Microsoft Looks Beyond Console Wars With New Xbox –

Microsoft Looks Beyond Console Wars With New Xbox

A customer takes a PlayStation 5 console to an electronics store in Sydney on November 12, 2020, the day of the PS5’s official launch.

Saeed Khan | AFP | Getty Images

Microsoft and Sony both released new video game consoles this week: Microsoft has the $ 500 Xbox Series X and the $ 300 Series S, while Sony has two models of the PlayStation 5, which start at $ 400.

The last generation of peace released by both lasted almost seven years. With the latest systems, Microsoft and Sony are building different strategies to attract gamers and generate even more revenue from gamers.

There is a lot on the line.

The epidemic has given people more free time to play the game. Gamers can bend for years to come, meaning big business for both companies.

Gaming represents 24% of Sony’s revenue. It accounts for 8% of Microsoft’s revenue, but Microsoft is more widely held as the third most valuable public company behind only Apple and Saudi Aramco, and any success in gaming could benefit many shareholders.

What happened last time

In 2013, when Microsoft introduced the Xbox One and Sony released PlayStation 4, Sony sent 4.2 million new consoles ahead of Microsoft, an estimated 3.8 million by IDC, the technology industry’s research company.

Sony had priced the PlayStation 4 at $ 400, $ 100 below the Xbox 500 price. Microsoft spent time promoting the Xbox’s entertainment capabilities rather than focusing more on gaming. First, the Xbox One came with Kinect, a device that lets people control the Xbox with voice commands and motion gestures. It was not a huge hit, and Microsoft wound up releasing the $ 400 Xbox package that left Kinect in 2014.

In later years, the owners of PlayStation 4 did not have access to exclusive games available on other systems, including “Uncharted 4,” “Horizon Zero Dawn” and “Spider-Man”. The Xbox One itself got a few exclusives, including “Halo 5.” also includes.

According to IDC, PlayStation 4 still surpasses Xbox One every year.

Microsoft has changed its gaming approach since the Xbox One launch. Phil Spencer, executive vice president of gaming at Microsoft, said in an interview with Verge last year that console shipments, a general measure of success, were not as important as the engagement in which people are playing.

Satya follows changes to other Microsoft products under Nadella, who replaced Steve Ballmer as CEO in 2014. The company had so much to defend Windows. It released versions of its Office applications for Android and iOS and it brought the Teams Productivity App for Linux to the Office suite for open-source operating systems. Linux becomes accessible in Windows. Microsoft started migrating customers to subscriptions, and it gave Windows 10 for free.

Microsoft CEO Satya Nadella talks to the participants during the Viva Technologie show at the Parc des Expositions Porte de Versailles on 24 May 2018 in Paris.

Chesnot | Getty Images

There is no slate of exclusive new titles in the new Xbox series X and S like last time. So how will Microsoft stand out?

The answer is Xbox Game Pass, an online subscription service that offers customers a list of over 100 games to download the last three Xbox consoles – all for at least $ 10 a month. . Microsoft plans to increase the service with new titles over time, as it does with Netflix Video.

Microsoft’s offering is broader than Sony’s new PlayStation Plus collection, with 20 PlayStation 4 games people can play a similar service if they subscribe to the PlayStation Plus online multiplayer service, which costs $ 5 per month.

Game Pass subscribers who pay an additional $ 5 per month get to play Xbox games on Android devices; The games are distributed over the Internet from Microsoft data centers. (Microsoft wants to provide a similar service for iOS devices, but says Apple’s App Store policies prevented it from doing so.)

The mobile option presents an answer to the type of Nintendo Switch, delivering powerful gameplay in a portable design. Sony’s PlayStation cloud service now no longer supports mobile devices.

Studio deals

More games are coming.

With those 23 game-development studios stemming from Microsoft’s $ 7.5 billion Zenimax acquisition announced in September, Microsoft’s gaming wing has been on an acquisition spree. It is up from 11 in 2018 and is larger than Sony’s 14-studio collection. Microsoft has contacted game developers in Japan, Nintendo and Sony’s home country, Bloomberg reported earlier this week.

Microsoft’s 343 Industries Studios should have gone with the new Xbox console this holiday season to release the sequel to the science-fiction shooting games in the next popular episode “Halo,” but in August the company announced that the game would be released by 2021 Will be delayed.

Conversely, the $ 500 PlayStation 5 and $ 400 PlayStation 5 Digital Editions (which have no disk drive) can play exclusive games like “Marvel’s Spider-Man: Miles Morales” and “Demon’s Soul”. The PS5 also boasts a software overhaul and key controller design.

Without these features in the new Xbox, people are looking for hardware improvements as a reason to go with Microsoft.

They are there, but they may not be enough to beat Sony.

What does micros now care

“There does not appear to be any technology in this generation that clearly competes with content,” the former Microsoft employee credited as the father of Xbox, who first pushed Sony to bring it to Sony.

Blakely has tried Microsoft’s new gaming hardware, and he said he thought Sony’s PlayStation 5 would have at least first hand.

IDC agreed with Blakeley’s expectation. Lewis Ward, IDC’s research director for gaming, said he expects Sony to sell as many as 5 million PlayStation 5s this year, and that he sells 3.8 million Xbox Series X and S consoles to Microsoft. (Microsoft will sell every console it produces this year and expects a record holiday in terms of gaming usage, Microsoft marketing chief executive of Xbox Business told CNBC in an email. Microsoft’s Xbox business chief Financial Officer Tim Stuart reported. Jefferies analyst Brent Thill said Thursday that he expected supply to increase in the fourth quarter and first quarter.)

Investors are less focused on Microsoft console sales anyway. Last year the company introduced a new metric: an increase in revenue of Xbox content and services, including a subscription to Game Pass and a longer Xbox Live service for online play, as well as popular games such as Minecraft for non-Microsoft devices Includes sales. This figure has been higher than overall gaming revenue growth in the last four quarters.

In addition, higher console sales do not necessarily help Microsoft’s finances. More console revenue Microsoft ends in its current fiscal year, which ends June 30, the company’s overall gross margin will be lower, Morgan Stanley analysts Keith Weiss and Josh Bayer wrote in a note distributed to customers last month.

“I think Sony will probably get out of the gate much faster with selling hardware, but I don’t think Microsoft cares,” said Ben Throop, founder of Vermont game-development company Frame Interactive. He has worked on several PlayStation games, and he hopes to buy a new PlayStation and a new Xbox – just not now. He said that Microsoft is focusing more on game rack subscribers than on consoles passing games, unlike Sony.

West said that Microsoft offers the most powerful console ever, and claimed that it absolutely cares about selling consoles.

“But focusing solely on consoles is an incomplete way to evaluate the gaming industry and how it will grow in the future,” he wrote. “Developers who work with us can reach gamers via the cloud on PC, console and mobile. And all new players who choose their games have multiple options to play.”

Watch: Next-generation Xbox and PlayStation consoles face a ‘challenging battle’: analyst


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