2013/11/20 Sony’s New Console Sells One Million Units in a Day, But the Future of Game Consoles is Murky
By: Greg Potter
Sony Computer Entertainment announced that it sold over one million units of its new PS4 video game console within 24 hours of its launch. To be fair though, that number does include pre-orders of the console, which began all the way back on August 6th. Sony Computer Entertainment America (SCEA) President and CEO Jack Tretton, predicted earlier that he expected over three million units sold by the end of the year, with five million being sold by the end of Sony’s fiscal year at the end of March 2014.
The PS4 console is priced at $399 at retail, with its competitor the Xbox One priced at $499. The Xbox One launches on November 22nd and should also see swift sales and high interest from hardcore gamers. Each console has its own selling points; the Xbox One has Kinect integration and can be used in conjunction with certain set-top boxes to provide a unique UI overlay in place of what is provided by the pay-TV operator, while the PS4’s main advantage right now is price. Both the Xbox One and the PS4 sport similar specs in terms of performance. Though graphical improvements between the new boxes and the previous generation of consoles is not quite as sharp as seen in previous generational shifts, as time goes on developers will be able to better take advantage of the processing power available in the new consoles.
MRG Analysis:
This is the first new generation of consoles from both Sony and Microsoft since the middle of the last decade and many things have changed since then. With the previous generation of consoles, many consumers saw the value in a device that could serve both as a streaming media player for services like Netflix and Hulu and as a device that can play high-end video games. Many of those purchasers this time around will probably skip on upgrading their consoles however. Many TVs today come with the ability to stream video content out of the box, and the latest standalone streaming media players can cost as little as $50. Additionally, smartphone and tablet games have become wildly popular among many consumers and are often priced more cheaply than the games sold on consoles. Compounding the problem is the fact that the PS3 and Xbox 360 will continue to be sold for at least the next few years at reduced prices, continuing to appeal to the casual gamer and video streamer.
Figure 1. Video Game Console Sales, 2012-2018
Source: MRG, Inc.
Additionally, many hardcore gamers may delay purchasing a console as well. Games are still coming out for the older generation of consoles, and the graphical differences between the older consoles and the newer consoles is not as contrasting as in previous generations. Gamers may wait to purchase until games come out that can take advantage of the full power of the newer consoles. They also may wait until the eventual drop in price of the consoles, content with the console they already own. Another issue for both the PS4 and Xbox One is the lack of backwards compatibility with disc-based games from the previous generation. While not necessarily a deal-breaker for most hardcore gamers, many consumers will be confused and/or upset that the new generation cannot play the same disc games as the prior generation. MRG’s forecast of video game consoles shows that shipments of new consoles will reach a peak of just over 40 million units next year, but will decline thereafter for the reasons above. With shipments declining in this manner, the outlook for the category beyond the forecast period is murky at best.
