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Microsoft’s Xbox courts core gamers with new titles at E3

Microsoft Corp. and Sony Corp. are gearing up for the next phase of competition between their dueling video-game consoles, highlighting exclusive titles that will be on sale for the year-end holiday season.

Microsoft kicked off the annual Electronic Entertainment Expo on Monday by showcasing its in-house shooting game "Sunset Overdrive," and another exclusive, "Forza 2," plus a package of re- released "Halo" titles, all on sale by the holidays.

The content for Xbox One, which has trailed the PS4 since both consoles were released in November, ups the stakes for Sony (NYSE: SNE), and has seen exclusives like "The Order: 1886" pushed back to 2015. Microsoft (Nasdaq: MSFT) used its entire 90 minutes to focus on hard-core players, who were alienated by an Xbox One debut last year focused on non- game entertainment.

“We will continue to listen to you, our community, and will continue to make Xbox for you,” Phil Spencer, head of the console unit, said at the event.

Microsoft has struggled to convince gamers that the Kinect motion-sensing controller justified the $499 price tag of the Xbox One, $100 more than the PlayStation 4. The maker of Office software today began selling a $399 version without Kinect.

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

Crowded Christmas

Microsoft fell less than 1 percent to $41.27 at the close in New York. Sony American depositary receipts advanced 1.2 percent to $16.30.

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 prowess, he said.

Nintendo Co., 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 tomorrow morning.

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

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

Exclusive Add-Ons

Microsoft showed exclusive content for Call of Duty, one of the industry’s biggest games. In November, the company will re- release 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, made in-house, will make its debut in 2015.

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.

“With the sheer number of shooters coming to market, 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.

PlayStation Role

Sony’s presentation later today is expected to include exclusive content for the game Destiny.

The PlayStation unit is crucial to Chief Executive Officer Kazuo Hirai’s plan to turn around Tokyo-based Sony’s electronics business.

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 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 home-grown Web programming.

“They’re positioning to move the boxes into the living room as multimedia devices,” said Michael Pachter, a Wedbush Securities analyst in Los Angeles.

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