Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Sony Corporation (ADR) (SNE) Has Microsoft Corporation (MSFT)’s Xbox One in Its Crosshairs

Page 1 of 2

On Monday night, Sony Corporation (ADR) (NYSE:SNE) held a major event to show off its new PlayStation 4 game console before the E3 gaming conference officially kicked off on Tuesday. It’s clear from the event that Sony is going for the jugular in its battle with console rivals Nintendo and Microsoft Corporation (NASDAQ:MSFT).

Nintendo has already been struggling with poor sales of its new Wii U console, which was released last fall, and Microsoft Corporation (NASDAQ:MSFT) is facing a backlash from fans over its use of digital rights management technology. With its announcement on Monday, Sony Corporation (ADR) (NYSE:SNE) undercut the Xbox One’s price by $100 while emphasizing that the PS4 will not incorporate new DRM restrictions. With these two moves, Sony has positioned itself to become the clear winner in this generation of video game consoles. Meanwhile, Microsoft finds itself on the defensive, as it needs to justify both draconian DRM restrictions and a high price tag.

Microsoft Corporation (MSFT)

Battle of the consoles

Last month, after Microsoft Corporation (NASDAQ:MSFT) revealed the Xbox One — the successor to its highly successful Xbox 360 game console — many gamers were outraged by the implementation of digital rights management for the new console. While very few details were given, it was clear that users would not be able to freely trade or resell used games.

As the uproar about Xbox One’s DRM policies grew, Sony Corporation (ADR) (NYSE:SNE) was suspiciously quiet. The company had revealed its PlayStation 4 console back in February, but had provided even fewer details than Microsoft Corporation (NASDAQ:MSFT). This led many to believe that PS4 would also incorporate DRM, causing fans to launch a social media campaign encouraging Sony Corporation (ADR) (NYSE:SNE) not to do so.

Last week, Microsoft Corporation (NASDAQ:MSFT) finally clarified its DRM policy for Xbox One. Xbox One consoles will need to connect to the Internet at least once a day for games to work, and users will be able to trade in or lend out games only if the publisher consents. While Microsoft will apparently allow trade-ins for its first-party games, other developers could potentially choose to disallow any sort of used market for their games. As one commenter put it, the DRM policies are “just as bad as we expected.”

The new DRM policy could also be bad for GameStop Corp. (NYSE:GME)’s business model, which relies heavily on trade-ins; used games offer high resale margins and also put cash in the hands of customers to buy more games at GameStop Corp. (NYSE:GME). However, the impact on Xbox One sales was clearly going to depend on whether Sony Corporation (ADR) (NYSE:SNE) adopted the same restrictions. If Xbox One and PS4 had similar DRM policies, plenty of gamers would have given in and accepted the restrictions. For GameStop, not all is lost… yet.

PS4 to the rescue

That’s where Sony comes back into the equation. As it turns out, Sony never intended to use DRM but decided not to rebut last month’s rumors in order to build suspense. This allowed it to deliver a potential knockout punch with its “no DRM” announcement on Monday. Sony made sure to take a swipe at Microsoft’s confusing DRM policy whenever possible in order to build loyalty to the PlayStation platform. This included a big slide emphasizing user freedom. PS4 users who buy a game will have four options: “trade in games at retail, sell it to another person, lend it to a friend, or keep it forever.”

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!