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posted: 6/14/2014 7:23 AM

Microsoft console battle with Sony heads into holiday phase

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  • Microsoft presents a reboot of the Xbox action game "Phantom Dust," during a presentation ahead of the Electronic Entertainment Expo at the University of Southern California's Galen Center on Monday, June 9, 2014 in Los Angeles. With the launch of the Xbox One, PlayStation 4 and Wii U in the video game industry's rearview mirror, the spotlight at E3 is expected to shift back to games.

      Microsoft presents a reboot of the Xbox action game "Phantom Dust," during a presentation ahead of the Electronic Entertainment Expo at the University of Southern California's Galen Center on Monday, June 9, 2014 in Los Angeles. With the launch of the Xbox One, PlayStation 4 and Wii U in the video game industry's rearview mirror, the spotlight at E3 is expected to shift back to games.
    Associated Press

  • Shawn Layden, president and CEO of Sony Computer Entertainment America, speaks during the Sony's PlayStation press event at the Electronic Entertainment Expo on Monday, June 9, 2014, in Los Angeles. Sony is bringing its PlayStation TV video- and game-streaming device to North America and Europe this fall.

      Shawn Layden, president and CEO of Sony Computer Entertainment America, speaks during the Sony's PlayStation press event at the Electronic Entertainment Expo on Monday, June 9, 2014, in Los Angeles. Sony is bringing its PlayStation TV video- and game-streaming device to North America and Europe this fall.
    Associated Press

 
Bloomberg News

SAN FRANCISCO -- Microsoft and Sony took turns parading exclusive video-game titles and features as the competition between their rival video-game consoles turns toward the year-end holiday season.

Microsoft kicked off the annual Electronic Entertainment Expo Monday by showcasing its in-house shooting game Sunset Overdrive, the exclusive Forza 2, and a package of rereleased Halo titles, all on sale by the holidays. Hours later, Sony countered with early access to Destiny, the highly anticipated action title, and exclusives including Little Big Planet 3.

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With Sony's PS4 in the lead since November, Microsoft used its entire 90 minutes to focus on hard-core players, whom the company alienated with an Xbox One debut last year focused on nongame entertainment. Sony, building on the momentum it's established, landed heavier blows, offering surprises from a white console to be bundled with Destiny to the lush science- fiction title No Man's Sky that the PS4 will offer first.

"Sony wins on quantity of exclusives, but they both performed flawlessly," said Michael Pachter, an analyst with Wedbush Securities. "Seriously, gamers won today."

The Sony highlights included the fall release in Canada and the U.S. of the $99 PlayStation TV set-top box that lets users play old titles on televisions without a dedicated console; the exclusive PlayStation Network superhero TV series "Powers," coming in December, and demonstrations at the show of its Project Morpheus virtual-reality headset.

A beta test version of Destiny will be available in July, with an even earlier alpha release coming to the PS4 on June 12 for the weekend. Sony put its mark on the full version of the game, a nonexclusive from independent studio Bungie that will be published by Activision Blizzard in September, with a special white version of the PS4.

"One senses Sony is building solid momentum and a viable ecosystem around its PlayStation platform," said Amir Anvarzadeh, an analyst with BCG Partners in Singapore, in an e- mail. "Not too unlike what Apple was doing with the iPod halo effect in the mid-2000s."

Microsoft has struggled to recover from marketing stumbles in the past year. The maker of Office software has had trouble convincing gamers that the Kinect motion-sensing controller justified the $499 price tag of the Xbox One, $100 more than the PlayStation 4. A $399 version without Kinect went on sale Monday.

"We will continue to listen to you, our community, and will continue to make Xbox for you," Phil Spencer, executive vice president of the console unit, said at the event.

The company, based in Redmond, Washington, is also offering free access to applications that formerly were part of a paid Xbox Live Gold membership.

Both new consoles have sold at a faster clip than any previous generation, with PS4 sales through March nearly double the PS3, according to Michael Olson, a Piper Jaffray Cos. analyst. Video-game developers are racing to deliver titles that showcase the machines' graphics power, he said.

Nintendo, which beat Microsoft and Sony for most of the last console generation, has struggled to gain traction for its Wii U. The company makes its E3 presentation on Tuesday in Los Angeles.

The holiday shopping season will be packed with shooter games, including Activision's Call of Duty: Advanced Warfare and Destiny, Electronic Arts' Battlefield Hardline, Ubisoft Entertainment's Far Cry and Take-Two Interactive Software's Evolve.

The crowded slate means players probably will turn only some of the shooter-game releases into big sellers, said Doug Creutz, an analyst at Cowen & Co. in San Francisco.

"Although we expect significant growth for the category this year, we doubt the category will expand enough for everyone to meet expectations," Creutz wrote in a June 6 research note.

While the console makers used to count on exclusive games to gain a leg up, there are fewer of them these days. Now most developers release the main titles for multiple platforms and the competition for exclusives focuses on downloadable content add-ons.

Microsoft showed exclusive content for Call of Duty, one of the industry's biggest games, as it seeks to get users to upgrade from previous consoles such as the Xbox 360.

In November, the company will rerelease the first four Halo titles in a package called the Master Chief Collection, exclusive for the Xbox. The collection will also have a digital series from producer Ridley Scott, Halo Nightfall. Halo 5 Guardians will make its debut in 2015.

"Our biggest focus right now is on the 85 million Xbox 360 customers to give them enough to make them want to buy Xbox One this holiday," Yusuf Mehdi, vice president for Xbox marketing and strategy, said in an interview. "I feel we delivered on the holiday and on the exclusives."

The PlayStation unit is crucial to Chief Executive Officer Kazuo Hirai's plan to turn around Tokyo-based Sony's electronics business. Part of the challenge is to keep customers interested with key exclusives like The Order: 1886 coming in 2015, too late for the holiday season.

An ascendant PS4 bolsters Hirai's financial resources as he focuses on television manufacturing and other struggling businesses. The console will serve as a big platform for delivering movies, TV shows and games downloaded from the Web.

Microsoft, even as it scales back its public ambitions for the Xbox One, is counting on the console for similar Web- delivered services. While each company attempts to shore up support from gamers, they are also trying to woo mainstream consumers with entertainment offerings including virtual reality headsets and homegrown Web programming.

"They're positioning to move the boxes into the living room as multimedia devices," said Pachter, the Wedbush analyst.

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