Battle of the Consoles: New PlayStation and Xbox Enter the $...

TOKYO / CHICAGO / STOCKHOLM (Reuters) – Think Michelangelo versus Da Vinci. Muhammad Ali and Joe Frazier. Batman versus Superman. Another epic rivalry will resume next week when Sony and Microsoft pit themselves against the next generation of their blockbuster video game consoles.

Sony, whose PlayStation 5 (PS5) is taking over Microsoft’s Xbox Series X and Series S, is widely viewed as being in pole position to capitalize on a pandemic-induced consumer spending boom that has fueled the $ 150 billion video game industry.

The Japanese company’s large number of games and wider fan base – it has sold over 100 million PS4s, winning the battle of the previous generation – should maintain its lead over American arch-rivals, according to industry experts.

“People who own Xbox tend to buy the new Xbox while people who own PlayStation are more likely to buy the new PlayStation,” said Michael Pachter, an analyst at Wedbush Securities.

However, the industry is changing and cloud games are on the rise, allowing games to be streamed without the need for bulky hardware. According to analysts, this could curb console sales in the years to come, which could benefit Microsoft.

The two consoles – the first released by the two companies in seven years – are eagerly awaited. The Xbox will go on sale on Tuesday and the PS5 in core markets two days later. It costs around $ 300 to $ 500 each.

The race to order the devices in advance actually started weeks ago, although it flashes and you may have missed it. Sony PS5 pre-orders sold out in minutes on many retail websites, including frustrating fans.

Julian Mercado, 17, was able to reserve a PS5 from Walmart.com WMT.N Just minutes after pre-orders began on September 16, he knew he would be playing against a legion of players.

“It’s just like shopping on Black Friday,” said the Dallas student, who has been playing video games with his father since he was five. “You show up early, you go away with something good. You show up too late, you will go away with nothing. “

PLAYING IN A PANDEMIC

Sony 6758.T Maybe they have the advantage, but a lot is at stake for the Japanese company. The gaming business is the biggest money cow. In fiscal 2019, the business unit, which includes hardware, software, and services, generated nearly a quarter of its consolidated revenue of approximately $ 77 billion and nearly 30% of its operating profit of $ 7.9 billion.

Microsoft MSFT.O doesn’t break out of the results of gaming, even though it’s a smaller part of their business than it is for Sony. No hardware sales are announced either, but the current Xbox One is estimated by analysts to have sold 50 million units.

For the other big hardware player, Japan’s Nintendo 7974.TSticking to consoles pays off when forecasting hikes last week after the surge in demand for your switch.

The PS5 is priced at $ 499.99, or $ 399.99 for a digital-only version, while the Xbox Series X retails for $ 499.99 and the lower-spec S Series retails for $ 299.99.

According to media research firm Ampere, around 5 million PS5s are expected to be sold this year, up from 3.9 million of the new Xboxes. The combined sales are expected to be higher than the previous generation.

See GRAPHIC tmsnrt.rs/3l3Rpe3 of the sales forecasts for PlayStation v Xbox: tmsnrt.rs/3l3Rpe3

“The pandemic is expected to change the US holiday season,” said Jason Benowitz, senior portfolio manager at Roosevelt Investment Group. “For some, playing from home has become a way of securely socializing.”

Sony’s game depth is supported by in-house studios, which are behind exclusive studios such as “Marvel’s Spider-Man: Miles Morales”. In contrast, the new Xbox, game experts say, will be lacking in killer opening titles, with the latest in its flagship series, Halo, being postponed until next year when the pandemic hits development.

However, the growth in cloud games could give the US software giant an edge in the years to come. Although both companies moved to offer services, Microsoft has been more aggressive.

The Xbox Game Pass subscription service has grown rapidly. It offers more than 100 titles, including brand new games, and has over 15 million users. Sony was reluctant to make its hottest titles available on services like PlayStation Now, fearing it could cannibalize big budget game sales.

‚DEMAND OUTSTRIPS SUPPLY‘

While the pandemic has spurred demand, it has also restricted Sony and Microsoft production, according to industry experts who see bottlenecks by 2021.

“Demand will exceed supply, so there will be some people who won’t get a grip on the console when they want,” said Piers Harding-Rolls, director of Ampere Games Research.

Sony has announced that retailers like Walmart, Best Buy BBY.N and goal TGT.N will sell the PS5 exclusively online when it launches November 12th to keep people from camping outside of stores during a pandemic.

Walmart is slated to sell $ 1.1 billion worth of new consoles by the end of January, according to Wedbush. Together with GameStop, it dominates the US market GME.Nwith a share of around 30% each, while the sale of consoles at Target and Best Buy accounts for around 15% each, according to the research company.

Target said it was working closely with its suppliers to secure enough inventory. Some buyers who reserved consoles told Reuters that Target had announced that it might receive them days after the launch date.

Walmart said it will start selling the new consoles at launch but declined to comment on whether there was enough inventory to meet demand. Best Buy also declined to comment on whether it would be able to meet demand, while GameStop did not respond to requests for comment.

For DeAnthony Thicklin, a casino companion who reserved his PS5 on Target.com in September, getting his hands on a console himself on launch day is a priority.

The 25-year-old gave some advice.

“Got all of your card information set up so all you have to do is click,” he said. “Don’t hesitate. Be quick. “

Reporting by Sam Nussey in Tokyo, Richa Naidu in Chicago and Supantha Mukherjee in Stockholm; Additional coverage from Uday Sampath Kumar; Adaptation by Kenneth Li and Pravin Char