Sony unveils PlayStation 5 console, announces new games

Sony unveiled it’s next generation console, the PlayStation 5 in addition to almost 30 video games. Yahoo Finance’s Dan Howley joins The Final Round panel to break down why the price of the console will be the key to its success.

Video Transcript

MYLES UDLAND: Let's turn now to the brewing console wars that we expect around the holiday season. Yesterday, Sony unveiled its PlayStation 5, and Dan Howley joins us now to explain why this thing looks like the Oculus, how much it's going to cost, and, I mean, I guess the state of new consoles. It's been almost a decade, Dan, since we saw brand new Xboxes and PS's at the same time.

DAN HOWLEY: Yeah, this is the PlayStation 5. It's expected to launch for holiday, as well as the Xbox Series X, which will launch this holiday, back to back, right next to each other. Sony showed off about 30 games, a little less, yesterday during a big live presentation, pre-taped in some parts, but really kind of giving us this live-streamed look at what the console has to offer.

I love the design. It's very controversial. Some people said it looks like a router. I think it looks awesome, though. It's going to be, though, an interesting kind of way to deal with the console wars, as far as Microsoft goes, just because Microsoft is a more powerful console. They're offering the Xbox Series X. They've already come out with all the specs. Sony has come out with their own, and Sony came out and said, look, yeah, our console is not as powerful as Microsoft's. So Microsoft, once again, is going to one-up Sony in that respect.

But here's where every thinking goes sideways and the most important feature that I'm saying that Sony and Microsoft have to focus on, and that is their pricing. The previous consoles that have kind of broached that $400 limit for pricing tend to do incredibly poorly versus those that don't. So look at the original PlayStation 3. That launched at $499 and $599. It's contemporary. The Xbox 360 launched at $299 and $399. And as a result, that put Microsoft on the board, as far as being a real videogame company. And in the end, they both basically sold the same amount of units.

Now, look at this current generation where Sony sold the PlayStation 4 at $399, and Microsoft sold the Xbox One X at $499. And Sony has blown away Microsoft. They've sold more than double what Microsoft has done, 110 million units versus round 50-something million units from Microsoft. So for the next generation, they really need to find a sweet spot as far as pricing goes.

Unfortunately, according to reports, Sony may be looking at between $450 and $499 for this new console. Gamers are not going to want to swallow that. And if Microsoft can somehow get the pricing lower, they could crush Sony this time around. Now, it's important to note, though, that Sony also showed off a digital-only version of the PlayStation 5 yesterday. That's one without a disk drive. That could knock off $50 of the price, but that could be that $449 to that $499 area that we're looking at. And I just don't know how gamers are going to respond to that.

MYLES UDLAND: Well, I mean, Howley, you mentioned gamers, but to me, it's parents, right? That's who really is buying this stuff. And I guess maybe, you know, this is obviously much more your area than mine, but I'm just kind of hung up on the form factor of this. And I also-- I mean, I understand that more, like, computing power requires cooling and stuff because the new Xbox is also going to be gigantic. I'm just surprised that in the year 2020-- because we both remember-- I think we were in, like, probably the sixth grade something-- the original Xbox was just--

DAN HOWLEY: Oh yeah.

MYLES UDLAND: --so ridiculous looking, I mean, compared to what the PS2 looked like at the time, which was a great device. I'm just surprised that we're, like, doing this monolithic, ridiculous thing that no one wants in their living room in 2020.

DAN HOWLEY: Yeah, it's interesting. And I think, really, this is going to be almost the last gasp of, you know, these real physical devices. We're starting to see more digital transformation, as far as cloud computing goes, cloud gaming. We have a few cloud gaming platforms out there. None of them are doing well. Invidia has it, but publishers keep pulling their games back from Invidia. Google has it, but publishers aren't really putting out as many games.

Now, the only one that I see succeeding right now is Microsoft. They have Project X Cloud. Right now, they have Game Pass, Xbox Game Pass. It-- I've said it before, it's the dumbest deal on the face of the earth just because it's so good. I don't know how Microsoft is able to sell it at such a low price. It's $60 a year. You get unlimited access to 100-something games.

They're going to roll that out along with their cloud gaming platform, and I don't see, at that point, what the reason for a console will be. And I think that's where we end up going. And it's also worth noting that Sony is working with Microsoft on its Azure platform for its own streaming service, all of that to combat Google, and then eventually Amazon, which is going to get into the cloud gaming space as well. So this may be the last generation of consoles.

DAN ROBERTS: Howley, you wonder also if the pandemic and the major hit to the economy and the unemployment level might contribute to dinging the holiday shopping season, especially with gaming. I'm sure that, you know, huge gamers would disagree. But to me, a lot of the stuff we're talking about seems like a discretionary purchase. You know, it's a gift item that in-- when money is tight, you might see some parents not buying for their kids, or-- I shouldn't just assume it's parents buying for kids-- you know, gamers buying for themselves. But these things are expensive. And if you've been laid off or furloughed or you lost your job and then you just got it back, I would think that sales may be-- the sales picture wouldn't be as bullish now.

DAN HOWLEY: Yeah, and that's an incredibly good point, just because they're launching at this point. You know, there were some reports that Sony might have a limited run of the PlayStation 5 when it first comes out. But these are-- you know, you're right, these are incredibly expensive consoles. I was talking to an analyst the other day, though, who said that the recession-- videogames are almost recession proof, to a degree, because their discretionary spending at a low cost per hour of entertainment.

You can get somewhere between, you know, 40 to upwards of 150 hours out of a game if you want. Some of them are free to play, like the new Call of Duty. Riot Games has some free offerings. They survive off of those in-game purchases. So the gaming industry should be relatively unaffected.

I mean, they're not going to have the boon that they have right now in COVID and people being locked in, but they're not going to see the kind of sell-off that you would see for larger forms of entertainment, more expensive forms of entertainment. It's a one-time purchase or a smaller purchase than something like a full on console. So where they might lose out on the physical devices, they'll make up for in revenue from sales of games for previous generation offerings.

MYLES UDLAND: All right, Dan Howley with the latest on what's going on in the videogame space. Howley, always great to get your thoughts. Have a great weekend, and we'll talk to you soon.

DAN HOWLEY: Absolutely.