Executive Summary

Our days of spending free time have begun to heavily rely on technology to provide us a sort of escape from high-stressful situations or an entertaining experience that we can no longer physically achieve. One main outlet is through the use of video games and the ever-evolving video game console market. No other technology company understands this most than Microsoft, with their attempt to come out on top in the gaming system wars. As the holiday season, fast approaches so does the lookout for the next hot ticket gift items. Microsoft was well aware of what a holiday 2020 launch would mean for its newest system, Project Scarlet. The scope of this article is to dive into the minds of Project Scarlet’s brain trust and look at the project plan through their eyes. What were the steps taken to fine-tune Project Scarlet, how did Microsoft learn from its past successes and failures, how would the COVID -19 pandemic affect things like the supply change and the potential risk of not meeting demand? Microsoft also decided to take a bold step to match its competitor Sony, by having an additional system being released at the same time known as Project Lockhart. Microsoft would once again be going head to head with old rival Sony for the lion’s share of the next-generation video game market. This was their time to shine and communicate their plans to the consumer for the minds and dollars of current and future gamers.

For almost two decades Microsoft has been at the forefront of gaming. The company which stepped into the gaming realm in 2001 with its original Xbox has had its fair share of failures along the way. The most notable of these was Microsoft’s second-generation, Xbox 360, which although was a hit with gamers, also had a massive backlash because of hardware problems. Even with these failures, Microsoft continued pushing forward in the gaming industry. The company’s latest project codenamed “Project Scarlet” was first officially announced during the Electronic Entertainment Expo (E3) 2019 press conference with Phil Spencer, Executive Vice President of Microsoft, as the Team Lead. The system was set to be released for the 2020 holiday season (Snider & Molina, 2019). This will be the 9th generation of home video game consoles and Microsoft’s fourth-generation Xbox systems. Launching parallel with Project Scarlet will be Sony’s latest foray in the gaming sector, the Sony PlayStation 5. This will ignite the latest edition of the console wars between rivals Microsoft and Sony. Codenamed Project Scarlet, Microsoft’s Xbox Series X is slated to increase gaming specs tenfold and took years of planning and preparation.

Most video game consoles take at least 4 to 5 years to go from the drawing board to the store shelves. During the last generation of video game consoles, Microsoft had two different systems, the Xbox One X and the Xbox One S, which catered to different consumer markets. Microsoft believed that this strategy would bring in the largest number of consumers for their brand. It would be a lesson that they would implement in the 9th generation of consoles. But even during the peak of the Xbox One’s popularity, Microsoft was turning its attention to the future, Project Scarlet. Project Scarlet launched in 2016 but remained a secret until roughly two years later in 2018 when industry insiders started to hear rumors about the next generation of consoles. With each console generation lasting between five to eight years, it was only a matter of time until Microsoft would make its new console official. Xbox team lead Phil Spencer said in 2018 that, “Microsoft’s teams are deep into architecting the next Xbox consoles”  (Campbell, 2018). The next phase in the deployment would come during the E3 2019 conference. During this conference, only the high-level information was shared with the public regarding processor speed and type of hard drive. There were no visuals such as what the console would look like. Details including price points were also omitted by Microsoft. The console itself was still referred to as the code name Project Scarlet.

The project timeline would shift too late 2019 with more and more rumors floating throughout the internet regarding what the console would be like and what it meant for the next generation of gaming. The first official sneak peeks trailer was on December 12, 2019 (Mercante, 2019). Consumers would have the opportunity to see for the first time what the console would look like and what they would look forward to in the upcoming year. More information around the power and capabilities of the console would be revealed in early 2020.

The specs in the upcoming Xbox Series X has been fine-tuned over time and slowly modified along the years with past systems. Some of these additions to the new system include, “…a custom chip based off of AMD’s Zen 2 technology, and Microsoft says that it will allow for 8K visuals and up to 120 frames per second” (Thier, 2019). Therefore, the results are clearer graphics and enhanced capabilities with Ultra HD TVs. This is all thanks to the trials and testing through past systems like the Xbox One (2013) and the later model Xbox One X (2017) which tested various graphic chips with faster load time, 4K capabilities, and introduced the streaming service Xbox Game Pass. Another critical change being made is that the system will be backwards compatible for the past three generations of Xbox consoles, which strategically appeals to nostalgic gamers (Giret, 2019).

The COVID-19 Pandemic has struck many sectors of business, even including the gaming community, affecting the manner of console launching events. Usually for game systems launching, there are interactive and extravagant events with large crowds and a strategical schedule spectacle. However, this time around, Project Scarlet, now called the Xbox Series X, was officially revealed during a streaming feed with live broadcasting displaying its third-party games at the Xbox 20/20 event. In an interview with Phil Spencer regarding plans to take on the pandemic, he stated,  “Early on, as we were starting to deal with people working from home, there were a lot of questions about what was going to happen with the supply chain and testing our hardware” (Cieslak, 2020). Nevertheless, contingency plans were put in place to make sure developers had the necessary testing kits to evaluate the systems functionality and further steps were taken to ensure on-scheduled manufacturing through supply-chains.

Microsoft’s Project Scarlet was not the only next-generation console the company had up its sleeve. Project Lockhart was a subset of Project Scarlet where Microsoft tried to create a parallel system that was all digital, a little less powerful, and a lot less expensive. Project Lockhart would later be revealed to be the Xbox Series S. The system would be a direct competitor to Sony’s all-digital console. Having an all-digital device would be a major win for Microsoft. However, the project plan was leaked early in the process and so many consumers knew that this was coming. It probably would have been a bigger surprise if there was not an entry-level console launching simultaneously with the Series X. Managing potentially competing projects could have spelled doom for Microsoft. Another potential risk of having another console launching was around the notion that this particular console would be an all-digital format device. Many hardcore gamers have been slow to adapt to this change in other consoles and prefer buying the physical copies of games. Microsoft, however, took this risk because it was a part of its long-term strategy to bolster its online streaming service (Devine, 2020).  Most companies would take the stance of just focusing on making the Xbox Series X the best console possible; however, this truly shows the number of resources and the scope a company like Microsoft can dedicate to its gaming sector. The biggest surprise would be the highly anticipated pricing of both of these consoles. Pricing could make or break the launch of the next generation.

The marketing of the console took another major step in September 2020 when Microsoft finally announced the prices of the Xbox Series X, along with its budget friendlier counterpart Xbox Series S. Throughout the summer of 2020 Microsoft held their cards very close to their chest and avoided potential price leaks. By announcing its price for the systems before Sony could release their prices, Microsoft set the market for the next generation of consoles. The price for the Xbox Series X would be 499.99 USD and the less powerful more consumer-friendly Xbox Series S would come in at the bargain price of 299.99 USD ( (Hamren, 2020). This was a great strategy for Microsoft, who in the previous generation was out-sold by Sony’s PlayStation 4 mainly because of a higher price tag. Sony was forced to make its PlayStation 5 console 499.99 USD and 399.99 USD for its all-digital version (Gartenberg, 2020). With the release of the price tag for the next generation of gaming consoles also came the long-anticipated release dates. Microsoft announced that they would be releasing both the Xbox Series X and Xbox Series S on November 10, 2020, worldwide.

In addition to the 499.99 USD and 299.99 USD price tags, Microsoft is also providing an alternative way to purchase its next-generation console. The company is promoting its Xbox Game Pass Ultimate which provides players with both Microsoft’s online gaming service “Xbox Live” and its Streaming Gaming service “Xbox Game Pass” for the low price of 14.99 USD. Microsoft is also bundling the Series X and S with the online services for an extra 10 dollars for Series S and 20 dollars for Series X (Xbox Game Pass, 2020). This would allow consumers to get their hands on the newest consoles without having to pay the full price tag upfront while locking in the consumer to Microsoft’s architecture of products.  It also makes the consoles more widely available and to the broadest consumer base. The subscription services are available across most major retailers like Best Buy, Walmart, Target, GameStop, and Microsoft’s online store, demonstrating a well-designed integration strategy on Microsoft’s spectrum to generate revenue streams and maintain a large network of loyal gamers.

For many gamers, the excitement came and went when Pre-Orders for both consoles became available. Microsoft had given the public about a week’s notice through a series of Twitter feed announcements, launching an event demoing upcoming games, and even though an announcement from the official website of Microsoft. This thought and effort was put in place to avoid mishaps that occurred when Sony announced their Pre-Orders for the PlayStation 5 happening the next day, but third-party retailers were releasing links to the Pre-Orders the same day of the announcement. Microsoft felt strongly about conveying transparency and communicating to the public to avoid as much confusion as possible when the time came for Pre-Orders to be available. However as accurately stated in an article, “Both were plagued with similar issues. Links would go up and down, stocks would sell out within minutes, and retailers that said they would have links ready to go were late. Sites could not handle the traffic, with users getting constant error messages. In the end, whether you got your preorder or not came down to luck” (Velocci, 2020). Many consumers went as far as getting the item added to their cart online from the retailer, then upon checkout, the inventory would be depleted. Since Microsoft was so transparent with the timing of when Pre-Orders would be available it allowed for individuals to conspire by buying in bulk through the use of bots for reselling at a larger profit.

The overall allocation of Pre-Orders per retailer caused consumers that really wanted to purchase the consoles to miss out on the opportunity. Another flaw in the Pre-Order process management was around the shift from the typical brick and mortar Pre-Orders from various retailers to mainly online Pre-Order with the exception of GameStop’s limited in-store and online (Kain, 2020). The COVID-19 pandemic played an important role in this shift. Retailers were weary of having consumers lining up outside stores and decided to hold this process largely online. Microsoft did all of the right things when communicating its pre-order policy and retailers largely fell in line. However, the large sentiment by the public is that there just were not enough pre-orders to fill the demand.

This on the other hand could be the exact course of action that Microsoft was planning on. By potentially making the Xbox Series X and Xbox Series S hard to find by limiting Pre-Orders, they would essentially be raising the demand for the new system. If people believe that this is the hot ticket item for the 2020 holiday season, then sales of Xbox Series X & S consoles will have a steady flow throughout the end of the year and into 2021. We see this trend throughout the tech and computer industries particularly with video game consoles and cellular phones. Unlike cell phones that come out yearly, video game consoles last for roughly 6-8 years or even longer. In this industry generations of sales need to last over the course of the system’s time or up to at least the end of the current generation when the latest console is announced.

The Xbox Series X & S are due to launch in November 2020 and one thing can be certain based on the demand for pre-orders, Microsoft’s strategy and project plan seem on track to be a success; however, only time will tell. A successful project launch of a new video game console could launch a company for the next decade or could indelibly signal the end for even the most popular household names in the industry.


Sasha Pagan is currently working for an online entertainment company known as BuzzFeed Inc. as an HR Generalist. Initially, Pagan attended Seton Hall University for her undergrad Bachelor Science degree back in 2011 and have recently completed her MBA degree from Montclair State University with a concentration in Human Resources Management. Know more about the author here: http://www.linkedin.com/in/sasha-pagan-a402862b


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