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What Project Scorpio means for the Xbox business, and the console industry

Things are going to get weird for Microsoft's console business

Microsoft confirmed the existence of Project Scorpio at E3 today, but it's scheduled for the holiday season of next year so it's unlikely that we're going to get many more details at this show. But Microsoft has planted a flag in the ground and issues a challenge to Sony and Nintendo: Power matters, and Microsoft intends to be the most powerful.

But what does this mean for the future?

Project Scorpio won't be a new generation

Microsoft stressed that "no one would be left behind" due to the hardware being "beyond generations." Games coming down the line will be compatible with the Xbox One, Windows 10 and Project Scorpio, which means that developers will have to create games that take advantage of what Scorpio can do, while also running on existing hardware.

Spencer described the sort of thing we can expect in an interview with The Verge:

On Scorpio, though, many of those games will feature improvements because of the more powerful hardware. Spencer cites Halo 5 as an example. While the game is capable of running at 1080p and 60 frames per second on the Xbox One, often the resolution drops in order to maintain a solid framerate. On Scorpio that won't be the case. "When a game like that runs on Scorpio," says Spencer, "it's going to run at maximum resolution the whole time."

This isn't a new console generation, this will likely be a premium experience for people interested in VR or playing their games in 4K resolution. So don't expect much in the way of new types of games or the sort of jump you're used to seeing with a new generation. Instead resolutions will be higher, framerate will be tighter and VR experiences are on the way.

Where the hell is the VR headset?

Microsoft's Phil Spencer said the word "VR" a few times during the Scorpio presentation, but we didn't see any VR hardware. Nor did we hear the words "Rift" during the presentation, even though Microsoft and Oculus have previously enjoyed a cozy relationship. The retail Rift comes with a wireless Xbox One controller, after all, and Microsoft has previously promised the ability to stream Xbox One games to a virtual reality theater in the Oculus Rift.

"We're not ready to announce something right now, but you can imagine at the price point of Scorpio — which we haven't actually said, but think about consoles and where they live in terms of price point — having something at six teraflops that will get millions of people buying it is very attractive to some of the VR companies that are out there already, and we've architected it such that something will be able to plug right in and work," Phil Spencer told The Verge.

So the door is open for a Scorpio release of the Vive, Rift or even possibly Microsoft's own hardware. Who knows? But the important thing is that VR is coming, and that's a great use for the Scorpio's power. It's also possible the VR headset is only coming to Project Scorpio, which means developers could take full advantage of the power of the platform without technically breaking Microsoft's promise not to leave anyone behind.

One quick note: Todd Howard was in Microsoft's video talking about virtual reality, and it's very unlikely that Bethesda's VR work is going to be on an Oculus Rift any time soon due to the company's litigation.

Sony has time to react

Project Scorpio isn't coming until the end of next year, and Microsoft seems very confident that it will win the competition for most powerful hardware. That power is one of the things that repeatedly stressed during the presentation, even though we were only shown a few very broad details. "

"The console will deliver 6 teraflops of computing capability, and true 4K resolution," our original report stated. "Microsoft is saying it's the most powerful GPU put into a console to date."

So now Sony knows what's coming, and it's very possible it may change some aspects of the upcoming PlayStation 4 Neo. This is exactly why announcing before the show was such a strong move by Sony: Microsoft felt the pressure to announce their hardware, and now the company has at least partially shown its hand, although we know even less about the PlayStation 4 Neo.

Console gaming is now stratified

One of the draws of gaming on a console was that everyone had the same experience. Developers could optimize for a single spec and the price would go down over time. You couldn't buy your way into better performance, and everyone was on the same footing.

That era is officially over.

Now the players who spend more will get a higher resolution and better framerates. This could lead to advantages in multiplayer games, and it may be the only way players will be able to play Xbox games in VR. The ability to go into the store and point to a single console is done for; now there will be the base model and something more expensive with better performance.

This is going to put added stress on developers who have to support multiple specifications, and it's going to annoy retailers who now have multiple versions of each console sold for very low profit margins on the shelves. We're going to feel this change in many ways as developers have to find ways to pay for the extra work and retail adapts to the new way of doing things.

Sony and Microsoft are changing the rules of the game, and it may not be for the better. But as of now, there's no turning back.

Xbox One S and Xbox Project Scorpio

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