I think that regardless of the promise of Kinect and whether it managed to live up to that promise (I don't think it did at all), that this was also caused by Microsoft's hubris. Besides touting stuff like Skype calls and voice commands, and how it was involved in their TV plans, I don't think there was ever some kind of unified message saying here's why people who play games should care about Kinect. It seemed like Microsoft mostly just showed up and said, "hey we're the Xbox people, we've been on top for the last 8 years, and we want one of these in every home so you're gonna pay for it, because you really have no other choice" Which seems like the worst way to get people to adopt something.
Whether this is the end of the Kinect, who knows? When they announced the new SKU I saw someone say, "there's nothing to worry about, if they want Kinect games they can just buy the one with kinect," wait you mean the one that they're having trouble selling already? I think there's a very real chance that the Kinect will suffer from Wii U syndrome when the new SKU comes out. Also known as, "no one is buying this thing, and no developers will make a game for it because no one is buying it."
Actually, to be honest, this probably would have been a horrible business decision, but you know what? If Microsoft cared so much about getting a Kinect in every home, then they should have covered the cost of it themselves. No consumer should have to pay an extra hundred dollars for a product that already failed once, and is mostly being sold on the promise of seeming futuristic.
Sure there's a chance that the Kinect add on by itself might succeed, but I just don't see Microsoft getting behind it, at least not for games, and especially not like they did back in 2010, with weirdo Cirque Du Soleil elephants and tons of games.
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