Two Daily Reactions in one day? And they both cover the competition? What even is PlayStation LifeStyle anymore, amirite? To be fair, the last one was simply my hype for the New Pokemon Snap. Being a PlayStation-dedicated fan, I thought it was a notable Nintendo moment that I was really thrilled about. This one, however, is about the friction between PlayStation and Xbox as Sony and Microsoft play chicken with their next-gen console reveal strategies. A recent rumor from an insider gives us a look at Microsoft’s playbook for July—said to be a “night of mic drops”—and we’re wondering if Sony should be worried.
The rumor was reported on Wccftech. An insider by the name of eastmen dropped some bombshells on the Beyond3D forums, first talking about price and saying Microsoft could be aiming as low as $400 for the Series X and $200 for the less-powerful (and still not confirmed) Lockhart option. They also indicated that Microsoft wants to rattle not just Sony, but the entire games industry with its announcements in July. It’s apparently the culmination of a strategy built up over years, being a “night of mic drop moments” and leading to the price reveal. Finally he adds that Lockhart is going to be small—possibly even Fire TV size—and is a “key device in their strategy” at a low price point and small console size.
The PS5/Series X Pricing Game of Chicken
So let’s break this down one by one. First, price. This is where Sony and Microsoft seem to be playing chicken the most. Back when the PS4 price was revealed, it was Sony’s own “mic drop” moment, coming in a full $100 lower than the Xbox One (along with a number of other features that blew Microsoft’s original messaging out of the water). Now, however? Price is a real concern for the PlayStation 5. Most people don’t expect it to be under $500 at minimum, and some estimates saying $600—which would repeat the classic blunder of the PS3’s price. Having the PS5 Digital edition gives Sony some room to play around with the pricing of its consoles, but comments about a focus on “value over price” have fans worried this one is really going to gouge into their bank accounts.
But there’s a really good reason Sony hasn’t revealed the PS5 price yet. It hasn’t actually firmly decided what number will be on that sticker on the box. There are ongoing conversations about how much the company can afford to lose on each console, what the difference between the digital and physical editions will be, and what any given price might look like in competition with Xbox.
Microsoft, on the other hand, has a lot more room within its business model to play around with the price. It’s an enormous company that can afford to take the loss and build it back up through subscriptions, services, and digital sales as it gets players into the Xbox ecosystem. Sony doesn’t quite have the same luxury of that padding with PlayStation. So what happens when it’s Microsoft that mic drops with a $400 price point in July? Well, don’t expect Sony to reveal a PS5 price before then, for one. It’s going to wait until after it’s sure where the competition rests before making any announcements, I’d expect sometime in August (where they’ll also announce the release date and open up preorders).
The question is what a $400 Series X price means for the PS5? I highly doubt Sony can get its console that low. The components we know about, custom-architectured SSD, 3D audio engine, and hardware-based ray tracing are going to make this an expensive box, and that’s before we even consider the DualSense controller as a pack-in (something I expect will retail at $70 on its own). Maybe, just maybe, Sony competes with that price with the PS5 Digital edition, expecting to make up any losses via subscriptions and digital revenue shares, as well as crippling the the used game/loaner industry. But even if the digital manages to swoop in at $400, expect the disc-based edition to be $500 minimum, if not $550 or even $600. You can be sure that Sony’s accountants and internal analysts are making projections and doing the math as you read this. Anybody—myself included—who claims to know the price right now does not. Every leak is purely speculation and educated guesswork. It’s Schrodinger’s pricing—everybody’s guesses are both right and wrong until Sony decides on and actually reveals the PS5 price.
Limited initial inventory may also play a role in pricing. If Sony is going to sell out of launch inventory regardless of where the price point lands, then what need does the company have to hit a specific low price or compete with Xbox? It’s classic supply and demand economics. Demand for the PS5 is high. Supply could be somewhat constrained. How high can Sony go at launch and still sell out? I’d love for the PS5 to be $400, but I’d also still get one at $600, so who am I to demand that lower price from Sony if I’m not willing to back it up by closing my wallet at those higher prices? Again, these are the conversations that are happening right now.
Seven Years Planning the Mic Drop
At E3 2013, Sony dropped the mic on Microsoft’s head again, and again, and again. Pricing, content strategy, games. The famous “here’s how you lend games to a friend” video. PlayStation was firing on all cylinders with the reveal of the PlayStation 4. But it was also a different time back then. E3 was still an industry staple. The two companies’ press conferences happened on the same day, mere hours apart. Announcements were centered to that specific time of the year. It’s 2020 now, and things could hardly be more different.
With E3 gone and events largely decentralized, nobody quite knows when or where any given announcement will come from. For example, now that Sony’s shown off a bunch of games and revealed the PS5 console design, it’s back to silence while we wait for something else. Will it be a showcase of the new UI? The console teardown Mark Cerny promised us? Content and subscription strategy with things like backwards compatibility, PS Plus, and PS Now? Price and release date? Will it happen in July? August? Later? We don’t know. There are some reports that may paint a general map—one saying Sony’s got a State of Play planned for August—but we’re largely left in the dark.
Microsoft, on the other hand, has spent the seven years since E3 2013 picking itself back up, brushing off the dust, and preparing some massive moves for the next generation. Xbox One stumbled right out of the gate, and Microsoft doesn’t want to make the same mistakes going into this generation. It’s landed on a very specific strategy of ecosystem over console. It’s made some surprising studio acquisitions, such as Double Fine now being a Microsoft Studio. And GamePass has become the “industry standard” of subscription streaming game services. Microsoft is locked, loaded, and ready to fire its enormous volley, kicking off next-gen later this year. I’d expect nothing less of them, to be honest.
But still, it feels less pointed; less targeted at Sony, just due to the nature of scattered reveals in 2021. Perhaps the actual Microsoft July event will change my mind on that, but where Sony’s E3 2013 mic drops immediately followed Xbox, this year’s next-gen announcements feel more like a war of attrition than years past. Should Sony be worried about whatever mics Microsoft is about to drop in July? I’d say that “worried” is the wrong word, but the PlayStation manufacturer should sure as hell be paying attention.
Whatever comes from PlayStation in August will likely be, at least in some small part, a response to what Xbox does in July.
Little Console, Big (Lock)Hart
After the PS5 console design was revealed, conversation quickly focused around just how big of a machine it really is. I still have a launch PS4, which is around 10 inches when stood vertically. The PS5, according to analysis of images (using ports and the disc slot as reference points) is about 15 inches! That’s an increase of 50%, and quite frankly, the biggest console ever. People have joked about The Xbox Series X just being a PC tower, but the PS5 is approaching PC tower sizes even more. The thing is a beast.
If the rumors are true, Microsoft’s reported Lockhart (codename, probably not final) console will not only be cheaper, but also a whole lot smaller, with the reported insider information saying they are trying to get it down to the size of a Fire TV. Given Microsoft’s focus on streaming and subscription services, this would make sense as a gateway device into the Xbox ecosystem. To get a next-gen Xbox console for that cheap (rumored to be half the price of whatever the Series X is) and that’s the size of your typical streaming device? It’s an attractive offer, and one that Microsoft is much better positioned to offer than say, something like Google Stadia.
At that point, comparisons will be drawn between PS5 Digital and Lockhart, and the PS5 and Series X, but with how different the strategies are for each, it’s hard to realistically justify those comparisons. Lockhart is reportedly less powerful than the Series X. PS5 Digital is the same PS5, just without a disc drive. Sony is focusing on exclusive next-generation experiences not possible on this generation of console, while Microsoft wants Xbox to be on open ecosystem (Series X, One, PC, and Lockhart). Where Sony’s success will be more measured on number of console units actually moved, Xbox’s is going to be a lot more ingrained into subscriptions and users across all of its platforms.
In short, no, Sony doesn’t need to be worried, but it should find a confidence and stand firm in its strategy for the PlayStation 5. It’s strengths lie in its games and existing broad fanbase. It needs to continue to appease the players who are already here for the console and the PlayStation brand, rather than pandering to the competition. Sony certainly ought to pay attention to what Microsoft is doing, as competition can breed creativity from necessity, but PlayStation—and its fans—don’t need to be worried about what Microsoft is about to bring. Just remain curious. The next few months leading to launch will be full of volleys back and forth between the two companies, but there are still years ahead of us as we really move into the next-generation of console gaming, and both companies have some exciting promises on the table.