Microsoft’s New Xbox One Sells Out; Like Sony, Launch Is Strong, But Questions Hang Over Console Business; Microsoft Says Initial Xbox One Sales Exceed 1 Million

Microsoft’s New Xbox One Sells Out

Like Sony, Launch Is Strong, But Questions Hang Over Console Business

IAN SHERR

Updated Nov. 22, 2013 8:30 p.m. ET

Microsoft Corp.’s MSFT +0.45% new videogame console drew crowds for its debut, emulating an upbeat launch by rival Sony Corp. 6758.TO -1.00% while offering a different take on living-room entertainment. The Redmond, Wash., tech giant said it sold more than one million units of its Xbox One videogame console in the less than 24 hours since its debut. The $499 device launched in 13 markets around the world, and sold out at most retailers.

“We are working to replenish stock as fast as possible to meet the unprecedented demand from our customers,” the company said in a statement.

Microsoft had previously said preorders were sold out as well and predicted it would set a sales record. “We are on track for the biggest launch of any kind,” said Yusuf Mehdi, head of marketing for the Xbox group, in an interview earlier this month.

But how long the strong demand will last for the Xbox One and Sony’s new PlayStation 4, which also initially sold out, remains a matter of debate. The console videogame industry has struggled to show growth in recent years, as some consumers turned to games created for mobile devices and social networking websites.

Market research firm PricewaterhouseCoopers said it expects world-wide console game sales to rise 4.2% to $25.98 billion this year, and projects another 6.4% jump in 2014. That is still far less than the 28% growth the industry saw in 2007 after the last batch of new videogame consoles were released

One concern is that some people may have lost the console habit, while a younger audience growing up on mobile devices might never begin playing in the living room.

“We’ve lost some gamers into other things,” said Paul Raines, chief executive ofGameStop. GME +2.17%

Mobile games account for some of that decline, he acknowledged. But Mr. Raines said activities like using social media and online video streaming have just as much of an impact.

Still, gaming industry executives remain upbeat following the dueling console launches. Sony, which attracted large crowds for the PlayStation 4’s launch on Nov. 15, said it sold more than one million units in its first day on the market. The device sells for $100 less than the Xbox One.

GameStop has said surveys of its affinity rewards program members indicated two-thirds of respondents planned to buy a PS4 or Xbox One within the next year. Its executives said the retailer had larger supplies than in previous launch years, and that initial indications were positive.

Many customers who turned out for the Xbox One said they were excited about features such as its Kinect motion sensor, which enables customers to speak commands and wave their arms and bodies to control games, watch TV and surf the Web.

“It’s the future of technology,” said Jack Bewley, 47, who preordered an Xbox One and was attending a launch party at the Microsoft Store in San Francisco to buy a Kinect-focused sports game.

Unlike Sony, which stressed the new PlayStation’s prowess as a videogame platform,Microsoft has emphasized the Xbox One’s additional roles in entertainment. The device can control a television and stereo as well, for example, allowing customers to issue commands with their voices.

Such features could help Microsoft in the coming years, said Liz High, an analyst at the analytics and consulting firm SDL PLC. She said social media conversations and consumer purchasing habits suggest Microsoft’s approach of marketing to a wider group of customers will likely be more effective with the next wave of consumers.

Some industry executives say the two machines are roughly comparable in videogame play, making the quality of software an overriding factor. That means that the console makers must keep funding development of games by their own teams and encouraging outside developers.

“The ultimate vulnerability is whether Microsoft and Sony do enough to water the ecosystem,” said John Riccitiello, a former CEO at Electronic Arts Inc. EA -1.07%

Microsoft Says Initial Xbox One Sales Exceed 1 Million

Microsoft Corp. (MSFT) said it sold more than 1 million Xbox One video-game consoles in less than a day after the new machine went on sale in 13 countries.

The tally surpassed first-day sales for the predecessor Xbox 360 and set a record for Microsoft, the Redmond, Washington-based company said today in a statement. The Xbox One went on sale in Australia, Austria, Brazil, Canada, France, Germany, Ireland, Italy, Mexico, New Zealand, Spain, the U.K. and U.S. after the company cut eight countries from the initial sales list, citing production issues.

Sony Corp. (6758) said on Nov. 17 it sold more than 1 million PlayStation 4 consoles in North America in the first day of release, topping initial sales for the predecessor PlayStation 3 in 2006. The PS4 goes on sale Nov. 29 in 30 countries in Europe and Latin America, followed by Japan on Feb. 22.

The two companies are competing for the attention of gamers and trying to revive a console market that shrank 32 percent to $13.3 billion from 2008 to 2012, according to market researcher NPD Group. Both are offering machines with upgraded graphics and more entertainment tie-ins. The Xbox One sells for $499, while the PlayStation 4 is offered for $399.

Microsoft, which has been pitching the Xbox One’s motion-sensing Kinect camera as a controller for all forms of living room entertainment, has focused its message on applications and exclusive content, including the games “Ryse: Son of Rome” and “Dead Rising 3,” and an upcoming live-action TV show from Steven Spielberg.

Microsoft rose 0.5 percent to $37.57 in New York and has gained 41 percent this year. Sony American depositary receipts fell 1.9 percent to $18.30.

Waiting List

GameStop Corp., the largest specialty retailer of video games, said this week that 2.3 million customers are on its waiting list for new players from Sony and Microsoft.

After replenishing initial inventories, Sony and Microsoft each are expected to sell about 3 million consoles worldwide by the end of the year, according to projections by Michael Olson, an analyst at Piper Jaffray Cos. in Minneapolis.

U.S. sales of both physical and digitally delivered games grew 17 percent in the three months ended in September, NPD reported yesterday, driving the industry’s biggest gain since the second quarter of 2011.

“We expect that the launches of Microsoft’s Xbox One and Sony PS4 will continue to fuel consumer excitement and spending for games heading into the holiday season,” NPD said in a statement.

To contact the reporter on this story: Cliff Edwards in San Francisco at cedwards28@bloomberg.net