No, Sony Have Not Won the Console Wars

Shaxster | On 07, Jan 2014

Today, Sony announced they sold 4.2 million PlayStation 4s worldwide in 2013. This is, inevitably, compared to the Xbox One, 3 million of which were sold in the same period (give or take a few days, based on release dates). Of course, everyone looks at these figures and thinks that Sony have clearly won the console wars. They’ve sold 1.2 million more consoles, after all! Game over!

Except…no. That’s a huge error in logic. Because what almost everyone is forgetting is the difference in price: the Xbox One costs $100 more. And basic economics tells us that when prices are higher, demand is lower. Obviously. So it would be ridiculous to expect the X1 to have sold as well as the PS4. These figures should surprise no one.

This decreased demand is made up for by the increased revenue, however. I’ve run the numbers, and calculated that Sony sold about $1.68 billion worth of consoles, whilst Microsoft sold about $1.50 billion. That’s assuming an average RRP of $399 and $499 respectively, which is obviously not correct (prices are higher in other territories). This is a different of $180 million: a not-insignificant difference, but hardly game-changing when we’re talking about billions. To put it into perspective, that difference is just 12% of Xbox One’s total revenue.

But that’s not all. Of course, Microsoft and Sony have different profit margins on their products. Microsoft make $28 per console, resulting in a rough profit estimate of $84 million. Meanwhile, Sony squeezes just $18 out of each PS4, leading to noticeably lower profits: just $75.6 million.

Now, I’d ask you to bear in mind that companies exist to make profits. That’s the end game: making lots of money. Not having loads of users. Not making the best games. Not having a marginally higher resolution and frame rate onBattlefield 7: Death Killing Edition. Making money. And what we see from these figures is that Microsoft are, at this point in time, making more money from Xbox One sales than Sony are from PS4 sales. Almost $10 million more. And I think those numbers do a much better job of showing the real winner of the console wars than some sales stats.