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PlayStation 4 sales hit 10M in blow to Microsoft’s Xbox

Sony has sold over 10 million PlayStation 4 (PS4) devices, the company said on Tuesday, landing a major blow to console rival Microsoft's Xbox One.

Jim Ryan, Sony Computer Entertainment Europe CEO, made the announcement at major gaming conference Gamescom in Cologne, amid a battle for dominance between consoles and mobile gaming.

Read MoreToys could save Nintendo's gaming fortunes

Meanwhile, Microsoft's Xbox One has sold around half of that at 5 million after the technology giant made an error with its strategy, according to analysts.

Where did Xbox One go wrong?

Microsoft has had an uphill struggle since it released its next generation games console to 13 markets including the U.K and U.S. in November 2013. The Xbox One was around $100 more expensive than the PS4 because it was bundled with Kinect, a camera that allows users to play interactive games.

Chris Morris | CNBC

Though this has been scrapped and the price reduced, it has done little to revive the Xbox One's fortunes.

"Xbox has suffered from a huge amount of negative publicity which has hurt it," Sam Gee, senior technology analyst at Mintel, told CNBC in a phone interview.

Will Microsoft catch up?

Microsoft will be hoping to gain a stronger footing in its fight with Sony after making a string of announcements at Gamescom.

Read MoreWhy the Xbox One still has a chance

The Redmond, WA-based company said "Rise of the Tomb Raider", the game famous for character Lara Croft, will be exclusive on Xbox One with a launch in late 2015, as well as new bundle packages for the console.

The Xbox One is also scheduled for release in 26 other countries which could give it some added sales power to catch up with the PS4.

The launch of a cheaper Xbox One and a strong show of content at E3, one of biggest video game trade fairs, has allowed Microsoft to improve Xbox One sales and "claw back some market share in recent weeks", Piers Harding-Rolls, head of games at IHS, told CNBC in an email.

"Microsoft's move to secure 'Rise of The Tomb Raider' exclusivity at the end of 2015 is a strategic coup. The title is well-anticipated and loved, and will allow Microsoft to go head-to-head with 'Uncharted 4', Sony's biggest third-person action exclusive, expected to launch in the same timeframe"

PS4 throws punches

Not to be outdone, Sony announced a slew of new games and features as gamemakers attempt to make consoles an entertainment platform for films, TV and music.

Read MoreIs it game over for Nintendo?

But the most advanced revelation could be the PS4 system update 2.0 which will allow friends to play a game even if they don't own it.

"The best way to think about Share Play is like a 'virtual couch'," Sony said in its official PlayStation blog.

"PlayStation 4 will create an online local co-op experience by allowing you to invite a friend to join your game—even when they don't own a copy of it."

It will also allow players to upload game footage to YouTube, a growing trend amongst users wanting to show off their gaming accomplishments.

Who will win?

The game is hardly over for Microsoft as the important Christmas period approaches fast. While Sony has the edge, a cheaper offering from Xbox and the new announcements at Gamescom, could make for an interesting clash, according to Harding-Rolls.

"The console business is a momentum business and the sales momentum continues to be with Sony and PS4 even with a better positioned Xbox One. That said, I believe that Christmas 2014 will be highly competitive between the two consoles," Harding-Rolls said.

- By CNBC's Arjun Kharpal

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