The PlayStation 5 and Xbox Series X might have similar specs and both use 7nm SoCs from AMD, but their next-gen business models are very different. We thought it prudent to discuss how Microsoft and Sony are approaching the new generation of console gaming.
Microsoft and Sony handle gaming very differently. To really understand the big differences between the PlayStation 5's and Xbox Series X's game plans, we have to take a quick look at each of the two company's business segments.
Sony cares a lot more about gaming than Microsoft does. Sony made $17 billion from PlayStation in FY2019 versus Microsoft's $10 billion from Xbox. The Japanese titan is locked to the PlayStation hardware and services ecosystem, and as a result, it's more laser-targeted on system-selling exclusives that've helped the PS4 move 110.4 million units worldwide.
Microsoft, on the other hand, cares more about services than hardware sales. Its games are more focused on engagement and service revenue generation and retention--a lot of Microsoft's first-party games have live hooks, microtransactions, and grindy mechanics. These games are designed to make you "sticky" in the Engagement Cycle and keep you connected, playing, and paying. Sony conversely pushes out singleplayer exclusives.
Microsoft also has Windows 10 PCs in their back pocket. This huge asset and the service-based focus are the main reasons why Microsoft is taking a more unified ecosystem approach to next-gen gaming.
With that out of the way, let's compare how Microsoft and Sony are handling next-gen with the Xbox Series X and PlayStation 5.
Microsoft - Xbox Series X
Read Also: Everything we know about the Xbox Series X
The Xbox Series X won't have first-party console exclusives - Microsoft is treating the XSX as an extension and evolution of the Xbox brand. There won't be Xbox Series X games, but instead just Xbox games.
Instead of marketing the Xbox Series X around games, it's marketing the console around games performance. It's not the games that'll be exclusive, but the performance of the games.
Microsoft's not interested in pressing the reset button and rolling at the expense of disrupting its tremendously successful online empire.
Microsoft doesn't want to phase out the Xbox One crowd right away, and will hold off on XSX exclusives for at least two years.
Microsoft is fine with making its first-party games available not only on Game Pass, but on PC, and older consoles. The Xbox business must now serve all parts, whether its subscriptions, services, online multiplayer, and consoles. These parts are all equally as important as the other, hence why there's no next-gen exclusives.
Rather than release two SKUs--a current- and next-gen one--Microsoft will launch one version of a game that automatically varies in performance depending on what platform you play it on. It's a feature called Smart Delivery, and it was actually added in the Xbox One X era.
That way the game can morph across multiple platforms and carry forward--and backward--across generations. This is designed so you don't lose the game, stay in the environment, and stay "sticky" in the ecosystem.
This also means developers have to optimize their game for four different Xbox consoles in 2020: The base 2013 Xbox One, the Xbox One S, 2017's Xbox One X, and the higher-end Xbox Series X.
Four gens' worth of backwards compatibility - Backward compatibility is a tremendous driver for engagement and subscriptions. BC has added massive value to Game Pass, which offers older Xbox era games. It's a way to ensure Xbox gamers not only keep their existing libraries and continue playing--and ultimately paying for subs like Xbox LIVE Gold--but also discover older games they never played via services like Game Pass.
The Xbox Series X will play four generations' worth of Xbox games: 2000's era Xbox, Xbox 360, Xbox One, and eventually, Xbox Series X titles.
All of these BC games will hit massive performance gains on the XSX. Microsoft confirms BC games use the full XSX's unlocked hardware, leading to big jumps in perf like double FPS, native 4K resolution, and HDR in Xbox, Xbox 360, and Xbox One games.
Sony - PlayStation 5
Read Also: Everything we know about the PS5
PS5 will have next-gen exclusives at launch - Sony confirms the PlayStation 5 will have next-gen exclusives right at launch. This fits into Sony's "games sell consoles" business model. Remember Sony doesn't have the might of universal Windows 10 compatibility, and while it does rely on services, it's services business infrastructure isn't as layered or robust as Microsoft's.
Sony instead relies on the premium system-selling business model that orbits first-party exclusives.
Sony is leaning into the next-gen reset in an effort to wow audiences and incentivize upgrading to the new model. This also gives developers freedom to make games specifically for the PS5 without having to also build for the PS4's outdated hardware.
We'll see first-party PS5 exclusives in 2020 when the console launches.
PS5 will have extensive PS4 backward compatibility - Sony might roll out PS5 exclusives, but it's not about to completely reset the the PS4's massive 110.4 million install base. The PS5 will play thousands of PS4 games at launch and all of them will be enhanced via the console's native boost mode functionality.
This is the most important feature for Sony to offer. It's imperative they handle the PS4->PS5 transition as smoothly as possible, and bringing over the existing library of games is the biggest part of the move.
We should expect similar perf gains in PS4 games as the Xbox Series X delivers with its BC library.
All new PS4 games will be required to run on PS5 too - Starting July 13, Sony will not grant certification for new PS4 games unless they also run on PS5.
There's a big reason for this: Sony wants to plant seeds for the PS5's succession right at the start.
Eventually the PS4 will be retired and the PS5 will take over, but until then, Sony wants to create an environment where devs can make two different versions of their games without disrupting the backward compatibility plans. It's a cross-gen mandate that will allow the PS4 to live on through the PS5 generation for years.
So essentially devs have to make all their new PS4 games forward-compatible with the PS5.
PS5 games, on the other hand, don't need to run on the PS4. This is the biggest difference between Sony's and Microsoft's next-gen gaming plans.
PS4 will live on 'several years' after PS5 launches - Sony has confirmed the PlayStation 5 won't instantly knock the PS4 off the market. Sony would be insane to just turn its back on such a massive install base of consumer hardware.
SIE president Jim Ryan recently said the PS4 will live on "several years" after the PS5 releases in 2020. This is an important mechanism of the smooth cross-gen transition, and ties directly with Sony's previously mentioned cross-gen policy.
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