So when is Xbox supposed to start outselling the PS5? Just wondering what your predictions are.
Well, that's a bit of the wrong way of looking at it, as unit sales aren't a great metric for system profitability for a reason, in fact that's kind of been the case for generations now. You don't need to sell more units than a competitor to hit similar or higher revenue or profit margins, which was the point of why I wrote that post in the first place.
Truthfully I don't see Series outselling PS5 at any point in the generation; however I'm expect profit margins for the Xbox division to close the gap with PlayStation division this gen, absolutely. I don't know what Xbox division did in terms of revenue for 2020, but PS division did $22.7 billion. Assuming 2:1, that could put Xbox's 2020 revenue at around $11.35 billion.
Going forward I can see that ratio reducing to 1.5:1 in a worst-case, maybe by late 2022. In terms of tying it? Probably around 2024, and potential to surpass that in the years afterwards. BUT, that all requires Microsoft to continue growing GamePass (especially in certain Asian regions and other territories like Middle East, Africa, South America), have healthy X|S sales, a strong string of 1P content, keep making inroads with 3P devs/pubs to diversify the library, get more parity in day-and-date 3P releases with Sony, net more timed exclusives of major AAA 3P titles over Sony.
If they can manage those things, even as Sony ramps up with PSVR2 and their 1P content comes out, unless Sony makes several massive 3P acquisitions or one of their IP blow up in terms of major popularity as a trans-media property, while PlayStation division will see growth, it won't be to a degree where they can maintain a 2:1 revenue margin advantage. Ports of some games to PC will help (not hurt) in their growth but by and large with the business model as Sony's had it for years, we know the upper limits of PlayStation in terms of unit sales in modern times, 100 million - 120 million or so. And we know what their revenue streams are with that number plus 1P sales #s.
Yet they are still experimenting with ports to PC, and expanding into other areas like anime licensing/streaming, mobile gaming etc. I don't think Sony has the infrastructure or internal resources to expand in those areas at a rate Microsoft can, however, which are the main reasons why I see Microsoft reducing or eliminating the revenue advantage of PlayStation division thoughout the generation (not to mention ongoing instability in other fields like film releases to theaters and live music events at public venues which affect Sony much more than Microsoft).
The only way I could see Sony expanding with the infrastructure at that rate to also compete with growing rate of corporate acquisitions is:
1: Continue facilitating partnerships and non-aggression pacts with Microsoft. The two have already agreed (though I don't know if this has happened yet) to use Azure for PS game streaming, and certain Zenimax games like Deathloop/Ghostwire are still coming to PS5 while others like ESO and F'76 will continue to receive updates. Microsoft have also left a door open to, in the future, cooperate with Sony and Nintendo in some facet of GamePass on their platforms if they can work out some terms, so while Microsoft is actively competing with them, they also want to try working with them.
And the reason they want to do this, in my honest opinion, is because they know a healthy Sony & Nintendo also keeps OUT companies like Google, Amazon, and even Apple from "filling in" a weakened slot in the mainstream non-mobile gaming space. There's a delicate balance Microsoft has to walk but so far they seem to be doing a good job. It's also this reason why I think they probably WON'T pursue companies like Square-Enix for acquisition; that basically cripples Sony, unless Microsoft agreed to keep those games multi-plat (but would that require GamePass on PlayStation in some form is the question). And in the case Sony felt threatened at being critically crippled in their most vital business division (PlayStation), that could drive them to..
2: Work with Google. Google already don't seem they want to do much with Stadia, especially in 1P content, but they have no issue providing the tech and their servers to other companies. A client like Sony would be a massive get for them and the fact they already have a "link" (loosely but still) via Jade Raymond's new studio is an interesting variable that could lead to something more in the future. Google'll never get business from a company like Microsoft, but if Sony feels like they can do better elsewhere, Google would probably be a first pick in setting up some deal for using their servers and streaming tech for PS+ and PS Now.
They could also, potentially, enter some sort of stronger partnership with Google where Google could just throw a ton of cash at Sony who could then make certain major acquisitions and deals beyond their current capacity, and grow their presence in the PC and mobile spaces, plus funding media ventures based on their gaming IP. Google has no issue with wasting money away, if they can direct some of that cash to a company that'd actually know how to use it in the gaming space, then it's money much better spent.
3: Partner with Amazon or Tencent. These are much less likely, the former because they have their own gaming plans and the latter because they seem more interested in just investing in companies and leaving it at that (potential fears via CCP ties are a concern though). However, they're still options, and also flushed with a lot of cash Sony could tap into if they could work out some strong deals.
Amazon in particular would be interesting due to Twitch and what integration a company like Sony could bring to PlayStation through that, though maybe it's a bit of a stretch. If they could make it work for non-gaming content though, like their films and anime...just imagine Sony essentially leveraging Twitch as their own streaming service, they could put certain content out for free on rotation while other content could be tied to various membership tiers, effectively as VODs. So instead of the newest Jumanji or Demon Slayer season going to Disney+ or Netflix, it'd go to Sony's official Twitch channels instead.
....technically they could do a lot of this with Youtube as well but Twitch is the more popular of the two for streaming content.
Now, also something to consider is those options I just mentioned aren't exclusive to Sony; Microsoft could just as easily pursue at least some of them. For example, while they wouldn't use Google's tech or servers for Xcloud, they could strike up partnerships with Youtube for MS-related media content for streaming and VOD purposes. Same with using Twitch for such as well; the site would just act as an access point but Microsoft could still host the content on Azure servers and (I guess) running it through AWS in some way if that's a requirement on Amazon's end.
Hell, these options are even possible for Nintendo, I believe some Switch games already run via cloud including a few through Azure. It's still on a game-by-game basis though.