Video game giants prepare for console wars as demand soars

A short video was all it took to send video game fans into a state of frenzied excitement.

Earlier this month, a nine-minute video was published showcasing the technical capabilities of the upcoming Sony PlayStation 5 console.

The video, which showed a woman climbing to the top of an ancient city before flying off a tower into a blue portal, didn’t even show any footage of upcoming games for the console.

But the lifelike graphics in the showreel were enough to generate a buzz on social media.

As PlayStation’s parent company Sony and Xbox owner Microsoft prepare to launch their next consoles later this year, the two technology giants are limbering up for ferocious battle for control of a surging market, which has been turbocharged by lockdown.

Even before covid, the global games industry generated $135bn in sales in 2018.

But both companies now plan to release their consoles at a time of unprecedented demand for video games as bored consumers, cooped up at home, seek diversions they can play in their living rooms or bedrooms.

A Nielsen survey of global usage of video games at the end of March found that players in the US reported spending 45pc more time gaming, with a 29pc increase in the UK and a 20pc rise in Germany.

Still, releasing the new consoles won’t be easy.

Disruption to supply chains and working practices has made development of the consoles and games tougher than ever.

Industry analysts warn that continued disruption caused by the coronavirus pandemic could delay the launches and lead to distribution problems as Sony and Microsoft finally ship the new consoles.

“If the World Health Organisation came out and said ‘No-one must launch new consoles until next year,’ they’d both breathe a sigh of relief because neither one would have to jump first,” says Jefferies analyst Ken Rumph.

But no such request has been made, so Microsoft and Sony are pressing on with plans to launch the Xbox Series X and PlayStation 5 around October.

A console changeover is a major event in the gaming industry which can lead to billions of pounds of profits and can make or break the fortunes of companies building the video games which run on the consoles.

Console launches have historically driven a “massive upgrade” in video game sales, says Liberum analyst Andrew Bryant. “It was always a great big splurge for the game software industry.”

Sony has so far sold 109 million units of its current PlayStation 4 console, while Microsoft lags behind with 41 million sales of the Xbox One.

Now, Sony is hoping to continue its lead with the PlayStation 5. The company says the new console will be around 100 times faster than its predecessor which could almost eliminate loading screens. It also hopes to drive sales through support for 8K high-definition gameplay.

Microsoft is hoping to win over customers thanks to a series of console-exclusive games as well as backwards compatibility with its previous three generations of consoles. The new Xbox will also support 8K gameplay.

It’s also hoping to piggyback on the demand for the upcoming game Cyberpunk 2077, a futuristic action game, by releasing a limited edition Xbox bundled with the game.

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