LOS ANGELES — Listening to the chatter at the E3 video-game conference, you would think Microsoft has already lost the next generation of the console business.
Take, for example, the couple sitting next to me on a shuttle bus to the conference last Tuesday morning.
They phoned their kids and excitedly shared the big news: Sony’s PlayStation 4 will sell for $400, undercutting the price of Microsoft’s Xbox One by $100.
They described how the PS4 won’t have used-game restrictions, as the new Xbox does. Then they asked their parents to pre-order a PS4 for them, before the first batch sold out.
Most Read Business Stories
- Google puts lid on cookie jar and ends an internet era | Commentary
- MacKenzie Scott marries Seattle teacher after Bezos divorce
- FAA safety engineer goes public to slam the agency's oversight of Boeing's 737 MAX
- Bill to limit evictions in Washington state advances
- 55,000 in Washington state may have to pay back thousands in jobless benefits
By midweek, pre-orders of the PS4 were the best-selling video-game product at Amazon.com, followed by pre-orders of the Xbox One. Yet the Xbox One was the site’s “most wished-for” item, followed by the PS4.
I’d argue that it’s early to call a race that doesn’t really begin until November, when the new hardware shows up in stores.
But speculating on whether Sony has won seemed to be one of the most popular games at E3 this year.
If you’d like to play along, here’s my opinionated cheat sheet on themes that emerged at E3:
The PS4 will win on price alone: Sony gets pole position because of its lower price, but buyers may look beyond the initial price tag.
Microsoft is including a Kinect sensor while Sony charges an extra $59 to include its “Eye” camera accessory.
Microsoft may tinker with its sticker price. It may offer phonelike-financing deals that bring the upfront cost of the Xbox One below that of the PS4. It did this with the current Xbox 360, offering it for $99 and a two-year, paid subscription to the Xbox Live service.
At $400 to $500, both consoles cost about the same as a basic iPad or laptop computer.
But console buyers will spend much more to get started. Games and additional controllers cost $60 apiece. Playing online, multiplayer games require a subscription to Xbox Live or the PlayStation network for $50 to $60 per year.
The price gap becomes less apparent when you realize that you’ll be investing $700 or more in a new game system.
It’s also complicated for avid Xbox gamers to switch to a PS4. They’d have to rebuild their network of online friends, game library and collection of gaming achievements. These switching costs may not be worth saving $100 on a new console.
Even so, Microsoft is likely to cut the Xbox One price in the spring, according to Michael Pachter, a Wedbush Securities analyst.
“They won’t right away; they’re too proud. They made a mistake of hubris,” he said.
Both Microsoft and Sony should keep an eye on their rearview mirrors. Thrifty buyers may end up buying Nintendo’s Wii U, which isn’t as powerful but starts at $300.
The Xbox One may restrict used games: Sony pulled further ahead by pledging to support used games without restriction on the PS4, in contrast to new limits Microsoft added to the Xbox One.
Microsoft may regain some ground here if game publishers go ahead and limit the transfer of used game discs on either platform. The issue may fade as more games are distributed online.
Resale restrictions are already placed on games and apps purchased through iTunes or Valve’s Steam service, noted Ed Fries, a former head of Microsoft game studios who now invests in game companies.
“I think there’s still a lot of confusion on both sides,” he said at E3. “Some things we take for granted on iOS or Steam, people are up in arms over in this world.”
Still, Microsoft is vulnerable to being labeled a bully and Sony took the opportunity to do so.
Microsoft stumbled by putting entertainment ahead of games: Some in the gaming crowd panned the Xbox One’s unveiling last month because it focused mostly on entertainment features.
Maybe, but this seems like a debate about marketing strategy as much as anything. Both Microsoft and Sony are trying to orchestrate buzz among different audiences with elaborately timed releases of information about their consoles.
Average buyers couldn’t care less about what was shown at the PS4 unveiling in February vs. the Xbox One unveiling in May. I wouldn’t discount their interest in entertainment features, either.
Some 42 percent of console owners use the systems to watch movies and 22 percent use them to play music, according to a market report released last week by the Entertainment Software Association, which hosts E3. It said half of American homes have consoles, and $20.8 billion was spent on game hardware, software and accessories in the U.S. last year.
Both the Xbox One and PS4 have basically the same hardware: PC architecture with 8-core AMD processors, 500 gigabyte hard drives and Blu-ray Disc players.
Microsoft led with its strength and differentiation, showing off its more advanced interface technology at the Xbox One unveiling. Its new Kinect sensor finally works well enough to become a decent controller for home-entertainment systems. This raised the profile of the console and would have been overshadowed by game news at E3.
Entertainment is a strength of Sony, but the company only mentioned it in passing at E3, saying that it’s improving its online music and movie services.
Stay tuned. I’ll bet both companies say more about their consoles’ entertainment capabilities in the coming months.
Meanwhile, from the cheap seats, it looks like Sony is ahead by a length heading toward the first turn. But you may as well grab a beverage and get comfortable. It may be five or 10 years before we see the checkered flag.
Brier Dudley’s column appears Mondays. Reach him at 206-515-5687 or firstname.lastname@example.org