Update on 11/24/15: I originally wrote this post back in 2013 in the lead up to the release of the PlayStation 4 and Xbox One. But it remains a popular post thanks to Google, so evidently this is a topic that people are still looking for information on.
As such, I've re-written this post, updating it in various ways since its original publication in order to account for both systems' new prices, new games, new features, etc.
The original story, for instance, noted that the PS4 was (at the time) considerably cheaper than the Xbox One. This is no longer the case. At the time of this writing, either system can be purchased for $349.99, often with at least one game included.
For more video game news, reviews and features, check out guidelive.com/geek.
What games are family friendly?
On both systems: Both the Xbox One and PS4 boast new entries in series that have been very popular with kids for years: Disney Infinity and Skylanders, both of which are "toys to life" games that involve physical toys that you can buy (sold separately) to add new characters and features to your games. A new entry into this genre of games is Lego Dimensions, which features characters from hit franchises like Lord of the Rings and Scooby-Doo.
A game that seemingly every kid today either plays or wants to play, Minecraft, is also available on both systems (as well as Xbox 360, PS3 and computers). Both systems also have a new story-based adventure game, Minecraft: Story Mode, from Telltale games. This is an episodic series that's being released in chunks, so while you can buy the entirety of season one right now, an Internet connection is required to download new episodes as they become available.
For two-player fun, the non-Dimensions Lego series of video games is still going strong. Lego Marvel's Avengers is coming soon, and Lego Jurassic World can give your kid their much needed fix of dinosaur fun.
I'm also quite fond of Rayman Legends, a 2D platformer with some fantastic art that can be fun for all ages.
Exclusive to the Xbox One: There's Disney's Fantasia: Music Evolved (also available on Xbox 360), which requires the Kinect camera but is a fun motion-controlled music game from Disney and the makers of Rock Band.
There's also the management game Zoo Tycoon (also available on Xbox 360) and the beautiful 2D side-scrolling game Ori and the Blind Forest.
Exclusive to PS4: If you're into simple platforming and level creation, LittleBigPlanet 3 isn't bad. If you're more into a cute adventure, Tearaway is much more clever.
A PS4 launch game, Knack, isn't the best kids game around, but as it's been out for a couple years now you might be able to find it in a bargain bin somewhere.
Can the new system play our old games?
In the case of the PlayStation 4, no. The system is not backwards compatible, and none of your PS3 games will work in your PS4. Sorry.
The Xbox One, however, recently added backwards compatibility as a feature. With a catch: Only a select number of old Xbox 360 games are compatible at this time (though more are on the way). An Internet connection is also required, even if you own the disc for the game you want to play (a backwards compatible version of the game is downloaded to your system).
Microsoft has a list of the more than 100 Xbox 360 games currently playable on the Xbox One, which includes both games on discs and digital games that were only available as a download. In terms of games enjoyable for all ages, that list includes Banjo-Kazooie: Nuts & Bolts, Lego Star Wars: The Complete Saga, Lego Pirates of the Caribbean, Plants vs. Zombies, Viva Pinata and a few others here and there.
If your child is old enough to be playing games online, you should know that both Microsoft and Sony will demand a monthly fee for this functionality on their new systems. The Xbox One has Xbox Live, which is generally about $60 a year (though you can find subscription cards for cheaper. I tend to buy them for $40). The PS4 has PlayStation Plus, which sells for $50 a year. Lately, both services have offered free downloadable games for their subscription members, but Sony has so far been much more successful at this, offering several free games every month for their fans.
Both systems also have voice chat functionality (the Xbox One has full HD video chat via Skype), web browsers, support for services like Hulu and Netflix and more. Most of Sony’s online services are free to all, while Microsoft has traditionally been more likely to lock theirs behind the Xbox Live paywall (though an entire family can benefit from one Xbox Live Gold account this time around).
Both systems have robust parental control options that can lock out select content for child accounts. You can, for example, restrict games that have a certain ESRB rating (such as M for Mature), which alone is a worthwhile feature. The same restrictions can be applied to DVDs and Blurays.
You can also limit what online interactions your child can take part in, disabling features like the web browser and chat functionalities, as well as the ability to play multiplayer games online.
Both systems also have options to restrict access to their digital stores. On the Xbox you can turn off access altogether or limit downloads to only products that are free. On the PS4 you can turn off access or set a monthly spending limit for PlayStation Store purchases.
You can find more information about setting these controls up from Microsoft and Sony, though both systems do a pretty good job of walking you through the process when you set up the console and/or account for the first time.
The cost of controllers:
Both systems only come with one controller by default, and neither system is compatible with the previous system’s controllers. And extras won’t come cheap. Both retail for $59.99 each.
On the plus side, both controllers are fantastic. Still, if you want to buy three extra controllers so a family of four can play a game, it’s going to get pricey.
Of note is the battery life of the PS4 controller, which is not great. If you plan on playing game for hours at a time, keep a long charging cable handy. The Xbox One uses standard AA batteries out of the box.
Keep in mind, too, that not all games even support four players at a time. Skylanders, Disney Infinity and the Lego games, for example, are limited to two people at a time.
Is one of these systems really the best family friendly option?
If you're buying the system purely for a child (i.e. it won't be played by any adults in the house), and if that child is under the age of 13, then you probably don't need an Xbox One or PlayStation 4 right now.
If you're looking into a new console for a teenager that wants to play games like Destiny, Halo 5 or Star Wars: Battlefront with friends then it might be time to invest. Both systems have been out for long enough now that they've built up solid libraries of games that aren't available on older hardware, making them with an upgrade (or worthy of being a first-time console).
Same goes for if you're a gaming adult that wants to check out games like Assassin's Creed Syndicate, Rise of the Tomb Raider or Fallout 4 for yourself but want some kid friendly options as well. While the systems don't exactly have a wealth of games for kids, there are at least some choices.
But don't forget about Nintendo's systems, the Wii U and 3DS. The Wii U has many of the same kid friendly games (Skylanders, Disney Infinity, etc.) as well as a large and growing selection of stellar Nintendo games that are fun for all ages, such as Super Mario Maker, Splatoon and Mario Kart 8.
The 3DS is a similar story (though it's best for a single person and isn't as easy a system to share with siblings), sporting a ton of great titles like Pokemon X and Y, Yo-Kai Watch, Animal Crossing: New Leaf and more.