Gamescom: Microsoft, Sony Battle Over New Consoles

Visitors at Gamescom in Germany on Aug. 21

Europe's largest gaming conference opens with a face off between the forthcoming Xbox One and Playstation 4.

COLOGNE, Germany – With apologies to Shakespeare, for the next five days the game's the thing in Cologne, where Gamescom, the world's largest gaming trade fair, kicked off Wednesday.

Some 300,000 people are expected to stroll through the Gamescom halls this year, proof, if any was needed, that the global video game industry is as buoyant as ever.

But amid all the noise and hype surrounding new titles and new tech, there is a bigger question looming over Gamescom this year: Where is the gaming business -- worth an estimated $80 billion worldwide -- going?

STORY: Sony's PlayStation 4 Will Be Available This Year for $399

Ahead of the event, much of the excitement centered on the so-called “battle of the consoles” the head-to-head competition between Microsoft's new Xbox One and Sony's PlayStation 4, both of which hit stores later this year. Gamers have waited eight years for the next generation XBox and seven for the new PlayStation, and the industry hopes the shiny new machines will reverse the recent decline in console sales.

Things haven't gotten off to a good start for Microsoft, which first unveiled the XBox One in May but stumbled on the PR front with a series of controversial, and since reversed, policies including a requirement that gamers check in online every 24 hours and restrictions on the sale of used games for the new console.

Microsoft also appeared to be pitching the XBox One less at hard-core gamers than at the general public, emphasizing its ability to stream films and surf the Internet instead of presenting new games. This contrasted with Sony's approach (and that of Nintendo, when it launched its Wii U console late last year) which focused on gaming credentials first, looking to win over the hard-core crowd before targeting the casual market.

But in its XBox One press conference in Cologne this week, Microsoft reversed course, preaching directly to the gaming choir. This included bundling top-selling soccer title FIFA 14 free with every XBox One preordered in Europe and making development kits available to indie game developers to encourage them to make titles for the new console. 

Sony Computer Entertainment executive Andrew House, the man in charge of Sony's Playstation division, couldn't resist taking a potshot at Microsoft's change in tack, noting that in his Gamescom address that “while others have shifted their message and changed their story,” Sony has been consistent in its gamers-first approach. House confirmed that Sony already has more than a million preorders for PlayStation 4, suggesting that strategy is paying off.

STORY: Xbox One to Launch in November for $499 

But while the blockbuster consoles get most of the attention, the real growth in the gaming industry is at the other end of the market: the low-cost or free-to-play titles such as Angry Birds, Candy Crush or Plants vs. Zombies that are mainly played on smartphones and tablets. A recent study by analytics company App Annie and research firm IDC estimates the global mobile gaming market will be worth $12 billion this year.

So it should come as no surprise that all the major gaming publishers were keen to push the free-to-play versions of their top titles. These included a free mobile version of Electronic Arts' FIFA 14, Ubisoft's free-to-play Panzer General Online and a free version of Sony's hit game LittleBigPlanet.

Some have predicted that the rise of mobile games will mean the end of the big consoles. The hype surrounding the next-generation Playstation and XBox, however, suggests that may be premature. But that isn't stopping everyone here from hedging their bets.