In an industry where public statements and events are usually carefully managed, the conference calls that follow financial results can sometimes be fascinating in their candour. It's rare to get much genuinely new information from them, of course, but every now and then you get a question that puts executives on the spot simply by asking something that many people have been thinking but the company itself has, for whatever reason, been tiptoeing around.
This week's Sony financials call yielded a good example. One questioner took it upon themselves to pretty bluntly suggest that Microsoft's PR efforts for Xbox Series X have run rings around Sony's next-gen PR, asking what grade CFO Hiroki Totoki would give the team thus far.
Totoki's response -- that we should wait and see the sales figures -- wasn't exactly revealing or insightful, though some commentators, perhaps reaching a bit, felt that there was a flash of Sony's old PS3-era arrogance in his comments. Either way, it didn't address the real issue at the heart of the query; why is Microsoft being allowed to establish the parameters of the next-generation contest, putting its information out there so far ahead of Sony and even establishing at this early point that it's launching a more powerful -- on paper, at least -- piece of hardware? It's still very early days, but you can see where the question is coming from. As an investor, one would have to wonder if Sony isn't on the back foot here to some extent.
Everyone seems to be primed for the big gaffe, the PR disaster that's going to define the early years of the next generation
This perception, I think, leans heavily on how things played out in the previous two generations, where the early years of the battle were pretty much won and lost well before console hardware actually started shipping. The PS3 suffered a drastic series of PR disasters and miscalculations in the run-up to its launch -- some of which yielded forehead-slapping quotes that are still reliable laugh-lines in industry presentations -- which played a major role in handing an early lead to Microsoft's Xbox 360. Microsoft, in turn, stuck its foot in its mouth right at the very outset of the Xbox One era and never quite managed to remove the taste of its toes, with the console's weird, TV-focused, Kinect-reliant debut effectively moving it out of contention for a while and giving the PS4 a clear runway for its meteoric takeoff.
As such, everyone this time around seems to be primed for the big gaffe, the huge error, the PR disaster that's going to define the early years of the next generation. Yet in reality, there's been nothing from either side which remotely compares to the kind of slip-ups made in past console announcement windows.
You could point at a few things that haven't gone down terribly well. Sony's decision to stick with the very dry, developer-focused GDC presentation from Mark Cerny even when it became apparent that it was being widely perceived as a kind of "unveiling" by the media and broader public, for example. Or Microsoft's opting to put its initial focus on a third-party line-up that will be mostly not only cross-platform but cross-generation, giving a rather muted opening statement to the console compared to what will hopefully be the fireworks of the first-party announcements.
Neither of these things, however, is the comedy banana peel that people seem to have been expecting -- or in some cases wishing -- for them to be. Maybe that banana peel is coming down the line; while telling people to judge the company's performance on its sales certainly isn't it, Sony's executive suite does have form with saying the kind of things that end up haunting a platform, so you can understand why people's ears perked up at that question and answer session.
For now, though, I suspect that most consumers who are following the unveilings -- and don't have any particular skin in the game -- don't have a hugely strong feeling about either upcoming platform. Neither has done much to spark enormous interest, and neither has done anything to attract opprobrium. They've seen a little more of what Microsoft is doing, for sure, and less of Sony's plans, but anyone deciding winners and losers at this point probably made that decision in their own minds a long, long time ago.
A drip-feed of low-key information suggests that the actual PS5 unveiling is going to be very, very software-centric
As for what Sony's doing, the very Marvel Studios inspired branding it revealed this week for its future first-party titles seems like a pretty big hint about the broad strategy. We actually know an enormous amount about PS5's hardware already, despite the lack of a formal "unveiling" -- thanks to a drip-feed of low-key information that suggests that the actual unveiling is going to be very, very software-centric.
It might even be almost Nintendo-like in that regard, shying away from discussions about specifications and instead leaning into an exclusive line-up. The Unreal Engine 5 tech demo which was shown off this week leans into that strategy as well; without Sony itself making an announcement of any kind, it effectively shows off a bunch of new technical features enabled by the new hardware and presumably allows Sony's own reveal to shy away from that kind of discussion to a greater extent. It's not that the PS5 reveal, when it finally comes, won't talk about PS5's capabilities; rather, it will really only focus on the new hardware in terms of specific features it enables in its games. I'd wager we'll see quite a few open world games doing pretty impressive things with high speed traversal, for example.
This is how Sony can potentially set PS5 up as a very different proposition to Xbox Series X; by going in heavy on software line-up from the word go, outlining a year or more of major releases which will be exclusive -- or somewhat exclusive -- to PS5. Bear in mind that while there are a few major titles left on the PS4's launch list -- The Last of Us 2, Ghost of Tsushima, and arguably the Iron Man VR title -- they were all announced some time ago, meaning that it's been quite a while since Sony announced a new first-party game. In theory, this means it should have quite a significant slate of titles ready to be unveiled for the new console's early lifespan.
Sony's competitive advantage right now is that it has a large number of mature, well-integrated first- and second-party studios that have been firing on all cylinders throughout the PS4 era and should be able to hit the ground running on PS5 -- a major head-start over Microsoft, whose recent efforts to build an Xbox studio organisation that rivals Sony's is going to pay off handsomely down the line, but is unlikely to really start to deliver results until a year or more into the console's lifespan.
Of course, this is largely guesswork. Perhaps the unveiling, when it comes, will reveal that all this benefit of the doubt was undeserved, that Sony has actually just gone off the rails and is going to announce a console that's less powerful than XSX and won't have a proper first-party line-up in its launch window, instead assuming it'll find a comfortable place to rest on PS4's laurels. But the hints in this direction are very strong, and the strategy of getting technical detail out of the way in order to clear a space, is the only one that truly makes sense.
The joker in the pack, however -- the joker in the pack for all of 2020, really -- is the impact of coronavirus, which Sony feels confident won't prevent PS5 from launching this year (albeit in limited supply), but which could be wreaking untold havoc on the development process of key titles and causing major reshuffling of launch window plans. The company is projecting confidence over that aspect, but it seems impossible that Sony has magically dodged the problems coronavirus has introduced for the development processes of every other games company in the world.
We won't get a clear view of what's happening there for some time, but if Sony's strategy is indeed software-led and the pandemic pushes back its software, then weaker sequencing of major titles early in the console's lifespan could cause an unfortunately rocky start for its next-gen ambitions. On the other hand, the same problems are likely to hit all of Sony's competitors in 2021, as delays to this year's development knock on to next year's release schedules -- but not every competitor is going to be launching premium new hardware with the promise of world-beating exclusives in that window.