Microsoft has reported its earnings for the final three months of 2014, and while net income is down 10% to $5.86bn, compared with the same period the previous year, Xbox One seems to be consolidating its position against Sony’s PlayStation 4 console. So where do both the machines stand right now?
From its own figures, Microsoft says that it shipped 6.6m Xbox One units to retailers in the three months up to 31 December 2014. This figure isn’t the same as consumer sales – it could be that some of these machines remain on the shelves.
By contrast, we know that PlayStation 4 sold through 4.1m units to purchasers between 23 November and 4 January, and that according to US market analyst NPD Group, Xbox One outsold PlayStation 4 during November and December, so the shipping figures and sell through figures for Microsoft’s machine could be reasonably close. We’d know more if Microsoft would release its sales figures, as Sony does, but it is sticking with shipping figures right now.
For the wider picture, Sony has confirmed that it has now sold 18.5m PlayStation 4 units worldwide, since the launch of the machine in November 2013. Estimates for Xbox One vary, but 11m units is the favoured figure, with Wii U back at 8.9m.
Can Xbox One catch up this year? “While we do foresee Xbox One selling a healthy amount out to 2018 on a worldwide basis, we don’t yet see the gap between the two formats narrowing in any significant manner,” says IHS analyst, Steve Bailey. “Microsoft successfully stemmed the bleeding from those stark stumbles in 2013, and has picked itself up well; the first-party full-price slate going into Christmas 2014 was arguably stronger for Xbox One, and the console went toe-to-toe with PS4 in the heated bundling/price reduction battle in the second half of last year.”
“However, PlayStation has been making it difficult for the gap to be closed. In terms of third-party alliances, for example, Destiny has been a major win for PS4, given how convincing multiplayer online experiences can be for swaying whole groups of established online friends toward a certain console’s online service.”
Considering the “death of the console” rhetoric that was floating around the industry in the run up to the launch of the latest Microsoft and Sony machines in 2013, the figures remain impressive. This generation has launched into a very different market than PS3 and Xbox One. The rise of the smartphone and tablet were supposed to be eating away at the traditional user-base at the casual end, while the resurgent PC – boosted by the rise of the Steam game download service – was supposed to be chomping away at the hardcore.
But then, compare the performance of this generation against Sony and Microsoft’s previous devices after a comparable sales period. Just over a year into its own lifespan, PlayStation 3 had shifted 10.53m consoles, while Xbox 360 had managed 7.6m. Combined sales of PlayStation 4 and Xbox One are, therefore up over 60% on the PS3 and Xbox 360 equivalents: 29.5m compared to 18.13m.
PS4 v Xbox One: the past and future
Analysts are pretty much agreed on why Sony triumphed last year. The PlayStation 4 was well marketed with an emphasis on games, and a decent price points. Microsoft chose to emphasise the unproven multimedia capabilities of Xbox One, concentrating its May reveal event on live and interactive TV features. Together with some confusing and ambiguous digital rights management concepts and used-game policies, as well as the mandatory inclusion of the new Kinect camera, the messaging was unpopular, and the price point too high for many. It is telling that the Xbox One has performed much more strongly in the US after an autumn price cut to $349.
Interestingly, though, neither has competed particularly strongly on exclusive games so far. For Sony, Killzone, inFamous and DriveClub all failed to really set the platform alight, with the remastered Last of Us the big highlight. Meanwhile Microsoft’s Ryse, Kinect Sports Rivals and Halo: Master Chief Collection fell short (the latter, like DriveClub, on technical difficulties), though Forza Horizon, Titanfall and, to a lesser extent, Sunset Overdrive faired better. Look at the top 100 games in the UK last year though, and there are no console platform exclusives in the top 10, apart from the Xbox One edition of Minecraft.
Will that change in 2015? Both consoles have some interesting contenders. PlayStation 4 will call on steam punk adventure The Order: 1886, Bloodborne, Uncharted 4, Street Fighter V and No Man’s Sky. Xbox One has Halo 5, Scalebound, Fable: Legends, State of Decay: Year One, and – perhaps – Minecraft, if it chooses to cease support for the PlayStation iterations. There’s also the timed Rise of the Tomb Raider deal, and the possibility of both Crackdown and Gears of War turning up later.
Other competitive factors in the coming year include peripheral technologies and multimedia features. Sony will tell us more about its Project Morpheus virtual reality headset, while Microsoft has just announced its Hololens augmented reality device, which is a standalone product but may well be compatible with the company’s console. As for other entertainment offerings; Xbox One has its digital tuner and OneGuide capabilities, providing a new platform for live TV, while Sony has its PlayStationTV and PlayStation Now game-streaming services.
“While elements such as pricing and software exclusivity remain key dictators of the battleground, there so much more at work here,” agrees Bailey. “Improved supply and distribution channels into certain territories; developer relations and platform accessibility; usage of social media channels; game-access subscriptions and freemium hybrids; cross-device functionality; catalogue momentum; regular and significant digital sales initiatives; exclusive non-game content.
“Both Microsoft and Sony have to compete on all of these fronts, not just with one another, but with a wider technological landscape – TV consoles are ripe for disruption, and have been for some time, but potential usurpers aren’t yet hitting out hard enough to halt them.”
For now, despite the fact that Microsoft is still reluctant to provide sell-through sales figures, the situation looks healthy for both PlayStation 4 and Xbox One. NPD figures for 2014 showed software sales across the industry falling 13% compared to the previous year, but the firm only accounts for boxed copies, so the figure may be hiding a rise in digital gaming purchases.
A year ago, some pundits were thinking in terms of crisis for the next-gen machines. However, it seems the many entertainment and technological pressures baring down on the traditional games consoles seem to be increasing interest and possibilities rather than drawing gamers away.
The challenge for Sony and Microsoft is to make money from their gaming divisions within their wider corporate interests. Xbox has been making a loss for years, and there is constant talk of the business being sold off – although the company has recently made a bid deal of its implementation into the Windows 10 ecosystem. By contrast, PlayStation 4 has proved profitable for Sony and the company is set to heavily rely on its gaming division this year, as the consumer electronics business falters.
Perhaps the most pressing question for gamers is where Nintendo goes next. Lagging behind its competitors, but with some wonderful Wii U titles already out, a dominant handheld and the promise of some key brand returns in 2015, we may well be entering into a three-way race again.
- PS4, Xbox One, Wii U – which console should you buy? Part one
- PS4, Xbox One, Wii U – which console should you buy? Part two
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