Console Wars: The PlayStation Strikes Back at E3

The Electronic Entertainment Expo, commonly known as E3, is an annual event presented by the Entertainment Software Association and was held over 11-13 June 2013. The expo allows video games and computer companies to showcase their upcoming equipment and titles. This year, like many years before, the event was held in downtown Los Angeles, and Euromonitor International was fortunate enough to attend.

The latest E3 was easily one of the most eventful in recent memory. This year saw the unveiling of new consoles from both Microsoft and Sony, with the Xbox One and PlayStation 4, respectively. As the Wii U was released by Nintendo last year, the next generation appears to be scheduled to fully arrive by the end of this year. With each system to be established by the holiday season, the question that remains is who will come out on top.

E3 Conference Photo

Nintendo first on the scene

Let us begin with the one console that is already on the market, the Wii U. The Wii U was released in November 2012 in North America. Since then, sales have been quite disappointing both in terms of units as well as retail value sales. Many are blaming the high initial price point (US$299) as well as the overall lack of console games, such as a new Zelda or Smash Bros.

It also came as a bit of a surprise this year when Nintendo announced that it would not hold a press conference at this year’s E3. Many are now concerned that the future of this console is in jeopardy following the release of new console competitors, and E3 for the most part has only heightened those fears. The Wii U touts a new GamePad controller with a touchscreen, but this feature may lose its uniqueness. Games such as Watch Dogs and Battlefield 4 revealed that these releases would feature tablet-integrated gameplay. Although this tablet integration lacks the Wii U’s ability to play games without the use of a television, it still diminishes a core unique feature the Wii U had going for it. In addition, Sony recently announced that the PS4 will feature Remote Play on the PlayStation Vita. The fate of the Wii U now seems almost entirely tied to the effect of new titles and any eventual price drop. To Nintendo’s credit, a few of the new titles I saw at the show were fairly impressive. Whether or not these actions will be enough to survive the onslaught of competition from the other next generation consoles remains uncertain. The outlook is not great, but overall I believe Nintendo could have done much worse at E3.

Microsoft receives little praise

Microsoft also unveiled its next generation console and, unlike Nintendo, many at the show felt it could not have gone worse. Microsoft was the global leader in static console retail sales in 2012 with a 37% share, but with Sony just slightly behind Microsoft, the company clearly cannot afford many slip-ups with this new generation of consoles. Few would call its pre-release a success, and much of what I heard from people at the show ranged from slight disappointment to unbridled rage. The standout issues for many at the expo were the requirement of internet access for functionality, restrictions on used games and the freshly revealed US$499 price point, which was steeper than many expected. The internet access requirement was particularly concerning for many at the show. Recent fumbles by games like SimCity and Diablo 3, two games that require an internet connection, have made consumers wary of any active internet requirements, with both these games suffering wide-scale server issues at launch which prevented owners of the games from playing them. Many at E3 were worried that the combination of these factors could lead to a large migration of some core Xbox users towards other systems, namely the PS4.

Not all reactions were entirely negative as some responded positively to new features such as the ability to live-stream your own gameplay and improved cloud services. In addition, many point out that Sony had similar slip-ups with the launch of the PS3, which it was eventually able to generally overcome. However, in this next generation console race, announcing this prohibitive price point and internet connection requirement clearly qualifies as a stumbling block.

Sony gets it right this time

Finally, Sony unveiled the PlayStation 4, which definitely appeared to be the big winner of the show based on the enormous applause it received at the end of its press conference. This was largely due to the fact that Sony announced it would be doing the opposite of nearly everything consumers found so frustrating with the Xbox One, namely that used games will have no restrictions, internet connection will not be required for system functionality and the price point will be lower (US$399). In fact, the only major complaint I heard was that online gaming would require a subscription to PlayStation+. However, even people who did not like this feature were pleased that it would not be required to access Netflix and other media services. In addition, PlayStation+ will give the subscriber free access to a variety of digital games for the PlayStation 3 and PlayStation Vita. With the addition of assured Vita Remote Play on a majority of PS4 games, Sony is poised to also grow its hand-held system sales after the PS4 release. In 2012, the Vita only obtained a 22% retail share of the global hand-held market, which was less than half that of the Nintendo 3DS’s share.

In short, Sony seems to have clearly won out at E3 by essentially promising one thing to consumers – if Microsoft is doing it, Sony will not. Microsoft, however, will likely take numerous measures to remain competitive in this next generation console battle, with this holiday season likely weighing heavily on its mind (the company has already rescinded the used game restrictions and internet connection requirements). Once again, the stage is set for Santa Claus to decide the winner of the first round in the console wars.