As followers of Microsoft (NASDAQ:MSFT) are aware, the Xbox One was unveiled yesterday in Redmond. It is a bold attempt by Microsoft to create an all-around entertainment device, thereby permeating every element of living room technology, except the TV itself. This long-awaited, next-gen entertainment and gaming device will have a strong effect on several companies. Here's a brief rundown of a few of these companies, along with a brief outline of their direction.
Microsoft is the current leader in consoles and has been for two years. Its Xbox Live has recently reached the 40 million user milestone, many of those being Gold subscribers that pay $60 a year. Add that to great games sales for titles like Halo (a game made by Microsoft itself), as well as sales of over 60 million consoles in total, and you begin to see the success Microsoft has experienced with Xbox. With the imminent release of the Xbox One, this success will-- in all likelihood-- be renewed and increased. In fact, the Xbox brand could soon come to dominate the living room entertainment experience, which is already happening now. As an investment, MSFT is solid and can only go up as a result of the upcoming One.
As Microsoft's main rival in the game console sector with its PlayStation, Sony has direct bilateral relations with Microsoft in regards to the success of its consoles. The specifications of the One and the PS4 are comparable, as is the overall game selection. This means that fans of both companies' gaming platforms will remain loyal customers; however, the Xbox One doesn't stop there. It also functions as an overall entertainment hub that links to television while maintaining an emphasis on gaming. Therefore, Microsoft may have a leg up on Sony in all-around appeal.
Nintendo has been struggling lately to keep up with Xbox and PS, and its Wii U has not matched sales expectations, even with the old generation consoles as its only competition. In fact, only now is it matching some of the features and specs that its rivals had six years ago. When the new gen is released, one can expect Nintendo to fall severely behind.
Electronic Arts (NASDAQ:EA)
Upon its rollout, EA will release four games for the One: FIFA 14, Madden NFL 25, NBA Live 14, and EA Sports UFC. The former three of these are long-running and successful franchises and the latter (UFC) is a new title. The aforementioned games (running on EA's new Ignite engine) will help EA strengthen their partnership with Microsoft, bringing sales to EA and adding strong titles to the One's lineup. Overall, the One is good news for EA.
The Xbox One might just be Redmond's most damaging product to Cupertino. Apple's foray into the TV entertainment market, the aptly-named Apple TV, was mildly successful in its own niche market-- a safe distance away from the far more popular Xbox 360. It competed more with Google (NASDAQ:GOOG) TV than anything, and was bought by users who wanted deep integration with iTunes and a lot of video and music content. Now Microsoft threatens to crush any hopes Apple may have had for the Apple TV by expanding Xbox's brand to include Xbox Music, Xbox Video, TV, and other content sources. Couple this with its already-existent gaming and web-browsing, and you've got a potent combination. If priced reasonably, the One has the potential to absolutely destroy Apple's living room presence.
Advanced Micro Devices (NYSE:AMD)
No matter what happens, AMD wins. This is because both Microsoft and Sony, the two strongest players in the market, are using AMD CPUs and GPUs in their new systems. As you can see here, AMD holds a very strong position in the future video game console market. So unless Nintendo does something spectacular or AMD falters on the PC front, investing in AMD is a surefire way to capitalize on the next-gen consoles.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.