Sony, Microsoft heading toward video game console showdown

By Dawn C. Chmielewski

Nov. 13, 2013 5 AM PT

“Console Wars, the Sequel” is coming to a retail outlet near you.

On Friday, Sony Corp.’s new PlayStation 4 video game system arrives.

A week later, Microsoft Corp. launches the competing Xbox One, its successor to the Xbox 360 console.

The next-generation systems will vie for the hearts and wallets of game aficionados — as well as a coveted place under the living room television.

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But each console maker has pursued distinctly different pathways into consumers’ homes.

Sony has positioned its $399 PlayStation 4 as a console designed for the hard-core gamer, the kind of devotee who is likely to stand in line for hours outside the local GameStop for the chance to be among the first to buy the latest hardware.

Microsoft, meanwhile, is describing its $499 Xbox One as an entertainment hub that plays games — but offers much more.

Analysts predict both devices will be hot sellers this holiday shopping season, with as many as 5 million units purchased before the end of the year.

“This console cycle is going to get off to a great start,” said Cowen & Co. game industry analyst Doug Creutz. “There’s clearly pent-up demand for the new boxes.”

Video games, once viewed as limited in appeal to socially awkward teenage boys, have become mainstream entertainment. In the U.S., more than half of households own a game console, and consumers spent nearly $20.8 billion on video games, hardware and accessories last year, according to the Entertainment Software Assn.

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Globally, researcher DFC Intelligence estimates the market for video games approaches $63 billion. Contrary to popular stereotypes, 45% of those who play games are women and roughly one-third are older than 36.

Some industry observers had predicted that the popularity of so-called casual games, which include such titles as “Candy Crush Saga” that anyone could pick up and play in a few spare moments, would undermine the traditional console market. But these new ways to play games, on social networks such as Facebook and on apps run on smartphones and tablets, did not end up making dedicated video game systems obsolete.

“The overall market has expanded because the demographic of who a ‘gamer’ is has greatly expanded,” said P.J. McNealy, chief executive and founder of Digital World Research. “It’s no longer just the 14- to 30-year-old male. It’s anyone who has played ‘Angry Birds,’ ‘Temple Run,’ ‘Bejeweled,’ or [any game] on a console.”

The initial buyers of Xbox One and PlayStation 4 are expected to be the most dedicated players.

Sony has honed its pitch to appeal to this group of buyers. In a demonstration of the new system at the St. Regis San Francisco hotel, executives emphasized its computational prowess (10 times more powerful than the PlayStation 3), exclusive launch titles (such as “Killzone Shadow Fall”) and social-networking features that enable gamers to share video from within the game.

“We’ve always said the PlayStation is about the gamer,” said Jack Tretton, president and chief executive of Sony Computer Entertainment America. “It is the ultimate gaming machine.”

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Microsoft, in a test drive last week in Venice, talked about the Xbox One as an all-in-one entertainment system whose Kinect controller recognizes the user when he or she enters the room, and automatically loads favorite games, TV channels, movies, albums and Skype contacts on the TV screen. Its voice control enables users to seamlessly switch from playing a game to watching a TV show or streaming music or a movie.

Game analysts note that the systems are roughly comparable. PlayStation 4, like the Xbox One, offers access to online movie and TV services such as Netflix and Hulu Plus, and Xbox One, like the PS4, enables players to record, upload and share game play highlights.

“From a pure gamer’s perspective, other than which titles are available on each system, there may not be as much difference as one thinks between Microsoft and Sony,” said Colin Sebastian, a technology analyst with Baird Research. “It may come down to things like price, where Sony has an advantage.”

Tretton said Sony is working hard to avoid the difficulties that marred the November 2006 introduction of the PlayStation 3, which came to market a year after the competing Xbox 360 console, cost $599 — $200 more than the top Xbox 360 console — and was hampered by a shortage of a key component used in its Blu-ray disc player.

“I feel more confident going into this generation of hardware than ever before,” Tretton said.

Microsoft, which rushed its Xbox 360 to market in late 2005 to get a jump on rival Sony, suffered from an initial defect that gamers dubbed the “red ring of death.” The malfunction cost the company $1 billion, according to published accounts.

Both game systems overcame those hurdles and about 80 million units of each were sold worldwide, according to McNealy.

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