Microsoft vs. Sony in Dueling E3 Presentations

Hardcore gamers were whipped into a frenzy on Monday as Microsoft and Sony held back-to-back presentations for their upcoming next-generation video game and entertainment consoles. The price of Sony’s PlayStation 4 will handily undercut that of Microsoft’s Xbox One. But Xbox fanatics will claim that doesn’t matter, as no “real” gamer would want a PlayStation 4 anyway.

Let the games begin!

So far, the coverage I’ve seen online has been decidedly pro-Sony, thanks largely to the lower price of the PlayStation 4—$399 versus $499 for the Xbox One. But let’s give Microsoft its due: Xbox fans are easily the most fanatical of any video game audience, and they're the one customer group from which the firm derives Apple-style loyalty. At $100 more than the PlayStation 4, the Xbox One will sell out handily this holiday season, thanks solely to these fans. Microsoft can then lower the price in 2014 as the console moves to more markets.

(I was the first to report that Microsoft would price the Xbox One at $499. A second version of the console with a lower price point but a two-year Xbox LIVE Gold commitment was since scuttled by the company.)

The $100 price difference between the consoles is somewhat artificial. Unlike the Xbox One with its Kinect sensor, Sony has unbundled its own sensor, the Eye, from the PlayStation 4. Buy both and the cost is $460, very close to the cost of the Xbox One. Why Microsoft doesn’t unbundle the Kinect and sell a version of the console for $399, however, is unclear.

But this isn’t about price, although online pundits are clearly leading you down that path. For the holiday 2013 launch window, both companies are charging as much as they can charge, knowing that their most loyal customers will buy whatever they offer. That Microsoft is able to charge $100 more than Sony says more about the companies' respective loyal customer bases than about the consoles. Xbox fans are fanatics. And a $400 price point is no more attractive to the non-hardcore gamers than is a $500 price point. Sorry, Sony.

Sony did win some points by marketing directly to some controversies surrounding the Xbox One. The PlayStation 4, it said, would “fully” support a used games market, an overt response to a Microsoft revelation that it would allow third-party game publishers to optionally charge a fee for customers to sell their games into the used game market. (There’s even a hilarious Sony video capitalizing on this situation.) And Sony went out of its way to note that the PlayStation 4 does not in any way require an Internet connection, as Microsoft confirmed the Xbox One does this past week.

But it’s not all coming up PlayStation 4. Sony doesn’t offer the same range of amazing media services that Microsoft does, and it certainly offers no TV integration capabilities, as is possible with the Xbox One. These markets are much bigger than the market for console video game players.

Ultimately, E3 is just a slice in time, and one thing Microsoft has done well between its May reveal of the Xbox One and this week’s show is keep future customers in the loop about its plans. I expect this to continue, and that Microsoft and Sony will find the market not as lopsided this fall, as was the coverage this week at E3.

There’s no way to look at this week’s events and make an accurate prediction about which company will win the coming generation of console sales. But here’s one thing we can all agree on: It won’t be Nintendo.