Gaming console market q217 – Nintendo resurgent

The dedicated console and handset market grew by 23.5% in Q2 2017 in revenues to $2.0b, 18.5% to 7.9m in unit shipments, while the installed base declined by 6.1% to 168m. For the year to the end of June the equivalent measurements were 7.3% ($12.3b revenues) and 3.0% (43m units), while the change in installed base was (of course) the same as the quarterly stats. Nintendo is resurgent due to its introduction of its Switch product, which was in its second quarter of shipments. My Figure shows a comparison of unit shipments by each of the 3 vendors which participate in this market. You’ll want to learn more about this important Internet-connected market.

Nintendo’s Switch product is a tablet which acts as a family console when slotted into the base station and acts as a portable ‘handset’ when detached. Its success over the last 2 quarters has lifted Nintendo out of its ‘also ran’ position of the last few years, when its Wii U was significantly less popular than Microsoft’s Xbox and Sony’s PSP and Playstation machines. Despite significant growth in the PC gaming market over the last decade, dedicated consoles still have strong role to play – offering each of their users a common experience. The Figure above shows my forecast for the revenues/spending on consoles, handsets and associated software up to 2020. You can see that the Credit Crunch of 2008-9 had a negative effect on this market from which it is only just recovering and that I am optimistic about the popularity of this product type going forward.

The advantages for the 3 gaming console suppliers is that each has created its own proprietary platforms for which software is restricted to the manufacture itself and its chosen partners. This Figure shows the revenues of each of the 3 suppliers over time (using a 4-q rolling analysis to take out the extremely (last quarter) seasonality of sales. Nintendo’s sales in the last year equalled Microsoft’s and are set to overtake them in Q3. This is a transitional market in which new platforms from Sony and Microsoft will also create a surge in their revenues; when they do they are likely to offer some level of backward compatibility with their current products, unlike Nintendo with either the Wii U or Switch.

The gaming console market is a fascinating market to measure – it teaches us about the differences between these proprietary platforms (where software is restricted to the hardware manufacturer itself and its chosen partners) and PCs, where software companies need to seek no particular similar agreements. It is very similar to the smart phone and tablet market, where Apple exerts a similar control on access to its iPhone and iPad – unlike its Android competitors.

I measure and forecast this market each quarter – please contact me if you need more details for your business plans or fill in the form below for our flyer and order form:

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