Xbox One versus PS4
While both the PS4 and the Xbox One are expected to be launched in November 2013, the two consoles are taking very different approaches on Internet connection and game policies. Xbox One integrates and provides functions ranging from entertainment and TV to communication, such as Skype. At $499, the new Xbox One system comes with a new generation of Xbox Live and a redesigned 1080p Kinect, whereas Microsoft Corporation (NASDAQ:MSFT) is imposing more restrictive policies on lending and reselling the Xbox One games. Furthermore, an internet connection is required at least once every 24 hours. Microsoft’s aggressive shift toward an online ecosystem continues to pose threats for GameStop Corp. (NYSE:GME)’s game resale business.
PS4, on the other hand, is selling at $399 ($100 cheaper than Xbox One). PS4 features innovative second-screen features and offers an expansive gaming ecosystem through the PlayStation Network cloud technology. Sony Corporation (ADR) (NYSE:SNE)’s motion sensor, the PS4 Eye Camera, can be purchased for an additional $59. Unlike Microsoft Corporation (NASDAQ:MSFT)’s restrictive policy, the PS4 will allow gamers to trade, sell, and keep games that are based on discs from the previous consoles.
PS4 does not require disc-based games to connect online to work, and Sony basically won’t impose any new restriction on pre-owned titles. It is Sony Corporation (ADR) (NYSE:SNE)’s decision that eased GameStop Corp. (NYSE:GME) shareholders’ concern on pre-owned games for now. While used video game products contributed 27% toward GameStop’s revenue in 2012, it accounted for 44% of the gross profit. Resale margins are more than double those of new video game products.
Pre-order numbers
The demand for the PS4 has been high, whereas the launch edition pre-orders are sold out already on Amazon.com, Inc. (NASDAQ:AMZN). As of June 14, 2013, the Xbox One’s pre-orders were lagging behind the PS4. The PS4 has now doubled Xbox One sales, whereas for every Xbox One unit that has been pre-ordered, two PS4’s have been pre-ordered. Based on the pre-order numbers, players seem to favor Sony’s offerings and its open policy on disc-based games more than Microsoft’s aggressive move toward an online ecosystem.
Sony Corporation (ADR) (NYSE:SNE) even raised its internal sales forecast due to positive signs about demand for the device. Sony also pointed out that demand may well outstrip supply. Amazon.com, Inc. (NASDAQ:AMZN) and GameStop Corp. (NYSE:GME) are already warning customers that they cannot guarantee shipment of the units on the promised release date.
What now?
With the latest pre-order numbers, the PS4 seems to be taking over the battle against the Xbox One for now. However, the real test is yet to begin as users have been shifting toward mobile gaming, where many people now play games on their mobile devices, such as smartphones and tablets.
On the other hand, GameStop is clearly a near-term winner as it will benefit from strong pre-order numbers from both the PS4 and the Xbox One. GameStop will also benefit more if the PS4 continues to outsell the Xbox One as Sony Corporation (ADR) (NYSE:SNE) is taking an open policy toward used games. However, in the long-term, the success of GameStop Corp. (NYSE:GME) will depend on how it can adapt to the online ecosystem as well as the mobile trends.
Bottom line
With the launch and strong pre-orders of the PS4 and Xbox One, GameStop, Sony, and Microsoft Corporation (NASDAQ:MSFT) will continue to capture investors’ attentions in the near-term. However, in the long-term, Sony Corporation (ADR) (NYSE:SNE) and Microsoft will have to continue adapting to the online and mobile environment, whereas GameStop Corp. (NYSE:GME) needs a new revenue model to penetrate into the online ecosystem.
Nick Chiu has no position in any stocks mentioned. The Motley Fool owns shares of GameStop Corp. (NYSE:GME) and Microsoft Corporation (NASDAQ:MSFT).
The article GameStop Likes the PS4 More Than the Xbox One? originally appeared on Fool.com.
Nick is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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