Microsoft's Xbox One X Console Won't Support Virtual Reality

By Sarah E. Needleman Features Dow Jones Newswires

There was a surprising omission at Microsoft Corp.'s press conference ahead of a big videogame industry gathering: virtual reality.

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Microsoft's new Xbox One X console won't support the emerging technology, once considered one of the hottest -- and overly hyped -- bets in gaming. The decision draws a sharp distinction between the new Xbox and rival PlayStation 4 machines from Sony Corp.

At a launch event Sunday, Microsoft said the Xbox One X, known as "Project Scorpio" while in development, will support 4K high-definition gaming and backward compatibility. The machine will launch Nov. 7 and cost $499--$100 more than Sony's high-end PlayStation 4 Pro, which made its debut last fall.

Virtual reality never came up. In an interview with The Wall Street Journal, Xbox marketing chief Mike Nichols said VR is more popular and better-suited for personal computers than consoles. "The opportunity on PC is larger, because the install base is larger and we think the customer experience will be better on PC," he said.

The VR omission was jarring considering Microsoft's E3 presentation last year left viewers with the impression Project Scorpio would hook up to a high-end headset, with many speculating on compatibility with Facebook Inc.'s OcuIus Rift. Mr. Nichols blamed that on poor messaging around the console's power.

Microsoft said it is focusing on supporting mixed reality, which blends the digital and real world, through products such as its own HoloLens.

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Still, the decision could prove a wise hedge as VR has been slow to take off, at least with console and PC gamers. Sony earlier this month said it has sold about one million units of its PlayStation VR since October, while research firms estimate Facebook's Oculus and HTC Corp.'s Vive lag behind in sales despite being on the market since spring 2016.

"Microsoft apparently doesn't believe the benefits of building their own VR platform justify the cost," said Colin Sebastian, an analyst at R.W. Baird. "They may lose some users on the margin, but we do not believe a lack of VR in the near-term will meaningfully impact sales."

One major criticism of VR games is that many play as short demos rather than full experiences. A dearth of hit apps may be a deterrent for Microsoft, MKM Partners analyst Eric Handler said. "There is not enough content for in home VR at this point," he said. "VR won't be relevant for several years. Why bother at this point?"

The high price tag for the Xbox One X, however, is a concern for some analysts, especially given the Nintendo Co. launched its Switch at $299 and the foothold the PlayStation 4 Pro already has. Sony said the machine has accounted for about 20% of total PlayStation 4 sales since it launched.

Write to Sarah E. Needleman at sarah.needleman@wsj.com

(END) Dow Jones Newswires

June 13, 2017 00:15 ET (04:15 GMT)