PS5 and Xbox Series X|S launch sales match, but don’t improve on, previous generation
Hardware sales largely dictated by product availability; competition for key components means continued supply constraints through 2021
Ampere Analysis data shows that 4.2 million PS5 consoles, a little over 2.8 million Xbox Series X|S consoles and 26 million Switch consoles were sold through to consumers in 2020.
Sales performance of the new consoles almost exactly matched the previous generation launch back in November 2013. While far from weak, both Sony and Microsoft will rue their inability to produce more consoles to cater for strong demand.
Sony on track to sell-in more than 7.5 million PS5s by the end of March
Considering the pandemic backdrop, Sony will be largely satisfied with its PS5 sales performance in 2020, but it’s likely that 5 million+ sales would have been achievable with better product availability. It’s worth noting that Sony delayed the launch of the PS4 in Japan until Q1 2014, while PS5 enjoyed a near simultaneous global launch.
Overall, Sony did not cede any notable hardware market share to Microsoft in 2020 across the new consoles and enters the start of the cycle with the similar momentum exhibited during the last few years of the PS4 sales cycle.
We expect PS5 sell-in to reach between 7.6-8 million by the end of March 2021, and thus will slightly outperform PS4’s sell-in volume of 7.5 million in the similar time frame.
Microsoft’s improved Xbox console positioning undermined by product availability
Microsoft entered the new console generation with understandable positivity. The company has been on a multi-year effort to revitalise its games strategy. This has meant deep investment in its first-party studio capability and a shift towards recurring revenue through the impressive Xbox Game Pass content subscription service.
Microsoft employed a two-tiered product strategy at launch, had the cheapest console on offer in Xbox Series S and launched in three times the number of markets compared to Xbox One back in 2013. As such, we believe Microsoft will be disappointed in its inability to take full advantage of these factors to deliver more sales at the Xbox Series X|S launch compared to Xbox One. A lack of product availability has undermined its sales potential.
While Microsoft is rightly focused on recurring revenue and overall audience engagement rather than hardware sales and is employing an aggressive ‘beyond the console’ games strategy, we expect the Xbox Series X|S user to remain a cornerstone of the overall Xbox business during at least the next five years.
At over 26 million sales to consumers, Nintendo’s Switch outperformed the Wii’s best annual sales
In 2020, Switch sales to consumers reached 26.3 million toppling the best sales year for the Wii of 24.5 million.
The sales success of the Switch justifies Nintendo’s decision to stick with its product strategy of combining unique and innovative dedicated games hardware with compelling first-party games. Switch hardware and software sales were the strongest yet in 2020, boosted substantially by pandemic-induced spending on games, and the types of games that Nintendo offers, which appeal to a broad demographic.
Nintendo’s stand-out Switch hit was the 31-million-selling Animal Crossing: New Horizons, a gentle, sociable game that will be synonymous with the pandemic lockdown for many people. Switch’s unique offering means that it appeals to a wide number of consumers including those that have other games consoles. In the UK, Ampere Analysis consumer data shows that of owners of the standard PS4, 23% also own a Switch.
Presentation: Five strategic trends shaping the future of the games sector
This presentation was delivered in June 2022 and examines the latest games market performance and expectation for 2022 and 2023 in a post-pandemic landscape, and explores the most important industry trends driving strategic decision-making across the games sector at the mid-point of 2022.