New PlayStation and Xbox enter $150 billion games arena

Xbox

Think Michelangelo vs Da Vinci. Another epic rivalry is rejoined this week when Sony and Microsoft go head-to-head with the next generation of the blockbuster video-game consoles.

Sony, whose PlayStation 5 (PS5) takes on Microsoft’s Xbox Series X and Series S, is widely considered to be in pole position to capitalise on a pandemic-driven boom in consumer spending which has buoyed the $150 billion video game industry.

The Japanese firm’s deep bench of matches and broader fan base – it’s sold over 100 million PS4s, winning the struggle of the former generation – need to see it retain its edge over its American rival, according to industry specialists.

Yet the industry is shifting and cloud gambling is rising, allowing matches to be merged with no bulky hardware. This could suppress console earnings in coming years, analysts say, a change that may benefit Microsoft.

The two consoles – the first to be published by the two firms for seven years – are eagerly anticipated; the Xbox will go on sale on Tuesday, and also the PS5 two weeks later in center markets, costing about $300 to $500 apiece.

The race to order the apparatus beforehand actually began weeks before, though blink and you may have missed it. Pre-orders of Sony’s PS5 sold out within minutes on many retail sites, as an example, frustrating fans.

Julian Mercado, 17, was able to reserve a PS5 from Walmart.com just minutes following pre-orders started on September the 16th, realizing he’d be up against a legion of players.

Related Article:
US judge rules Apple could bar Epic Games's 'Fortnite' from App Store

“It’s exactly like shopping on Black Friday,” said the high school student from Dallas, who has been playing video games with his father since he was five. “You show up early, you walk away with something good.

PLAYING IN A PANDEMIC

Sony may have the edge, but the stakes are high for the Japanese company. Its gaming business is its biggest cash cow; at its fiscal 2019 the branch, including hardware, software and services, earned close to a quarter of its roughly $77 billion set earnings and almost 30% of its $7.9 billion operating profit.

Microsoft doesn’t break out the outcomes of gambling, though it’s a bigger part of its company compared to Sony. It also doesn’t disclose hardware revenue but the existing Xbox One is projected by analysts to have sold 50 million units.

For the other huge hardware player, Japan’s Nintendo, sticking to consoles is paying off using it hiking forecasts last week after elevated demand because of its Switch.

The PS5 will retail at $499.99 or $399.99 for a digital-only edition, although the Xbox Series X will sell for $499.99 and the lower-spec Series S for $299.99.

About 5 million PS5s are forecast to be sold this year, surpassing 3.9 million of the new Xboxes, according to media research firm Ampere, with joint sales expected to be higher than the former generation.

“The pandemic is expected to transform the US holiday shopping season,” explained Jason Benowitz, a senior portfolio manager at Roosevelt Investment Group. “Playing from home has become a way for some to safely socialize.”

Related Article:
After the success of Animal Crossing, a thin pipeline for Nintendo

Sony’s games depth is encouraged by in-house studios behind exclusives such as “Marvel’s Spider-Man: Miles Morales”. By comparison the new Xbox, say games specialists, will lack killer launch titles, using the newest in its flagship “Halo” series pushed back to next year as the pandemic hits development.

Cloud gaming growth can hand the US software giant an advantage in coming years, though. Although both firms have proceeded to offer solutions, Microsoft has become more competitive.

Its Xbox Game Pass subscription service has grown rapidly; it provides over 100 titles including brand-new games and contains more than 15 million consumers. Sony was reluctant to make its latest titles available on services like PlayStation Now, fearing this may cannibalise sales of big-budget games.

‘DEMAND OUTSTRIPS SUPPLY’

The pandemic, while fuelling a demand, has also constrained Sony and Microsoft’s generation, according to industry specialists, who view shortages stretching into 2021.

“Demand will outstrip supply so there’s going to be some people who won’t get a-hold of the console when they want to,” said Piers Harding-Rolls, director of Ampere’s games research.

Sony has declared that retailers like Walmart, Best Buy and Target will sell the PS5 exclusively online when it launches on Nov. 12, to prevent people from camping outside shops during a pandemic.

Walmart stands to market up to $1.1 billion worth of new consoles by the end of January, according to Wedbush. It overlooks the US market along with GameStop, each having a roughly 30% share, while sales of consoles at Target and Best Buy comprise about 15% , the research firm stated.

Related Article:
Big tech companies now asking Seattle employees to work from home over coronavirus fears

Target said it was working closely with its vendors to procure enough stock. Some shoppers who had booked consoles told journalists at our partner news agency Reuters that Target had said they may receive them days after the launch date.

Walmart said it would begin selling the new consoles at start but declined to comment on if it would have enough stock to satisfy demand. Best Buy also declined to comment on whether it’d be able to meet demand, while GameStop didn’t respond to requests for comment.

For DeAnthony Thicklin, a casino attendant who reserved his PS5 on Target.com in September, the priority is to get their hands on a console on the launch day .

The 25-year-old offered some advice.

“Have all your card information set up so the only thing you have to do is click,” he said.

“Don’t hesitate. Be quick.”

The team at Platform Executive hope you have enjoyed this news article. Initial reporting via our official content partners at Thomson Reuters. Reporting by Sam Nussey in Tokyo, Richa Naidu in Chicago and Supantha Mukherjee in Stockholm. Additional reporting by Uday Sampath Kumar. Editing by Kenneth Li and Pravin Char.

Stay on top of the latest developments across the platform economy and gain access to our problem-solving tools, proprietary databases and content sets by becoming a premium member. Subscription plans start at under $7 per month.

Share This Post