To counter the negative response and the subsequent PR challenges, Microsoft execs are turning the focus to digital delivery, with the hope that consumers will adjust to a console environment that does not rely on game discs.

The problem is that Microsoft's core consumer base is unpersuaded. Additional restrictions on previously owned content and internet connectivity requirements have made it easier for Sony to gain access not only to the gaming world's undecided voters, but to loyal Xbox users as well.

Microsoft's battles are already being fought (and possibly lost) on a number of fronts, and PR difficulties in one of its strongest areas is no doubt a cause for concern at the company's strategic levels.

As Sony and Microsoft move ahead, each on its own path to owning the living room, key challenges in defining the parameters for owning content lie ahead.

Early signs suggest that Microsoft is already on the defensive, so the next question Is whether we will see policy changes in an effort to stem the rising signs of customer discontent.

At the time of publication, the author had no positions in stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
Richard Cox is a university teacher in international trade and finance. His articles appear on a variety of Web sites, including MarketBulls.net, Seeking Alpha, FX Street and others. Investing strategies are based on technical and fundamental analysis of all the major asset classes (stock indices, currencies and commodities). Trade ideas are generally based on time horizons of one to six months.

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