Gaming Console Sales Drop 27% In 2012 – Now For Gaming Tablets

Gaming Market Highlights

  • Total market revenues drop 14% to $37.9 billion
  • Console revenues fall 27% to $11.7 billion
  • In hardware Sony leads with a 41.9% share of revenue
  • Nintendo is in second with 29.9%
  • Microsoft closes in with a 28.3% share
  • Hardware unit shipments slip 22% to 57.2 million
  • The installed base drops 8% to 285 million
  • Software drops just 6% to $25.0 billion
  • PC Software grows 29%

gaming q412 fig1
We don’t want to get too depressed, but Xmas was not a great season for the gaming console market. You’ll be interested in catching up on the business levels. As always this article is co-authored by Lizzie Hingley who continues to gain experience from the area.

Sony Leads In Revenue, Nintendo In Units

The gaming console market is a 3 horse race, due to the high costs to entry. We show market shares for 2012 in Figure 1. In total revenues from console hardware were $11.7 billion (down from $16.1 billion in 2011) – of this Sony has a significant lead with a 41.9% share from a mixture of Playstation 2, 3 and its PSP. Microsoft continues to sell just home Internet machines in this market, although it could be argued that its Surface products cross over into our area: like Sony it has a bigger share of revenues (28.2%) than unit shipments (17.7%). Despite a dramatic fall off in business over the last couple of years Nintendo continues to lead in terms of unit shipments with a 43.5% share.
gaming q412 fig2

Nintendo Ships 3.1 Million Wii Us

Unit shipments from Nintendo dropped from 31.8 million in 2011 to 24.9 million in 2012. It has however been the most creative of the 3 vendors, reporting 3.1 million sales of the Wii U in its first recorded quarter. Despite this Wii Us and Wiis together in 2012 totalled 7.5 million in comparison with the 10.3 million Wii sales in 2011. Shipments of DS dropped from 6.5 to 2.6 million as to be expected: more concerning was the slight drop in 3DS shipments (from 15.0 to 14.8 million). Our summary of 2011 and 2012 Nintendo shipments is shown in Figure 2.
gaming q412 fig3

Sony Playstation 3 Grows…. Just

In total unit shipments from Sony slipped from 26.4 to 22.2 million between 2011 and 2012 (see Figure 3). Although it’s stopped reporting them in the last quarter we believe it still sold around 1.4 million Playstation 2s in the year. Its biggest achievement was to grow Playstation 3 shipments from 14.1 to 14.3 million sales. PSP and PS Vita (included in the slide above) sales slipped from 4.7 to 6.5 million shipments in the year.
gaming q412 fig4

Microsoft Has A Lot More Than xBox On Its Hands

Shipments of xBox dropped from 14.9 to 10.1 million in the year and Microsoft remains the only one of the three vendors not to promote a portable console. Of course the company has a lot going on beyond console sales in the gaming market, such as the introduction of its Surface tablet designs . As with the xBox it has decided to compete directly against its OEMs for the first time in the PC and tablet markets, even if generating sales from its new operating systems remains the thermometer of success.
gaming q412 fig5

gaming 2012 fig6

Some Conclusions – Tablets – If You Can’t Beat ‘Em…

Our forecast is somewhat depressed (Figure 6), with the bright spot in 2013 coming from the growth of Wii U and Sony’s upcoming PS4. The big question is how Xmas sales will do this year and whether Sony can beat history in the home Internet console market to do better than its rivales: traditionally it loses market share in Q4 (see Figure 6).
In 2012 the only bright spot in the gaming market was PC software, which grew by 29% over 2011 levels to reach $8.1 billion: companies such as Activision Blizzard and Electronic Arts are finding a small, but growing business there.
Tablets come in all shapes and sizes from Kindles to iPads and are very rarely sold on their ability to run games: however they certainly compete for household budgets – pruned as a result of economic uncertainty – at Xmas and the gaming console is losing out. Much has been written about the negative effects Tablets have on the PC market and the delayed and/or missed opportunities of emulating Apple and Samsung’s success. As always we need genuinely new hardware platforms (such as the Wii U) and a new approach to the mobile console market – how about marketing them as dedicated gaming tablets?

2 Responses to “Gaming Console Sales Drop 27% In 2012 – Now For Gaming Tablets”

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  1. An interesting blizzard of figures.

    A priori, the two options seem a smarter and better thin client with some local storage with remote cloud server number-crunching.

    Or a powerful home/local device with online features.

    The worldwide mass market winner will be the the thin client.

    For wealthier gamers, the powerful home/local device will be the winner.

    Some other avenues could be dead ends. For example PC software when there is really no need for a PC for most people in the world. Or more accurately, no need for an overt PC, just a smart TV will do when supplemented with a smart tablet and/or smart phone or dongle-depending how affluent you are.

    I expect there will be many niche markets for small or shruken-down companies to exist in with little hope of a comeback in the big time.

    True, the recession is effecting this market, but second and third world customers were never affluent to start with in Western terms, so it was easy to read the big picture of what was going to happen, with Apple iOS and Blackberry versus Android for example.

    Amazing how we all are now dependent on mobile smart devices for survival. In the Phillipines for example where some phone masts survived the typhoon, lives are saved daily.

  2. bevanp says:

    Interesting to see if you do this in a year’s time what the situation looks like. From a console perspective Steam might give a shot in the arm to that sector, but at the expense of the existing Big 3.
    In terms of the games themselves the future is definitely digital. This means that the old established developers and publishers like EA, Activision, Ubisoft et al need to get to grips with both the technology and business models that are developing. The emerging games developers and the growth of on line social games like Candy Crush (that generates revenues of $860k per day) are less likely to develop for the existing consoles.
    Consoles may be a declining market. Games definitely isn’t.

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