the HD DVD drive as a piece of hardware. I asked if we would ever see games use the drive. A firm "no." I asked if we would ever see a 360 with an HD DVD drive built-in. Another firm "no." No hesitation.

"We don't want to charge customers $200 extra for something that may be the next Betamax," Henson told me (whoops).

They seem committed to the optional aspect of the HD DVD drive as it keeps the price down for consumers who don't care about HD DVD. It's a much different strategy than Sony's bundling a Blu-ray drive with every PS3. I don't know if it's the right one—HD DVD would certainly catch on faster if they found a way to incorporate it into the 360's design—but the question of a higher price for the hardware is a tough one. Is it really worth raising the price for a feature people don't seem to be asking for? They tell me developers by and large aren't asking for more space or complaining about a lack of space with a regular DVD, outside of a few comments here and there.

There is no real difference in quality based on what I've seen between HD DVD and Blu-ray. Keep in mind that unless your display can handle a 1080p or 1080i resolution the PS3 will downgrade the image into 480p. I don't know how quickly these two competing formats will catch on, but when it comes to image quality, they both look great.

The real story? I'm buying a Sony Bravia

I've had a little over an hour with both pieces of hardware on a great television and have gained a few insights into how Microsoft thinks about the marketplace right now. So far I just don't see much difference in quality between the two systems in terms of graphics, although a few things look better on the 360 simply because developers have had longer to work on the hardware. It's a wash between the multiplatform games, but the lack of a hardware scalar hurts Sony badly at the 1080p resolution; they simply can't upscale the games into that resolution, and the PS3 comes off worse when you look at both versions of a title like Call of Duty right next to one another. It also complicates things for Blu-ray playback since the PS3 can't show a Blu-ray movie in 720p.

Microsoft has used their year-long head start wisely to refine the firmware and online experience with the 360, and that hard work shows through clearly; the PS3 feels a bit unfinished in comparison. Hopefully Sony has some big features they will roll out soon, but for now the Xbox 360 is ahead of the PS3 in what the systems in their current incarnations can do.

Microsoft has really dropped the ball with the hard drive, though. It's just too small and it hurts their vision of people buying their movies and television shows through the 360. It's not an appealing idea until you get something much roomier in there. The "vote with your dollar" argument is also lacking when it comes to microtransactions. You have to be careful with what you charge for if you don't want to look like you're nickel-and-diming customers, and Sony's $3 Lemmings, free entry-level Sudoku download, and $5 PSone games for the PSP are a strong value. A dollar or two here makes a huge difference in how the consumer views you, and pricing should be handled cautiously.

When the PS3 was being hyped, a lot of people assumed the graphics and feature set would be much better than what we had seen on the 360, and while I don’t think the 360 looked much better in these demonstrations, they do prove that the 360 can ably keep up with the PS3 (and in some cases beat it) in terms of features. This hardware war may come down to the whether or not consumers think having Blu-ray is worth the extra cost, or the question of people being bothered by the lack of the hardware scalar. What is and isn't HD is a confusing question, and both systems seem to have different answers.

This should be an interesting next few years.

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