The previous generation of game consoles released by these two companies lasted about 7 years. Through the latest systems, Microsoft and Sony adopt different strategies to attract players and generate more revenue from players.
The new crown pneumonia pandemic has given people more free time to play games. Players can continue to indulge in the game for the next few years, which is a huge business opportunity for both companies.
Game revenue accounts for 24% of Sony’s total revenue and 8% of Microsoft’s revenue. But Microsoft is more regarded as the third most valuable public company, second only to Apple With Saudi Aramco, any success in gaming can benefit many shareholders.
What happened last time
According to IDC, a technology industry research company in 2013, when Microsoft launched the Xbox One and Sony released the PlayStation 4, Sony’s new game consoles shipped 4.2 million units, surpassing Microsoft’s 3.8 million units.
Sony previously set the price of the PlayStation 4 at $400, which is $100 lower than the Xbox One’s $500. Microsoft spends its time promoting the entertainment features of Xbox, rather than focusing more directly on the game itself. Initially, Xbox One came with Kinect, a device that allows people to control Xbox through voice commands and gestures. The game was not a big success. Microsoft finally launched a $400 Xbox package without Kinect functionality in 2014.
In later years, PlayStation 4 users could play exclusive games that were not available on other systems, including Uncharted 4, Horizon Zero Dawn, and Spider-Man. Xbox One also received some exclusive products, including Halo5.
However, according to IDC data, PlayStation 4 sales surpass Xbox One every year.
Since the release of Xbox One, Microsoft has adjusted its game strategy. Microsoft’s executive vice president of gaming business Phil Spencer said in an interview with the media last year that the usual measure of success is game console shipments, but it has no user stickiness (including the number of people playing games).
Before this change, other Microsoft products under the leadership of Satya Nadella also changed. In 2014, Nadella succeeded Steve Ballmer as CEO. The company no longer insists on maintaining Windows systems. It released the Office application version for Android and IOS and brought the team productivity applications in the Office suite to the open-source operating system Linux. Linux can be accessed in Windows. Microsoft began to migrate Office users to a subscription model and provided Windows 10 for free.
The new Xbox X series and S series do not have exclusive new games like last time. So how will Microsoft stand out?
The answer is Xbox Game Pass, which is an online subscription service that provides customers with a catalog of more than 100 games, covering all three Xbox consoles before, and downloading all games for only $10 a month. Microsoft plans to enhance this service by launching new games over time, just like Netflix Does the same for videos.
Microsoft’s services are much broader than Sony’s new PlayStation Plus Collection. If users subscribe to the PlayStation Plus online multiplayer game service, they can play 20 PlayStation 4 games for $5 a month.
Game Pass users can play Xbox games on Android devices for an extra $5 a month: the games are published on the Internet through Microsoft’s data center. (Microsoft also wants to provide similar services for iOS devices, but says that Apple’s App Store policy prevents it from doing so).
The choice of mobile devices is for Nintendo Some kind of response from Switch, the latter provides powerful gameplay in a portable design. Sony’s PlayStation Now cloud gaming service does not support mobile devices.
Microsoft’s game division has been acquiring frantically. It owns 23 game development studios, including Microsoft’s announcement in September last year that it would acquire Zenimax’s studio for $7.5 billion. This number is higher than the 11 studios in 2018 and also surpasses Sony’s 14 studios. According to media reports earlier this week, Microsoft has reached out to Japanese game developers, Japan is the home of Nintendo and Sony.
Microsoft’s 343 Industries studio was supposed to launch the next episode of the popular sci-fi shooter “Halo” this holiday season, together with the new Xbox console, but the company announced in August that the game would be postponed to 2021.
In contrast, both the $500 PlayStation 5 and the $400 digital version of the PlayStation 5 (without a disc drive) can play Marvel’s Spider-Man: Miles Morales (Marvel’s Spider- Exclusive games such as Man: Miles Morales and Demon’s Souls). PS5 has also carried out software transformation and main controller design.
There are no such features in the new Xboxes, and people are looking for hardware improvements as a reason to choose Microsoft.
Hardware improvements do exist, but they may not be enough to overthrow Sony.
What does Microsoft care about now?
“In this generation of products, I don’t see any technology that significantly improves content,” said Seamus Blackley, a former Microsoft employee known as the father of Xbox, who was the first to promote Microsoft and Sony Contestant.
Blakely has tried Microsoft’s new gaming hardware, and he said he thinks Sony’s PlayStation 5 will have the upper hand at least initially.
IDC agreed with Blakely’s expectations. IDC game research director Lewis Ward said he expects Sony to sell up to 5 million PlayStation 5 consoles this year, and Microsoft Xbox Series X and S consoles will sell 3.8 million.
Jerret West, chief marketing officer of Microsoft’s Xbox business, told the media in an email that Microsoft will sell all its consoles this year, and it is expected that the number of games used during the holiday this year will be a record. Microsoft Xbox business chief financial officer Tim Stuart told Jefferies analyst Brent Thill on Thursday that he expects an oversupply situation in the fourth quarter of this year and the first quarter of next year.
Investors’ attention to the sales of Microsoft game consoles has also declined. Last year, Microsoft introduced a new indicator: Xbox content and service revenue growth, including subscriptions to Game Pass and Xbox Live online game services, as well as popular games such as Minecraft for non-Microsoft devices. This number is higher than the overall game revenue growth in the past four quarters of sales.
Besides, higher console sales do not necessarily help Microsoft’s financial situation. Morgan Stanley analysts Keith Weiss and Josh Baer wrote in a report to customers last month that in the current fiscal year ending June 30, Microsoft The more revenue from gaming consoles, the lower the company’s total gross profit margin.
Ben Throop, the founder of Frame Interactive, a Vermont game development company, said, “I think Sony may launch hardware sales faster, but I don’t think Microsoft cares about this. Ben Throop has developed several PlayStation games, He hopes to buy a new PlayStation and a new Xbox — but not right away. He said, unlike Sony, Microsoft is more focused on attracting Game Pass users than mobile game consoles.
West retorted that Microsoft provided the most powerful console ever and claimed that Microsoft absolutely cares about console sales.
“But focusing only on the console is not a complete way to evaluate the gaming industry and its future development,” he wrote. “Developers working with us can use desktop computers, consoles, and mobile devices to reach other gamers through cloud services. All new games Players have the same many options.”