Gaming in 2021 Download report

Despite blockbuster instalments from Call of Duty and Rockstar’s Red Dead Redemption on the horizon, there has been much debate on the future of the console industry.

Current-gen devices have found it difficult to meet the success of their predecessors, console ownership rates have steadily declined over the last few years, and some have even predicted the death of console gaming altogether.

For some, this represents a crisis in the console industry, but to dig a little deeper paints a much more positive (and realistic) picture.

Here, we outline why we need to realign our expectations of the console industry, and why it will continue to be a cornerstone of the gaming industry.

The Console Industry is Now Working to its Strengths

Much analysis on the so-called ‘console decline’ points to falling year-on-year console sales and highlights the explosive growth of mobile gaming, together with the continued strength of PC gaming.

Let’s start with the comparison issue.

Console gamers obviously compose a much smaller cohort of the gaming market, but the significantly higher figures seen for mobile and PC gaming are being inflated by the substantially larger casual gaming market. As the name would suggest, this is an entirely different market from those who are keen to invest significant time and resources into the latest gaming titles (not to mention eSports fans). And it’s this latter group that the console industry is falling back on.

Since mid-2015, our research shows that games console ownership figures have been declining at a very consistent rate, with ownership of these devices having shrank by 40% in this period.

Simultaneously, usage of consoles as gaming devices have also experienced a decline, but this time at a much slower and inconsistent rate.

Yet, this is primarily a phenomenon affecting internet users in Asia Pacific and the Middle East & Africa. Both regions have seen around a 50% decrease in console ownership figures in the same period, with as much as a 23% decline in online consumers using these devices for gaming in the Middle East and Africa. While there has been a decrease in ownership figures in Europe, LatAm and North America, this has been to a much lesser extent.

“The ‘console decline’ is primarily a phenomenon affecting Asia Pacific and the Middle East & Africa”

This is broadly reflective of the fact that the console industry has for some time had the most to gain from its core Western markets. As such, it makes sense that the console industry has doubled down on these regions to future-proof its role in the gaming industry.

Consoles Now Compete in a Different Landscape

When the previous generation of consoles hit the market (c. 2005-2006), the iPhone was yet to be released, and Facebook was yet to transition from being a website solely for students into a fully-fledged social space for the consumer market.

In short, the Xbox 360, PlayStation 3 and the Nintendo Wii just didn’t have to compete in the same way for the free time of a consumer like their successors do, especially now that social media and online TV (to name just a few activities) account for such large (and growing) chunks of daily media time.

“The Xbox 360, PlayStation 3 and Nintendo Wii didn’t have to compete for consumer attention in the same way as their successors do.”

This is clearly reflected when we look at the performance of last-gen consoles compared to current-gen consoles. Despite being on the market for at least 4 years, the latter are yet to overtake their predecessors as the top gaming devices among console gamers in all but a few key markets (including Germany, New Zealand and the UK). But that’s not for a lack of want – when we asked internet users which console they are interested in purchasing:

It’s the PS4 that emerges as the most desired console by a considerable distance.

Consoles Now Compete in Different Verticals

So how does the console industry stay competitive in this changing landscape? The simple answer is to boost the console’s value-proposition. To do this, you give the consumer more to do on the console, making it an all-in-one household entertainment hub.

In an industry such as the games consoles market, product innovation is at the forefront of future growth strategies.

‘Gaming’ is no longer the absolute focal point of console functionality.

These consoles allow consumers to browse the internet, upload content to social networks, communicate with friends, listen to music, shop online, and importantly; engage with various forms of online TV.

Elsewhere, and despite Microsoft’s integration of Cortana with the Xbox One, consoles are often overlooked when discussing the exciting future of voice tech. But their new role as a broader household entertainment hub makes them ideal candidates in the race to get AI assistants into every household. PlayStation has also proved to the world that consoles are more than capable of singlehandedly progressing the VR industry with its successful rollout of headsets earlier this year, beating many expectations. With these added functionalities, consumers now have more reasons to use their consoles.

“The console now serves as a household media hub”

By diversifying the role of the console, and by upgrading the existing generations, the industry has largely shaken off the longstanding console lifecycles which have traditionally caused earnings volatility for Sony, Microsoft and Nintendo.

Above all, however, any apprehensive investors will feel reassured to know that these added functionalities are indeed strengthening the use-case of consoles:

We’ve seen consistent increases in daily time spent on games consoles among internet users since 2012 – rising from an average of ¾ hours per day to just under an hour.

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