Sony’s head of games has admitted that the Japanese group’s new console may be its last, as it unveiled the pricing of its PlayStation 5 in anticipation of a fight with rival Microsoft over next generation technology.

Sony will sell the PS5 with the same $499 price tag as Microsoft’s upcoming Xbox Series X, intensifying focus on the rivals’ line-ups of exclusive games as they battle for dominance in an evolving entertainment industry where millions remain housebound due to Covid-19. 

While the console makers have previously fought on comparisons of hardware, analysts said competition between Sony and Microsoft’s new machines will be defined by their investments in in-house games production.

For Sony, more than Microsoft, the outcome of this fight will be critical. Its gaming division is its biggest revenue driver and its importance will rise as the global pandemic and tensions between the US and China cast a shadow over other units, such as those that sell the image sensors used in Apple’s iPhones. 

The company expects its gaming business to generate 30 per cent of its revenue and nearly 40 per cent of its operating profits for the fiscal year to March 2021. 

Sony and Microsoft’s upcoming consoles represent the fourth time they have competed head-to-head in this space, with both throwing massive resources at capturing a critical segment of the global games market estimated to be worth about $45bn.

Some analysts have predicted that this could be the last round of the console wars as games streaming and digital downloads push content across different devices and the technology evolves away from a large box sitting under a TV. One of the main launch titles for the PS5 — Devil May Cry 5 — will only be available digitally. 

In a 45-minute online promotion on Wednesday that showcased new titles such as Spider-Man: Miles Morales and Resident Evil 9, Sony revealed that it would launch two versions of its new PlayStation. The main edition — which includes a disc drive — and a version that only plays digitally downloaded games for $399. Both will go on sale on November 12 in Sony’s core markets including the US and Japan, and on November 19 in the rest of the world.

The long-anticipated price announcement from Sony came a week after Microsoft disclosed that its Xbox Series X will be priced at $499 while its less powerful, smaller Xbox Series S console will go on sale for $299 on November 10.

Minami Munakata, an analyst at Goldman Sachs, said that the disc-free version of the PS5 would support an industry acceleration towards digital-only games sales.

“I expect digital sales will increase in the future because of this lower-priced model launching,” said Ms Munakata. She believes the ratio of digital games sales compared to disc-based sales would likely rise from around 51 per cent now to 80 per cent in five years’ time. 

The timing of the launches sets up Sony and Microsoft for an end of year showdown against a backdrop of Covid-19, which has forced profound behavioural changes on households globally and boosted the games industry as people have immersed themselves in home entertainment.

Analysts expect that the impending Microsoft-Sony showdown will have many elements of the traditional console war, with an emphasis on games that are exclusive to each machine, as well as the range of titles available at launch and during December’s critical festive season.

On Wednesday, Sony showcased a series of games generated by its own studios — production units that it has acquired or developed in-house in an attempt to get an edge over Microsoft. Its US rival has in recent years made a flurry of studio acquisitions to bolster its own line-up.

David Gibson, an analyst at Astris Advisory in Tokyo, said the pricing of Sony’s hardware was as expected and the line-up of launch titles from its in-house studios was strong. “Spiderman will beat Master Chief easily,” said Mr Gibson, referring to Sony’s main launch title’s chances against Microsoft’s flagship series, Halo.

Back in 2013, Sony priced its PS4 at a $100 discount to Microsoft’s rival Xbox One, setting off one of its most successful launches with sales of the console having now surpassed 112m units.