As the first quarter of 2022 comes to an end video game console shortages remain a major issue. Sales potential for both hardware and software has been limited and will remain as an issue throughout the rest of the year. While market growth is still expected, DFC’s forecasts have been lowered in expectation of limited supply.
The latest DFC Intelligence forecasts expect 4% growth in the video game console market to $49 billion in 2022.
The biggest loser though is Sony whose PlayStation 5 system remains in high demand but limited by supply.
Going forward the big question is whether the PlayStation 5 shortage will allow Microsoft to gain ground with both Xbox Series X/S and its Game Pass online service. Recent DFC consumer surveys show that the PlayStation 5 is still the preferred system by a significant margin. However, as Microsoft continues to build up a content library this could change.
New Nintendo System
There is also the issue of Nintendo and the possibility of a new console system in the mix. The latest DFC forecasts have Nintendo launching a new, as of yet unannounced, console in 2024. This is expected to create a situation where the console market is divided between three platforms with declining spread in total shares.
By 2026, DFC expects Sony PlayStation systems to have 39% of the console software market (packaged and online revenue) with Nintendo at 34% and Microsoft at 27% vs 2021 where Sony held a 43% share vs Nintendo’s 37% and Microsoft’s 20%. Clearly a trend is emerging for Microsoft.
PC Becomes a AAA Platform
The console shortage issue is having a trickle-down impact on PC games as well. High-end PCs are becoming another platform for AAA games as most recently shown by the massive success of Bandai Namco’s Elden Ring. Elden Ring is a multi-platform title that has sold 12 million units in its first month, with a large portion the PC version.
Long-term the issue is whether Microsoft’s hybrid PC/console strategy will be too much for Sony. Nevertheless, the console market is expected to see solid growth over the next five years as demand continues at record levels.
It should be noted that with the volatile market situation, DFC forecasts are subject to change. At the latest Sony investor conference in February, Sony CFO Hiroki Totoki stated that it was fair to assume that supply issues would likely persist over the next fiscal year ending March 2023. However, he also noted that providing an accurate forecast would be especially difficult. Sony is hoping to provide more insight at their late April/early May fiscal year earnings announcement.
In these turbulent market conditions, the video game console market remains uncertain. If Sony can increase supply of PlayStation 5 systems there could be more substantial market growth. Currently, DFC forecasts remain bearish when it comes to short-term hardware supply.
DFC Intelligence will continue to issue new forecasts as announcements warrant. However, the current outlook is for supply constraints to have a significant negative impact on the outlook for 2022.
For more information on the latest forecasts go here.
