128 million console gamers set to leave the market
Is the video games console industry in free fall?
Maths does not lie, no matter how you look at it. Even if the December 2015 period matches 2014 for sales – which isn’t looking likely based on this year’s trends – 2016 will still come in five million console sales short of 2015. We’ve reached the middle of this generation and fatigue is starting to set in earlier than expected.
By fatigue, we mean that the ability to convert a potential audience into a card-carrying console audience has reached its critical point on the current consoles. The Wii U has long since stalled, the Xbox One continues to sell, but at a slower rate to 2015, and while the PS4 continues to sell relatively well, it too is expected to see a downward trend in 2016.
When we put this against the historical sales data from the seventh generation (Xbox 360, PS3 and Wii) we can see the same decline occur. However, alarmingly that decline is starting much earlier than it did in the previous cycle. While the Wii began to dive from its lofty heights in only its second year, the PS3 and Xbox 360 didn’t start to plateau until their fourth and fifth years respectively, before beginning to decline in earnest in their fifth and sixth years respectively.
2016 to see year-on-year drop in console sales
The PS4 and Xbox One will start their anticipated year-on-year unit sales decline in only their third years – two years earlier than the seventh generation. In 2015, the year saw the PS4 (17.5 million), Xbox One (8.5 million) and Wii U (3.5 million) contribute 29.5 million consoles to the overall install base – growth of 13% on 2014.
While the final figures are not in, the PS4 had sold 11 million, the Xbox One 5 million and the Wii U 1.3 million through to November 2016. In December of 2015, 7.5 million units of the three consoles were sold into homes over Christmas, so even if it was to match last year’s figure – remembering the Wii U is unlikely to contribute anything of note – we’re left with around 24.5 million for the year.
That’s a 17% drop year-on-year, which equates to 5 million fewer consoles sold. Significant.
It’s certainly not a small anomaly, anyway. Historical data in previous generations has shown that a single console can buck the downward trend– the Xbox 360 responded from a 7% drop in 2009 to a 32% gain in 2010 (a 19% overall gain) – but as a market, we see the same parabolic lifecycle for year-on-year sales across the consoles. It looks like a frown.
So how will this generation fair?
Despite the estimated 17% drop in console sales through 2016, even if we take the unlikely scenario of a zero change in year-on-year sales through to the natural end of this generation in 2019, the figures still look bleak, especially in comparison to what proceeded it in the previous gen. In the seventh generation, the Wii sold 101 million units, the PS3 87,000,000 and the Xbox 360 86,000,000. Altogether, that’s 274,000,000 console gamers across its seven years. In this generation, we have the Wii U on 13 million, the Xbox One on 25 million and the PlayStation 4 on 50 million. We’re currently at 88 million consoles sold across four years, but we are already starting to see a slide in year-on-year sales, two years earlier than the seventh generation.
If we forecast ahead through 2017, 2018 and 2019 under the unlikely scenario that the PS4 and Xbox One hold zero change on the 16,000,000 and 7,000,000 they’re expected to sell in 2016 respectively, where do we end up? Roughly another 69,000,000 units sold by 2019. And that would bring the generation’s total up to 157 million.
That’s still 117 million short of the seventh generation of consoles.
More likely, however, we will continue to see a slide year-on-year. If we were to see even a mild – by previous generations standards - 8% drop continue through 2017, 2018 and 2019, a more accurate figure for this generation’s total console install base would actually be 146 million. This would be roughly comprised of 90 million PS4s, 42 million Xbox Ones and 14 million Wii Us.
This would still be around 128 million short of the seventh generation.
There is no fate
Of course the future isn’t written, anything could happen. The emergence of mid-generation hardware leaps with the PS4 Pro and Project Scorpio, and exciting additions like PSVR, could see 2017 rebound. And possibly even 2018! But even the most optimistic of estimates can’t impact the bottom line - over 100 million console gamers will have left the market this generation.
That’s a big deal.
And while it is easy to blame the Wii U’s failure for that, the reality is the PS4 and Xbox One have not picked up that audience. Indeed, only the PS4 has a chance at this point of equalling the results of its predecessor, with the Xbox One likely to struggle to half its predecessor’s sales, pending something unforeseeable.
So where are these 100 million gamers? Are they on mobile or PC? Are they on Netflix? Are they simply still playing on their PS3s, Wiis and Xbox 360s? In the harsh economic times and political instability of this era, are the generation of old gamers leaving the console scene at a faster rate than newcomers are arriving. Whatever the overriding issue, it’s one that needs to be solved.
What do you think?