Its really simple.
Scenario A: Microsoft announces the price of the Series X. Playstation announces the price of the PS5 with the disc drive. XBOX undercuts Sony with the Series S, which is actually even cheaper to make than a regular XBOX ONE S. Sony then offers the digital-only PS5 at a huge loss to undercut Microsoft. The consoles release and the digital only version sells out immediately because of severely limited supplies. Everyone who wants a Playstation bites the bullet and buys the more expensive version (or waits for a cheap one because its a console launch and there’s no real rush).
Microsoft leans more heavily into Gamepass subscriptions as a measure for success and quickly drops Series S to an even lower price. No one who actually has Gamepass cares because their XBOX ONE S/X is just as good as a Series S and anyone who wants better graphics already plays on PC. Microsoft looses.
Scenario B: Sony announces its PS5 with the disc drive first. Microsoft undercuts them with Series X for a loss. Sony follows suit with the digital-only version. Microsoft announces Series S as a cheaper alternative. At launch day both consoles release and both the Series X and Digital only PS5 sell in limited quantities because both companies want to mitigate their losses by encouraging the vast majority of consumers to buy the profitable versions. XBOX quickly gains the reputation of having the less powerful console since Series S is just a current gen console masquerading as a next gen one. Microsoft looses.
Scenario C: Sony waits until Microsoft announces both versions even at the expense of moving back its release date because it is the clear market leader and it can use the pandemic as an excuse to mitigate PR damage. It then undercuts on price and wins because the cheapest console is almost guaranteed to win.
Scenario D: Sony releases all of its first party exclusives on PC in an attempt to compete with Microsoft in the new Digital space created by Gamepass. Microsoft’s decision making on game design begins guiding the entire industry as Sony attempts to create games that are service oriented and easily monetized. We all loose.
Oh wait, that wasn’t simple at all.
