It’s About Winning Your Loyalty
In the latest salvo of an almost two-decade console war between Microsoft and Sony, both Sony’s Playstation 5 and Microsoft’s Xbox Series S/X were launched last week. With increased spending on videogames due to ongoing quarantine and travel restrictions, the launches have been described as historically significant.
As is typical for a “next-generation” launch, both consoles sport significant boosts to computing power, support 4K graphics and offer faster performance and loading times. But unlike previous launches, they present starkly different visions for the future of video gaming. Sony continues to focus on providing exclusive content. Meanwhile, Microsoft yesterday launched its Project xCloud game streaming service in Australia — the most recent step in a wider trend towards embracing a subscription-based business model.
For a long time, new consoles had been primarily marketed around “platform exclusive” titles available only for that console. Sony and Microsoft have in the past paid millions to developers for exclusivity deals. In 2010, Microsoft paid Rockstar Games US$75,000,000 to stop Grand Theft Auto IV from becoming a Playstation 3 exclusive.
Sony’s recent PS5 launch carries on this tradition. The console is marketed in terms of first-party exclusives, such as those developed by Naughty Dog (Uncharted, The Last of Us) and Sony Computer Entertainment’s Santa Monica Studio (God of War). Sony has also had great success selling hardware peripherals that make its consoles more attractive, evident in recent quarterly revenues. The PlayStation virtual reality headset sold more than five million units worldwide during the last generation.
In contrast, Microsoft quickly abandoned the Kinect. This motion-sensing device bundled with the Xbox One never won over its audience. That said, although Sony vastly outsold Microsoft with the PS4 last generation, it seems in 2020 Microsoft has shifted the goalposts of success.
As Phil Spencer notes, Microsoft’s aim is no longer to sell the most consoles, but to accumulate the most players, irrespective of where they’re Emperor123 playing. The console itself is now almost secondary. For instance, Microsoft’s Game Pass subscription service, launched in 2017, provides access to Xbox titles across both Xbox consoles and PC. Game Pass follows a similar model to Netflix, wherein users pay a monthly fee to access a library of content.