How the PlayStation 4 Will Compete

Signaling the pent-up demand for next-generation gaming consoles that's simmering in the market, GameStop (NYSE: GME  ) indicated that it expected demand for the new Sony (NYSE: SNE  ) PlayStation 4 to drain the supply. That's great news for the retailer, which has been struggling to keep up with changes in customer buying habits. But it's also good news for Sony, which is launching a new console into a market that's soon to be thick with second-tier gaming systems.

The competition
Until now, the gaming market has been dominated by three big players -- Sony, Microsoft (NASDAQ: MSFT  ) , and Nintendo. This year promises to be a game changer, though, as new systems like the OUYA come onto the market. The OUYA is a small console that is designed to run Android games on the big screen, and it's been generating huge amounts of buzz in the gaming world. The system is priced at around $100, including one controller, and will be available in early June.

The PlayStation 4 controller actually looks very similar to the OUYA controller, and both will support touch interaction through a small pad in the middle of the device. But apparently customers are still yearning for the benefits of the more traditional system, including the PlayStation network and huge titles like God of War and Final Fantasy, which appear only on the PlayStation.

In addition to the new small consoles, Sony will be contending with its archrival, the Microsoft Xbox. The announcement for the new Xbox is rumored to be coming in early June, at this year's E3 convention. Analysts are predicting that the new machine will also have a late 2013 launch date, putting it in direct competition with the PlayStation 4. Since there are almost no details about the system, GameStop has not made any official announcements, but Xbox 360 consoles were sold out or on backorder for months after the launch in 2005.

PlayStation 4 specs
Details of the PlayStation 4 continue to emerge, but we know that it's going to have some impressive new rendering capabilities and touch interaction. That's not a huge leap forward, but Sony is banking on the demand for its exclusive titles to make up for the small upgrades in hardware. One of the biggest advantages that the new PlayStation will have comes from Sony's active courting of independent developers.

That's taken action away from Microsoft, who initially had formed strong bonds with those same developers. As video game analyst Ben Kuchera pointed out, developers working with Microsoft has suffered recently "due to patch fees and the requirement to work with large publishers, and the abundance of ads on the Xbox dashboard is hurting the discoverability of smaller games." That has given Sony an easy win, and should help the PlayStation compete with the indie-focused OUYA.

In short, the new PlayStation 4 looks like it's going to make a splash with gamers and retailers. GameStop has said that the first half of the year is going to be soft, but expect good things to follow from its work with the PlayStation at the end of 2013.

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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 02, 2013, at 12:09 AM, klm82006 wrote:

    The Ouya will cost $99.99 with one controller not $150.00 you people need to get your facts straight.

  • Report this Comment On April 02, 2013, at 6:35 AM, chemman65 wrote:

    The only people that think the OUYA and the android consoles are going to put a dent in the big 3's bottom line are those that don't know gaming.

    For perspective, it's like saying the muscle car market is going to be damaged by the hybrid market. Two completely different buyers in two different markets. The only thing in common is games and cars.

  • Report this Comment On April 02, 2013, at 9:11 AM, TMFRedRam wrote:

    klm82006,

    Sorry about that, I'll get that changed. Apparently my reading comprehension took a coffee break.

    Andrew

  • Report this Comment On April 02, 2013, at 2:17 PM, khadersami wrote:

    One comment I would make is that your comment "the PlayStation 4 controller actually looks very similar to the OUYA controller" might be confusing to readers that are not familiar with the gaming market. It would be more accurate to say that the OUYA controller looks very similar to the PS3/(unveiled) PS4 controllers, which are commonly referred to as DualShock3 and DualShock4, vs the other way around. Naturally, I'm sure these controllers in turn have borrowed and been inspired by previous generations of controllers from Sony, MicroSoft, Nintendo, Sega, etc...

  • Report this Comment On April 02, 2013, at 4:39 PM, TMFRedRam wrote:

    Thanks khadersami, that's a great point. The PS controller came first, and the theoretical PS4 controller looks very similar to the PS3 controller but with a touch pad in the middle of it. That's very close to the OUYA layout, which was doubtless inspired by the PS.

    It's evolutionary, isn't it? Looking through the years, you can still clearly see an original Nintendo control pad in the new designs, and that was merely a reflection of the layout on arcade machines.

    Cheers, Andrew

  • Report this Comment On April 03, 2013, at 2:21 PM, ewro wrote:

    The nice thing with PS4 is you will be able to play download titles like what the OUYA will offer thru the Playstation store + games that offer much fuller experiences

    OUYA will be too limited.

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