Why the PS4 and next Xbox will/won't launch in 2013

by Michael in , ,

According to Examiner.com, Michael Pachter has this to say about the next generation of systems:

“I think there’s zero chance of a tease from Sony for PlayStation 4 and only a 20 percent chance from Microsoft that they’ll tease the next Xbox,” Pachter told Forbes. “Neither console is launching in 2013, so there’s no reason to tease them in 2012.”

It's a tough call. Pachter has a hit and miss track record (as does anyone who's an analyst).

The way I see it, there are 5 things Microsoft and Sony would like to do in an ideal world with their next console launches:

  1. Launch in 2013.
  2. Launch with a sizable performance leap over the current generation of consoles.
  3. Launch with bundled advanced motion controls (Kinect/Move, possibly upgraded).
  4. Launch with affordable hardware.
  5. Launch without taking an immense loss per unit.

Item 1 is desired to avoid letting Nintendo have the Wii U as the only new home console on the market for well over a year and 2 full holiday sale seasons.

Item 2 is desired to show customers obvious value. The "wow factor" can only exist if the visual leap is significant but, as I've mentioned before, it's difficult to do this when the previous generation was sold at a huge loss while prioritizing this particular aspect of the console (and this time around you have other new areas which take a large slice of the cost pie).

Item 3 is desired to not be left behind. "Regular" people now expect motion controls with a home console. The Wii was huge, the Kinect has become a significantly well known success, and the Wii U is yet another platform launching with motion controls and a new interface attached. Launching a new console without any sort of alternate control available is a nonstarter.

Item 4 is desired as a response to the trials Sony had with its exorbitant pricing at the PS3's launch. People don't want expensive consoles.

Item 5 is desired because, frankly, it's hard to make that money back. While using loss-leading strategies is still feasible, you have to manage the losses such that you don't get yourself into a hole you can't dig yourself out of. Sony has been gradually shedding features of the PS3, discarding hardware left and right, over the course of the generation because the system couldn't recoup its losses otherwise (because of the debacle addressed by item 4). You only take losses small enough that you can eventually make those up on game and accessory sales. Large enough losses will never be recouped, especially if you're trying to sell to larger groups of casual owners--who buy fewer games for their consoles than so-called "hardcore" gamers.

It is extremely difficult to do all of these things at the same time. At least one of the above items has to be sacrificed. It's my guess (and make no mistake, it's only an educated guess--I don't purport to know anything secret) that Sony and Microsoft are absolutely not going to sacrifice items 3-5.

That means the companies are left with the following decision:

  1. Launch in 2013 with systems that are noticeably but not impressively more powerful than the previous generation.
  2. Launch in 2014 with systems that can have a more substantial (and more perceptible) increase in performance but leave Nintendo's Wii U as the only new home console for well over a year and two full holiday sales seasons.

Pachter is betting on item 2. I don't have a horse in this race. He could be right, he could be wrong. Either way, the reason will almost surely be one of these two points.