Strategy Analytics: Previous Peak Sales Out of Reach for Next Gen Consoles

Next generation game consoles will provide a short-term lift to the industry, but offerings from Sony, Nintendo, and Microsoft will fall short of matching peak sales levels experienced late last decade. The Strategy Analytics Consumer Home Devices (CHD) service report, "Game Console Sales Forecast: 2005-2017," predicts a 15 percent year-on-year drop in game consoles sales in 2013, down to 28 million even as PlayStation 4 (PS4) and Xbox One hit store shelves in mid to late November 2013.
With the console war reigniting in less than a month, Strategy Analytics predicts that the PS4 will have an early sales advantage due to several unforced PR errors with the gaming community on the part of Xbox One. "In the long run, however, we expect Xbox One to make up some lost ground against PS4 as consumers begin to realize the full range of multimedia capabilities the device has to offer. While we expect Xbox One to outperform PS4 in the US market, we don't anticipate a significant loyalty shift away from PlayStation in Japan and Europe," analyst Eric Smith added.
Signs have not been favorable for the game console segment as Wii U has struggled to sell one million consoles in the first nine months of 2013 due to a lack of blockbuster titles thus far. In comparison to the Wii U, the value propositions for PS4 and Xbox One are markedly different, and Strategy Analytics expects solid early demand for the new console platforms in the 3 to 4 million unit range each. Overall, game console market demand is expected to peak in 2016, although sales will be down 33 percent from highs reached in 2008.
"While Wii U, Xbox One, and PS4 hold the promise and technological prowess to transform gaming in the living room, this may only benefit core gamers," stated David Watkins, Director of the Connected Home Devices service. "Casual gamers are sufficiently happy with cheaper gaming options on more ubiquitous devices like smartphones, tablets, smart TVs, and digital media adapters, which will naturally depress the highs the industry achieved with the Nintendo Wii."