E3 2014: Microsoft vs. Sony -- Round 2

Sony ate Microsoft's lunch at E3 in 2013; will the tables turn this year?

Jun 11, 2014 at 10:05AM

It was easy to see who the winner was at last year's E3; Sony (NYSE:SNE) wiped the floor with Microsoft (NASDAQ:MSFT) as both companies introduced their new consoles to the gaming public. Every gamer in the Electronic Entertainment Expo knew that Sony had come out of the gate strong, and the company's momentum has yet to stop.

So is E3 2014 Microsoft's chance to turn the tide? More importantly, is it already too late? The only way to find out is to examine each company's respective press conference and to check out what they each have to offer on the showroom floor at this year's E3.

A tale of two conferences
Microsoft kicked off a slate of press conferences on Monday by refocusing itself on the one group that really matters for a gaming company: gamers. It's the hardcore gamers who are willing to shell out the big bucks at the beginning of a console cycle, and Microsoft succeeded in alienating this group before it even released the Xbox One last year. Now it's doing everything in its power to win them back, and it showed at this year's press conference.

Microsoft kept things tightly focused on its games; there was no mention of the Kinect, which had been a centerpiece in last year's presentation. There was also barely anything said about Xbox Live, or about how gamers no longer need to be Xbox Live Gold members if they want to watch Netflix and other services on their Xboxes. Instead, Microsoft hit the audience with game after game -- Call of Duty: Advanced Warfare, Assassin's Creed: Unity, Halo, Tomb Raider, and more. The list was impressive, but there's one issue: The only game Microsoft showed that's both an exclusive for its platform and definitely going to be a hit was Halo 5. If that's all the company has in its back pocket, it doesn't matter how many gamers it impresses -- those gamers can just as easily buy their games for the PS4.

Speaking of which, Sony took a page out of Microsoft's book circa E3 2013 and presented not only games but new features for its console as well. The two most talked about features were the PlayStation Now, a streaming game service users can play PS3 and PS4 games with, and PlayStation TV, a $99 streaming device that lets you play games on a separate TV using only one PS4. It's the PlayStation TV that should really catch investors' attention, as the device has the potential to act almost like Amazon.com's Fire TV and could be a nice add-on for PS4 owners. Ironic that this device was so well received by gamers while the Kinect, Microsoft's $100 add-on for the Xbox One, was roundly derided and eventually detached from the Xbox One.

Showroom floor
As important as it is for the console companies to make a good first impression with their press conferences, it's much more important for gamers to be impressed when they get their hands on the products. That's why I paid close attention to what Sony and Microsoft were focusing on with their booths at this year's E3.

The Microsoft booth followed the company's theme from the press conference -- crammed with games. Immediately upon entering the booth, you were met with rows upon rows of gamers playing Sunset Overdrive and Forza Horizon 2, both Xbox One exclusives. There are, of course, various other games packed into the booth, but Sunset Overdrive and Forza are the only big Xbox One exclusives to be seen -- the rest can be played on a PS4 as well.

This is a problem for Microsoft. After all, if Sony has sold 2 million more PS4's than Microsoft has sold Xbox Ones, what's to stop more gamers from purchasing their games on Sony's console? As great as it is to see Microsoft return to form, the company needs to begin presenting gamers with solid evidence that they need an Xbox One, and Sunset Overdrive isn't going to cut it.

Meanwhile, Sony's booth felt a lot less cramped and a lot more diverse. The company had plenty of games on display, sure, but what caught the crowd's collective eye was the rows of Project Morpheus kits being demoed. Project Morpheus is Sony's answer to virtual reality, and through the use of a headset and the PlayStation Move controllers, Sony puts gamers right into the action. It was pretty cool to see people turning this way and that as they played, and the games Sony was using in its demonstration looked like fun. Right now it's just Sony and Facebook's Oculus vying for VR supremacy, and Sony's Morpheus certainly looks like its catching people's attention.

And the winner is ...
In fact, it seems as if the audience at E3 is paying close attention to Sony. Gamers liked the way Sony handled its unveiling of the PS4 last year (especially the fact that it was $100 cheaper than the Xbox One at the time), and they seemed to like the way Sony is branching out from its core gaming crowd. Between Now, TV, Morpheus, a slew of indie games and some exclusives to boot, Sony appears to have gotten a strong start to E3 2014. Meanwhile, Microsoft played catch-up with its press conference, and unless it can find a better reason for gamers to buy an Xbox One than some so-so exclusives, it'll keep playing catch-up in sales as well.

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Mark Reeth has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Apple, Facebook, Google (A and C shares), and Netflix and owns shares of Amazon.com, Apple, Facebook, Google (A and C shares), Microsoft, and Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

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Jun 12, 2015 at 5:01PM

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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