Video Game Console Market to Decline through 2005, Says In-Stat/MDR

In-Stat/MDR expects video game console prices and shipments to continue declining until the next generation of consoles comes to market. The high-tech market research firm finds that Sony is still dominating the market with its PlayStation 2 (PS2) console, which shipped its 70 millionth unit in January 2004.





"As is typical with the back end of a market this one is characterized by companies cutting prices on both hardware and software to entice more casual, value-oriented consumers," says Brian O'Rourke, a senior analyst with In-Stat/MDR. "However, as can be expected, year-over-year shipment declines will continue until all next-generation consoles are on the market in 2006."

The first next-generation console should hit the market in the fourth quarter of 2005 with the introduction of Microsoft's Xbox 2. Sony, however, is not likely to give Microsoft too much lead-time before launching its PS3 console, which should occur by mid-2006. Nintendo will try to launch its next-generation GameCube 2 console either before, or simultaneously with Sony, which Nintendo considers to be its primary competition.

In-Stat/MDR has also found that:

• Nintendo’s GameCube has performed solidly over the past year, with a worldwide price cut in the fourth quarter of 2003 significantly increasing sales.
  
• Microsoft’s Xbox is in a struggle with the GameCube for second place in the market. It has performed well in North America, and is doing increasingly well in Europe.
  
• Sony will ship the most next-generation consoles through 2008. It has a proven track record built over the last 10 years, and has shown itself to be a marketing powerhouse. However, Microsoft and Nintendo are expected to narrow Sony’s lead in the next generation.
  

The report, "Game Consoles 2004: Waiting for the Next Generation" (#IN0401260ME), includes a five-year shipment and revenue forecast for each current generation console: the PS2, Xbox, and GameCube, broken down by region. Shipment and revenue forecasts for the next generation of consoles are also provided through 2008. There is also an annual forecast for online console gaming subscribers through 2008. The three participants in this market, Sony, Nintendo and Microsoft, are profiled in depth in four areas: console business, marketing strategies, online plans, and shipment analysis. In addition, four responses on consumers’ console ownership and buying plans from In-Stat/MDR’s annual Residential Technology Survey are included.

Source: press release





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