Two ‘final boss’ companies are set up for a winter boost as COVID restrictions look to be extended. So what can we expect from these gaming giants?
Sept. 29, 2020
Competition between these two gaming giants has been heating up recently with the announcement of their new consoles. Both are to be released in November, directly competing in price, date of release, and features. Each company has a core group of dedicated consumers, with biased opinions flying from both sides, and it remains to be seen who will win in the upcoming console wars.
The pandemic has given the gaming market a boost as many of us were forced to spend our free time indoors. With winter moving in, both Sony (NYSE: SNE) and Microsoft (NASDAQ: MSFT) are set to benefit as COVID restrictions look to be extended.
With the highly anticipated PS5 coming out, gamers all over the world are expecting to find a console which will give them a smoother, faster, and higher quality gaming experience. Although pre-orders have been a bit chaotic, the company has said they are working on increasing the number of units available closer to the launch date.
Sony is releasing two versions of its console — though they are basically the same. Consumers will have the option to buy a digital-only version of its PS5 which will be $100 cheaper and is likely to be its big money maker. Digital software sales are up 83% YOY bringing in $3.7 billion for FYQ1, whilst overall digital downloads made up 51% of all video games sold on the PS4 for 2020 so far. With this trend, on top of continued COVID measures, this cheaper option will be far more appealing.
Sony’s overall goal is to push users into its digital services. In 2019 alone it is estimated that the PlayStation Network brought in $12 billion, of which $3.2 billion came from its subscription services. This is more than Sony made in profit from sales of its most successful console the PS2, which was around $2.2 billion.
With the upcoming fifth generation console, it is hard to predict how much money Sony will make off the new device, particularly when companies initially sell their consoles at a loss. However, the PS4 has sold a total of 113 million units to date, in which it saw a spike again this year due to the lockdown. With continued COVID restrictions looking to continue over winter, the PS5 will likely find itself in many living rooms come Christmas and the new year.
Microsoft, like Sony, has 2 consoles coming out in November, the Xbox Series X and the Series S. Whilst the Series X comes in at the same price as the more expensive PlayStation model, the Series S will be $200 cheaper at $299. The Series S will be less powerful than its Series X counterpart, but it will be an all-digital console, much like the PS5 digital edition. In line with recent trends, the emphasis is now on the digital aspects of the gaming industry.
For its predecessor, the Xbox One, it has sold to-date just under 50 million units, with 1.6 million being sold this year, By the same period 2019, the number of Xbox Ones sold was just under 1 million, boosting up another 2.78 million units by December. With extended COVID restrictions, the next generation Xboxes could see the same trend continue alongside the launch.
In addition to the new consoles, Microsoft is allowing customers to opt for the ‘All Access’ financing deal, which you instead pay $35 or $25 per month for 2 years. This deal includes both the console and its Game Pass Ultimate, a perfect option for a teenager with a side job, or someone who can’t afford to fork out $300 on the spot.
In other news, Microsoft announced its plan to buy ZeniMax Media and thus it’s well-renowned game publisher Bethesda. This $7.5 billion deal will come into effect in the latter half of 2021 and it will give Microsoft a stronger position in the gaming market as it now has control over popular games such as Elder Scrolls, Fallout, and Doom. The news of this might entice people to look into buying an Xbox over the PS5.
As for investors, this announcement will make them a lot happier after the disappointment of its failed TikTok bid. But, with 2.7 billion people expected to play at least one video game this year, the benefits of a winter boost will be enough to go around and the battle of the gaming bosses can continue as normal.
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