Are Video Game Consoles Dying?




Author: Greg Potter
Email: [email protected]
Phone: 1.480.685.4939
VP of Global Research: Norm Bogen
Email: [email protected]
April 2013

Nintendo recently announced more disappointing sales figures for its new Wii U console. Sales of the console have been beat out every month since it launched by both the Xbox 360 and PS3, each released over seven years ago. The chart below highlights the dismal performance for the Wii U in comparison with its competition over the first six months of each console’s life cycle. The Wii U starts out almost as well as the original Wii, however subsequent shipments in the January through April timeframe do not come close to matching the other consoles. Nintendo estimates that the Wii U will ship nine million units during its next fiscal year, April 2013 to March 2014.

Figure 1. Worldwide Video Game Console Shipments, First 6 Months of Sales

 

Source: MRG, Inc.

MRG Analysis:

Video Game consoles in general have not fared so well in the last year. The chart below has sales at roughly 30 million for 2012, a vast decrease from the prior year. With two new consoles set to launch this year from both Microsoft and Sony, MRG expects a slight bump in sales figures for 2013. Historically though, console sales will never again reach the numbers seen in 2010. Portable devices running iOS and Android, featuring games that are the graphical equivalent of the PS2, and that cost anywhere from free to at the most $10 present a challenge to Nintendo, Microsoft, and Sony over the next few years. These mobile devices can even be paired with big screen televisions (via Miracast or Airplay) and game controllers (via Bluetooth) for a more console-like feel. Some televisions also feature games. LG, for instance, includes a motion-based remote control, which is capable of playing games like Angry Birds or other motion games directly from the television. Additionally, consoles like the Ouya, which runs Android, are also looking to undercut sales of titles for the other platforms that usually run about $60 each. While most Android games may lack the polish and depth of traditional console games, they still provide hours of entertainment (especially for children) for a fraction of the cost. By pairing cheap (or even sometimes free) games with a traditional gaming controller and the capability of using a big screen television, Ouya hopes to play to the more budget minded consumers. MRG believes that these types of consoles featuring mobile operating systems with large development communities paired with traditional console gaming controllers will ship at least 2 million units in 2014.

Figure 2. Worldwide Video Game Console Shipment Forecast, 2010-2017

Source: MRG, Inc.

The next generation of consoles from Sony and Microsoft are, at their core, nothing more than updates to the graphics capabilities of the older consoles. Shipments are forecasted to dip below 30 million consoles by 2017, and MRG thinks that at least one console manufacturer may cease production toward the end of the forecast and switch to becoming a software-only company, similarly to Sega. Many hardcore gamers, will of course update their consoles, which along with shipments of cheaper Android-based consoles, accounts for the sales bump in 2013 and 2014, however MRG believes that unlike in the past, those who purchased their consoles for casual gaming and the mix of media features like Netflix and DLNA, will choose not to buy a new console.

 



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