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TOKYO / CHICAGO / STOCKHOLM (Reuters) – Think Michelangelo versus Da Vinci. Muhammad Ali and Joe Frazier. Batman v Superman. Another epic rivalry rejoins next week when Sony and Microsoft go head-to-head with the next generation of their hit video game consoles.
Sony, whose PlayStation 5 (PS5) acquires the Xbox Series X and Series S from Microsoft, is widely viewed as being in the prime position to capitalize on a boom in consumer spending fueled by a pandemic that has propelled the $ video game industry. 150 billion.
The Japanese company’s broad gaming base and broader fan base – it has sold over 100 million PS4s, winning the battle of the previous generation – should see it retain its edge over its arch-American rival, according to industry experts.
“People who own Xbox tend to buy the new Xbox, while people who own PlayStation tend to buy the new PlayStation,” said Wedbush Securities analyst Michael Pachter.
However, the industry is changing and cloud gaming is on the rise, allowing games to stream without bulky hardware. This could slow down console sales for years to come, analysts say, a change that could benefit Microsoft.
The two consoles, the first to be released by the two companies in seven years, are eagerly awaited; the Xbox will go on sale Tuesday and the PS5 two days later in major markets, costing between $ 300 and $ 500 each.
The race to order the devices in advance actually started weeks ago, although it blinks and you may have missed it. Sony’s PS5 pre-orders sold out in minutes at many retail sites, for example, frustrating fans.
Julian Mercado, 17, managed to reserve a PS5 from Walmart.com WMT.N minutes after the pre-orders began on September 16, knowing that he would face a legion of players.
“It’s exactly like shopping on Black Friday,” said the Dallas high school student, who has been playing video games with his father since he was five years old. “You arrive early, you leave with something good. If you are too late, you will leave with nothing. “
PLAY IN A PANDEMIC
Sony 6758.T it might have the upper hand, but the stakes are high for the Japanese company. Your gaming business is your biggest source of income; In its fiscal 2019, the division, which includes hardware, software and services, generated about a quarter of its group sales of approximately $ 77 billion and nearly 30% of its operating profit of $ 7.9 billion.
Microsoft MSFT.O It does not break down the results of the games, although it is a smaller part of its business than for Sony. It also doesn’t disclose hardware sales, but analysts estimate that the current Xbox One sold 50 million units.
For the other big hardware gamer, Nintendo of Japan 7974.TSticking to consoles is paying off with its ramping forecasts from 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 lower-spec S Series for $ 299.99.
Around 5 million PS5s are forecast to be sold this year, up from 3.9 million for new Xboxes, according to media research firm Ampere, with combined sales expected to be higher than the previous generation.
See CHART tmsnrt.rs/3l3Rpe3 of PlayStation v Xbox sales forecasts: tmsnrt.rs/3l3Rpe3
“The pandemic is expected to transform the holiday shopping season in America,” said Jason Benowitz, senior portfolio manager at Roosevelt Investment Group. “Playing from home has become a way to socialize safely.”
Sony’s depth of gaming is backed by in-house studios behind exclusives like “Marvel’s Spider-Man: Miles Morales.” By contrast, the new Xbox, game experts say, will lack spectacular launch titles, and the latest in its flagship “Halo” series will be delayed next year as the pandemic hits development.
However, the growth of cloud gaming could give the American software giant an advantage in the coming years. Although both companies have moved to offer services, Microsoft has been more aggressive.
Its Xbox Game Pass subscription service has grown rapidly; offers more than 100 titles, including new games and has more than 15 million users. Sony has been reluctant to make its most popular titles available on services such as PlayStation Now, fearing that this could cannibalize sales of big-budget games.
‘DEMAND OUT OF OFFER’
The pandemic, while fueling some of the demand, has also restricted Sony and Microsoft production, according to industry experts, who see the shortage extending through 2021.
“Demand will outstrip supply, so there will be some people who won’t get the console when they want it,” said Piers Harding-Rolls, director of games research at Ampere.
Sony has announced that retailers such as Walmart, Best Buy BBY.N and objective TGT.N It will sell the PS5 exclusively online when it launches Nov. 12, to prevent people from camping out of stores during a pandemic.
Walmart can sell up to $ 1.1 billion in new consoles by the end of January, according to Wedbush. Dominate the US market together with GameStop GME.N, each holding about a 30% stake, while console sales at Target and Best Buy comprise about 15% each, the research firm said.
Target said it was working closely with its suppliers to ensure sufficient inventory. Some buyers who had reserved consoles told Reuters that Target had said they could receive them days after the launch date.
Walmart said it would start selling the new consoles at launch, but declined to comment on whether it would have enough stock to meet demand. Best Buy also declined to comment on whether it could meet demand, while GameStop did not respond to requests for comment.
For DeAnthony Thicklin, a casino goer who pre-ordered his PS5 at Target.com in September, the priority is getting his hands on a console on the day of launch.
The 25-year-old offered some advice.
“Have all of your card information set up so all you have to do is click,” he said. “Do not hesitate. 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
