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ANALYSIS: Next-gen crash recovery?

ANALYSIS: Next-gen crash recovery?

Jules Williams, consumer retail analyst at Kantar Worldpanel, discusses whether the next generation of consoles has what it takes to restore the games industry...

It‘s no secret that the past few years have been tough for the industry. Physical games sales are down by 60 per cent since 2009, with rising digital sales failing to make up the difference.

The reasons are twofold. Firstly, fewer casual gamers are still engaged with the market. Many were drawn into buying games by the Wii, but this trend has run its course.

The second problem is increasing disengagement of more committed gamers, who have bought fewer and fewer games in recent years.

But the next generation of consoles presents an opportunity to bring both groups back into the fold.

Big annual release franchises such as Call of Duty and FIFA have become reliable sellers but, as we saw in 2012, the industry needs other franchises to boost sales. The Christmas period looks promising, with big releases including GTA V, Batman and Battlefield all hitting the shelves.

But it is the next-gen consoles that will have the decisive impact on games sales. Pre-order sales have been impressive, but perhaps most encouraging is the broad base of shoppers who intend to buy next year. A fifth of people planning to buy within the next year are light video game shoppers, those who only buy one or two titles each year – exactly the kind who have fallen out of the market in recent years.

"Only a fifth of Wii U software spend has
come from families, compared with half
for the Wii. In fact, Wii U’s typical buyer
is similar to the PC gamer – generally under
45, buying without a family in mind. This
lost market has had a huge effect on the
games industry as a whole: four out of five
lost video games shoppers in the past
four years were Wii buyers."


The appeal of these two consoles to non-core gamers will rely in part on features that aren’t necessarily related to playing games. When Nintendo marketed the Wii to those who had little interest in button-bashing, it meant that 63 per cent of Wii’s software spend came from over 45-year-olds and families, two groups that typically have little interest in video gaming.

It is important that both consoles make a clear case as to why these new features are interesting. Wii U has so far not been able to explain why non-core gamers should upgrade. Only a fifth of Wii U software spend has come from families, compared with half for the Wii. In fact, Wii U’s typical buyer is similar to the PC gamer – generally under 45, buying without a family in mind. This lost market has had a huge effect on the games industry as a whole: four out of five lost video games shoppers in the past four years were Wii buyers.

Microsoft and Sony appear to have learnt lessons from this. Microsoft has been at pains to emphasise that Xbox One will include TV, film, music, sports, and apps alongside its gaming element. This has invited criticism from its core gamer base, but in the long term Xbox’s marketing as an all-in-one essential living room feature could pay off by appealing to light game shoppers and families.

PS4 is more recognisable as a traditional games console, but according to many sources, Sony is close to revealing a virtual reality headset. This could bring back past consumers, provided it is affordable. Occulus VR, the tech firm rumoured to be working with Sony, recently released a video showing a 90-year-old grandmother delighted at using the technology.

Should either of these pitches be successful in attracting the unconventional shopper then there is a good chance sales will soar.

If though, like the Wii U, they fail to expand their customer base, the next few years are unlikely to match the games sales seen in the last decade. 

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Tags: video games , consoles , market , Next-gen , recovery , crash

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