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Every few years, an estimated 2.7 billion people wait excitedly for the newest generation of video game consoles to be released. Reflecting their competitive strategy, two of the biggest brands in this market, Sony’s PlayStation and Microsoft’s Xbox, release new console models in close proximity to each other, so dedicated gamers know they will have new options, regardless of which brand they tend to prefer. The moment for the introduction of the newest generations—the PlayStation 5 and Xbox Series X—is drawing nigh, but the stakes and the competitive environment are a little different this time around.

Both releases are slated for early November, which reflects a traditional approach, in that it is early enough to allow holiday shoppers to get excited and make the purchases for themselves or loved ones. But even before those introductory dates arrive, both Sony and Microsoft have cautioned that they anticipate insufficient stock. Disruptions in their international supply chains, due to COVID-19, mean that they are unlikely to be able to meet consumer demand. They know it in advance but are moving forward with the releases, hoping at least to keep some gamers supplied and that the rest will remain excited enough to wait a bit to receive their consoles. At the same time, gamers still stuck largely at home due to the pandemic are already expressing impatience, such that supply gaps might be a particularly stressful problem this year.

Other differences reflect some divergences in the strategies that each company appears to be adopting. Specifically, Sony is determined to leverage brand loyalty, earned through the popularity of previous PlayStation generations, and its strong brand awareness make the PlayStation 5 the most appealing console. In addition to highlighting the cool, futuristic design, it is strongly marketing the exclusivity of the games available only through its platform.

Although Xbox has the popular Halo franchise, the release of the newest installment of that series has been delayed, such that it will not be available in time for the holidays. While noting disappointment with the delay, Microsoft also has adopted a different stance, emphasizing the availability of games across various devices. Therefore, it asserts that the timing of the new console introduction does not have to match that of a new Halo chapter. With the apparent belief that gaming is becoming an increasingly mobile market, it hopes to attract gamers to subscribe to its Xbox Game Pass service, which gives users access to a vast library of games, or else its new xCloud service, which allows them to play games on their Android devices.

That is, even as it invests in developing a new console, Microsoft is acknowledging and supporting users’ potential preference to play games on old consoles, phones, and computers too. It has committed far more to building cloud-based access than Sony has. In turn, analysts predict that even if Sony might continue its dominance upon the release of the new generations of consoles, due to the popularity of its PlayStation and players’ loyalty to the brand, its old-school thinking may leave it at a disadvantage in the long term.

Discussion Questions:

  1. How do Microsoft’s and Sony’s strategies for introducing their new consoles differ?
  2. Which would you purchase? Why?

Source: Kellen Browning, “Coming this Fall: The Return of the Video Game Console Wars,” The New York Times, September 15, 2020