PlayStation 4, Xbox One take it to the next level - San Francisco Chronicle ~ Electronic Gadgets

The most avid video game players will line up to buy the Sony PlayStation 4 when it goes on sale Friday, one week ahead of Microsoft's Xbox One.

But for about 2,000 workers in PlayStation's new headquarters in San Mateo, Friday only marks the start of a long battle for video game console supremacy that they hope will go on for years.

"We always say it's a marathon, not a sprint," said Jack Tretton, president and CEO of Sony Computer Entertainment America. "It's not about Nov. 15, it's not about this Christmas. It's about gathering consumers on a worldwide basis over the next decade. We realize we're not going to get everybody on day one."

Sony had more than a million preorders for the PlayStation 4, the company's first new home game console since the PlayStation 3 hit retail shelves seven years ago. Meanwhile, Microsoft hasn't introduced a home console model since the Xbox 360 in 2005.

The video game industry is hoping for a major boost from both next-gen consoles. Indeed, the research firm Gartner projects worldwide industry revenues will hit $93 billion this year, up from $79 billion last year.

Sony's main office remains in Japan, but the 1 million-square-foot campus on Bridgepointe Parkway is the headquarters for development and marketing for the PlayStation platform for all the Americas. While the PlayStation holds the advantage in sales globally, the San Mateo office is key for its future in the lucrative North American market. That's where the Xbox has the edge, said Brett Sappington, director of research for Parks Associates of Dallas.

"With this new platform, there's a real opportunity for Sony to turn that around," he said. "If you're Sony and you end up tied at the end of 2013 in sales, that's a win for you."

PlayStation's headquarters for the Americas has long been in the Bay Area, but has gone largely unnoticed because offices were scattered across Foster City. But in June, Sony completed its move into the former campus of enterprise software maker Siebel Systems, now part of Oracle.

New visibility

With a fountain spraying behind a "PlayStation" sign that can be seen from the Bridgepointe Shopping Center across the street, Sony has the kind of visibility that it long lacked, even within the Bay Area, Tretton said.

"People know that Apple is here and people know that Google is here, and hopefully people know a little bit better now that PlayStation is here," Tretton said.

The campus has features common among Silicon Valley tech companies competing for talent, including its own restaurants and a gym with yoga, massage and weight rooms.

Perhaps the most uncommon feature is a state-of-the-art audio recording studio that rivals the best of the music industry. Sony wanted to build on its success last year when its "Journey" game soundtrack received a Grammy nomination, an industry first. There are two audio control rooms and two live recording studios, along with in-house music producers and recording engineers "that we pulled in from the record industry," said music director Chuck Doud.

Sony hopes a tricked-out studio provides gamers with the kind of detail that persuades them to pick a PS4 over the Xbox One. But only time will tell whether that is enough to tip the scales, said Sappington. Some of the initial buzz favors the Xbox One because of a highly anticipated first-person shooter, "Titanfall," which Redwood City's Electronic Arts will publish exclusively for the Xbox One, Xbox 360 and personal computers.

"The one thing I can't project is how popular the titles will be," Sappington said. "That's the big wild card."

Getting an edge

Sony might have an edge by pricing the PS4 at $399, $100 cheaper than its rival, he said. "If Sony takes the overall lead in sales, that might force Microsoft to change its pricing or bundle games with consoles to catch up," he said. "When that happens, then the fight really begins."

Parks Associates projects home video game console sales to hit 26.8 million units this year, down from 30.7 million last year. But as the next-gen consoles start to take off, sales should pop to 33.5 million units in 2014 and hold steady for a few years after that, Sappington said.

But those include sales of the older Xbox 360 and PlayStation 3, which will remain in production. The new consoles are, at least initially, not compatible with games from the older consoles, meaning players who have invested in the older games may be reluctant to upgrade to the new machines. But Sony's Tretton said he isn't expecting every PS 3 owner to switch right away.

Sony didn't discontinue sales of the PlayStation 2, introduced in 2000, until the start of this year, and Tretton expects a long life cycle for the now-$199 PlayStation 3, which has an installed base of about 80 million units. "Quite frankly, if everybody wanted one, we couldn't manufacture enough to give to them," he said.

And unlike with past releases, consoles makers like Sony, Microsoft and Nintendo have more competition from smartphones and tablets, which have become popular with casual game players.

Tretton believes that also creates an opportunity because those devices have helped expand the gaming universe, with an estimated 1 billion players across the globe.

"I still think it's the fact that days are only 24 hours long and people ultimately have to sleep, so there's a lot of competition for their time and attention, not just gaming," Tretton said.

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