It’s been some time since we looked at gaming console markets, so I thought you’d like to get the latest on the developments there. In 2015 revenues were 4.5% down at $30.3B, with spending split 65:35 between software and hardware. In all there were 41.6M shipments, with an 89:11 split between consoles and handsets. Sony, Microsoft and Nintendo held 56%, 29% and 15% shares of the hardware market respectively.
My forecast (see Figure) is for software to continue to lead the market. Handsets – hard hit by smart nd PC tablet sales – will decline, while the home console market will see a less sharp decline. Each generation of console for each of the three vendors ages over time. Currently the XBox One, Playstation 4 and Nintendo WiiU are at mid-life points – suffering declines in hardware, but increases in software sales. We shouldn’t forget that consoles are sued for more than just games: the addition of the Internet and Blu-Ray disks allows their users to connect with gaming services, watch TV and movies.
Gaming consoles remain relevant despite developers focusing more on free-to-use apps for iPads, smartphones and PCs in recent years. The ‘tied-in’ nature of consoles allows their suppliers to manage the user experience more effectively: for users they provide a wider and differentiated community of game players with whom to interact.
The total installed base of Sony, Microsoft and Nintendo gaming consoles was 68M, 44M and 72M respectively at the end of 2015. The Figure shows how gaming software is distributed by platform. Sony is the most popular platform for developers, followed by Nintendo and PCs. Microsoft is in last position currently.
During 2016 it will be interesting to watch the development of new platforms, although I don’t expect anyone other than the three current suppliers to enter the market. There will continue to be major advances in PC gaming hardware also, which I hope to cover for you in future posts.