Sony v Microsoft - let the 2013 games begin

With some months to go before the next generation of games consoles hit the shelves, the battle of the next generation consoles is well and truly under way, with the opening shots fired at this year’s E3.

Gamers gathered at the annual event in Los Angeles, California, to hear plans by rivals Sony and Microsoft as they go head to head later in the year.

Although the companies were there to showcase the games they were planning for their respective consoles, the opening buzz was inevitably about the Xbox One and the PlayStation 4 and how they stacked up against each other.

For Microsoft, as it had promised, E3 really was all about the games. Unlike previous years, here were no celebrity guests to plug games on stage; all the focus was on what we would be playing on the new console and when.

Microsoft executives took to the stage to talk about the exclusive games coming to the system, from a new version of Forza Motorsport to Ryse: Son of Rome and a new Halo title due next year.

However Sony was considered to have taken an early lead over Microsoft following its press conference on Monday when it finally revealed what the PlayStation 4 would look like and how much it would cost, in addition to the line up of games it planned to bring exclusively to the console. At €399, it will be €100 cheaper than its Microsoft rival at launch.

It was the announcement though about its digital rights management – or lack thereof – that drew the most attention. Defying expectations, Sony Computer Entertainment America chief executive Jack Tretton said there would be no restrictions imposed on using the physical discs in the PlayStation 4, regardless of whether they were new, borrowed or preowned games.

There had been no change on policy from the PlayStation 3, Tretton said, putting to rest equally the concerns of consumers and retailers, many of which rely on the trade-in business to make a profit.

Sony was clear and to the point. No DRM and no need for an always-on internet connection, another feature of Microsoft’s cloud-connected console that had raised eyebrows among some consumers. The announcement drew a cheer from the crowd.

“If the console had backwards compatibility, it would pretty much seal the early battle in Sony’s favour,” said Paul Jackson, principal analyst at Informa Telecoms & Media.

“Gamers will be pleased by Sony’s pricing and support for many independent developers and delighted that Sony isn’t following Microsoft’s strategy of requiring an always-on broadband connection and imposing restrictions on sales of second-hand games. This might be enough to give the PS4 an early lead in sales and buzz on release.”

Damian Thong, an analyst at Macquarie Securities in Tokyo, called the first round for Sony.

“We now think Sony and its PS4 have the edge over Microsoft’s Xbox One,” Thong wrote in a report. “The PS4 offers gamers a more powerful machine at $100 cheaper than the Xbox One.”

There was a marked contrast in approach between the two firms. While the Xbox One is pitching itself as an all-in-one system for games, live television, films and music, offering extras such as intelligent TV and Kinect integrated that enables voice and gesture control as standard for the platform, Sony was talking about its relationship with developers and emphasising that it was all about games first.

However games firms are facing a new landscape as consoles increasingly compete with mobile devices and tablets, leading to decisions such as Microsoft’s to target the living room rather than just the gamer.

“Xbox One is positioned as the near-ultimate under-TV box in North America: users need add only a set-top box for a complete entertainment experience,” Informa’s Jackson said. “This is a compelling proposition for the OTT providers and app-development ecosystem.

“However, the potential backlash among gamers against some of Microsoft’s strategic decisions – the need for an always-on connection, the fact that Kinect is always listening and the restrictions on the sale of used games – might limit its appeal initially.

“Outside of the US,” Jackson added, “the broader entertainment offerings are still unknown, leaving a definite opportunity for aggressive content/operator firms such as BskyB and Liberty Global but potentially limiting the console’s appeal.”

With only a few months until launch, Microsoft may struggle to sign similar deals outside the US, Jackson said, but Microsoft Europe’s vice president of interactive entertainment Chris Lewis reiterated that the company saw an opportunity in Europe and planned to capitalise on it as much as possible.

“We know we have to have content and entertainment partnerships that are authentic locally to your country,” he said. “They take time. We want to get the right and that investment we’re committed to make.”

Sony, meanwhile, has promised entertainment content tailored for gamers, and intends to use all the assets at its disposal – including its entertainment divisions – to make that happen. How much of that content will be available to Irish users, and how Sony plans to tailor it to fit an ever evolving audience of gamers, is not yet clear.

Microsoft is also taking inspiration from Sony’s PlayStation Plus service, offering free games to its Xbox Live Gold subscribers to sweeten the deal.

Despite some predicting victory for Sony even at this early stage, Microsoft is still confident that its console, with all its entertainment features in addition to the games aspect, will appeal to gamers.

It will have 13 exclusive games, including eight new franchises, allow users to broadcast gaming sessions live over Twitch and allow you to “snap” apps in a similar way to the Windows 8 operating system, running two programmes at once – so you can play a game and Skype a friend at the same time, for example.

Lewis said the company was pleased with the level of preorders that had been placed for the console already and there had been a great reaction to the company’s plans for the console, despite confusion over the plans for dealing with trade in games.

“We support used games. We support trade of games,” he said. “In fact, the way that we describe how it will work with Xbox One is about how we can share, how folks in the living room can share their library of games with friends, irrespective of whether they have the disc with them, irrespective of whether they’re on their own Xbox One or somebody else’s.

“It’s about choice. It’s about offering consumers that flexibility of digital choice.”

However, the company said it would continue to listen to feedback from its retail partners and it was looking at its policy in some areas, particularly in the game rental area.

“There is this loan-and-rent discussion that has come up,” Lewis said. “It won’t be available at launch but we are looking at that. We will look to evolve that policy on the right way.”

Sony, meanwhile, is trying to woo developers, creating a more accessible architecture and aiming for a more reasonable price point, Informa’s Jackson said.

"The extension of PlayStation Plus across three platforms – PS4, PS3 and PS Vita – and bets on massive titles such as Destiny from Bungie make it a compelling package for dedicated gamers."

However, he warned that Sony’s ambitions beyond traditional gaming were still unclear and a lack of entertainment services in a similar vein to the Xbox One could lead to the console struggling once early- adopting gamers have their hardware.

It seems though that Sony took a leaf out of Microsoft’s book for something: online gaming. Microsoft requires players who want to play games online to take out a subscription to its Xbox Live Gold service, which costs from €5 a month.

Those who want to play online multiplayer games on the PlayStation 4 will have to take out a PlayStation Plus subscription, a change from its current policy on the PlayStation 3.

And just because the next generation of consoles is imminent, it doesn’t mean the existing crop will be going anywhere any time soon.

Like Sony did with the PlayStation 2, Microsoft is also keeping its Xbox 360 a core part of its strategy for the near future. A sleeker, slimmer Xbox 360 was unveiled at the pre-E3 event on Monday, indicating that Microsoft plans to keep producing the goods for its 76-million strong install base.

“We remain very committed to Xbox 360,” Lewis said. “That platform will continue to be vibrant for a number of years. We’ll continue to bring content to it, both us and our development partners.”

The next few months are sure to bring some surprises as the games firms prepare to go to head to head. Regardless of what the outcome is, it will certainly be an interesting time in the industry, for all concerned.