PlayStation 5, Xbox Two Likely To Feature Virtual Reality

Sony (NYSE: SNE) and Microsoft (NASDAQ: MSFT) are still a month away from releasing their newest game consoles, but speculation for the next generation has already begun.

Christine Arrington, the Senior Games Analyst at IHS Electronics & Media (NYSE: IHS), told Benzinga that there is no guarantee that either firm will want to produce another console. Between downloads and cloud gaming services, some developers believe that may not be necessary.

But if they do make another generation of consoles, Arrington expects them to integrate virtual reality and/or augmented reality.

"I know Microsoft has filed for a patent on some display technology that uses the entire room," Arrington told Benzinga. "You can see that they're looking into those things and trying to assess the viability in a consumer home environment, so I think bringing that technology into the home is still a huge challenge."

By the time the next console generation arrives, that may not be a problem. Xbox One is scheduled to ship eight years after Xbox 360. PlayStation 4 will be released seven years after PlayStation 3.

There's no telling how long consumers may wait for PlayStation 5 and Xbox Two to arrive.

"If we wait another eight to 10 years for a console cycle, I imagine some of those technologies will be ready for the consumer environment," said Arrington.

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In order for virtual reality and/or augmented reality to succeed, Arrington believes that these technologies must meet the following requirements:

• Is it comfortable?
• Does it not make you sick?
• Does it not give you a headache?

"All those things," she said. "And what's the price point? I do believe the next time around we will see a lot of VR technology [and] AR technology, will have to be integrated -- things that you cannot do that are hardware-based that have to be part [of] the console. What other reason would there be for another console? Graphics power? Ten years from now, I would assume that you've got GPU cloud servers that are dating the consoles."

Arrington seems to be intrigued by what Sony is doing with its cloud gaming service, which is scheduled to launch in 2014 across all PlayStation Network devices (PlayStation 3, PlayStation 4 and PS Vita).

"I think it's very interesting," said Arrington. "Everybody is so focused on the backwards compatibility aspect of it, making sure that PS3 games are still playable. But it's so much bigger than that. It's introducing a new distribution channel for PlayStation 4 and for the whole industry, but also opening up a lot of creativity in game development."

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That distribution channel will initially focus on PlayStation 3 games. It is more or less Sony's way of beta testing the service before attempting high-end current-generation games, which might require better compression and a faster Internet connection.

"I think nobody quite knows what's going to happen yet, but developers are behind closed doors working with the technology, and coming up with new and creative ways to make it a platform rather than just thinking of it as a distribution channel," Arrington added.

"In the short-term, yes, we'll have PlayStation 3 games, and that's great. Long-term it will be very interesting to see what creativity comes out of having this capability [from] a console."

PlayStation 4 is scheduled to be released in North America on November 15. The console will be released in Europe on November 29, and will arrive in Japan on February 22, 2014.

Xbox One will be released globally in 13 territories -- Australia, Austria, Brazil, Canada, France, Germany, Ireland, Italy, Mexico, Spain, United Kingdom, United States and New Zealand -- on November 22.

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

Louis Bedigian is the Senior Tech Analyst and Features Writer of Benzinga. You can reach him at louis(at)benzingapro(dot)com. Follow him @LouisBedigianBZ