This Christmas many Australians will be dreaming of ripping wrapping paper off the most desired consumer items of 2020: gaming consoles from Microsoft and Sony.
Key points:

  • New gaming consoles from Microsoft (Xbox) and Sony (PS5) have just been released
  • This might be the last iteration of the two-decade-long ‘console wars’ between the companies
  • Digital platforms, allowing gamers to play on PCs, tablets and mobiles, might spell the end of consoles

The new Xbox (Series X and Series S) and PlayStation (PS5) have more similarities than differences.
Both are immensely powerful computers able to stream content from the internet at high speeds and they do a lot more than just play games.
“They’re mostly trying to do the same thing,” says Stephanie ‘Hex’ Bendixsen, a television presenter and Twitch broadcaster.
“More and more people are becoming PC (personal computer) gamers to get that really high-end graphics experience. Consoles are competing with that.”
Game developer Lisy Kane, lead producer at League of Geeks, said the machines made gaming experiences more accessible: both in how easy they are to set up, and in price.
“Compared to PCs they’re much more affordable, especially for families,” she said.
‘Netflix-ing’ gaming
This Christmas is the culmination of a two-decade arm wrestle over the future of entertainment and technology.
It comes as the multinationals behind them transform how consumers access content.
Hands On With Xbox Series X & PlayStation 5!
Both Microsoft and Sony are selling subscription-based passes that allow access to a huge library of games.
It is similar to what Netflix has done with film and television series and some analysts expect it to be the future business model.
Game expert Ralph Panebianco said Sony from Japan and Microsoft from the United States are charting vastly different futures.
“I think it’s more about creating an ‘ecosystem’,” Mr Panebianco said.
“Microsoft don’t care if you don’t buy an Xbox. You can play on all devices. Sony still very much want you to have the hardware.”
Both companies are spending big on studios to produce games.
Microsoft just spent $9.8 billion buying Bethesda Softworks the maker of Elder Scrolls, Fallout and Doom but doesn’t intend to pull its content from Sony’s platforms.
Instead, it wants the publisher’s focus to create its best work for Xbox platforms, like the console and its online service.
Both Sony and Microsoft are spending big on studios to produce games.(Unsplash: Hardik Sharma)
Last Christmas?
Each ‘generation’ of consoles lasts for about five to six years.
This is the fourth iteration of the Xbox, the fifth of the PlayStation.
At the start of their lifespan the units generally cost as much or more to produce than they are sold for.
Selling consoles is vital for locking consumers in, creating an audience for a rolling schedule of blockbuster titles, many of them exclusive to the system. But do gamers need one?
Ms Bendixsen said the platform offered means most games are available to play on PC as well as Xbox.
“Ironically, this kind of negates the need for an Xbox,” she said, but added that like many gamers, she still has one: “I like the UI [user interface] and my friends have it”.
Mr Panebianco, known as ‘Skill Up’, has a huge following on YouTube, with more subscribers than the AFL, NRL and A-League combined.
He agrees Microsoft doesn’t care about the actual ‘box’ people play with.
“Xbox is positioning itself for an Xbox-less future,” he said, citing the way the company helps players to connect on devices like PCs, tablets and mobiles.
“But we’re not there yet. The experience of streaming games even in a developed country with good internet access is not there yet.”
Sony recognises that box-less future but hasn’t committed as fully, he believes, spending up by buying studios and putting millions into blockbuster exclusives like ‘Spider-Man: Miles Morales’ and racing game ‘Gran Turismo 7’.
Overseas, Google has released a subscription-based games system called Stadia that doesn’t require a console, just a controller and an internet-connected smart-TV.
Ms Kane is also unsure if this will be the last generation of physical consoles.
In terms of our internet speeds, our digital infrastructure, “we’re still not quite there in being fully digital,” she said.
This is the fourth iteration of the Xbox, the fifth of the PlayStation. Both have been popular Christmas gifts.(Unsplash: Evelyn Chin)
Everything to everyone
Previous generations of gaming consoles marketed themselves as “hubs”, allowing you to navigate your TV through any kind of screen-based fun.
But smart-TVs and casting devices have trimmed that ambition.
“That didn’t work,” Mr Panebianco said.
“This was the lesson of last gen: don’t try and be everything.
“They tried to do a broad thing, they wanted to control your entertainment universe: download movies with us! Watch TV through us! And a lot of people went, ‘no, that’s terrible.'”
IBISWorld senior industry analyst, Liam Harrison says the push for consoles to be a multimedia centre has been a key focus for the Xbox, more so than the PlayStation, to only mixed success.
“As newer, more convenient devices for multimedia such as the Google Chromecast have entered the market, the ability for consoles to sell on these multimedia features has been reduced,” Mr Harrison said.
“In addition, the release of digital-only variants a ‘discless’ PS5 and the Xbox Series S don’t have a disc drive reduces the multimedia capabilities of the consoles.
“That leaves them even more susceptible to competition from alternative multimedia devices. As such, games are still the principle selling point for these consoles.”
Sony vs Microsoft vs Nintendo
In the most-recent generation, Sony’s PlayStation (PS4) dominated, seizing about 60 per cent of the market.
Microsoft’s Xbox One took most of the rest. The PS4 was cheaper, with popular exclusive games.
This time, the fight is different.
Christmas stock shortages make it difficult to know who will take the early lead in the market, and the Xbox Series S is cheaper than the discless version of the PS5 edition.
And there’s another player, doing something very different. Nintendo’s Switch is essentially a morph of a games console and a handheld device.
It’s not as powerful as either of the Xbox or PS5 but has intuitive motion controllers that make it easier for casual gamers to pick up and play.
“Nintendo has attracted a family-friendly image and sells based on family interaction and a generally friendlier attitude towards games,” Mr Harrison said.
“Although competitive gaming exists on Nintendo consoles, they have never been the selling point.
“They tend to sell to either families which would otherwise not seek out a console or sell to the more hardcore crowd who are likely to buy a Nintendo Switch in addition to any other gaming device they may already own.”