Despite increasing competition from devices such as smartphones and tablets, and online gaming services discouraging consumers from spending on expensive gaming consoles, the video game systems market continues to grow. In 2013, the market declined primarily due to consumers putting off their purchases on account of new generation consoles launches. However, during the forecast period 2014–2018, the market is expected to grow, and this market insight discusses the factors that are expected to drive the market. The insight also includes a SWOT analysis of the major vendors.
Market Definition and Overview
The video game systems market includes video gaming consoles and handheld devices that render videos in addition to being used for gaming. Video is usually rendered on these devices using formats such as MPEG LA defined codecs as well as Windows Media Video codec. While High Efficiency Video Coding (HEVC) has not made it to the latest generation of consoles, PS4 and Xbox One, MPEG 4 AVC remains the dominant format on these devices. The increasing use of video streaming applications on these devices, even on seventh generation consoles—PS3, Wii, Xbox 360, had driven manufacturers to quickly adopt MPEG 4. This trend continues in major eighth generation consoles, and is also evident in the devices of some of the low cost new entrants.
The devices included in this analysis are Sony’s PlayStation (PS) 2 (not included 2013 onwards), PlayStation 3 and 4, PlayStation Portable, and PlayStation Vita; Microsoft’s Xbox 360 and Xbox One; Nintendo’s Wii U, Wii, 3Ds, and Gamepad. The percentage share of consoles in the total unit shipment increased from in 2012 to in 2013. The percentage share of handheld devices declined from in 2012 to in 2013. This shift can be directly attributed to the release of Xbox One and PS4 in 2013.
The regions covered within this study are North America (NA), Europe, the Middle East and Africa (EMEA), Asia-Pacific (APAC), and Latin America (LA). The forecast period is 2014 to 2018, with 2013 serving as the base year, although 2012 numbers have also been provided. Unit forecast is based on the number of units shipped by device manufacturers and not units sold.
In 2013, the total market declined by %. This decline was primarily due to the fact that many consumers put off their console purchases during the year in favor of the newest generation consoles, Xbox One and PS 4, launched in 2013. A number of other factors also played a role in this decline. Other factors such as the increasing use of smartphones and tablets for gaming, limited to no price cuts that continue to render consoles an expensive purchase in emerging countries, high import taxes in countries such as Brazil, and to some extent even a slow economy, prevented consumers from making new console purchases.
Of course, additional factors such as availability of online games, accessories, subscription price, and breadth of streaming content and third party apps all contribute to the adoption of a video game console.
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