E3 2014: Sony Is Still Winning

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The annual E3 conference is always a big deal for gamers and industry observers, but this year's show felt especially pivotal.

Last year, Sony ( SNE ) hit Microsoft (NASDAQ:) with everything but the kitchen sink .

Microsoft made a number of strategic errors in the Xbox One launch -- it installed onerous Internet check-in requirements, added restrictions on used games, and included the Kinect motion control system, which resulted in a $100 price premium to the PlayStation 4.

Sony capitalized on Microsoft's mistakes, pushing the PlayStation 4 as a truly gamer-friendy device and effectively painting Microsoft as evil.

E3 2014 kicked off yesterday, and that means Microsoft had the opportunity to publicly take a pound of flesh out of the Sony juggernaut.

Here's what I saw.

1) Microsoft Is All About Gaming , Thankfully

At last year's E3 event, Microsoft aggressively positioned the Xbox One as an all-in-one entertainment device.

It pulled a 180 this year, focusing entirely on games, with a heavy focus on hard-core franchises like Halo, Forza Motorsport, and Activision's ( ATVI ) Call of Duty.

This was the right move to make. This early in the cycle, most buyers are serious gamers, and their needs to be met if Microsoft is to cut down Sony's lead .

2) PlayStation TV Is a Potential Winner

Sony is bringing its Vita TV streaming set-top box to North America under the name PlayStation TV.

PlayStation TV can play most Playstation Vita (Sony's handheld) games, stream PlayStation 4 games to different TVs around a house, and stream older console games through the upcoming PlayStation Now service.

Assuming PlayStation TV ends up with a robust lineup of media apps like Netflix ( NFLX ), Hulu Plus, and Pandora ( P ), its gaming capabilities could give it a serious advantage over devices like Apple ( AAPL ) TV and Amazon.com (AMZN) Fire TV .

3) Halo Can't Get Here Soon Enough

Microsoft showed a trailer for Halo 5: Guardians , giving a glimpse into the next update for the Xbox' flagship series:



However, it's not coming until fall 2015. That's basically the same timing between the release of last generation's Xbox 360 and Halo 3 -- about 22 months.

Microsoft will release a multiplayer beta for Halo 5 this December, at least three full quarters ahead of the official release.

To keep Xbox fans happy in the meantime, Microsoft is releasing Halo: The Master Chief Collection , a compilation of past Halo games.

Microsoft is pushing really hard to get Halo content in front of potential Xbox One buyers, which speaks to a sense of urgency -- or perhaps paranoia.

4) Inside Looks Amazing

Playdead Studios' trippy adventure game Inside blew my mind, looking like a cross between a Pixar movie and a bad acid trip:



Inside will debut on Xbox One in the first half of 2015. It won't move hardware for Microsoft, but it does represent a compelling mindset in terms of creative direction that will hopefully be rewarded by consumers .

Playdead's 2010 title Limbo , which had a similarly dark motif, was critically well-received and generated strong sales for an independent title.

EA (EA), Activision, and Ubisoft do a great job with the mega-budget hardcore games. It's refreshing to see smaller companies stepping up with these types of oddball innovations.

5) And So Does No Man's Sky

I'm not really sure what's going on with Dead Man's Sky , but it's generating a lot of buzz among gamers.



The visuals are bizarre and beautiful, and the gameplay features both dinosaurs and space battles.

This creation from Hello Games will debut on PlayStation 4, and purports to have a "procedurally generated universe," which means the game's infinite world will be generated according to an algorithm. That could mean endless variety and replay value.

Conclusion

Each side had some notable software exclusives, like The Order 1886 for PlayStation 4 and Forza Horizon 2 for Xbox One, and there was no knockout blow landed by either side.

If I had to choose, I'd say Sony edged out Microsoft in terms of public perception, though perhaps that victory gets a bit diffused since many of the big games at E3 -- like Call of Duty: Advanced Warfare and Assassin's Creed Unity -- will be available on both PlayStation 4 and Xbox One.

Sony's still got momentum on it's side, and Microsoft did nothing to disrupt it.

Twitter: @MichaelComeau



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Stocks , Technology

Referenced Stocks: SNE , ATVI , NFLX , P , AAPL

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