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Forums - Sales Discussion - The console market is stabilizing

 

Your view of the competitive landscape as of 2021

Level playing field (all three fairly equal) 20 24.10%
 
Strongly slanted Playstation 8 9.64%
 
Strongly slanted Nintendo 16 19.28%
 
Strongly slanted Microsoft 2 2.41%
 
Strongly slanted Nintendo & Playstation 35 42.17%
 
Strongly slanted Microsoft & Playstation 0 0%
 
Strongly slanted Microsoft & Nintendo 2 2.41%
 
Total:83

It has been 4 gens (5th to 8th) during which Nintendo and Sony have been competing for market dominance, and 3 gens during which Microsoft joined the melee.

When Microsoft entered the console market, the Xbox was seen as a new entrant, since Sony had already succeeded with the PS1 and made itself a name for itself a gen ahead of Microsoft, and had dethroned Nintendo from the #1 spot, and the PS2 was already very successful by the time MS came in. To make things more new for Microsoft, they were the 4th player in a battle that was normally waged between two or three players (Sega vs Nintendo, then Nintendo vs Sega vs Sony). Also, while the big players were always japanese (except in the 1st & 2nd gens), Microsoft was not a japanese company and was from another industry: computer operating systems and a handful of PC peripherals and games.

After 3 gens in the console space, Microsoft is starting to show its guts with their new moves gearing up for next gen. As the next gen starts, Sony will have been a long-time player, with the Playstation celebrating its 25 years in the industry and launching it's 5th generational console, which Sega stopped at 4 (Master System, Genesys, Saturn, Dreamcast). Microsoft will finally have its 4th generational console, now being almost as old as Sega was when it left the home console race.

Sony now, after having completed 4 gens in the industry, has outlived Sega (in gens lived), and Microsoft will soon outlive Sega's gen lifespan 2 years after the Series X/S is released (the dreamcast was discontinued in 2001, two years  after launch).

These players, albeit newcomers at the time they entered the industry, are now cemented into the landscape as the 3 main players of the industry for a long time to come. While in the past a few contenders were fighting for the crown (Nintendo, Sega, Bandai, Neo Geo, Atari), for the last 4 generations it was mostly fought over by 3 main players: Nintendo, Sony and Microsoft. 

Nintendo is a veteran here, having starting on consoles since the first generation with the Color TV-Game series of consoles. Skipping gen 2, they then have been in consoles for 6 consecutive generations (NES, SNES, N64, GC, Wii, WiiU/Switch) or 7 depending on how you see it (WiiU gen 8, Switch gen 9), and also have experience from 4 portable generations (GB, GBA, DS, 3DS). They are currently at their most solid point in their history. While the Wii and DS sold very strongly, their success was expected to be short-lived from signs that were visible during the Wii era: lots of Wii shovelware, and hints that the motion-control novelty would eventually wear off. However, with the Switch, we see a Nintendo console which on one hand is selling very well, and on the other hand, enjoys a robust library of high-quality compelling games. They have also taken over a complete main geographical region of the gaming world, Japan. Having already tasted success with the DS and Wii, Nintendo seem more aggressive, cautious and confident in their new direction as the Switch succeeds.

Sony started off with success as of the release of FFVII on the PS, and rode that success fairly smoothly until the PS3. While the PS3 staggered a little, it still sold considerably well, and then the PS4 regained its lost ground, while never reaching the same success as the record-breaking PS2. Over the gens, Sony has acquired and built studios, gaining development grunt and collecting a fair chest of exclusive IPs property of Sony. This puts Sony in a much stronger position as even compared to the PS2 era, since its reliance on 3rd parties, while always very important, is less overwhelmingly dependent. On the handheld side, while the PSP seemed to share some of the fire of its home console cousins, the Vita showed that Sony was not dedicated to the handheld space, and that Nintendo had a stronghold on that segment of the market, and so Sony exited. While the sales of the PS4 don't match the dominance PS enjoyed during their 1st and 2nd gens on the market (in market share), their overall position is more safe due to their experience in the market and the IPs they've acquired.

Microsoft entered the industry with a lot of potential. Whether it was being seen as the spiritual successor to the Dreamcast, or their purchase of Rare, Microsoft had somehow created their rightful place in the industry despite their rotten image during the Netscape days. After a somewhat shaky start sharing 2nd/3rd place with Nintendo's floundering Gamecube, they entered the next gen early with the 360 and enjoyed the support of the great majority of 3rd party publishers, having almost all the same games as the Playstation that were not made by Sony or its partners, even the most shocking PS-true series such as Final Fantasy and GTA. After MS seemed to drop the ball with the Xbox One, Phil Spencer has steered the ship in the right direction, and is making all the right moves in preparation for the next generation. With the series S at 299$, or 25$ per month with Xbox All Access, and with the recent purchase of Bethesda, Microsoft is getting ready to change the power dynamics of the industry, leveling the playing field for all three competitors.

Next gen is most likely to see Sony and MS neck and neck from start to finish, with Nintendo enjoying the success of the Switch for an extended period of time, most likely with a new Switch model sometime late next year (soft gen for Nintendo). The console sales will be strong for all three players and the industry seems to have entered a kind of stability where all three players can succeed at the same time, much in the spirit of the PSWii60 gen, but this time with Nintendo in a much more robust shape.

Last edited by padib - on 22 September 2020

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Nintendo and sony are market leaders, dont see that changing any time soon.



 

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It's Still PlayStations and Nintendo's market to lose.



Bite my shiny metal cockpit!

The powermove MS just pulled off, by forking out 7,5$ billion and getting ZeniMax, put them right at the top of the pack, if if not atleast equal to the others now.

ZeniMax: Bethesda Softworks + Arkane Studios + Alpha Dog+ Bethesda Game Studios+ id Software + MachineGames + Roundhouse + Tango Gameworks

Its insane that future Doom/Fallout games may be console exclusives to xbox imo.

(voted its a pretty level playing field now)



This comes across as a selective writeup to arrive at the desired conclusion of all three manufacturers doing about equally well. At no point does the essay touch on Sony's entry in the handheld console market and subsequent exit. If you factored that in, you'd see a clear advantage for Nintendo going forward because they have the sole control over an entire sector in the console business.

We are also in a year where Switch sales are poised to exceed the peak level of the Wii and will be only second to the DS. At the same time most people already expect the PS5 to do worse than the PS4, simply because Microsoft didn't commit tremendous blunders with their new Xbox. The very likely result is that Nintendo will finish this gen far ahead of both Sony and Microsoft in terms of both unit sales and profits. Japan being a lost cause for both Sony and Microsoft doesn't point to any kind of balance either.

Switch also marks the seventh consecutive generation for Nintendo. Just saying.



Legend11 correctly predicted that GTA IV (360+PS3) would outsell SSBB. I was wrong.

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I think Microsoft will fundementally shift/change/break a lot of the traditional market.

They are looking at the future of the business and want to secure the market for the Netflix of games before Google/Sony/Amazon/Netflix itself get there.

That and streaming too raises a lot of questions. It's not about platforms for MS, think they are looking at it as services and they want to be on top.

I've tried xCloud ($1 intro month, why not) on Android phones ... and y'know it is basically very playable. The lag is really not that perceptible and I don't even have the greatest connection. I'm able to play a fast paced fighting game even like Killer Instinct and pull of combos without much fuss. 

What is the console market when people don't need a console and can just play even the highest end games on any display they feel like (phone, tablet, PC, TV) just through an app, with 5G becoming eventually the standard, in 5, 6, 7 years, you can sorta see what MS is thinking. With no hardware, everything is a service and if they have the defacto service, well then they have the last laugh over Sony. 

I don't think the console market is stabilizing ... I think it's headed for some potentially massive changes. Even software pricing, what is $60-$70 for one single game when a service is offering you 200-300 games, including new release titles, for only $10 a month. 

Last edited by Soundwave - on 22 September 2020

I think this analysis leaves out a big thing: that the console market is only a submarket to the bigger gaming market. In the past the console submarket as a whole was nearly consumed in the video game crash. Since then it has carved out it's niche. But that is changing.

By now PC-gaming and console-gaming - which were for a long time quite separate - are more and more similar, with games releasing on both submarkets. This is not a problem per se, but if one submarket gets into trouble it is easy for gamers and devs to jump to the other, as they are both quite similar in gaming choices by now. You already can see it, as some geographical markets (like China and Korea) nearly completely avoid consoles in favor of PC-gaming. In other regions it is the other way around.

The second challenge comes from the mobile area. Given, we have mobile games around for a while, and they are a pretty separate niche. But mobile devices get more powerful and devs more ambitious. The big problem for the mobile market is monetization.

But the biggest challenge ahead is cloud gaming. And that has the potential to completely remodel all other gaming markets. I actually think the Zenimax-acquisition is not so much to fight against Sony and Nintendo, but MS bulking up to fight the cloud-gaming wars.

The thing is, you only can see a consolidation in the console market by ignoring the outside. But the coming changes may destroy the console market completely, more likely though they will transform the role of consoles. And how the current companies will do under these circumstances and if other competitors join under the new possibilities is something that is quite hard to get a grasp on.



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Mnementh said:
I think this analysis leaves out a big thing: that the console market is only a submarket to the bigger gaming market. In the past the console submarket as a whole was nearly consumed in the video game crash. Since then it has carved out it's niche. But that is changing.

By now PC-gaming and console-gaming - which were for a long time quite separate - are more and more similar, with games releasing on both submarkets. This is not a problem per se, but if one submarket gets into trouble it is easy for gamers and devs to jump to the other, as they are both quite similar in gaming choices by now. You already can see it, as some geographical markets (like China and Korea) nearly completely avoid consoles in favor of PC-gaming. In other regions it is the other way around.

The second challenge comes from the mobile area. Given, we have mobile games around for a while, and they are a pretty separate niche. But mobile devices get more powerful and devs more ambitious. The big problem for the mobile market is monetization.

But the biggest challenge ahead is cloud gaming. And that has the potential to completely remodel all other gaming markets. I actually think the Zenimax-acquisition is not so much to fight against Sony and Nintendo, but MS bulking up to fight the cloud-gaming wars.

The thing is, you only can see a consolidation in the console market by ignoring the outside. But the coming changes may destroy the console market completely, more likely though they will transform the role of consoles. And how the current companies will do under these circumstances and if other competitors join under the new possibilities is something that is quite hard to get a grasp on.

Is there going to even be much of a fight for the "streaming wars" because right now it looks like Microsoft is way ahead of anyone else and it looks like the board of directors is all in on becoming the Netflix of gaming, you don't just drop 7.5 billion on a gaming company if it wasn't approved by the top end of MS brass. 

If Sony decides to try to get into an acquistion fight with MS, I think that's going to end badly for them. They don't have the money to spend that MS has and if the XBox division now has the full support of MS to do whatever it takes to get that Netflix of Gaming goal accomplished ... well that could get ugly real fast for Sony. 



Even after the adquisition, I still want to see if Microsoft is going to reinforce their dedication to hardware or if they are going to focus more on making the Game Pass accessible to more platforms.



You know it deserves the GOTY.

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Darwinianevolution said:
Even after the adquisition, I still want to see if Microsoft is going to reinforce their dedication to hardware or if they are going to focus more on making the Game Pass accessible to more platforms.

GamePass isn't some "side thing" though if it gains massive traction, then the idea of the console itself begins to get very blurry.