Posted by: seanmalstrom | March 10, 2014

Email: A major tech site acknowledges the contraction of gaming market

Greetings, Master Malstrom.

Techcrunch, a prominent technology news site, seems to echo your sentiments on the next generation of consoles: http://techcrunch.com/2014/03/09/console-crisis/

“On the cumulative console sales score at least, Sony’s PS4 appears to be edging out the Xbone, for now.

The thing is neither of these new generation console flagships is selling very well when compared with previous generations of flagship consoles. The console market appears to be shrinking significantly — and that’s evidently having a knock-on impact on games studios and game development. The big games studios don’t exclusively develop for a single platform, after all, so the health of the entire market is key to keeping games studios in business.”

[…]

“Whatever the exact truth of the new generation of consoles sales – and it is still certainly early days for the PS4 and Xbone – it looks pretty clear that the console market overall has a big problem: aka the C-word, market contraction.

It’s not just new flagships failing to sell as well as new consoles used to; previous generations of consoles are evidently not sustaining long-tail sales as once they did either. Sales of the PS3/360/Wii are declining at an alarming rate compared to the transition from the prior outgoing platforms (PS2/GC). Those consoles stuck around selling in larger numbers for longer than their current-gen equivalents so there’s a wider market collapse going on.”

The article talks about shrinking hardware sales, the rising costs of game development, games studios going down, the competition from mobiles and PC, Sony (the Pyrrhic victor of the console war) cutting its staff.

NeoGAF people have found this article and are melting down over it, calling it lame and stupid without presenting any coherent rebuttals: http://www.neogaf.com/forum/showthread.php?t=781760

Thanks for reading, and thanks for your thought-provoking writings!

It’s too early to say that based on a couple of months of data from Xbox One and PS4. With all the fanboys out there suffering hardcore personality disorders, I’ve learned you can’t say something unless you can prove you can’t say the reverse. For example, Nintendo fans kept arguing how amazing 3DS had ‘turned around’. Even with Iwata saying otherwise, they still continue to repeat the mantra. I tend to think Iwata has a better grasp of his company’s products than enthusiast gamers of whatever stripe.

On my own view, I don’t see how the console market can do anything but contract based on the macro-economic downturn alone. Everything is down! Retail is down! Yet, video game consoles are going to increase? That doesn’t sound probable.

Certain Sony fans are having orgasms over PS4 launch numbers. Early launch numbers really show nothing because the first few million are the easiest units to sell. Being ‘sold out’ doesn’t matter either when a console is launching worldwide. There will be logistical issues. You don’t want a console to be ‘sold out’ for long because you lose many potential sales.

When PS4 is doing 400k+ in the United States on non-Holidadays and is still sold out, I’ll be impressed then. THAT is the comparison that must be made to the Wii. Those are Wii numbers. The first few months of Wii had extremely limited supply due to Nintendo insisting on a ‘worldwide launch’ and being shocked and awed by the colossal demand. PS4’s numbers at this point is more indicative of initial supply than any demand.

PS4 demand could increase over last generation by cannibalizing the Xbox 360 gamers. If Xbox One numbers fall and PS4 numbers rise, this is exactly what will happen. There are many reasons for Xbox 360 users to abandon the Microsoft ship beside not trusting Microsoft with their DRM policies. The Xbox 360 red ring of death hardware failures are reasons enough for 360 gamers to go PS4. I know several myself that are doing just that.

If PS4 cannibalizes the Xbox gamers (it is not ‘consolidation, it is cannibalization you dumbtards), then the market contraction still occurs.

I think PS4 will greatly outsell Xbox One and Wii U, but PS4 sales will come to earth in the following months. Just as most game software sales have transitioned to being bought within the first few months, I believe hardware sales are transitioning that way as well.

Now we just have to wait for the sales data to appear.


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