Retail

Is This The Last Year For The Xbox/PlayStation Console Wars?

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As America heads into a holiday shopping season that will be unlike anything that has ever come before, we can all at least look forward to one piece of returning familiarity — the latest iteration of the “Console Wars.” That’s a holiday tradition that pops up every seven or so years when Microsoft and Sony release their Xbox and PlayStation systems’ latest editions, then spend the holiday season slugging it out for dominance in the video-gaming market.

Microsoft’s entrant to the competition — the Xbox Series X — is due out in November. Sony’s release date for the new PlayStation PS5 remains unknown, but the company has confirmed it will be available for holiday 2020.

The latest iteration in the battle for gamer love will look familiar to those who were there for the last round in 2013 (or the round before that in 2006). Tech specs will be held up head to head, game catalogs will be scrutinized and compared and fans of one system or the other will insult each other on social media. The race to actually get one’s hands on a console will be fast-paced and cutthroat, as supply will be limited and demand incredibly high heading toward the holidays.

But it will also be a different console war than what we’ve seen before, partly because of pandemic-related production woes and the much greater than normal difficulty getting the latest and greatest gaming-console technology to the masses.

However, some of those changes will also reflect the fact that gaming has changed tremendously in the mobile era — grown explosively in the COVID-19 period. Gaming has gone from a massive niche in digital entertainment to becoming one of the global entertainment industry’s main hot spots.

Gaming market researcher Newzoo recently estimated that 2.7 billion people — more than a quarter of the world’s population — will play a video game this year. And gaming’s growth during the pandemic has generated increased spending on gaming. Gamers worldwide are forecast to spend roughly $160 billion this year alone.

Not surprisingly, such large consumer spend has attracted big interest from the Googles, and Apples and Amazons of the world, looking to grab a slice of the growing revenue pie.

In a gaming space that’s becoming increasingly complex, 2020’s Console Wars won’t only be about which console ends up on top, as had been the issue in previous years. After all, consoles don’t matter nearly so much in a world where video gaming is becoming one and the same as mobile gaming.

A Tale Of Two Strategies 

Preseason forecasts estimate that Sony will sell about 5 million PS5 units this holiday season to the Xbox’s 3 million. Barring a major miss on Sony’s part, PlayStation should outperform the Xbox because the Sony console has a better catalog of exclusive games — which has historically provided the advantage, according to The New York Times. Additionally, Xbox’s signature Halo game series won’t have its latest release available until 2021 due to COVID-related delays.

The two companies are also pursuing different marketing strategies. Sony is relying on its traditional tactics, hyping its newest machine’s improvements (sleeker, faster, better graphics, etc.) in tandem with touting its exclusive content catalog. The company will argue that it’s necessary to own the PS5 to enjoy the latest and greatest that PlayStation has to offer.

On the other hand, Microsoft is going a very different way this year. Matthew Ball, managing partner at venture capital firm Epyllion Industries, told the Times that Microsoft is certainly promoting the Xbox Series X, but is less invested in putting all of its gaming eggs in one basket.

“Sony is focused on convincing gamers they need to get a PlayStation 5,” he said. “Microsoft is telling customers they can get a Series X, or a lower-cost Series S, or keep your old Xbox, or use your PC, mobile phone or tablet — and we’re still there for you.”

Case in point, Microsoft announced earlier this week that its game-streaming service XCloud is now available to users of Google's Android service. Billed as the “Netflix of Gaming,” the service allows gamers without consoles to access the Xbox lineup anywhere there’s a fast enough internet connection (10Mbps or better). Access to the streaming system requires Android users to sign up for Xbox Game Pass Ultimate, which costs $14.99 per month after a $1 trial. It offers more than 150 games. 

"One of the key benefits of cloud gaming is that it gives you more choices in how to play," Kareem Choudhry, Microsoft's vice president for cloud gaming, said in a statement. "Cloud gaming as part of Xbox Game Pass Ultimate now opens up the world of Xbox to those who may not own a console at all." 

Choudry went on to note the service is equally relevant for Android users who are already Xbox console owners, as it allows them to move games from consoles in their living rooms to anyplace they happen to be with their phone or tablet.

Unlike Sony, Microsoft isn’t looking to make its content exclusive just to those willing to shell out some $500 for a top-of-the-line console. Instead, it’s willing to open up access even if that runs the risk of diluting console sales and ceding this year's Console War to Sony.

Given the market’s changing shape, Microsoft might not care, as the battle for gaming dominance is increasingly looking disconnected from the battle for console dominance.

New Combatants Are Entering The Fray 

Big Tech firms have noticed over the past year that gaming is big business, and they’ve begun moving into the field quickly and aggressively.

For instance, Google last fall launched its game-streaming service Stadia. Shortly afterward, Apple launched its own game-streaming service called Arcade.

Apple also sought to expand access to Arcade as part of this week’s rollout of the tech giant’s new Apple One subscription bundles. Those include game streaming at all subscription tiers offered.

Amazon hasn’t yet formally thrown its hat into the ring, but rumors have abounded for several years that it has its own game-streaming service under the code name “Project Tempo.”

Is This The Console Wars’ Final Battle? 

High-quality digital gaming wasn’t really possible in the past absent the high-test hardware included in purpose-built video-gaming consoles. But in a world where 5G is emerging with much-higher mobile Web speeds than have ever been available, specialized console hardware might no longer be necessary.

That isn’t to say that consoles are done, or that the Xbox Series X or Sony PS5 won’t sell well this holiday season. They certainly will — and will probably sell out in short order in a lot of places.

But whether the Console Wars will continue to be the only center of the gaming world seems unlikely given Big Tech’s interest in the sector. In fact, 2020 might be the final battle in the Console Wars as we’ve known them. 

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NEW PYMNTS DATA: HOW WE SHOP – SEPTEMBER 2020 

The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.

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