Online Gaming – Cat among pigeons

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Microsoft cleverly puts Sony in a very difficult position.

• Microsoft has announced that Xbox Live members will now be able to play games with members from other gaming networks such as the PC as well as other consoles.
• This has been coming for some time as Windows 10 devices all share elements of commonality that makes enabling this feature much more straight forward.
• Consequently multiplayer between PC and Xbox has been on the cards for a while but it is the possibility of multiplayer gaming between Xbox and PlayStation that has really set the cat among the pigeons.
• Xbox Live and PlayStation Network have for years been fierce competitors as the console purchase decision has in part been driven by which multiplayer network the user’s friends are on.
• With this change, Microsoft is offering to create a single huge gaming network so that any player can play with anyone else as long as they are running the same version of the same game.
• From its current position, Microsoft has very little to lose and everything to gain as its missteps in marketing the Xbox One at launch cost it dear.
• RFM estimates that the Xbox Live network has about 49m users while PlayStation Network has 93m.
• A reason for this is that PlayStation 4 has substantially outsold Xbox One since its launch.
• This gives a huge advantage to PlayStation as Metcalf’s law of networking states that there is an exponential relationship between the size of a network and the value that it can create.
• Consequently, I estimate PlayStation Network is 4-5 times more valuable than Xbox Live.
• This is why it makes perfect sense for Microsoft to extend this olive branch to Sony as it has far more to gain than Sony does.
• However, the ones that benefit most of all will be the users of these networks which is why I expect Sony to come under intense pressure to take Microsoft up on its offer.
• This puts Sony in a very difficult position because although the overall value of its network will increase with 50m more users, Microsoft’s will increase much more.
• This is why I suspect that Sony will refuse to make PlayStation Network available to Xbox Live although I suspect that this is a mistake.
• Sony has done very well in this generation of console but in the next generation I see it being at huge risk (see here)
• This is because consoles are increasingly becoming part of the digital ecosystem where user experience, software and services matter.
• This is something to which Sony has aid almost no attention as the user experience on the PlayStation 4 was clearly designed by an engineer.
• The result is an awful user experience where the user simply wants to start playing the game as quickly as possible and has almost no interest in anything else that the console might have to offer.
• By contrast, Microsoft has put a lot of effort into its user experience which actively encourages users to explore and see what else is available.
• I think that in the next generation, this is going to be a major factor in the user’s purchase decision and consequently Sony is at great risk.
• However, if Sony was to embrace global multiplayer gaming it might just signal that it has understood the importance of the ecosystem and will be fixing the shortcomings in its current product.
• Unfortunately, Sony has a long history of losing commanding market share positions resulting from choosing to further its own ends against the interests of its customers.
• I fear that very little has changed and that Sony may go the way of Sega in the next generation.