E3 2015: How Sony Could Lose Its Leverage To Microsoft

Sony Corp (ADR) SNE and Microsoft Corporation MSFT are gearing up for a week of news from the 2015 Electronic Entertainment Expo. The two industry stalwarts are scheduled to host their annual press conferences later today, and the stakes are higher than ever.

"Sony has to be really careful in how they play this," Patrick Moorhead, president and principal analyst at Moor Insights & Strategy, told Benzinga. "I think that, when you look at when the PS4 and Xbox One were launched, Sony took a game approach and Microsoft took a living room entertainment approach. Since the announcement, Microsoft went back to the roots of Xbox with games."

Moorhead said that Microsoft also made Kinect (which was initially required to use Xbox One) an optional device and put "all of their energy into gaming."

"I think Sony needs to be very careful, because Microsoft has had over a year to lock into this gaming strategy," he said. "There's the potential that Microsoft gets the leverage back, meaning that they take the positioning away from Sony."

Related Link: E3 2015: What's Coming For Nintendo?

'Disastrous' Event

Asif Khan, CFO of Virtue LLC and CEO of Shacknews.com, told Benzinga that he "wouldn't put it past Microsoft to have a disastrous press conference and Sony to actually surprise people."

Khan explained, "To me, the Morpheus, I tried it and I'm not impressed by the hardware," said Khan. "I know it's not done yet. Where Morpheus, I think, has a head start is they already have their interface device in the [PS] Move and people have already been using [that controller]. But it's a proprietary solution. Where Valve and Oculus are going to support all sorts of platforms, Morpheus is only going to work on PS4."

One drawback is that, thus far, Oculus VR hasn't shown any significant features for the console it supports, Xbox One. Consumers can use an Oculus Rift headset stream Xbox One games to their PC, but the games will not be playable in 3D or offer any virtual reality effects.

"What we do know is that right now they haven't shown us that, 'Hey, this is an immersive "Halo" experience,' or 'Hey, this is "Forza" in the Rift!'" said Khan. "Right now it's, 'Here's "Forza" on a TV in the Rift.' Who cares? I was shocked that that was what they were leading with."

DirectX 12 – An Unknown Threat?

Moorhead likes what Sony is doing with its streaming game service, PlayStation Now, but said it needs triple-A titles to really succeed. Even then, he worries that Microsoft could still have an advantage with DirectX 12.

"Does DirectX 12 bring anything to the table in terms of efficiency and quality of gameplay?" he questioned. "The new Xbox runs Windows 10 [and] Windows 10 has DirectX 12. Microsoft could have an ace up its sleeve for E3 and this should be the time for them to drop it."

Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.

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