Microsoft set up shop in New York last week and held more intimate sessions with analysts and media in a smaller venue with less pomp than the Sony event several stops away. I left the briefing feeling very excited about what Xbox had to offer regarding media and was hoping to dive into a deeper gaming experience when I got home. Before getting any further, Microsoft has advised that Xbox One is still in beta testing, even at the time of writing (11:45pm EST, 11/19/13).

Duly noted. It took forever to set up Xbox One at home. It took three times just to boot to the right screen to begin the first 509MB update, which completed within ten minutes on a modest Wi-Fi network with 25Mbps downstream cable service. The system was still buggy after this update but cleared up completely after another 329MB update was pushed out on Sunday. Another 333MB update that pushed out on Tuesday brought the system to near launch readiness with app availability and sharing features that rival the PS4. I am told that multiple updates will not be pushed like this after launch and this is only a product of the system being in beta testing.

Once Xbox One was up and running, I was immediately taken with its multimedia capabilities. The new Kinect camera is incredibly powerful. How powerful you ask? It can: 1) See in night-vision, some kind of topographical vision, as well as regular old-fashioned light; 2) recognize faces of people it knows once they are in view; 3) track people moving through the room based on their skeletal profiles; 4) sense your heartbeat; 5) distinguish between real people and 2D images of people on screens; and, 6) it has its own cooling fan to help do all that.

Skype on Xbox One was an instant classic at home for the entire family. Skype on Xbox One (requires a $60/year Xbox Live Gold subscription) is a vastly superior experience to Skype on other devices. Users can sit on the couch and casually Skype with their friends displayed on the TV screen while the Kinect camera tracks movement in the room and zooms in and out to include everyone present. During testing, a friend on the receiving end noted that the presentation felt “more natural” and that it felt like there was a cameraman in our living room shooting a news interview.

Voice commands are another cool feature of the Xbox One that makes the experience feel more natural. I found myself eschewing the controller in my hand for the easier, “Xbox Go Home” or “Xbox Go to Music” voice commands, mostly because it’s largely bug-free and could detect my commands over sounds from the TV or elsewhere in the room. There are often times when the voice commands need to be repeated, and some cases when the commands are misinterpreted, but the fix is quite simple for both situations: Xbox One can be told to “Stop” or “Stop listening,” and you go back to holding dominion over one of the machines in your life. This feature did make it into a few of the games I previewed, where you command comrades or distract enemies with sound while controlling your character with the controller.

Xbox One’s control over TVs and Set-top Boxes (STB) with the OneGuide Electronic Programming Guide was fantastic in demo. Being able to switch out of games immediately into live TV or being able to snap a sidebar of fantasy football stats alongside live TV was incredible. Alas, for cheap cord-cutters like me, this is not available. In addition to needing an Xbox Live Gold subscription, users must have a Pay TV subscription to use OneGuide. This isn’t Microsoft’s fault, but this does showcase the perilous environment in which Xbox One finds itself as it tries to take over the living room.

Unfortunately, the games available at launch were not wildly impressive. They required incredibly long install times, long load times, and nothing particularly stood out about the graphics. At the time of writing, the gaming felt very lonely as opposed to the PS4 “What’s New” timelines or the social sharing that comes so easily on PS4. More features are being rolled out as the November 22 launch date approaches, so this is by no means a final verdict. At the time of writing, SmartGlass had just been released into the wild and it definitely has potential to boost the depth Xbox One’s gaming capabilities.

I get the distinct feeling that Microsoft may have tried to make Xbox One something for everybody. The more features that are unlocked during beta testing, the more optimistic I am about Microsoft achieving that goal. There’s an argument in our latest Game Console forecast, to which I still ascribe, that Xbox unit sales will begin to match those of PS4 in the later years of the console war as more people see Xbox One in action delivering content to the living room in addition to a comparable gaming experience to PS4.

The question Microsoft needs to answer is, will there be too many paywalls erected – Xbox Live Gold has its perks with gaming, but it’s a little frustrating to hide the coolest multimedia features behind it while OneGuide is also restricted to Pay TV customers – that diminish the value proposition of Xbox One’s media streaming capabilities? Also, will Microsoft be able to keep up with the gaming innovations coming out of Tokyo, and to some extent, Kyoto?

This blog series will be followed by an insight piece available to clients after both systems are launched and we have a chance to assess the early days “not in beta” in a larger context with our market data.

- Eric Smith