Sony Won the Battle, but Microsoft Can Still Win the War

Sony (NYSE: SNE  ) is ripping a page out of the Apple playbook, attacking Microsoft (NASDAQ: MSFT  ) to make a point.

It may not have hired Justin Long and John Hodgman to roll out "I'm a Mac" ads, but it's doing something even more sneaky by hitting Mr. Softy below the belt.

Sony has been the unexpected star of this week's E3 expo. It not only moved to price its upcoming PS4 for $100 less than Microsoft's Xbox One, but it's laying into Microsoft's requirements that gamers perform periodic online check-ins to validate game ownership. It's also making it easier for gamers to trade in used games.

"PlayStation 4 won't impose any new restrictions on used PS4 games," Sony Computer Entertainment of America head Jack Tretton said to thunderous gamer applause.

"When a gamer buys a PS4 disc, they have the rights to use that copy of the game," he continued. "They can trade in the game at retail, sell it to another person, lend it to a friend, or keep it forever."

More thunderous applause.

GameStop (NYSE: GME  ) shares rallied -- sending the shares 8% higher on Tuesday -- before giving back nearly half of those gains on Wednesday. GameStop is the biggest beneficiary of a vibrant used-game market, and Sony's news was sweet.

At the moment, it seems as if Microsoft's Xbox One is toast. Sony just delivered what gamers want to hear. However, isn't Microsoft delivering what developers want to hear?

Requiring online connections will make it easier to sell games directly to players. The same Web-tethering requirement will make it easier to sell virtual items and additional levels. The ability for publishers to dictate whether or not they want their games to be resold will result in no lost revenue to secondhand transactions.

Gamers will want Sony to succeed this Christmas. Publishers and developers will want Microsoft to be the victor.

The normal inclination is to hand the crown for the next generation from Microsoft to Sony. Gamers are the ones who buy the systems, and they are cheering Sony on this week. However, we really haven't let publishers cast their votes.

What if publishers price Xbox One games at lower price points than PS4 titles? It can happen. In fact, it should happen. If Xbox One discs are less valuable to gamers because they lack trade-in value, then the perceived value will be lower. Why can't software companies pass on those savings to the gamers in a move that will shift the value proposition of the Xbox One console itself?

What if they decide to only put out Xbox One versions of some titles? Each platform has its exclusives, but what if publishers begin holding back on one platform to favor the one where the margins will be higher?

This week was a battle in a war that won't be decided until the holidays. Sony won the battle, but Microsoft has too big of a lead in the current console generation to assume that it will lose the war.

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  • Report this Comment On June 13, 2013, at 10:03 PM, JesseBakerBaker wrote:

    Get freaking real. You SERIOUSLY EXPECT the publishers, after single-handedly killing the used game market for the XBox One to follow that up by freaking LOWERING THEIR PRICES OUT OF THE GOODNESS OF THEIR HEART? Especially since they are the ones who pressured Microsoft to eat the proverbial gun and kill themselves with this BS series of suicide moves to doom the XBox One before it even comes out in stores?

    They will charge an arm and a leg for their games and more than likely UP the price to make up for the lack of sales for their XBox One games, not lower the prices.

    This is what the game publishers, who release unfinish games and force you to buy DLC to get the crap that should have been in the game itself when you buy it, who have ruined games with micropurchases designed to bleed players of cash, and who have blamed the used game market as their all purpose scapegoat for making crappy games no one likes. They WANTED the crap that Microsoft has laid out and no way will they do crap like undercharge for their games. They WANT to punish consumers and gouge them, because they are that bad as far as slicing off their nose to spite their faces in the name of short term profits....

  • Report this Comment On June 13, 2013, at 10:17 PM, McShabadoo wrote:

    Only shot Microsoft has is to make an incredibly large exclusives library that people just can't say no to.

  • Report this Comment On June 13, 2013, at 10:39 PM, ShooterMcGavin7 wrote:

    "Why can't software companies pass on those savings to the gamers in a move that will shift the value proposition of the Xbox One console itself?"

    Because consumers also infer quality from prices. For example, when Wii games were priced below equivalent PS3/Xbox360 titles, gamers assumed that they were lower quality on average. And they were right.

    If one priced identical $49 Xbox v. a $59 PS 4 titles, on average consumers would assume the Xbox title has something wrong with it. Your argument also fails historically, consider Xbox live, for example.

  • Report this Comment On June 13, 2013, at 10:39 PM, LucinaStar wrote:

    The person who did this article must be a Xbox fanboy. If Microsoft doesn't change some of controversial policies with the XboxOne then they have lost the war. The only other way to still stay in war is if they have lots of must buy exclusives.

    However, their lack of variety and trend and to please the causal market more shows me that XboxOne will probably end up being like the first Xbox.

    In fact I really think PS4 might be the next PS2 in terms of gamer and developer support.

  • Report this Comment On June 13, 2013, at 10:41 PM, Sdiver2489 wrote:

    Microsoft has too big a lead in the current generation? Since when? Last console sales numbers for total consoles sold I saw showed the consoles tied.

    Add to that that microsoft CHARGES for gamers to use apps such as Youtube, Netflix, etc and you have a company that obviously doesn't care about the consumer. Consumers decide which console wins...not the publishers. Publishers produce games for consoles that sell well, they want to cater to the largest market.

    And publishers pricing XBOX games lower? That isn't happening. No way.

    Microsoft has angered the gaming community and word of mouth is one hell of a powerful form of "social media". Good luck recovering.

  • Report this Comment On June 13, 2013, at 10:42 PM, normgarry wrote:

    FACT: there is no winner or loser. Microsoft sold roughly the same number of 360s as SONY sold PS3.

    The release schedules are all controlled - and far and few between. Therefore, many gamers end up buying both systems over time.

    the exclusives force you to buy in a specific direction and since most of these games don't offer addictive or even COMPLETE multiplayer experiences without DLC, many buyers end up buying the intellectual property they want rather than buying "the system".

    Look at the titles on PS3 and XBOX360 right now. They are literally the same games.

    Developers don't want to develop on one system when they could port a game to the other and make MOAR MONEY.

  • Report this Comment On June 13, 2013, at 10:45 PM, poornamelessme wrote:

    Motley Fool isn't a fanboy. They simply read like paid advertisements.

    This line gets me:

    Microsoft has too big of a lead in the current console generation to assume that it will lose the war.

    The only problem is, Xbox 360 is currently in 3rd (last) place in worldwide console sales for this generation. And Sony is widening it's lead... and it wouldn't surprise me if in 5-10 years it gets close to Wii numbers. Nintendo is of course #1 this generation.

    So I have no idea what lead Microsoft has, when they are behind in worldwide sales ... now.

  • Report this Comment On June 13, 2013, at 10:46 PM, Capivara wrote:

    D.O.A.

  • Report this Comment On June 13, 2013, at 10:50 PM, VegasSmitty wrote:

    Microsoft won by a landslide, compare net worth of both.

  • Report this Comment On June 13, 2013, at 11:09 PM, bluegill88 wrote:

    "What if they decide to only put out Xbox One versions of some titles? Each platform has its exclusives, but what if publishers begin holding back on one platform to favor the one where the margins will be higher?"

    Bingo

  • Report this Comment On June 13, 2013, at 11:10 PM, LucinaStar wrote:

    @normgarry: PS3 ended up selling more systems than the 360. Also umm the first Xbox had plenty of multiplatform titles as well yet the ps2 still WON that console war.

    The fact that the ps2 sold so many consoles is also what attracted developers and publishers to make their games exclusive for the ps2. They don't want to continuously waste time and money on a console that isn't making that much money.

    Also you're wrong about ps3 and 360 titles being the same games. Most multiplatform games are better on 360. The only time ps3 was better or the same as 360 is when the developer used the ps3 as the lead platform.

    @poornamelessme Wasn't talking about Motley Fool as a whole but specifically the writer. Clearly he some bias when comes to the Xbox.

  • Report this Comment On June 13, 2013, at 11:20 PM, DonkeyJunk wrote:

    "The same Web-tethering requirement will make it easier to sell virtual items and additional levels."

    I remember when you didn't have to pay extra to get the complete content for a $50 game. This is why people are rotating out of consoles and into mobile.

  • Report this Comment On June 13, 2013, at 11:29 PM, jkdevore wrote:

    I can tell you exactly what developers want. Money. So if a console is sitting in the hot seat with gamers and not selling then "developers" won't continue supporting that console as much. They will go where the gamers are flocking to. I'm going to say that Sony will have this generation more easily than Microsoft but Microsoft will probably be ahead of Nintendo if the Wii U doesn't get more support than what it has right now.

  • Report this Comment On June 14, 2013, at 12:00 AM, user78415 wrote:

    no sony won the war way back from ps1 ps2 and ps3......then ps4.

    PS3 ALREADY OUTSOLD 360 WW BY 100K

    AND PS3 WILL OUTSOLD WII IN EUROPE BY 3M

    360 ONLY WON US ONLY

    SEGA SAID THAT IF YOU DON'T HAVE WORLD WIDE SALES THEN YOU DON'T HAVE CONSOLE TO SELL ANYMORE..

  • Report this Comment On June 14, 2013, at 12:21 AM, locsphere wrote:

    I am tired of Microsoft's anti consumer policy and this we're listening nonsense.

    Here is my petition! I am working on rewording it so it is shorter!

    https://www.change.org/petitions/demand-xbox-one-do-away-wit...

  • Report this Comment On June 14, 2013, at 12:21 AM, poornamelessme wrote:

    @LucinaStar

    Yep, I know he does sound biased like a fanboy. But I meant ... Motley Fool sounds like a fanboy most of the time with many their articles, on various topics ... as they read like they either want to move stock prices one way or another, or were paid by a company to run an article. Facts and common sense doesn't matter to them.

    As for publishers possibly withholding titles, or making them exclusive for xbox ... yes, it's a possibility. But keep in mind it takes 1-3 years to crank out a decent title. Whatever is in development now, will still be released on both platforms (not counting normal exclusives). And if PS4 sales dwarf Xbox One a couple of years from now, it won't matter if Microsoft is more publisher friendly. Publishers would be a 'fool' to not publish for a system with the most marketshare.

    It's not even clear how much of the profit on used games (through whatever few retailers Microsoft allows) even goes back to the publishers, or goes into Microsoft's pocket.

    Anyway, as has been stated here, Microsoft sort of killed themselves with all of their idiotic restrictions and pricing. All is not lost, as they can change their policies before release, but right now it looks bad.

    And before anyone starts any fanboy claims, I own an Xbox 360 currently and don't even own a PS2 or PS3. Yet if things remain as they are, my next system would be a PS4.

    I am now awaiting the next Motley Fool article a few weeks from now, stating how Sony has won the console war, after Sony pays them for running an advertis... I mean article.

  • Report this Comment On June 14, 2013, at 12:22 AM, Zatannux wrote:

    "However, isn't Microsoft delivering what developers want to hear? Requiring online connections will make it easier to sell games directly to players."

    You do understand that you will be able to make purchases/install games and updates on to your PS4 from your smart phone, tablet, and you can buy PS3 stuff on your computer now. The difference is Micro$oft is forcing you to do so! These "experts" and fanboys are bending and twisting the truth to help them coop with the FAILbox One.

  • Report this Comment On June 14, 2013, at 12:43 AM, butlerdidit82 wrote:

    The Motley Fool owns shares of Apple, GameStop, and Microsoft. That about sums up the validity of this article.

  • Report this Comment On June 14, 2013, at 1:24 AM, Junito25 wrote:

    for those of you you have never been xbox fanboys lack the necessary right to judge before saying anything to insult Microsoft and its creation. ive played both systems and it seem to me that the xbox has a better protect ted server than playstation considering that the sony's servers were hacked and had to compensate their members by giving them free games instead of the money that they lost from their personal info getting hacked and stolen.with the continuous updates of the new xbox one the system updates periodically to prove the gamer's legitimacy. this is something that is very important nowadays. i have played both systems and while i am not trying to throw the ps4 to the floor i believe that the xbox will have the potential lead over time.

  • Report this Comment On June 14, 2013, at 1:32 AM, Wingeddamnation wrote:

    Hahahaha. It's the publishers huh? If the publishers are saying they are screwing MS over, why not Sony? Oh, it's because since Xbox kids who are going to buy it will drop $60 on a game they aren't going to own. Oh, I got an even better one that MS can't even fix; Once the servers go down for the Xbox One console, what are you gong to do with all the games you 'rented' that you so wanted to play Multi-player with your friends once the Xbox One servers go down? Pretty much you own a digital pile of nothing. Good luck trying to convince me. No matter what MS does to redeem itself the Kinect thing is the final straw. "Yeah, let me connect all of my other digital things onto the Xbox One". Not even them cutting their price by half will convince me. They aren't getting my money but to all his own.

  • Report this Comment On June 14, 2013, at 2:47 AM, Capivara wrote:

    Microsoft delivering what developers want to hear?

    A) Sony has bent over backwards to change its reputarion among developers

    B) The most important thing developers/publishers want is an increased installed base

    Advantage Sony

    Microsoft has two options

    1) untether the kinect to the console (heres a novel idea, make a great product and let people choose to use it instead of making it feel like eating vegetables) and eliminate the online connection requirement (again, make a compelling experience not a forcibly compelled consumer)

    2) Drop $15 - $20b and buy EA, TTWO and Ubisoft, seems like a very expensive alternative to #1 but its not like MSFT isn't willing to make it rain to get what it wants.

  • Report this Comment On June 14, 2013, at 3:02 AM, Risky88 wrote:

    MSFT is all about nickel and diming the customer

    360 has always been a TOTAL ripp off

    pay just to play YOUR game online and the cheapest system they provide is 100 bucks less but only 4gbs of hard drive, yeah you can do a lot with that UNLESS you UPGRADE your HD.

    list goes on and on

    common sense is not so common

  • Report this Comment On June 14, 2013, at 3:21 AM, Ratacon wrote:

    But...But...Xbox One, lets you watch television. Not only that, but it makes a great door stopper. Plus I can put my coffee cup on top of it and use it as a coaster. So...Go ahead and buy your PS4, with all your cool tradable games. And enjoy your many hours of great fun with friends. When you are all distracted and a thief breaks into your home, then the jokes on you. There won't be any fun in my house with the, Xbox One. So I will always be on alert. I can at least throw my Xbox One at the thief, Knocking him out, and saving the day. Good bye Sony and Hello to Xbox One...Thank you Microsoft, for giving me a peace of mind.

  • Report this Comment On June 14, 2013, at 7:22 AM, GAprof wrote:

    Microsoft needed to understand something: Sony is not going to be outspent.

    1. MS used low power GDDR3 RAM, Sony used GDDR5, TWICE the bandwith/ power.

    2. MS's TV and background ads they put on their console, plus the other "features" no one wants (yeah, why use a remote and technology my TV company spent millions developing) Use over 2 gb of RAM. that's more than 4x the current memory of the 360, just to get it to run.

    3. THe PS4's processor has twice the processing cores that MS put in their Jaguar chip. This is laughable.

    4. Used games- deal sealer.

    MS stock relies on much more than Gaming, as does Sony, so I wouldn't be freaking out. I might even buy some on the low in a year or so. Perhaps MS needed better people in development, because the XBOX 1 is going to tank.

  • Report this Comment On June 14, 2013, at 12:38 PM, LucinaStar wrote:

    @Junito25 When my sister had gold we started to get magazines and dvds sent to out house that we never signed up for. We let the subscription run off and they stopped.

    Not to mention their are plenty of cases of people saying their accounts were hacked on gold. The issue that happened with psn was only made big news because it affected everyone at the same time and Sony didn't inform people immediately.

    Also umm there really haven't been lots of reports of anyone losing money (so why Sony compensate everyone like that when a lot people also didn't even have their CC info on file) so now you're just making up stuff.

    If you think that one incident is going to make lots of people buy the xbox one then I'm sorry but I don't care if you "played" both systems. You're still a xbox fanboy. Many people won't be able to even get xbox one because of 24 check.

    Doesn't matter "very important" nowadays what's the point of owning the system if you can't even play your games due to lack of internet?

  • Report this Comment On June 15, 2013, at 1:08 PM, DoubleAughtCode wrote:

    I will first apologise for the length but there is a lot of SPIN being taken as truth on many facets of BOTH consoles.

    Okay... lets set EVERYTHING striaght.

    First off, did anyone listen to the PS4 announce in March... a specific feature that a very creepy looking person laid out will make it so other gamers know your REAL NAME and REAL AGE and REAL LOCATION by making it connect to your social media sites. While this may be fine for some, its a dangerous ground for any under age users, as now they will be broadcasting to any adult predators their age, name, and location. Yet SNE will have you beleive the Kinnect is made by the CIA and will ALWAYS be monitoring everything you do... NOT SO.

    Now, as I promised, I went back and reviewed al;l statements by both companies on their conosles and here is the PLAIN TRUTH OF IT ALL.

    The Playstation 4 WILL HAVE TITLES that do require an internet connection just like the XBox. The reason that MSFT is stating that certain games will require this connection, as Phil Harrison said certain single player games would not, is not the fault of Microsoft. Im thankful MSFT has chosen to let us know the current direction many developers are taking.

    It is the fault of the game developers. Phil Harrison made this clear as well:

    "So, there is a lot of anxiety about “what if my Internet connection goes down” and you don’t have connectivity for a period of time. There are a host of features which will be usable without an Internet connection — watching movies, playing certain single player games… ALL OF WHICH WILL OPERATE OFFLINE. We expect most of the more advanced experiences, like online multiplayer games, or games which have a lot of connected features… those games won’t operate if you don’t have an Internet connection. We designed the system to take advantage of a connection to the cloud, and all that that means. But no, it’s not required that you are connected all the time, every second of every day."

    As you can read, the SINLGE PLAYER GAMES that will require that 24 hour check-in that "...have a lot of connected features..." Does anyone truly think that none of these SINGLE PLAYER GAMES are not cross platformed and the SAME REQUIREMENTS will exist for the game, as its a developer deal not console manufacturer, on the Playstation 4? Of course they will... the games connected features will be intergral to the game itself. This is the way games are swinging,; to allow connected social media, sharing , etc. features. Its not about MSFT or SNE.

    As far as pay to play online... how many of you missed the bottom statement when SCEA announced details of the NEW Playstsion Plus program? It made it clear that the ONLINE MULTIPLAYER FACET of the Playstation WILL BE A REQUIRED PAID service, via PS Plus, to play online (with the PS4 but Im sure it will carry to the PS3 as the LV0 exploit is the reason the PS4 WONT be BC... see bottom of post). So now both have entered an equal stage in that matter, but the paid for network should improve game play security on the SCEA console.

    Last, I want to cover the STUPID, STUPID, STUPID rumor that I can only guess Sony paid to have passed around like candy, as it was the lamest rumor Id heard in a LOOOONG time. Its about used games. Its like Sony pushed this out ther just for the appluase for something that IS NOT under their control in the least. As well, XBox (MSFT) stated that they are attempting to work out a place we can even trade/sale/buy 'used' digitgal media.

    So, in closing, we have seen that BOTH the XBox One AS WELL AS the Playstsion 4 will have some single player games, that have a lot of connected features, that REQUIRE an internet check-in. Its not the consoles choice... ITS THE DEVELOPERS. Secondly, both consoles are now going to be requiring one to pay2play online... being an avid COD'er on the PS3... I cant be happier that the security will get a bit better. And lastly, bothg consoles are still going to allow used games to be played, in fact SNE is the only company with a patent on tracking/locking used games so if any company DID do something so stupid, it would be the company with THE ONLY patent able to do so. Microsoft is actually trying to figure out how to make a marketplace for even our used digitial content... thats pimpn right there.

    All in all for playability both consoles are on EQUAL ground and have manipulated alot of people on these facts, from nuubs to seasoned gamers. But, unfortuanlty for Playstaion fanmans like me, the PS4 is no more than a stripped down AlienWare gaming machine without the freedom of a computer as well. The XBox One, with its voice and jesture operatibility and enhanced smart-glass, is an honest NEXT-GEN platform that will allow us to do many of the things we normaly need three or more devices to accompish.

    My only happiness is that I wont be throwing away all the games I bought for my PS3, as they have ditched BC completly on the PS4, when I get the XBox One finally give my PS3 a neighbor on the shelf. The only OUTDUELING Sony has done is with pure SPIN... and they can keep that award, at least XBox gave us real deets and introduced something that is from tomorrow.

    -> GOSUB NOSPINZONE

    -> print TURTH, HONESTY, INTEGRITY

    -> RETURN

    ***NOTE ON B/C: As an EXTREME AMD FAN I could not be more upset with BOTH companies in ditching B/C. AMD, for several years now, have a layer called the HARDWARE VIRUTALIZATION LAYER. It has been poroven to be able to emulate every envirmonet from Unix Box to PowerPC to a MAC. For either company to blame architecture change for any of this is an insult to the good name of AMD. They need to be honest that its about their kernels being broken open to the core and their lack of willingness to create Antivirus software for your console. I encourage anyone challenging this statement to go and FULLY educate themselves on the AMD HARDWARE VIRTUALIZTION LAYER.***

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