Under the strip-lit, soulless shell of the Earls Court exhibition centre, a queue is forming. Towards the front of this winding mass of flesh and denim sits a small boy. A huddle of pallid and paunchy men in black T-shirts keep sneaking peeks over each other's heads towards the young prince encased in a futuristic carriage. It's not North West or Harper Beckham or Prince George. It's just a little runt playing Drive Club, but the fact that he's playing it on the soon-to-be-released PlayStation 4 has made this technological starchild the temporary envy of men 40 years older than himself.

Since its launch in 1995, PlayStation was always more than another one of Sony's electronic playthings: it changed the idea of what a videogame could stand for. It birthed characters that defined their eras: Lara Croft, Crash Bandicoot and Solid Snake. It helped to make a worldwide phenomenon of the Fifa series and the endless moral panics surrounding Grand Theft Auto. More than that, it was gaming's first lifestyle brand, one to one to rank up there with Nike, Coke and Ikea.

But at the turn of the millennium, Microsoft, the all-conquering giant of "proper" computing, entered the videogame world with its own wired-up Venus De Milo: the Xbox, a more powerful, more serious, more intimidating console originally aimed at those who took their gaming very seriously.

For a decade or so, PlayStation and Xbox fought out it with updated consoles, flashier games, celebrity voices, technological innovations and newer tricks. There was a clash of the titans going on, a landgrab for the vistas of our imagination.

But in the cold, Apple-dominated world of 2013, both consoles stand as slightly diminished figures. Despite trying to branch out into other media, they never did become the mainstream home-entertainment hubs of feverish prediction. The games industry is still racking up the numbers: a few months back, GTA V sold an astounding 1.57m copies in the UK on in its first day of release, while roughly 80 million people around the world own a PlayStation 3, and it's a similar figure for the Xbox 360. But Sony and Microsoft have always craved more than just profits; they want their machines to make a cultural impact, to become central to our lives. It's why the PlayStation v Xbox console wars ultimately superseded those of Sega v Nintendo, companies focused on fun gameplay and child-friendly characters.

Drive Club, one of PlayStation 4's titles.

Now, perhaps aware that interest in their phoney war is waning, Sony and Microsoft have chosen to go head-to-head for the first time ever, with both next-generation consoles – PlayStation 4 and the iconoclastically named Xbox One – about to be released within a week of each other. Yet all that this confrontational posturing has done is to highlight how similar these two consoles are. Both have the same flagship games, both claim to prioritise social gaming, and both are heavily internet-based. Any allegiance that gamers might once have had to the "cooler" PlayStation and more "serious" Xbox seems to have dissipated.

At an Xbox press event, a game developer working independently from both companies quietly confides that "there isn't much difference at all between the two of them". When pressed to venture anything that might determine a victor in this contest, he says that "obviously the Xbox has the Kinect [its camera-based motion sensor] built-in, but you can buy the add-on for the PlayStation. Supposedly the Xbox is more powerful, but really, it's all about the games." And with most developers now willing and able to code for either machine, it simply becomes a case of which company can haggle for the best exclusives. As far as I could tell, the aspect of their console that the Xbox crew were really trying to sell was the voice-recognition system, where you can make your Xbox do your bidding by shouting commands like "Xbox volume up!" like the owner of an unruly dog.

Later, I chat to Phil Harrison, current vice president of Xbox's corporate division, whose previous job at Sony makes him a veteran of the console wars. Naturally, he insists that Xbox One is the technologically superior beast and reckons that online functionality is the key battleground. "We have the best multiplayer and online service backed by the power of our Xbox Live cloud and we bring you all your games and entertainment, whether on-demand or live, in one place," he tells me with an almost cult-like sincerity and conviction. "We believe that we have built a truly new generation console for the next decade and beyond."

On the other side of the barricade, Murray Parnell, the marketing director for PlayStation UK and Ireland is similarly bullish about the graphical and gaming capabilities of his new console but when I ask him about the forthcoming battle with Xbox One, he sounds slightly more measured. "We are aware of the fact that PlayStation is just one of many technologies that compete for people's time and money. The good news is that by any reasonable measure, the hype and expectation for the next generation of home consoles is huge, so the opportunities are exciting for everyone." He emphasises that PlayStation 4 is £80 cheaper than its rival, which could well be a clincher for many in a credit-strapped Christmas.

Despite the consoles' techno-gimmicks, both teams insist that the actual experience of gaming is something they'll never lose sight of. "The tradition of gaming is still core to what we do," says Pannell. "In many ways the PlayStation 4 is a console built by gamers, for gamers." Similarly, Harrison stresses that "Xbox is, at its core, a gaming brand. It's our heritage and we'll never lose sight of that or compromise our commitment to gamers."

So what about the games, then? At the Gadget Show Live, the most popular gaming exhibit on offer was Battlefield 4, the latest instalment of the militaristic first-person shooter franchise that began life on the PC. It's an impressive, engrossing shoot 'em up – but single-player missions are clearly secondary to the seven multiplayer modes, supporting up to 64 players simultaneously. The Xbox's Forza Motorsport 5 is similarly online-inclined. Even in its single-player mode, the game utilises other people, getting rid of the predictable patterns of artificially intelligent computer drivers and using those of other gamers taken from the cloud, with all their weird grudges and idiosyncrasies.

Battlefield 4 will be available for both Xbox One and PS4

Bringing that idea of social interaction to even a game's basic one-player mode is a slightly foreboding but logical extension of videogaming's latest fascination. The successes of Call Of Duty and GTA V's online modes (a friend told me he ended up robbing a virtual bank with a team of sleep-deprived American frat boys) prove that games are no longer just a solitary or immediately social experience. They're as much social media as they are entertainment now. Whereas once there was something oddly cold and almost Kubrickian about racing a computer around a circuit, with next-gen consoles, you're always surrounded by other people. Always online, never alone, which is somehow just as chilling in its own way.

On a personal level, I wonder if the new generation of games lack the kind of depth and emotional investment of the ones I grew up on. I'm no "retro gamer" purist, but I remember being genuinely chilled when creeping through the corridors of the first Silent Hill, and close to tears when Snake and Otacon hugged it out in Metal Gear Solid: Sons Of Liberty. Obviously playing against your mates or tweaking hillbillies online can be emotionally involving, but not in the same way. It's more like playing a game of table football than watching Die Hard.

I'm not entirely sure about the future of games. The next-generation games are very impressive to look at, and engrossing in a basic way as a result, but in terms of cultural impact, I can't help but feel we're a long way off seeing anything like Lara Croft on the front cover of The Face again. At the turn of the century, videogames were starting to look like they could be the new cinema. Now they're just games again.

Xbox One is out on Fri; PlayStation 4 is out on 29 Nov

PlayStation 4

Pros

It's a tiny bit more powerful: for example Call Of Duty: Ghosts runs at 1080p on PS4 and 720p on Xbox One, not that you'd notice without a TV the size of a double bed. You'll also be able to use a PS Vita handheld to play PS4 games when someone else is using the TV, which in most households will be extremely handy.

Cons

Although the quirky Knack, interesting-looking Drive Club and probably-OK Killzone Shadow Fall will be exclusive to PS4, Microsoft's exclusive games – the superb racer, Forza 5, and next spring's first-person-shooter-come-mech-driving-simulator, Titanfall – are perhaps more exciting. Other than that, their launch lineups are indistinguishable, as are their built-in social features, Blu-ray players and desire to rule your sitting room. Nick Gillett

XBox One

Pros

The Xbox One joypad, with its vibrating triggers and multiple design tweaks has a slight edge over Sony's still-brilliant DualShock 4. Xbox One also integrates slightly more fully with cable and satellite TV, although so far that's limited to offering social interactions while watching live sport and is hugely Ameri-centric.

Cons

Xbox One is £80 more expensive than PS4, and that's mostly because you'll be buying Kinect 2.0, Microsoft's motion-sensing hardware, which you'll get whether you want it or not. On the strength of the original Kinect, you probably don't. Its motion-sensing abilities were so gravely limited it failed to spot all but the most dramatic full body movements. We shall see whether the new Kinect follows the same futile path. NG

• This article was amended on 22 November 2013 because it contained several errors. The introduction described someone playing the new instalment of Gran Turismo on PlayStation 4; the latest release has not yet been developed for the new PlayStation. The article referred to Forza Motorsport 4; that should have been Forza 5. The name of Xbox's camera-based motion sensor, Kinect, was misspelled as Kinnect. A picture caption described Drive Club as one of PlayStation 4's launch titles, when the game is scheduled for a 2014 release.