A console launch in three acts: The birth, death and rebirth of Xbox One

The video game industry's most exciting story this generation can't be found in the likes of The Last of Us, Halo 5 or the latest Call of Duty.

The most compelling narrative to arise out of this new crop of consoles isn't coming from any video game, it's the Xbox One's Miltonian fall from grace and its attempt at redemption.

If the Xbox One's launch were a movie, it would fit very neatly into a three-act structure, and we would be witnessing right now the console's final, biggest moment of crisis. What happens next in the launch's third act seems to rest entirely with the new(ish) head of Xbox, Phil Spencer.

Act One: The Setup

Riding high on the successes of the Xbox 360, Microsoft went into the Xbox One with a new vision, a vision not just to capture the gaming audience, but to finally, after years of public discussion, truly take over the living room with a device that would be the center of a family's entertainment experiences.

Like many console reveals, Microsoft had to deal with a lot of rumors. In this case, though, many of those rumors increasingly left hardcore gamers, the early adopters upon whom most console launches rely, feeling not just concerned, but downright hostile. There were stories of the console being a sort of cable box, that the games would require an internet connection, that the system wouldn't support used game sales, that it would require a camera and microphone bundle to operate. That tension peaked when a Microsoft Studios creative director tweeted a joke about always-online consoles, sparking a firestorm of online outrage, death threats and eventually his decision to leave the company.

As Microsoft's official reveal of the Xbox One approached, there was a decidedly negative buzz in the air. Gamers wondered how many of those unwelcome rumors would come true.

On May 21, 2013, Microsoft turned a corner of its campus into the stage for a massive Xbox One press conference. Media from around the world flew in to hear the details of the console. This was the introduction of our story's major character: the Xbox One.

While gaming was certainly important to Microsoft, much of the push for the device involved entertainment. The console would ship with a Kinect, could control your cable box using voice commands, would be supported by a new television studio, would have sports apps. The biggest blow to the unveiling was the confused messaging on whether the console would require an internet connection. During the event, Microsoft's Don Mattrick said that the always-on function wasn't a requirement for single-player games, but later another company official said it would require an internet connection once a day. By the end of the day, Microsoft officials said they hadn't really decided how it would work.

While the always-online issue continued to plague Microsoft, the bigger concern was the focus of the console's reveal. To hardcore gamers, the console seemed to be about video games second, and they were vocal about their displeasure. The face of that displeasure was quickly becoming Mattrick, the president of Microsoft's Interactive Entertainment Business and a man who seemed to enjoy goading gamers about concerns over backward compatibility and internet requirements.

This sudden twist of fate, a loss of gamer faith, quickly becomes the first major plot point of the Xbox One's launch story.

Act Two: Confrontation

Riding into E3 2013 on a wave of negative reactions, Microsoft promised that its big E3 press conference would be all about games. But the press conference fell flat, with the question of digital rights management and the Xbox One's $499 price tag overshadowing anything the company said about the games the console would be seeing. Sony's press conference later that night managed to garner a standing ovation from attendees with a $100-lower price tag for the PS4 and jabs at Microsoft's approach to DRM.

The bad E3 seemed to wake up Microsoft to the issues it faced. Days after the E3 flop, Mattrick and Microsoft announced a stunning reversal to their DRM plans. Less than a month later, Mattrick was out, heading to Zynga as its new CEO.

This moment of confusion by Microsoft, the suggested consumer-unfriendly digital rights management approach, and the reversal and departure of Mattrick, coupled with less-than-stunning sales numbers for the console in the fall of 2013, sets the stage for a sudden, driven change in direction.

In February 2014, Microsoft CEO Steve Ballmer announced his retirement and Satya Nadella was named as his replacement. Days later, Nadella announced that Phil Spencer, the chief of Microsoft Studios, would now head up the Xbox division, a clear sign that gaming was starting to become the new focus of the Xbox One.

Now two months into his new job, Spencer announced that the company would start selling a less expensive Xbox One without the Kinect, an unpopular add-on included with all Xbox Ones to that point. In July, Microsoft shut down the entertainment studio designed to create original video content for the console.

With the Xbox One's second holiday looming, the console received a temporary price drop. That price drop marked the final step in what felt like a methodical attempt to take back all of the bad decisions that led to the Xbox One's hobbled launch and struggle to outpace the PlayStation 4 in the following year.

The Xbox One now sits firmly at square one, a slightly overpriced, slightly underpowered console with a slowly increasing array of solid exclusive games. More importantly, it is a console with the potential for a new vision, a vision most likely to be shaped by Phil Spencer.

Act Three: Resolution

In every three-act narrative, there is a moment when the protagonist must confront one final, seemingly unsurmountable challenge. That confrontation always comes after a moment of pure clarity, a moment when the protagonist decides on a monumental change of course. For the Xbox One, that moment was the appointment of Phil Spencer and the sea change he brought with him.

Looking back at the Xbox One through its short history, back to the message of Microsoft's third console on its first day in the sun, the gaming system is a completely different thing than what emerged and what it slowly evolved to become.

The Xbox One on that spring reveal day in 2013 was a multimedia device, a cable box supplement, the hub to your living room or den experiences and, oh yes, it was also a gaming system. It was a bit of technology promising to push the medium of gaming forward with one giant $499 leap.

But those promises, those innovative ideas (both good and bad), that scope of entertainment evaporated in the heat of the fear-and-loathing-powered furor ignited by early adopters and hardcore gamers.

So Microsoft retreated, it backpedaled on promises, eventually dropped bad ideas and hid away good ones. It ducked and weaved until what it had left was a console that plays games, up against a console that does the same thing. And for every month of 2014 so far, the PlayStation 4 outsold the Xbox One.

Both the PS4 and Xbox One have the same price now, $399. While the design of the hardware and the technology inside both consoles can't be changed easily, what can change is the thing that Microsoft excels at: the software that drives its console.

So here stands Spencer at the beginning of Xbox One's third act (and in some ways, also his own third act). This is the deciding moment. Can a console that started out with such high ambitions, only to drop them all in an attempt to stay relevant, make a comeback?

Yes, and we're starting to see that.

Microsoft has been grabbing exclusives like the next Tomb Raider and the next Crackdown left and right. There have been price drops and holiday sales. And there is still plenty going on in the background and through monthly free updates to the system.

A lot of the little things still need work; it's a punch list of minor problems that someone has to methodically tackle and fix. Next comes those promises neither taken back nor delivered upon. Microsoft has to make good on those things, like the ability for any console to become a tool for game creation. Finally, Microsoft has to dust itself off and, in the face of an overwhelming capitulation, figure out how it can bring back some of the promise of those early ideas without the awful tinge of anti-consumer sentiment.

And that's where Spencer comes in. With the Xbox One launch, its real launch this holiday, the console needs a plan. Spencer's plan.

Microsoft gave the PlayStation 4 a year-long head start. Sony's goal was to deliver a solid gaming experience for gamers, to bring to market a better PlayStation 3. And they've nailed that, solidly winning over early adopters and gamers in the first year. But Sony's laser focus on games does come with a cost: It doesn't have the same potential to broaden its market that Microsoft wanted for the Xbox One.

What happens next, whether Microsoft can empower the Xbox One to realize that vision, will end this third act, this gaming generation's final culmination. Sony gave Microsoft a head start last time and caught up with the PlayStation 3 just as the generation wound down. Now maybe it's Microsoft's turn.

Good Game is an internationally syndicated weekly news and opinion column about the big stories of the week in the gaming industry and its bigger impact on things to come. Brian Crecente is a founding News Editor of Polygon.