The Nintendo Switch set records in 2020.   Despite being in tight supply, the Switch sold more hardware units than any game system during a single year.  In 2021 the main question is will the Switch once again be the best-selling system for the year or can the PlayStation 5 challenge its reign?

The latest DFC Intelligence console video game forecasts predict a close race between the PlayStation 5 and the Nintendo Switch for best-selling hardware system of 2021 (based on units sold).  A great deal may depend on manufacturing and available supply.

Overall, in 2021, the PlayStation 5 is expected to outsell the PlayStation 4 in its best year and possibly beat the PlayStation 2 for best single year sales of a Sony console.  However, the Switch is likely to do even better.

The challenge Sony faces is that the PlayStation 5 is still targeted towards a high-end video game demographic.  Right now, software offerings for the system is looking limited.  Consumers buying the PlayStation 5 are clearly early hardware adaptors versus discerning video game buyers looking for the best overall entertainment value.  

The good news for Sony is that there are plenty of game consumers looking to buy a new system trusting Sony will eventually deliver the software library.  In today’s environment the PlayStation 5 can set sales records without a killer software application.

A major question remaining is what becomes of Microsoft and the Series S/X?  In DFC Intelligence purchase intent surveys, the number of consumers intending to buy a PS5 over an Xbox Series S or X is well over two-to-one.  The ratio is significantly higher outside the U.S.

The software lineup for the Xbox is currently not looking any stronger than the PS5.  Microsoft’s focus on game subscription services and the lower-end Xbox Series S really devalued its position as a premium hardware provider.

However, there is an opportunity for Microsoft to reset the narrative.  The late 2020 acquisition of Zenimax Media/Bethesda Softworks was a major step towards Microsoft acquiring some exclusive high-end software. 

There are also hardware enthusiasts that recommend the Xbox Series X over the PlayStation 5.  For example, this week Tom’s Guide stated:

“With more powerful hardware, a better design, a more comprehensive game subscription service and a delightful controller, the Xbox Series X has the early lead in the next generation of consoles.”

However, this was the fine print.  In the overall rating Tom’s Guide had the PlayStation 5 at 61 and the Xbox Series X at 62.  This is typical of most review sites that tend to conclude with a general endorsement of both systems.

Further reading of the fine print in Tom’s Guide gave the PlayStation 5 the edge in performance and software exclusives with the Xbox Series X winning for design.  In other words, the PlayStation 5 wins in what truly matters to consumers.

The reality of the software situation is that the software lineup for both systems is weak.  Sony has clearly driven home the impression that it has the better lineup of high-end exclusives, but this is not necessarily the case.  We are already seeing the launch of Bethesda games on Game Pass driving a big spike of usage for the Xbox One.  This is a subtle sign that there is potential to get consumers to rethink the Xbox Series X.

Clearly Microsoft needs to reset the narrative among consumers, and this will be hard to do. Focusing on hardware power or price is unlikely to do the trick for Microsoft.  The PlayStation 5 controller has suffered from drift issues that also plagued the Nintendo Switch.  However, that is at most a small speed bump for the system. 

Microsoft needs some software exclusives that are new and NOT just part of a subscription service. Halo Infinite will be a start, but really Microsoft needs to message consumers that they have exciting new products and are more than just a $15/month subscription service.

The current DFC Intelligence forecast have the Xbox Series X doing well.  Nevertheless, the PlayStation 5 and Nintendo Switch are looking to be the true stars in the near future.  Furthermore, these hardware sales will start translating to software revenue. 

Overall game software (including online and subscriptions) for the Sony, Nintendo and Microsoft systems is expected to reach a record $35 billion in 2021.  The growth in 2020 should continue this year, with 2022 looking even better!

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