Why Ballmer and Hirai will control the next-gen war

flyfletch on 29 Apr '13 said:

I would imagine that indie developers are important, more so now than ever. I seriously doubt they will be the making or breaking of the next gen consoles though.

Taus on 29 Apr '13 said:

Pretty impressed with Rob's articles these days

The advent of new consoles and a new generation has given scope to more detailed analysis and opinions over and above the 'business as usual' reviews

Pretty good, you should write more pieces in this vein however would add that MS are under a degree of financial pressure

The analogy that MS turns a greater profit hence has more money is true on a facile level but does not allow for the cost of financing or shareholder value. Essentially, as a listed company, MS' management are using shareholder's capital to invest in MS products and services. Shareholder capital comes at a cost, not in terms of interest, but an 'opportunity cost', i.e. what return a shareholder could make if he / she decided to divest from MS and invest in another asset / company

Typically if MS do not return value in excess of its cost of capital then there will be downward pressure on their share price. We are already seeing this at the moment in terms of MS. They are presiding over declining revenues from mature produces (Windows, SQL Server, Office, Windows Server) and their new products (Surface, Zune etc) are not generating the returns which shareholders' demand

The exception being XBox, that has been a successful product, however MS are under their own pressure, the days of $75M on a single title maybe over for them as well unless they can leverage their platform to a wider audience which the rumours are pointing to a 'yes' to that strategy

If Sony are gambling on indies, MS are gambling on multimedia - taking a gaming device and turning it into a media hub. If they are not able to grow XBox revenues next gen they will come under pressure, like Sony, to divest, streamline their product lines, concentrate on higher return products

El Mag on 29 Apr '13 said:

You take that back, the Dreamcast isn't dead it's just sleeping!

WHERESMYMONKEY on 29 Apr '13 said:

So how does Nintendo figure into the equation or do they just not count as a hardware manufacturer anymore because the wiiU isn't a graphic whore's wet dream.

Diomedes1977 on 29 Apr '13 said:

Well, now we games have to show MS that no, they cant actually "buy" the market. If they havent won this generation (they will end last ones in fact) and are willing to put DRM, ban second hand etc....just imagine if they were the sole rulers of the videogame market.

And, if the rumors are true, the PS4 is somewhat more powerful and is expertly designed, and will have 100% japanese support etc....hence it should win in gamers hearts.

RoOhDiNi on 29 Apr '13 said:

"Who will win Next Gen?"

Steam and Nintendo

StonecoldMC on 29 Apr '13 said:

Roll on the Next Gen!

Its going to be a long month to wait for this MS reveal!

TheLastDodo on 29 Apr '13 said:

Storm is coming...........

http://coedmagazine.files.wordpress.com/2011/06/master-chief-halo-i-want-you-for-unsc-recruitment_poster-header.jpg

Barca Azul on 29 Apr '13 said:

I get the impression that MS are fishing with hand grenades though. Yes they can throw cash about, but unless they look at the genres of games they make, they wont find they can cater for all.

If you look at the last few years since kinect, there has been little fresh content for core/mature gamers is the impression i have.

Im sure there are a few like me who dont give a flying carpet over map packs or 3 week exclusives.

GTA IV DLC hurt, but it was timed.

Im not tied to one of the three, I just feel MS 1st party isnt as good as the other two and until they fix it, im unlikely to go back to them.

Rob Crossley on 29 Apr '13 said:

Pretty impressed with Rob's articles these days

The advent of new consoles and a new generation has given scope to more detailed analysis and opinions over and above the 'business as usual' reviews

Pretty good, you should write more pieces in this vein however would add that MS are under a degree of financial pressure

The analogy that MS turns a greater profit hence has more money is true on a facile level but does not allow for the cost of financing or shareholder value. Essentially, as a listed company, MS' management are using shareholder's capital to invest in MS products and services. Shareholder capital comes at a cost, not in terms of interest, but an 'opportunity cost', i.e. what return a shareholder could make if he / she decided to divest from MS and invest in another asset / company

Typically if MS do not return value in excess of its cost of capital then there will be downward pressure on their share price. We are already seeing this at the moment in terms of MS. They are presiding over declining revenues from mature produces (Windows, SQL Server, Office, Windows Server) and their new products (Surface, Zune etc) are not generating the returns which shareholders' demand

The exception being XBox, that has been a successful product, however MS are under their own pressure, the days of $75M on a single title maybe over for them as well unless they can leverage their platform to a wider audience which the rumours are pointing to a 'yes' to that strategy

If Sony are gambling on indies, MS are gambling on multimedia - taking a gaming device and turning it into a media hub. If they are not able to grow XBox revenues next gen they will come under pressure, like Sony, to divest, streamline their product lines, concentrate on higher return products

Really interesting response, Taus.

KK-Headcharge78 on 29 Apr '13 said:

Well in my opinion, I predict the following for the next gen;

It is there for MS to lose and will be largely determined by the release schedule, launch line-up and affordability vs the PS4
Sony will be considerably more powerful if their 1st and 3rd party support is very strong
Ultimatley MS's resources will allow them to keep ahead of the curve IF they don't go too 'social' and do concentrate on the core
The Wii-U will be as good as dead in the next 2-3 years due mainly to poor 3rd party support and the hangover of crap marketing and their competition nicking the blueprints of the Wii
Nintendo will cease to make consoles in the next few years concentrating on their strong hand-held proposition and licensing out their 1st party stuff
The Nextbox and PS4 will be largely defined by their 1st party stuff otherwise they will offer near identical 3rd party line-ups

fustacluck on 29 Apr '13 said:

So how does Nintendo figure into the equation or do they just not count as a hardware manufacturer anymore because the wiiU isn't a graphic whore's wet dream.

I'm guessing CVG will start talking about the Wii U as a contender when Nintendo does, but their lack of support over the last 6 months coupled with the announcement that they won't even be holding a press conference at E3, and that they've only sold less than half a million consoles so far, speaks volumes.

Stan_Goodspeed on 29 Apr '13 said:

Microsoft can spend much more on timed exclusives, but like its name implies this is a short-term strategy. They have no footing in Japan and come second - if not third - in key markets like the Middle East & Europe. Sony dominates in these regions and no third-party publisher would give up on such markets for its most popular brands. Once the PS4 reaches 20-30 million units sold, what kind of CEO could possibly convince its board that a €50 million payola was a wise choice?

The Xbox guys clearly know their lack of first-party offering (and overall lack of exclusive franchises compared to Sony or Big N) is their only weak point, but paying upfront to get timed DLC can only get them so far. They'll never get total exclusivity on franchises like GTA or MGS, their biggest asset is their multimedia approach. Until Apple strikes, that is.

My guess is a status quo for next-gen, with Sony perhaps gaining back some lost marketshare in the US.

toaplan on 29 Apr '13 said:

Sony's stock price has doubled in the past 6 months, as investors are growing more confident due to the PS4 and Hirai's other turnaround initiatives. "Abenomics" and the depreciating Yen have also contributed to this.

M$ always tries to use the $ from the Windows quasi-monopoly to expand and attack new markets - usually without much success. No matter how much $ they have thrown at those new products, consumers just haven't wanted the Zunes, Kins, MS Web TVs, Bings, Windows RT tablets etc. when there are better and cooler products out there.

The Xbox360 has been one of the few of those that hasn't crashed and burned hard, and even it seems destined to end up in last place in sales of this console generation. Last time MS was able to catch Sony by surprise with an early launch and some killler new features and they were further helped by the unfortunate mistakes Sony and Kutaragi made with the PS3. This time they are facing a better-prepared Sony.

Barca Azul on 29 Apr '13 said:

Microsoft can spend much more on timed exclusives, but like its name implies this is a short-term strategy. They have no footing in Japan and come second - if not third - in key markets like the Middle East & Europe. Sony dominates in these regions and no third-party publisher would give up on such markets for its most popular brands. Once the PS4 reaches 20-30 million units sold, what kind of CEO could possibly convince its board that a €50 million payola was a wise choice?

The Xbox guys clearly know their lack of first-party offering (and overall lack of exclusive franchises compared to Sony or Big N) is their only weak point, but paying upfront to get timed DLC can only get them so far. They'll never get total exclusivity on franchises like GTA or MGS, their biggest asset is their multimedia approach. Until Apple strikes, that is.

My guess is a status quo for next-gen, with Sony perhaps gaining back some lost marketshare in the US.

Id guess a CoD exclusive could have a similar effect for next gen as GTA IV this time round, but would Activision want to take the risk?

Rumour is some kind of EA exclusive for nextbox, but im guessing it would be the Respawn tittle, as you cant see them giving FIFA or BF as an exclusive.

fustacluck on 29 Apr '13 said:

Well in my opinion, I predict the following for the next gen;

It is there for MS to lose and will be largely determined by the release schedule, launch line-up and affordability vs the PS4
Sony will be considerably more powerful if their 1st and 3rd party support is very strong
Ultimatley MS's resources will allow them to keep ahead of the curve IF they don't go too 'social' and do concentrate on the core
The Wii-U will be as good as dead in the next 2-3 years due mainly to poor 3rd party support and the hangover of crap marketing and their competition nicking the blueprints of the Wii
Nintendo will cease to make consoles in the next few years concentrating on their strong hand-held proposition and licensing out their 1st party stuff
The Nextbox and PS4 will be largely defined by their 1st party stuff otherwise they will offer near identical 3rd party line-ups

Remember, though, that motion control existed in games long before the Wii surfaced. Microsoft had the Sidewinder, for PC, and Sony had EyeToy (and the Move controller was already patented, and demonstrated in a crude form in an E3 press conference before PS3, before Wii (or Revolution, at the time) was announced). The only real innovation Nintendo made was to base the entire console around that control, and to present it in a more easily palatable form to the non-gaming public. To say that the other manufacturers stole Nintendo's blueprints is a bit arse-backwards, especially when Kinect is basically a more advanced EyeToy.

The only thing you can say is that the other two wanted to copy Nintendo's success, by rejuvenating their older technologies.

budge on 29 Apr '13 said:

I get the impression that MS are fishing with hand grenades though. Yes they can throw cash about, but unless they look at the genres of games they make, they wont find they can cater for all.

If you look at the last few years since kinect, there has been little fresh content for core/mature gamers is the impression i have.

Im sure there are a few like me who dont give a flying carpet over map packs or 3 week exclusives.

GTA IV DLC hurt, but it was timed.

Im not tied to one of the three, I just feel MS 1st party isnt as good as the other two and until they fix it, im unlikely to go back to them.

This, for me too.

It'll be interesting to see what Microsoft show off in their conference next month but personally i'm not expecting anything exciting.

The_KFD_Case on 29 Apr '13 said:

Pretty impressed with Rob's articles these days

The advent of new consoles and a new generation has given scope to more detailed analysis and opinions over and above the 'business as usual' reviews

Pretty good, you should write more pieces in this vein however would add that MS are under a degree of financial pressure

The analogy that MS turns a greater profit hence has more money is true on a facile level but does not allow for the cost of financing or shareholder value. Essentially, as a listed company, MS' management are using shareholder's capital to invest in MS products and services. Shareholder capital comes at a cost, not in terms of interest, but an 'opportunity cost', i.e. what return a shareholder could make if he / she decided to divest from MS and invest in another asset / company

Typically if MS do not return value in excess of its cost of capital then there will be downward pressure on their share price. We are already seeing this at the moment in terms of MS. They are presiding over declining revenues from mature produces (Windows, SQL Server, Office, Windows Server) and their new products (Surface, Zune etc) are not generating the returns which shareholders' demand

The exception being XBox, that has been a successful product, however MS are under their own pressure, the days of $75M on a single title maybe over for them as well unless they can leverage their platform to a wider audience which the rumours are pointing to a 'yes' to that strategy

If Sony are gambling on indies, MS are gambling on multimedia - taking a gaming device and turning it into a media hub. If they are not able to grow XBox revenues next gen they will come under pressure, like Sony, to divest, streamline their product lines, concentrate on higher return products

True, and a salient observation, however, Sony is already under that kind of pressure and in the extreme given the billions of dollars/pounds of losses it has incurred these past few years. That is not to say that it isn't a potential risk for Microsoft - it is, just as it is for any and all publicly traded companies in any industry.

Microsoft are not invincible nor "too big too fail." (Recent history has shown us that no company nor financial institution is safe and removed from risk - especially in investment circles.) Yet that having been said, Microsoft is, as Rob astutely points out in his editorial piece, in a far stronger position both financially and market-wise in regards to the different products and services it sells compared to Sony, and Nintendo as well for that matter.

Personally I was greatly turned off by Sony's arrogance with the PS3. So much so, that I chose not to purchase it. (That and the horribly small, gimped controllers in my opinion - Microsoft's controllers are sublime and ergonomically unmatched.) Now, it seems the tables are turning: Sony comes across as more humble and focused (at least outwardly), while the rumours that have been flying about thick and fast around the internet regarding Microsoft's next-gen console plans, leave a decidedly unappealing flavour in my gaming mouth. To be frank though, other than the PS4 apparently having more hardware grunt, and whereas I expect Microsoft's software-based user interface will be smoother (makes sense given Sony's engineering roots and Microsoft's software roots), I have a sneaking suspicion that each new console will offer many of the same functions and capabilities including the option for publishers and developers to lock down games and effectively destroy the second-hand market via online activation much like what was done with the PC market years ago. Unlike the PC market, I do not expect console game prices to drop, and I find it hugely naive for anyone to think that the businesses involved here will freely give up the added profit padding once they gain ever tighter control of their respective markets. It is not a good thing for consumers, and in the long run it may well end up denting profits and the company cultures of the corporate parties involved.

shellster2 on 29 Apr '13 said:

Microsoft understand that in order to rake in the money they need you to spend money on their services of which gaming is only one part. They want you to buy your music, films, apps, maybe even books through MS, whether it's on console, pc, tablet, they don't care. The war is about services, not hardware, the next xbox is a means to an end. MS are a software first company, Sony are a hardware first company and the money is in software and services. For this reason alone I think MS will outdo Sony.

I happen to think Sony have done a good job with PS4 but surely with their music and movie business they should be tying all that Sony has to offer into one compelling set of devices and services. Maybe they will... We'll find out at E3.

For those of you who say 'I only want to play games on my console' well that's up to you but clearly there's a market for those who want music/movies/apps on their console too. At the end of the day they can release all the apps and services in the world and if you don't want to use them, well that's entirely up to you.

The current gen has been a 'toe in the water' for MS and Sony. The next gen they'll make a big splash. (now that sounds cheesy!)

Barry316 on 29 Apr '13 said:

Taus said it well, simply throwing money at something won't guarantee it top place.

Just look at Man City!

Shommy on 29 Apr '13 said:

Well, now we games have to show MS that no, they cant actually "buy" the market. If they havent won this generation (they will end last ones in fact) and are willing to put DRM, ban second hand etc....just imagine if they were the sole rulers of the videogame market.

And, if the rumors are true, the PS4 is somewhat more powerful and is expertly designed, and will have 100% japanese support etc....hence it should win in gamers hearts.

LOL... "expertly designed" oh and some 10 year old designed the new xbox. Dude they are all expertly designed. The PS3 is supposedly more powerful than the XBOX 360, look where that got them, lol.

USA RPGs > Japanese RPGs
USA, European games > Japanese games. This does not mean Japanese games are bad though, it is just that American and European games target and appeal to a larger target.( USA and Europe)
USA products > Japanese products

Fr33Kye on 29 Apr '13 said:

Way to start off by making me sad about the dreamcast. I've been trying to say this for a while, microsoft have the money not just for third party devs, but for media companies and marketing. When the marketing blitz is on and the big companies and names are flocking to microsoft it's gonna be hard to say you cant buy the market. They may have shareholders but they also have lots of weak products, the xbox is not one of them and they are going to do almost anything to take over the living room and not lose an inch of market share to sony. Microsoft want the nextbox to be your everything.
I never connected sony's indie push to financial troubles, this is a very nice article. Sony's broke but i like them more right now, scrambling for cheap indies hahaha. I wanna see them take some big risks with first party games. Supposedly Kaz is doing a pretty good job righting the ship.

A lot of microsoft products really fail to take off, it's amazing really.
Edit: Microsoft arent stupid, i dont think they sre going to leave any perceived demographic ignored. They'll throw something out there for the "core gamer". We're just a smaller piece of their plans now.

Madjeski on 29 Apr '13 said:

I personally think Microsoft have made too many mistakes this generation and I think looking back over the last few years! They will be kicking themselves that they didn't outsell the PS3 by at least tens of millions based on the head start they had and the PS3's teething troubles. If Microsoft had/hadn't;

1) Had the red ring of death issues
2) Had several hardware revisions before they finally got it right with the 360 Slim (Wi-fi and HDMI included)
3) Had continued the 1st Party and Exclusive titles that they had during the first few years throughout the entire console cycle
4) Had dropped the Xbox Live Gold Subscription service shortly after Playstation Network caught up in terms of speed and reliability (2009-2010?)
5) Had created a game rental service similar to Playstation Plus
6) Hadn't spent millions of dollars and years developing hardware we didn't want... Ahem Kinect Ahem
7) Hadn't changed the Xbox firmware/operating system several times (the XMB still looks the same as 2007 and is fine)
Didn't shove adverts down customers throats despite the fact they have already spent money on a Gold Subscription
9) Didn't require customers to purchase a Gold Subscription to watch media content such as YouTube

This is all sound rather negative but my point is if they hadn't done all those examples and had continued with the positives such as;

1) Low price point compared with PS3
2) Exclusive content / timed DLC
3) Easy platform to develop for
4) Fantastic Arcade/Indie service
5) Best controller on the market
6) Continued to purchase more fantastic quality IPs such as Gears and Halo

Then I feel they would have blown away Sony and it would have been a 2 horse race between Microsoft and Nintendo. As it stands I feel the next generation will be fairly similar in terms of sales for Microsoft and Sony, but I wouldn't want to hazard a guess on Nintendo sales...

curryking3 on 29 Apr '13 said:

There is one key difference between Steve Ballmer and Kaz Hirai though.

Kaz was brought in to turn the Sony ship around, and so far is doing so by integrating their businesses and streamlining product portfolios.

On the other hand, Steve Ballmer has been in power for nearly 10 or 11 years I think, and at this point the Microsoft ship wants to put him on a plank and throw him out.

Kaz Hirai is a saviour of Sony.

Steve Ballmer is a old fogey that is sinking the Microsoft ship overall. Windows 8 and Surface and Windows Phone can attest to his failures as CEO to capitalize on massive growing markets. Only 1 million Surface RT and Pro tablets combined have been sold. Ballmer is old hat.

fustacluck on 29 Apr '13 said:

I personally think Microsoft have made too many mistakes this generation and I think looking back over the last few years! They will be kicking themselves that they didn't outsell the PS3 by at least tens of millions based on the head start they had and the PS3's teething troubles. If Microsoft had/hadn't;

1) Had the red ring of death issues
2) Had several hardware revisions before they finally got it right with the 360 Slim (Wi-fi and HDMI included)
3) Had continued the 1st Party and Exclusive titles that they had during the first few years throughout the entire console cycle
4) Had dropped the Xbox Live Gold Subscription service shortly after Playstation Network caught up in terms of speed and reliability (2009-2010?)
5) Had created a game rental service similar to Playstation Plus
6) Hadn't spent millions of dollars and years developing hardware we didn't want... Ahem Kinect Ahem
7) Hadn't changed the Xbox firmware/operating system several times (the XMB still looks the same as 2007 and is fine)
Didn't shove adverts down customers throats despite the fact they have already spent money on a Gold Subscription
9) Didn't require customers to purchase a Gold Subscription to watch media content such as YouTube

This is all sound rather negative but my point is if they hadn't done all those examples and had continued with the positives such as;

1) Low price point compared with PS3
2) Exclusive content / timed DLC
3) Easy platform to develop for
4) Fantastic Arcade/Indie service
5) Best controller on the market
6) Continued to purchase more fantastic quality IPs such as Gears and Halo

Then I feel they would have blown away Sony and it would have been a 2 horse race between Microsoft and Nintendo. As it stands I feel the next generation will be fairly similar in terms of sales for Microsoft and Sony, but I wouldn't want to hazard a guess on Nintendo sales...

You missed out "Hadn't lost interest in their core customers once they knew they had them, and instead concentrated on Nintendo's customers".

CatfishMurphy on 29 Apr '13 said:

Sorry, I'm gonna have be a bit of a mythbuster here, but all this "Microsoft are lacking in the first party department" is a bit of a fallacy. Microsoft have actually shifted considerably more first party titles this gen than Sony have and they have a killer app/system seller in Halo, which Sony has yet to find an answer too.

I really don't think they have much of an issue here; you may prefer Sony's first party offerings, as I do too, but in the grander scheme of things it's no biggie from a business point of view for MS.

flyfletch on 29 Apr '13 said:

Sony's stock price has doubled in the past 6 months, as investors are growing more confident due to the PS4 and Hirai's other turnaround initiatives. "Abenomics" and the depreciating Yen have also contributed to this.

M$ always tries to use the $ from the Windows quasi-monopoly to expand and attack new markets - usually without much success. No matter how much $ they have thrown at those new products, consumers just haven't wanted the Zunes, Kins, MS Web TVs, Bings, Windows RT tablets etc. when there are better and cooler products out there.

The Xbox360 has been one of the few of those that hasn't crashed and burned hard, and even it seems destined to end up in last place in sales of this console generation. Last time MS was able to catch Sony by surprise with an early launch and some killler new features and they were further helped by the unfortunate mistakes Sony and Kutaragi made with the PS3. This time they are facing a better-prepared Sony.

You see, from what im reading people are assuming that MS are stupid (probably well earned in some respects) but a company that has revenues of over 20 billion a quarter and over 6 Billion profits a quarter (profits are up actually) is clearly doing something right. So lets take a different look at it.

If they really really wanted too they could quite literally buy Sony out of gaming, it would cost a fortune but it could be done. If they decided to buy up most of the major developers and make their franchises exclusive it would be game over.

We know this is not the approach they will take as it would be a huge financial outlay, but its something they could easily do and have a lot of change. MS has over 70 billion in reserves, that number increased in Jan by nearly 6 billion. These are numbers that Sony can only dream of.

So the point is MS know they dont need to buy up all the developers and they also know that in a financial slugging match Sony will not win, all they needs to do i splash some cash in the right direction and they get the developers on their side without the huge outlay of buying them up. To be honest i dont see either company as stupid, what i do see is both MS and Sony owning the next gen together.

And much as i love them, there is no way Nintendo will even have a look in this generation, and they will probably be happy with that as long as they remain profitable (and so will i as long as i have their games).

Anyway, bring back Bill....he will sort it all out lol

CatfishMurphy on 29 Apr '13 said:

I personally think Microsoft have made too many mistakes this generation and I think looking back over the last few years! They will be kicking themselves that they didn't outsell the PS3 by at least tens of millions based on the head start they had and the PS3's teething troubles. If Microsoft had/hadn't;

1) Had the red ring of death issues
2) Had several hardware revisions before they finally got it right with the 360 Slim (Wi-fi and HDMI included)
3) Had continued the 1st Party and Exclusive titles that they had during the first few years throughout the entire console cycle
4) Had dropped the Xbox Live Gold Subscription service shortly after Playstation Network caught up in terms of speed and reliability (2009-2010?)
5) Had created a game rental service similar to Playstation Plus
6) Hadn't spent millions of dollars and years developing hardware we didn't want... Ahem Kinect Ahem
7) Hadn't changed the Xbox firmware/operating system several times (the XMB still looks the same as 2007 and is fine)
Didn't shove adverts down customers throats despite the fact they have already spent money on a Gold Subscription
9) Didn't require customers to purchase a Gold Subscription to watch media content such as YouTube

This is all sound rather negative but my point is if they hadn't done all those examples and had continued with the positives such as;

1) Low price point compared with PS3
2) Exclusive content / timed DLC
3) Easy platform to develop for
4) Fantastic Arcade/Indie service
5) Best controller on the market
6) Continued to purchase more fantastic quality IPs such as Gears and Halo

Then I feel they would have blown away Sony and it would have been a 2 horse race between Microsoft and Nintendo. As it stands I feel the next generation will be fairly similar in terms of sales for Microsoft and Sony, but I wouldn't want to hazard a guess on Nintendo sales...

You do make some excellent points here. MS started this gen way better than Sony did, but Sony have come on strong in the last couple of years. I think a score draw will be a fair result for this console war.

I think for the next gen Sony will continue to see solid sales, whereas I feel MS are (seemingly) taking a lot more risks and are either about to produce another Dreamcast (Gamecube if I'm being kind) or a Playstation 2, though I'd settle for another 360 since that's the console I've enjoyed most this gen.

Get Over Here on 29 Apr '13 said:

One thing that always gets overlooked in these market predictions for consoles is marketing.

Quite simply MS routinely drop several hundreds of millions on marketing. Just look how many Windows 8/Surface adverts that have flooded your television lately.

Sony can't compete with that. I actually read somewhere that Sony's marketing budget for PS4 is a mere $200 million. In comparison, iirc, MS's Kinect marketing budget alone was $500 million.

The effects this has are obvious. When it comes to AAAA 3rd party titles such as COD and GTA, the uninitiated would be forgiven for thinking these games are only on Xbox as that's predominantly what is advertised on the TV.

I think the best hope Sony has is what they appear to be doing: cater more to the hardcore and the millions of Playstation fans around the world and try to survive.

toaplan on 29 Apr '13 said:

We know this is not the approach they will take as it would be a huge financial outlay, but its something they could easily do and have a lot of change. MS has over 70 billion in reserves, that number increased in Jan by nearly 6 billion. These are numbers that Sony can only dream of.

So the point is MS know they dont need to buy up all the developers and they also know that in a financial slugging match Sony will not win, all they needs to do i splash some cash in the right direction and they get the developers on their side without the huge outlay of buying them up. To be honest i dont see either company as stupid, what i do see is both MS and Sony owning the next gen together.

MS very much need those reserves for their main battle against Apple and Google. They already burned billions with the original Xbox and I doubt they'll be willing to throw many more B's at the console market, instead preferring to spend the reserves on things like the $8 billion acquisition of Skype, which could be more helpful in the bigger picture.

Besides, a significant part of those cash reserves may be located in the many overseas M$ subsidiaries and may not be available for large acquisitions without heavy tax consequences related to profit repatriation. Then there's also the issue of M$ not wanting to look like they're buying their way into market dominance - which is something that could attract the attention of regulators, and result in possible blocked deals, fines and negative publicity.

Also, at least Japanese devs won't abandon Sony and Nintendo for M$, even if Ballmer shows them the money, and many Western devs also have long-standing successful relationships with Sony.

Fr33Kye on 29 Apr '13 said:

Sony's stock price has doubled in the past 6 months, as investors are growing more confident due to the PS4 and Hirai's other turnaround initiatives. "Abenomics" and the depreciating Yen have also contributed to this.

M$ always tries to use the $ from the Windows quasi-monopoly to expand and attack new markets - usually without much success. No matter how much $ they have thrown at those new products, consumers just haven't wanted the Zunes, Kins, MS Web TVs, Bings, Windows RT tablets etc. when there are better and cooler products out there.

The Xbox360 has been one of the few of those that hasn't crashed and burned hard, and even it seems destined to end up in last place in sales of this console generation. Last time MS was able to catch Sony by surprise with an early launch and some killler new features and they were further helped by the unfortunate mistakes Sony and Kutaragi made with the PS3. This time they are facing a better-prepared Sony.

You see, from what im reading people are assuming that MS are stupid (probably well earned in some respects) but a company that has revenues of over 20 billion a quarter and over 6 Billion profits a quarter (profits are up actually) is clearly doing something right. So lets take a different look at it.

If they really really wanted too they could quite literally buy Sony out of gaming, it would cost a fortune but it could be done. If they decided to buy up most of the major developers and make their franchises exclusive it would be game over.

We know this is not the approach they will take as it would be a huge financial outlay, but its something they could easily do and have a lot of change. MS has over 70 billion in reserves, that number increased in Jan by nearly 6 billion. These are numbers that Sony can only dream of.

So the point is MS know they dont need to buy up all the developers and they also know that in a financial slugging match Sony will not win, all they needs to do i splash some cash in the right direction and they get the developers on their side without the huge outlay of buying them up. To be honest i dont see either company as stupid, what i do see is both MS and Sony owning the next gen together.

And much as i love them, there is no way Nintendo will even have a look in this generation, and they will probably be happy with that as long as they remain profitable (and so will i as long as i have their games).

Anyway, bring back Bill....he will sort it all out lol

Yea that's not how it works. It may seem like microsoft may have the cash reserves to buy these things, but that doesn't mean they are able to. Not only does everyone have to agree to sell, but is the xbox division just supposed to say we need stupid amounts of money for acquisitions because of a failure to compete? I'm not saying it's impossible but even though microsoft are integrating everything they still have lots of different divisions. More money for the xbox means less for other areas, areas they are already likely struggling in. And acquisitions don't always work out, for one there would be a stupid amount of work to fix redundancies. Then there's there competition in other markets, if they spend all their money buying devs and publishers do they then let apple eat their lunch in other markets?

If microsoft started buying devs, they'd probably bleed talent.

You're right though, micorsoft aren't stupid. They also aren't poor. If they started considering acquisitions and large buyouts, it'd be because they are struggling against the playstation's momentum. And buying out large dying publishers might not fix that. And like i said, not every company wants to be bought. Sony tried to buy insomniac for years but they said no. Activision have stayed strongly multiplatform because to them there's more money in a franchise that spans multiple franchises so they'd have to offer them a lot of money to change their mind. Then there's less money in the division for other things, and if they ask for a lot of money and don't show lots of progress really soon? People will start losing their jobs.

flyfletch on 29 Apr '13 said:

Yea that's not how it works. It may seem like microsoft may have the cash reserves to buy these things, but that doesn't mean they are able to. Not only does everyone have to agree to sell, but is the xbox division just supposed to say we need stupid amounts of money for acquisitions because of a failure to compete? I'm not saying it's impossible but even though microsoft are integrating everything they still have lots of different divisions. More money for the xbox means less for other areas, areas they are already likely struggling in. And acquisitions don't always work out, for one there would be a stupid amount of work to fix redundancies. Then there's there competition in other markets, if they spend all their money buying devs and publishers do they then let apple eat their lunch in other markets?

If microsoft started buying devs, they'd probably bleed talent.

You're right though, micorsoft aren't stupid. They also aren't poor. If they started considering acquisitions and large buyouts, it'd be because they are struggling against the playstation's momentum. And buying out large dying publishers might not fix that. And like i said, not every company wants to be bought. Sony tried to buy insomniac for years but they said no. Activision have stayed strongly multiplatform because to them there's more money in a franchise that spans multiple franchises so they'd have to offer them a lot of money to change their mind. Then there's less money in the division for other things, and if they ask for a lot of money and don't show lots of progress really soon? People will start losing their jobs.

Your absolutely right, thats not how it works. What i thought i would do is take a look at it from another angle. There is absolutely no way thats the way it will play out, just something thats a very remote possibility if they decided to go that direction.

Fr33Kye on 29 Apr '13 said:

Ahhh, anyway you are right that people are underestimating Microsoft a bit. They're not going to abandon anyone because they don't want to lose anyone to sony, and that marketing money is gonna be tough to beat.

damoxuk on 29 Apr '13 said:

Gamers win Next gen as all gens. Competition is good news for new games and deals/IP.

Woe the time one company "wins" then see stagnation prevail.

Down with robots on 29 Apr '13 said:

Taus said it well, simply throwing money at something won't guarantee it top place.

Just look at Man City!

It's safe to assume that without the Saudi money City would be fighting relegation every season, rather than going for the title, so throwing money about does actually work to a large degree, but ultimately it depends on who your rivals are - and City have Man United with their vast amounts of spending money. So in summing up, United = Sony, City = Microsoft. West Brom = Atari.

SgtNatino on 29 Apr '13 said:

I think Sony will ultimately come out on top next generation. The fact that the PS3 launched a year later than the 360, with some of the worst pricing and marketing seen in recent years - yet still managing to outsell the 360 worldwide should be a wake up call to MS.

I feel MS has become complacent; they cite their success this generation as meeting and exceeding their competition, when in actuality they just got a very lucky break with Sony's incredibly botched PS3 release. Anyone that claims that Microsoft could have competed with another PS2-level console from Sony is deluded. The Wii and PS3 would have ate up all the market share if Sony hadn't fecked up so bad.

With Sony now looking to their PlayStation business to save the company from financial ruin, they are obviously pushing VERY hard to snatch back all the market share that they lost, and I fear MS hasn't got the same drive as Sony now has. It's like both companies have switched sides from 2005 - Microsoft now becoming complacent, like Sony once was, and Sony becoming the incredibly driven MS from 2005, desperate to get a large slice of the gaming-market pie.

Sony NEED the PS4 to succeed, otherwise their company may slide ever closer to bankruptcy. A cornered animal can be very dangerous, and MS need to tread carefully to avoid being eaten.

tanukilou on 29 Apr '13 said:

first and foremost: i'll gravitate to where more games like Journey are.

Imaduck on 29 Apr '13 said:

Games, good games, regardless of genre and what's all the rage. As many of those I enjoy as I can get, no more no less. Don't give a flying f**k who's logo is on the box, it's what they do with it that I'm buying or not.

Two Pennys Worth on 29 Apr '13 said:

Another great article Rob.

The_KFD_Case on 30 Apr '13 said:

There is one key difference between Steve Ballmer and Kaz Hirai though.

Kaz was brought in to turn the Sony ship around, and so far is doing so by integrating their businesses and streamlining product portfolios.

On the other hand, Steve Ballmer has been in power for nearly 10 or 11 years I think, and at this point the Microsoft ship wants to put him on a plank and throw him out.

Kaz Hirai is a saviour of Sony.

Steve Ballmer is a old fogey that is sinking the Microsoft ship overall. Windows 8 and Surface and Windows Phone can attest to his failures as CEO to capitalize on massive growing markets. Only 1 million Surface RT and Pro tablets combined have been sold. Ballmer is old hat.

Conversely, one could also state that Steve Ballmer is a vetted and grizzled captain of industry (so-to-speak), who is well-versed in the operations, capabilities, strengths and weaknesses of Microsoft. I am not stating that your interpretation is flawed, I have however yet to hear or read of any public misgivings about Steve Ballmer's continued leadership of Microsoft.

Dijon on 30 Apr '13 said:

The momentum is with Sony at the moment: the PS3 has overtaken the 360 in global sales, the whole gaming world is looking forward to The Last of Us, they announced first -and everyone was impressed by what they announced. MS now have something to prove, which is certainly not a position anyone expected them to be in at this point.

PS3 had a terrible start, but Sony has done fantastically well to get close to where they surely would have been if they hadn't had so many self-inflicted setbacks. The specs rumours turned out to be pretty accurate with PS4, and with that in mind and given how MS has pushed the 360 as a media machine towards the end of its lifetime, I think it's a pretty good bet that what MS reveals does turn out to be a similarly specced but less gaming-optimised, multi-media box.

And for all the talk of how much games consoles can do these days, the majority of money made in the console gaming business is from games, which to me says it's smart to design a console with gaming prioritised. The kind of person who buys an Xbox 360 to be used primarily as a media device does not strike me as the kind of person who will spend upwards of £400 on an upgraded box that offers essentially the same services.

As for the whole marketing thing someone mentioned, I think it's a non-issue for Sony if MS outspends them. This isn't the presidential election, you don't win by spending more money, and Sony are well aware that Playstation has been a global household name for over 15 years. My grandmother knows what a Playstation is. The Xbox is not yet in the same position, they have favourable market share in the US and are tied pretty evenly with Playstation in the UK, but the rest of the world is PS first.

Maybe it's just the gaming media and the rivalry between fanboys, but for whatever reason the impression everyone has is that Sony and MS play the game with the explicit objective of beating the other. Maybe this is true, certainly the stakes involved are so high that we've seen them come out all guns blazing and finish almost shoulder to shoulder this gen. So the other interesting thing is where this leaves Nintendo. Nothing in the way Nintendo has acted in recent years makes me think that they are trying to beat the other two, or that they think they need to. They'll do their own thing as always. And I believe their approach could be proven prudent. We know that the development costs to make a 360/PS3 game of a standard considered par for the course is has become so great that many developers are folding. And for all the hype about the power and potential of PS4 and 720, those development costs are only going to go up. PS4 may not need solving in the same way as PS3, and development tools have come on in leaps and bounds, but making bigger worlds, with more detailed people, places and things in them will take longer and more resources. So how many more studios are surely going to fail this generation? With that situation it seems possible to me that many developers looking anxiously at the outlay required for PS4/720 development will the Wii U as a favourable destination. The first hint of this was when Capcom made the decision to shift development of Monster Hunter Tri from PS3 to Wii, because of the development costs associated with making PS3 games. And that's a major publisher with a system selling series that is guaranteed huge success in Japan and solid US sales. The Wii also got stylish, experimental titles like Madworld from Platinum and the Suda51 game No More Heroes. I don't see any reason to doubt that this trend will continue and expand with the new generation, assuming that Nintendo manages to reassure developers and publishers that Wii U has a future. A strong end of year line up with Mario Kart, Wind Waker HD, Pikmin 3 and possibly Smash Bros could well be enough to kickstart that for the Big N.

-I should add that I'm a 360 gamer who doesn't own a PS3 or Wii U, although I don't think I've been biased at all.

ted1138 on 30 Apr '13 said:

Fanboyism aside, what sells systems is games, and all it'll take to shift the next gen is a couple of mind blowing 'can't be done on anything else' type games. MS have the advantage, in that they can afford to invest more in those types of games, but as Sony have proven in the past, you don't need to have them at launch, you can just show some rendered 'footage' of them(Killzone/GT), and people will buy your system, even if they have to wait a year or three for those games to come out...

Jensonjet on 30 Apr '13 said:

Are Microsoft throwing enough cash at the next Xbox that it'll be reliable, and well made? And with all that cash they can throw at the Xbox division the last 'innovation' they came up with was Kinect! I'm not worried about next gen. This generation I started with Xbox, and moved over to Playstation. Both are second-rate gaming compared to PCs (however, that's another matter), so I base my purchase on several factors. I'm happy to stick with Sony. I've had more fun with their console than I had with Microsoft's. Each generation they produce machines of similar spec. Sure, each has their exclusives, but for every exclusive on one console there's an equivalent, or close enough copy to make up for it on the other. I'm happy for both companies to do well, and equally, if one doesn't, it makes no difference to me. I choose the best product for me that's available. I have no particular love for either corporation, and I genuinely don't care how great their profits or losses. I want cheap video game entertainment.