The gaming console and software market is stochastic – the success of the three platform players and the handful of software houses they licence enjoy rapid growth when a new console is released and a slowly decline in business in the quarters beforehand. In the second quarter of 2019 Nintendo is still enjoying the extra business in brought in when in launched the Switch. In the case of both Microsoft and Sony they are maintaining their business largely through software and upgrades to ageing consoles. Things will change significantly with the launch of their new products – most possible next year.
Sony’s new console – possibly the Playstation 5 – will possibly be released next year, while Microsoft has launched Project Scarlet, which again will see a new machine – perhaps the Xbox Two – towards the end of 2020. While it may well upgrade the Switch, I don’t expect Nintendo to launch a significant new console for some time; not least because it is still making good money from its current product.
Currently Nintendo is the market leader (see my Figure above, which shows revenues from hardware and software for the three platform suppliers as well as Activision and Electronic Arts. There are big hurdles to becoming a console supplier – not only in the costs to develop the technology, but also in the constant activities needed to protect their intellectual property. A bit like cartridges in the printer market, only licensed software is allowed by console vendors and, unlike the printer market, there is no pressure on them to open up their platforms.
America and EMEA are the two strongest regional markets for gaming consoles and associated software, despite the fact that Sony and Nintendo are Japanese suppliers. We noted elsewhere that Asia Pacific is currently the major market for mobile devices, which are being bought with disposable income that might otherwise have been spent on gaming.
©ITCandor Limited – unauthorised copying of this content is illegal and will be rigorously defended by us through court action