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.
The console's name was ridiculed. Gamers pointed out that it would cause confusion with the first Xbox, and joked about what the Xbox One's future successors' name would be. The first Xbox was nicknamed "Xbox Original".
One feature that was poorly met was the different 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 an oversized piece of useless plastic. 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.
Finally, during the event, Microsoft's game list showed very few games that made the Xbox One not worth buying at the time, 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.
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 Mircrosoft 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.