Analysis & Opinion

PS4 and Xbox One set to go head to head in holidays 2013

Paul Jackson, principal analyst at Informa Telecoms & Media

Paul Jackson, principal analyst at Informa Telecoms & Media

Microsoft and Sony have released more complete details, including pricing, of their new home consoles in the past day at the E3 conference in Los Angeles.

Despite using similar architectures and similarly designed enclosures, the two firms are taking markedly different approaches to their next-generation consoles: Microsoft has already set out a broad TV-centric entertainment agenda, announced details about more exclusive games and revealed a rather disappointing price point: US$499, €499 and £429.

Sony, in contrast, has emphasised a focus on games, a developer-friendly approach and much more pleasing pricing: US$399 €399 and £349. Both are set to hit the market at the close of the year, with Microsoft targeting launches in an ambitious 21 countries.

Gamers will be pleased by Sony’s pricing and support for many independent developers, and delighted that Sony isn’t following Microsoft’s strategy of requiring an always-on broadband connection and imposing restrictions on sales of second-hand games. This might be enough to give the PS4 an early lead in sales and buzz on release.

The Xbox One continues to impress, both in terms of games and capability: the addition of free games every month to Xbox Live Gold, mirroring Sony’s popular PlayStation Plus service, will boost the subscription service’s appeal.

Certainly for the entertainment-obsessed households of North America, the platform’s lineup of first-person shooter games and deals with the NFL and broadcasters will make it an attractive prospect. The platform might struggle to build the same breadth of TV deals and games with local appeal in other markets in the relatively short four to five months until launch.

The leap in game quality between console generations isn’t as great as it has been for previous releases. In fact, many growth markets, such as South Africa, are still enjoying excellent games on the PS2 – meaning that it’s not solely the promise of better games that will sell consoles. So what will?

Xbox One is positioned as the near-ultimate under-TV box in North America: users need add only a set-top box for a complete entertainment experience. This is a compelling proposition for the OTT providers and app-development ecosystem.

However, the potential backlash among gamers against some of Microsoft’s strategic decisions – the need for an always-on connection, the fact that Kinect is always listening and the restrictions on the sale of used games – might limit its appeal initially.

Outside of the US, the broader entertainment offerings are still unknown, leaving a definite opportunity for aggressive content/operator firms such as BskyB and Liberty Global but potentially limiting the console’s appeal. Of course, the number of units available at launch will be limited: exactly how many Xbox Ones will be available in the other 20 launch markets is unknown.

Sony, by contrast, is reversing its past strategies by wooing developers, creating a more accessible architecture and aiming for a more reasonable price point. The extension of PlayStation Plus across three platforms – PS4, PS3 and PS Vita – and bets on massive titles such as Destiny from Bungie make it a compelling package for dedicated gamers. If the console had backwards compatibility, it would pretty much seal the early battle in Sony’s favour.

But Sony’s ambitions beyond traditional gaming are still unclear: sure, the box will support apps such as Netflix and iPlayer, but is the aim for the PS4 to act as the same sort of entertainment centre that Microsoft is promising? Lacking these services and the Xbox One’s voice/motion-control UI, the PS4 might struggle once early-adopting gamers have their hardware.

This article originally appeared on the Informa Telecoms & Media analyst blog here.

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