Xbox One vs. Playstation 4: Who’s Winning the Next-Gen Console War?

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Video games are big business these days, and the next generation of video game consoles represented one of the most important tech product launches of 2013. Despite the challenge posed by smartphones and tablets — or more accurately because of the threat of casual mobile gaming — Sony (SNE) and Microsoft (MSFT) had a great deal riding on the November launch of the Playstation 4 and Xbox One.

xbox-one-msft vs Playstation 4
Source: Nintendo

They’d watched rival console maker Nintendo (NTDOY) beat them to market with its own new console the Wii U, only to fall flat on its face.

They fought a year-long public relations battle that saw Microsoft lose face over always-online requirements for Xbox One, worries that its Kinect sensor would be eavesdropping on gamers and concern from hardcore gamers that the Xbox One was losing its focus on gaming in favor of being an entertainment console. Its $100 price premium due to the bundled Kinect also raised questions. (The online requirement was eventually dropped, and the Kinect was made optional.)

Both the Playstation 4 and the Xbox One sold one million units in their first 24 hours, setting industry launch records.

Six months in, Playstation 4 sales are a bright spot in Sony’s earnings, while the Xbox One has been a big part of boosting Microsoft’s Devices and Consumer Hardware division revenues. With the launch, first holiday sales and the second round of blockbuster game titles being released, who’s winning the next generation console war?

Xbox One vs. Playstation 4: Console Sales

While Xbox One and Playstation 4 were neck in neck during their 24 hour launch window, it was the PS4 that took the lead and has held on to it.

xbox-one-msft and Playstation 4 both had record launches
Source: Microsoft

According to Sony, Playstation 4 sales worldwide topped 7 million in April. Microsoft has sold 5 million Xbox One consoles during the same period.

If you’re curious about the Wii U, Gamespot’s Mark Walton says Nintendo’s entry in the next gen console race has hit 6.17 million units. That puts it well behind the Playstation 4 in total sales, despite a year-long head start.

Xbox One vs. Playstation 4: Pricing

The Xbox One’s $100 price premium over the Playstation 4 put Microsoft’s console at a disadvantage at launch. $399 for the PS4 was an easier sell than $499 for the Xbox One, even if Microsoft did include the Kinect motion controller while PS4 buyers would have to pay extra if they wanted Sony’s Eye motion controller.

xbox-one-msft is losing to Playstation 4 in sales
Source: Sony

Price isn’t the entire story, though. In Canada, Sony raised the PS4’s price to $450 in March — lowering its advantage over the Xbox One to just $50. Despite the price increase, Playstation 4 availability remains limited at Canadian retailers. That’s good news for Sony. Until it starts generating a profit from the Playstation 4, it needs to avoid discounting, and the Canadian move suggests that consumers are okay with the current price tag.

However, Microsoft appears to have hit the panic button and announced early in May that it will begin selling the Xbox One without the Kinect for $399.

The Wii U retails for $299, packaged with two best-selling games.

Xbox One vs. Playstation 4: Games

If there’s one area where the Xbox One has had somewhat of an upper hand over Sony, it’s in exclusive games.

xbox-one-msft has exclusives like Titanfall
Source: Electronic Arts

Electronic Arts (EA) released Titanfall, a highly anticipated online shooter exclusively on the Xbox One. It also has a new Halo game in development. Dead Rising 3, Killer Instinct and Ryse were Xbox One exclusives, while the Playstation 4 has had few marquee titles to itself besides Killzone Shadow Fall.

In total games sold, the Playstation 4 seems to be in the lead at this point. Sony says it has sold 20.5 million copies either through retail stores or as digital downloads. Microsoft numbers are harder to come by, although the company’s claims of averaging three games sold per console would suggest it’s in the 15 million range. However, that means Microsoft is matching Sony in terms of games-sold-per-console.

Launch exclusives aside, both consoles are being well served by game developers; both the Xbox One and Playstation 4 are on track to building respectable video game libraries.

One area where the PS4 has shown an advantage over the Xbox One in terms of games is resolution. With a little more power under the hood than its Microsoft rival, Playstation 4 versions of games are often rendered at a higher resolution than their Xbox One counterparts. For example, Activision’s (ATVI) Call of Duty: Ghosts runs at 1080p resolution on the Playstation 4 and just 720p on the Xbox One.

Xbox One vs. Playstation 4: Momentum

It’s hard to deny that momentum has been on the side of the Playstation 4 since prior to launch and remains with Sony.

xbox-one-msft not as good as playstation 4 on graphics
Source: Sony

Microsoft dropped the ball in the lead-up to the next generation console releases, allowing Sony to position the Playstation 4 as the console built for gamers. And by including the Kinect motion sensor with every Xbox One instead of offering it as an optional accessory, Microsoft gave the Playstation 4 a $100 price advantage.

Will the $399 Kinect-less Xbox One help to close the gap? It does level the playing field, but as CNET’s Nick Statt points out, Microsoft’s previous move of bundling Titanfall — a $60 game and one of the most highly anticipated Xbox exclusives — for free with the Xbox One failed to knock the Playstation 4 off its perch, even temporarily.

Xbox One vs. Playstation 4: Outlook

It’s too early to call a winner in this round of the next generation console wars. Both the Xbox One and Playstation 4 have significantly outsold their previous iterations in a big way, an accomplishment Microsoft and Sony can celebrate in a world where casual mobile gaming has disrupted the industry.

xbox-one-msft now offering $399 without Kinect
Source: Microsoft

Both consoles have additional capabilities coming online that developers and gamers will be able to take advantage of. Microsoft’s Azure infrastructure is expected to come into play, boosting the Xbox One’s capabilities through cloud processing while offering more expansive online gameplay. Sony is on the verge of flipping on its Playstation Now game streaming service that will bring PS3 titles to the Playstation 4.

At this point, we can call a loser, though. Nintendo had a full year head start and a lower price point than its rivals, but the Wii U has been a disaster for the company. While the Xbox One and Playstation 4 have been setting records, attracting developer support and media attention, the Wii U’s already disappointing sales have trailed off.

Look for the Xbox One and Playstation 4 to be duking it out for hardcore gamer dollars for the foreseeable future — at least until the Steam Machine initiative gets its living room console replacement act together.

As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.

Brad Moon has been writing for InvestorPlace.com since 2012. He also writes about stocks for Kiplinger and has been a senior contributor focusing on consumer technology for Forbes since 2015.


Article printed from InvestorPlace Media, https://investorplace.com/2014/05/xbox-one-msft-playstation-4/.

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