Clash of consoles: New PlayStation and Xbox enter the $ 150 billion gaming arena – fight!

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TOKYO / CHICAGO / STOCKHOLM (Reuters) – Think Michelangelo vs Da Vinci. Muhammad Ali and Joe Frazier. Batman vs. Superman. Another epic rivalry is joined next week when Sony and Microsoft go head-to-head with the next generation of their blockbuster video game consoles.

Xbox Series XIS – Microsoft’s next generation gaming consoles can be seen in this document image dated September 2020. Microsoft / Document via REUTERS

Sony, whose PlayStation 5 (PS5) takes on Microsoft’s Xbox Series X and Series S, is widely seen as being in pole position to capitalize on a pandemic-linked consumer spending boom that has supported the video game industry of $ 150 billion.

The Japanese company’s vast gaming bench and wider fan base – it has sold more than 100 million PS4s, winning the battle of the previous generation – should allow it to maintain its edge over its American rival, experts say. of the sector.

“Xbox owners tend to buy the new Xbox, while PlayStation owners tend to buy the new PlayStation,” said Michael Pachter, analyst at Wedbush Securities.

Yet the industry is changing and cloud gaming is on the rise, allowing games to be streamed without bulky hardware. This could dampen console sales in the coming years, analysts say, a change that could benefit Microsoft.

The two consoles – the first release by the two companies in seven years – are eagerly awaited; the Xbox goes on sale Tuesday and the PS5 two days later in key markets, costing around $ 300 to $ 500 apiece.

The race to pre-order devices actually started weeks ago, but is flashing and you may have missed it. Sony’s PS5 pre-orders sold out within minutes on many retail sites, for example, frustrating fans.

Julian Mercado, 17, managed to reserve a PS5 on Walmart.com WMT.N minutes after pre-orders began on Sept. 16, knowing he would face a legion of players.

“It’s just like shopping on Black Friday,” said the Dallas high school student, who has been playing video games with his father since the age of five. “You show up early, you come away with something good. You show up too late, you will leave with nothing.

PLAY IN A PANDEMIC

Sony 6758.T may have the edge, but the stakes are high for the Japanese company. His play activity is his biggest cash cow; In its fiscal 2019, the division, which includes hardware, software and services, achieved nearly a quarter of its revenue of around $ 77 billion and nearly 30% of its profit from operation of $ 7.9 billion.

Microsoft MSFT.O does not explode the results of the game, although it is a smaller part of its business than for Sony. It also doesn’t disclose hardware sales, but the current Xbox One is estimated by analysts to have sold 50 million units.

For the other big hardware player, Nintendo of Japan 7974.T, sticking to consoles is bearing fruit with the increase in forecasts last week following high demand for its Switch.

The PS5 will retail for $ 499.99 or $ 399.99 for a digital-only version, while the Xbox Series X will retail for $ 499.99 and the S Series below $ 299.99.

About 5 million PS5s are expected to be sold this year, compared to 3.9 million new Xboxes, according to media research firm Ampere, with combined sales expected to be higher than the previous generation.

See tmsnrt.rs/3l3Rpe3 GRAPHIC of PlayStation v Xbox sales forecasts: tmsnrt.rs/3l3Rpe3

“The pandemic is expected to transform the holiday shopping season in the United States,” said Jason Benowitz, senior portfolio manager at Roosevelt Investment Group. “Playing at home has become a safe way for some to socialize.”

Sony’s gaming depth is backed up by in-house studios behind exclusives such as “Marvel’s Spider-Man: Miles Morales.” In contrast, the new Xbox, gaming experts say, will run out of killer launch titles, with the latest in its flagship series “Halo” pushed back to next year as the pandemic hits development.

The growth of cloud gaming could, however, give the American software giant an advantage in the years to come. Although both companies have moved to offer services, Microsoft has been more aggressive.

Its Xbox Game Pass subscription service has grown rapidly; it offers more than 100 titles including brand new games and has more than 15 million users. Sony has been reluctant to make its most popular titles available on services like PlayStation Now, fearing it could cannibalize big-budget game sales.

‘ASK FOR SUPPLY’

The pandemic, while fueling some demand, has also limited production at Sony and Microsoft, according to industry experts, who see shortages extending through 2021.

“Demand will exceed supply, so there will be people who won’t get their hands on the console when they want it,” said Piers Harding-Rolls, director of games research at Ampère.

Sony announced that retailers like Walmart, Best Buy BBY.N and target TGT.N will sell the PS5 exclusively online when it launches on November 12, to prevent people camping outside stores during a pandemic.

Walmart is expected to sell up to $ 1.1 billion worth of new consoles by the end of January, according to Wedbush. It dominates the American market with GameStop GME.N, each with a share of around 30%, while console sales at Target and Best Buy are around 15% each, the research firm said.

Target said it is working closely with its suppliers to ensure sufficient inventory. Some buyers who booked consoles told Reuters that Target said they could receive them within days of the launch date.

Walmart said it will start selling the new consoles at launch, but declined to say if it will have enough stock to meet demand. Best Buy also declined to say if it would be able to meet demand, while GameStop did not respond to requests for comment.

For DeAnthony Thicklin, a casino agent who booked his PS5 on Target.com in September, the priority is getting his hands on a console on launch day.

The 25-year-old offered some advice.

“Have all of your card information configured so that all you have to do is click,” he says. “Do not hesitate. To be fast. “

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

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