Why Microsoft is Afraid of Sony
March 25, 2009 by Otter
The Xbox 360 is currently second place in the console wars race. Microsoft, however, seems more concern about the Playstation 3 than the leading Nintendo Wii. They even went so far to discredit the Nintendo Wii as not being in the same market. So why is Microsoft so afraid of Sony and the Playstation 3 despite the comfortable lead? Let's take a look at several factors.
Context
The Xbox 360 had a year head start on the Playstation 3. As a result on being on the market earlier, Microsoft was able to get a first-mover advantage and got a nice lead before the Playstation 3 launched. If Sony didn't delay the Playstation 3, the situation would have been a whole lot different.
This last part is pure speculation and cannot be stated as fact.
Sony's high-definition video game system would have outsold the Xbox 360 (even with the higher price tag) based on hype alone. Not to mention that many of the games the Xbox 360 is getting might have become Playstation 3 exclusives. In reality, the Playstation 3 is selling about even with the Xbox 360 if you don't account for the year head start (even more in Europe). Furthermore, the Playstation 3 cost a lot more and had to face stiffer competition than the Xbox 360 did when it launched. As much as Microsoft like to brag about beating Sony, the difference between the two isn't all that great if you take in the context of the situation.
There is no "context" to take in. "Hype" cannot be quantified. The 360 isoutselling the PS3 worldwide. Period. And the Wii outsells them both. These are facts, and only the facts. Besides, this ignores the fact that the Wii costs more than the cheapest 360, was released a year later, and still outsells the 360 and the PS3. Headstart/more expensive just doesn't hold that much weight.
Grand Scheme
The Xbox 360 is outselling the Playstation 3 handily. However, Sony has more than one video game system. The PSP is selling solidly while the Playstation 2 is maintaining a steady pace. Therefore, Sony actually has a bigger market share than Microsoft. So while Microsoft only likes to concentrate on winning the battle against the Playstation 3, they lack the punch to compete against Sony (and Nintendo) in the grand scheme of the gaming industry.
The highlighted part is incorrect. Please refer to this.And, where is Sony's share of the PC gaming market in the "grand scheme of the gaming industry"?
First-Party Support
Microsoft is growing heavily reliant on third-party support. They recently shut down Ensemble Studios (Halo Wars), let Bungie (Halo 3) go independent and did not attempt to buy Bioware (Mass Effect). Since third-party gaming companies can switch alliances at any time, Microsoft is walking a tight rope.
"Walking a tight rope"? Really? They have the highest software attach rates. Just look at all the TP exclusives Sony lost this gen. A developer would be stupid to drop MS and make an exclusive alliance with PS3.
Sony, on the other hand, is quietly building up the biggest first-part development core in the gaming industry. Their studios span all three major regions (Japan, North America and Europe) and feature tremendous talent.
Sony needs to ramp up first party development, as they have lost most of the advantages they had last gen with TP exclusives.
First-party Playstation 3 games are gaining praise and popularity. With more third-party opting to release multiplatform games, exclusive games on the Xbox 360 and Playstation 3 may ultimately determined the battle between the two high-definition systems. With less fire power, Microsoft should definitely be concern about Sony.
This I would somewhat agree with. Although, for multis, the 360 still has the higher install base, so it is still likely to sell more than the PS3 for the same games (not counting for major graphical/content differences).
Free Online
Finally, Xbox Live paid subscriptions are one of the biggest revenue streams on the Xbox 360. The Playstation 3 offers free online play over the Playstation Network. Since the differences between the two networks are superficial, Microsoft should fear for their pockets if the Playstation 3 ever caught up to the Xbox 360 in sales. Not only will they lose market share but they will also lose out on extra revenue since many people will rather pay online for free than pay for it.
Owning both systems (PS3 and 360), at the moment, I would say that the differences go beyond "superficial". The last count was 17 mil gold users for Live. If the differences were that "superficial", this number, in theory, should be much much lower. And, it is obvious that the people who maintain the PSN are not doing their jobs for free. It is safe to say that Sony is including the price of the maintainence in the price of every PS3 sold. PS3 owners who don't utilize the service fund those who do.
I do think that MS will lower the price of Live sometime soon, though. And, I think that for their next console they may not charge a seperate "fee" for Live, but include it in the price of every console. Then again, Sony may seperate out the fee from their next console to make it cheaper. Who knows?
The Xbox 360 is only dominating the Playstation 3 in North America. The two systems are just about even in Europe while the Playstation 3 is leading handily in Japan. Because of that and the above factors, Microsoft has every right to be concerned about the Xbox 360 lead over the Playstation 3.
Given the measly performance of the original Xbox in Japan, and Japanese indifference to non-Japanese electronics, the 1 mil mark for the 360 is impressive. Yes, still only 33% of the PS3's sales, but for Japan very good.
WardCleaver02
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