Games console hardware 2021: End of year shortages bite

Console sell-through volume increased 2% year-on-year to 48 million units

Sales volume of games consoles to consumers increased in 2021 driven by newly released devices from all three manufacturers, but volume growth was significantly hampered by weak availability of Sony PlayStation 5, Microsoft Xbox Series X and Nintendo Switch OLED devices during the last two months of the year. Shortages are continuing into 2022 and although there is optimism that component availability and supply chain efficiency will improve later in the year the situation remains unpredictable.

Switch OLED drives upgrades and new users

Now that Switch sales have reached 100 million units, Nintendo has outlined the next phase of its Switch sales strategy, which is converting existing Switch households into multi-Switch owning households. The release of the Switch OLED supports this strategy by prompting original Switch flagship owners to upgrade and by offering enhancements, such as a bigger screen and better screen legibility, that are attractive to older demographics. This strategy will also be supported by upcoming games such as Nintendo Switch Sports which hopes to emulate some of the appeal delivered by the hugely successful Wii Sports.

PS5 falls behind PS4 due to Q4 supply constraints   

Sony ended 2021 with PS5 cumulative sell-through reaching 17 million units, around 1.6 times the performance of Xbox Series sales. At this early stage the global sales momentum is with Sony, but it will be frustrated that its potential has been undermined by product availability.     

The monumental effort made to overcome supply chain challenges for the first full year of the PS5’s lifecycle hit a brick wall in the last two months of 2021. Lower than expected sales, particularly in December, means that PS5 sales performance has fallen behind the previous generation PS4. It is unlikely that this course will be corrected until at least later in 2022, but more likely into 2023, and will depend on what is an unpredictable component supply chain environment.

While Sony will be relatively satisfied by its performance versus its nearest competitor, it will be aware that performance in the console market is very dependent on sales momentum. Anything that undermines that momentum is not welcome.

Xbox Series S comes to the rescue  

Microsoft ended 2021 with its Xbox Series family of devices reaching cumulative sell-through of 10.5 million units. This is on a par with the previous generation Xbox One cycle. In a similar way to Sony with the PS5, Microsoft has suffered substantial shortages to its high-end Series X device, undermining its potential in the market to an extent. Microsoft has also used Series X components to upgrade its cloud gaming servers, putting additional pressure on consumer availability of its flagship console.  

Microsoft has managed to partially mitigate Series X shortages with its dual product strategy. The cheaper, less powerful Xbox Series S has experienced much better availability and alongside Xbox Game Pass, has driven unprecedented adoption of this digital-only device. Ampere estimates that cumulative sell-through for Series S was ahead of Series X at the end of 2021.

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