Is the Game Console Market Shrinking? - Analyst Blog
16 3월 2013 - 12:29AM
Zacks
A new report from market research firm NPD shows that only 29%
of “core gamers” will purchase the next generation of gaming
consoles right after they are released. The report, named “Core
Gaming 2013,” defines “core gamers” as those who spend more than
five hours a week playing games and who play most genres of
games.
The report follows data from NPD which showed that 2012 was the end
of the sole dominance of the physical video game. Stock keeping
units (SKUs) had begun to give way to digital transfers and
download. But what was more disturbing was that video games sales
had declined by 9% from the previous year. And of the $14.8 billion
worth of sales, excluding hardware, $5.92 billion came from
digitally distributed content.
The alarming detail about the second figure is that even though it
represents a 16% increase over digital sales in 2011, growth was at
14% in 2011. This implies that though growth is happening, it’s
sluggish in nature and may not be enough to compensate overall
decline.
These numbers clearly show a developing trend which is bringing
about sweeping changes in the gaming business. The next generation
of gaming platforms has to change the game radically in favor of
the industry. These sentiments were echoed by Andrew House who
heads Sony Computer Entertainment’s (SCEA) PlayStation Division
recently.
At an event held to introduce the new PlayStation 4 console from
Sony Corporation (SNE), House admitted that the
company was betting big on the product. The stakes are probably
equally high for Microsoft Corporation (MSFT) and
Nintendo Co. Ltd. (NTDOY) as the next generation
of gaming consoles is launched. Both the PS4 and the successor to
the Xbox 360 are now expected to launch towards the end of the year
and to be priced between $350 and $400.
In fact, price and underlying costs have become a key factor behind
the success of gaming consoles going forward. And this is closely
linked to the price and availability of gaming titles.
Publishers have disagreed over the development costs of the next
generation PS4 and Xbox games, leading to concerns that the cost of
these titles will rise. An analyst from Wedbush Securities Research
has predicted that these games will cost around $70. SCEA CEO
Jack Tretton says PS4 titles will not cost more than $60. But that
has done little to allay these concerns.
This may directly affect sales of the new consoles because many of
the new titles can be played on both current as well as next
generation consoles. This means that only staunch loyalists will
buy these consoles when they are first introduced. Instead, they
are likely to wait for prices to drop. This is far from good news
for console makers.
Console-makers have already made key decisions to drive down costs.
Unlike, the past where consoles ran on custom made chips, both Sony
and Microsoft will use off-the-shelf chips produced by chip maker
Advanced Micro Devices, Inc. (AMD). AMD’s chips
are able to deliver the required visual horsepower using
accelerated processing units or APUs. The risk here is that the
success of these platforms is now closely tied to the fortunes of
AMD.
This negates the need to set up dedicated chip manufacturing
facilities or ordering custom made chips as was done in the past
from the likes of IBM (IBM). Besides, focus has
shifted from raw processing power to the versatility of these
chips. Consoles are increasingly being used to play audio and video
content as well, morphing into a central entertainment hub for the
home.
This fits into the trend where tablets and smartphones are changing
the face of gaming, at least of mobile gaming at any rate. They are
also being viewed as versatile entertainment devices. They have
also popularized casual gaming which is growing as a category,
giving traditional console makers much food for thought.
Of course, the serious gamer will stick to the gaming console.
But the future success and growth of console gaming will closely
depend on whether the industry can successfully match up to these
emerging trends.
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