At E3 2013, the Xbox One was revealed to the public. Despite some promises, Microsoft announced some features that weren't met with praise, but rather immense criticism and backlash that, to this day, continue to hurt the console's performance.
Before E3 2013, there were huge rumors that the PS4 and Xbox One (wasn't known as Xbox One back then, was rumored to be Xbox 720) were going to have DRM and no game sharing policies, which caused many to be worried, specially after what DRM did to EA's Simcity, and thinking to switch to either the Wii U or PC, or just stick to their old consoles. Fortunately when the PS4 was announced it denied those rumors, as for the Xbox One, gamers were now worried about it, a Microsoft game exec. called Adam Orth kept supporting that games should be always on and made fun of people who didn't like it, when he was criticized on twitter for that, he responded by posting a picture of Obama using his phone with a caption on it "Deal with it"
This was widely criticized by gamers and decided to choose the PS4 instead, however Microsoft apologized for Adam Orth's actions and has fired him, this gave many gamers hope that the rumors might not be true.
E3 2013 Reveal
When the console was revealed at E3 2013, the worst fears of gamers across the world came true when it was confirmed that the console would have DRM, along with many other features that made it look worse. For starters, the console's name was ridiculed as many gamers pointed out that it could cause confusion with the first Xbox, and joked about what the Xbox One's future successor's name would be. The first Xbox was nicknamed "Xbox Original" to differentiate it from the Xbox One.
One feature that was poorly met was the new game licensing scheme: all games, including those purchased at retail, would be bound to the user's Xbox Live account. Users could access their purchased games from any other Xbox One console, play games without their disc once installed, and allow users to "share" their games with up to ten designated "family" members. They could also trade games at "participating retailers" and also transfer a game directly to any Xbox Live friend on their list for 30 days, but only once. To keep the licenses synchronized, the console would need to be connected to the internet every 24 hours, or else all games would be disabled until the console was connected again. The reason this was meant with major dislike was because it would infringe on gamer's first-sale rights on the physical disc of the game, rendering the disc near useless upon first use as well as making the game licensed to the gamer rather than let them own it, even after buying the disc. Essentially, this meant that you could no longer buy used games or lend them to your friends because the discs were useless. In essence, gamers no longer would own the games they paid for, they'd only rent them with Microsoft's permission.
Freedom with game ownership once purchased has always been one of the main advantages consoles have over PC, taking that away from the Xbox One made the console look irrelevant, as it was essentially just like Steam. Not only that, once the Xbox One is discontinued years later, it's servers would go offline and every single Xbox One game ever made would become completely unplayable.
The biggest amount of backlash went towards the 24 hour check-in restriction, and for one simple reason: There is NEVER any guarantee that the console will consistently get internet access every single day without fail. Should you have connection problems, go on a trip, have long power outages, move to a new house, live in a location with poor internet reception or no internet at all, or Microsoft's servers went down for whatever reason, your Xbox One would become a $499 doorstop. This also meant the Xbox One would be an always-online system.
The Kinect add-on, while improved upon, was also heavily criticized because of privacy concerns as Kinect could have been used for surveillance with it's face recognition and ability monitor a gamer's heartbeat combined with the always-online requirement. This was made worse when Microsoft announced that using the Kinect would be mandatory. Microsoft tried to justify this by claiming that it was an integral part of the Xbox One, and Kinect is required for the system to function, but there is one major problem with this: if the Kinect were to break and cease functioning, just like with the check-in restriction, the console would become an oversized piece of useless plastic. In reality, this was a poor excuse to cover up the fact that Microsoft was trying to force Kinect upon everyone, even those who didn't want it.
Finally, during the event, Microsoft's game list showed very few games to encourage gamers to buy the Xbox One, showing more entertainment features than actual games and little to no innovation over the Xbox 360, and it didn't even have backwards compatibility. The Xbox One was seen more like a glorified cable box than an actual game console with many anti-consumer restrictions. To add insult to injury among the gaming community, Microsoft stated that if gamers did not want these restrictions, they should stick to the Xbox 360. This comment, of course, resulted in even more backlash as it felt like a middle finger to those who wanted the new console but didn't have internet.
When Microsoft announced the Xbox One at E3 and it was negatively received and many saying they'll get a PS4 instead, Sony took advantage of all of this by advertising and promoting the PS4 that it doesn't have the Cons of Xbox One on E3 2013 as well as various social media outlets such as Facebook, Twitter, they kept advertising that it doesn't have always online and can play used games normally, the ads were so strong and funny that it made many people choose the PS4 more over the Xbox One, even Xbox fans
This event pushed the PlayStation 4 in a more positive light and increased its sales when Sony announced the console wouldn't have any of those restrictions and would be a more consumer friendly console. Tom McShea, an editor at GameSpot even went so far as to call Microsoft anti-consumerist, punishing its loyal customers with strict regulations. Gamers also accused Microsoft of being greedy for demanding more money to use the games they already paid for via these restrictions.
Microsoft began a massive damage control campaign, trying to defend the restrictions and price, praising the console whenever possible, and censoring criticism. There were even rumors that Microsoft was bribing third-party developers not to show PlayStation 4 games. This predictably only made Microsoft look even worse. Gamers en masse, even hardcore Xbox 360 fans, declared they wouldn't support the Xbox One and migrated to the PlayStation 4 or even to the Wii U.
Because of the insane amount of backlash and the PlayStation 4's preorders far outmatching the Xbox One's, Microsoft announced a month later in June 2013 that it would be dropping the new licensing scheme, 24 hour internet check-in (although a mandatory software update would need to be downloaded upon the console's intial setup process to enable Blu-ray and DVD playback), and the mandatory use of the Kinect. Strangely enough a Change.org petition to restore the restrictions was made (which thankfully failed). The Xbox One was mockingly nicknamed "Xbox 180" after this announcement. Microsoft's decision to undo the DRM restrictions was seen as a victory for gamers, as they were able to prevent these anti-gamer practices and prevent others from attempting to do the same.
Despite Microsoft removing these restrictions, they permanently soiled the Xbox One's image and the console has had a rather slow growth. PlayStation 4 quickly became the go-to console for most gamers and is currently the best selling console of its generation with the Xbox One lagging far behind. Microsoft even stopped publishing sales figures for the console from October 2015, most likely due to inferior numbers to the PlayStation 4. Things got even worse for the Xbox One when Microsoft announced that they won't make any exclusive games for the console anymore, which can be taken as a sign that Microsoft is giving up on the console.