10 Million Reasons the PlayStation 4 is an Official Success

Sony's PlayStation 4 is selling like gangbusters. Source: Sony.

There seems to be no end to the massive competition between Microsoft's (NASDAQ: MSFT  ) Xbox One and Sony's (NYSE: SNE  )  PlayStation 4. The two consoles launched around the same time late last year, offering similar features but creating separate loyalties among gamers.

To prolong the warring, Sony announced in a press conference at the Gamescom conference in Cologne, Germany, this week that it has sold 10 million PlayStation 4 consoles since its launch. That's a bit of bad news for the Xbox One, which has faced a series of stumbles before and after its launch.

Xbox One. Source: Microsoft.

Keeping score
PlayStation 4 worldwide sales nearly doubled since February, when Sony reported 5.3 million sales. The company made sure to note the 10 million number is actually sell-though transactions with customers, not just shipments.

Though Microsoft held a press conference about the Xbox One this week as well, the company didn't disclose any console sales numbers. The most detail the company has given recently came in a blog post last month; Microsoft said Xbox One sales doubled from May to June, but didn't provide concrete sales numbers since launch. Microsoft said back in April that it had shipped about 5 million of its new consoles, and in its fiscal fourth-quarter of 2014 it shipped 1.1 million Xbox One and Xbox 360 consoles.

What's impressive about Sony's latest numbers is that the PS4 needed less than nine months to hit 10 million sales, while the previous-generation PlayStation 3 took 13 months to reach that milestone. The strong sales have helped Sony outsell the Xbox One for six consecutive months.

More than just numbers
The recent PS4 sales milestone is more than a victory for Sony, it's yet another blow to the Xbox One -- which has had anything but a smooth launch.

Before the Xbox even hit the market, Microsoft angered gamers with the console's digital rights restrictions, which would have allowed users to give their games to other players only once, and only if those people had been part of their Xbox friends list for at least 30 days. The company also nearly required the console to be connected to the Internet at least once every 24 hours.

The gaming community's outcry led the Xbox team to reverse the restrictions before the Xbox One launched. Last summer, Don Mattrick, then-president of interactive entertainment business at Microsoft (and now CEO of Zynga), wrote a blog post outlining how users would be able to share games the way they had with the Xbox 360 and that an Internet connection would not be required.

For its part, Sony was mainly quiet about any digital rights management or always-on Internet connection plans it did, or didn't, have for the PS4. Either way, Sony avoided the public controversies while Microsoft was wading knee-deep in them.

Source: Sony.

But while all that was cleared up before the PS4 and Xbox One launched, there was still one glaring difference between the two devices: the price. Sony's console sold for $399, while the Xbox One cost $499. Sure, Microsoft's device came with the motion-sensing Kinect, but the extra $100 proved to be yet another problem the console didn't need. In June, Microsoft unbundled the Kinect from the Xbox One and lowered the price to match the PS4.

The price cut is likely the reason why Xbox sales doubled from May to June, and could mean the console might catch up to PS4 sales, assuming it is still behind.

Console and game revenue aren't the key revenue drivers for Sony and Microsoft, but they are integral parts of both companies. In fiscal first-quarter 2014 results released in July, Sony's games and network services branch posted an operating profit of $43 million, up from a $159 million loss in the same quarter of the previous year. Revenue from the division hit roughly $2.5 billion in the quarter.

In its earnings release Sony said, "This increase was primarily due to the contribution from sales of PS4 hardware which was launched in November 2013, as well as a significant increase in network services revenues accompanying the launch of the PS4."

Microsoft's computing and gaming hardware revenue -- which includes Surface tablet revenue -- increased 23% year over year in its latest quarter, to $1.4 billion. The company said in its release that Xbox platform revenue increased by 14%, year-over-year, which was "driven primarily by increased console revenue."

The console wars are from over, particularly with the Xbox One's recent price drop, and over the next few quarters Microsoft could close any sales gap that may exist. But until the company releases full Xbox One sales numbers, it appears Sony is winning the console battle right now.

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  • Report this Comment On August 17, 2014, at 1:59 PM, JJ82 wrote:

    "Before the Xbox even hit the market, Microsoft angered gamers with the console's digital rights restrictions"

    Just one in a long line of things they did to anger gamers, and its also one of the FEW on that list they took care of.

    And that is why it is not selling well. As an owner of the first 2 Xbox consoles I can say that I will not be getting a One, ever, because of their design decisions.

    I do not buy hybrids, hybrids are sub-par and do nothing great and that can be plainly seen by their choice of using ESRAM, a weak GPU and building it on the assumption that offsetting to cloud computing will make up the difference.

    Not to mention that people would be willing to buy a weak game console just to have the same apps they more than likely already have on other devices.

  • Report this Comment On August 17, 2014, at 3:17 PM, WillT82 wrote:

    Why is this such a big deal?? I have both the Xbox one and the Playstation 4, and I still play both equally although the Xbox One does seem to have more games coming out recently than the Playstation 4 at the moment. Yes I am also aware that most of the games for Xbox one are on the Playstation 4 so since I have both its just determining which game plays best on which system.

  • Report this Comment On August 17, 2014, at 10:40 PM, 69ingRainbowDash wrote:

    10 million reasons you are a fanboy should be the title.

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Chris Neiger

Chris has covered Tech and Telecom companies for The Motley Fool since 2012. Follow him on Twitter for the latest tech stock coverage.

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