E3 2016: Expect A Midlife Console Crisis And Plenty Of Virtual Reality

E3 2016 may have lost some intrigue Friday after Sony confirmed the rumored PS4 upgrade, but there are plenty of surprises in store for the annual game industry pageant of new offerings and bragging rights for best presentation. While the focus will be on the next moves from Sony, Microsoft and Nintendo, virtual reality will also share the spotlight at E3 2016.

Sony has a commanding lead in the current generation console battle, with more than 40 million PS4 consoles sold since the November 2013 launch. The confirmed PS4 upgrade will be optimized for ultra HD and virtual reality, but it won’t replace the PS4.

“It’s sort of like when the iPhone 6s came out. Your iPhone 6 is not a paperweight. It’s the same as calling it a PS4s,” Michael Pachter, managing director of equity research at Wedbush Securities, told International Business Times.

Sony said the company will not reveal the new console, codenamed Sony NEO or nicknamed the PS4K, at E3 2016, but there are questions for the next phase of the PS4. “I say the two options are the new console comes in at the $349 price and they discontinue the PS4 or the new console comes in at the $399 price and they will lower the price of the PS4 to $299 and keep them both,” Pachter said.

Microsoft will have its own upgrade on display at E3 2016 with a slim version of the Xbox One. The console will not feature upgrades to the console’s CPU or GPU. Microsoft’s efforts to create a Universal Windows Platform with games being available for PC and Xbox One won’t be enough to catch up to Sony, Pachter said. The Xbox One would need something akin to a Hail Mary at the end of the fourth quarter to close the gap of approximately 20 million consoles that sits between Microsoft’s console and the PS4. Something as drastic and expensive as closing off console eSports could be a potential answer, but that’s just speculation.

There is also a distinction that needs to be made about consumers. Sony’s PS2 will continue to be the standard for consoles with more than 170 million units sold. Sony’s PS3 lost to the Xbox 360 in the next round of the console wars, but that victory did not come from new consumers.

“When Microsoft so-called beat them last cycle, they sold 80 million [Xbox 360s]. Sony lost share to Microsoft and now they are gaining it back. Sony is winning back all its old customers, not like Microsoft is losing new converts,” Pachter said. Nintendo’s poor performance with the Wii U has given both consoles more room to flourish.

Nintendo’s E3 2016 presence will be limited to “The Legend of Zelda” and “Pokemon.” The acknowledged Nintendo NX will not be revealed at this year’s conference. The company’s dominance in the mobile space is shrinking as more players turn to smartphones or tablets. With the console race looking like a clear victory for Sony, the most intriguing aspect of E3 2016, aside from game reveals, could be in virtual reality.

“Virtual reality will be a focus. Oculus is demoing, although the product is in the market, not a lot of people have seen it because it’s sold out. HTC Vive will be shown and Samsung will have a big display for the Gear VR, Pachter said. “I think the press will like VR because you’re going to see a lot more stuff than you’ve seen in the past.”

The Oculus Rift and HTC Vive have been released while Sony’s PlayStation VR will launch in October. Sony’s PlayStation VR will feature prominently at the company’s press conference with even more games revealed for the headset. The PlayStation VR could also get the first blockbuster title for a headset. If Sony announces a “God of War” or “Uncharted” VR game, that’s something the Rift or Vive can’t offer to consumers. Pachter predicts Sony will sell 2 million to 4 million PlayStation VR headsets, with 3 million looking like a pretty reasonable estimate. Sony’s big selling point is that the PlayStation VR does not require special equipment or a high price for entry. Pachter expects fewer than a million headsets to be sold for the HTC Vive or Oculus Rift, but that could all change in the next few years as the cost of VR goes down.

“Sony wins, if you’re measuring by units. Over the long run, I think all of these headsets are going to come down in price and the system requirements will become ubiquitous over time. I mean, if you could run the Oculus Rift from your iPad in five years then there is no special requirement,” Pachter said.