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Analyst: Are the console wars over?

February 23, 2022

All eyes were on Sony and Microsoft who released their 9th generation consoles, the PlayStation 5 and Xbox Series X/S, in autumn 2020. A year and a half later, Dataxis has offered its assessment.

The pandemic and subsequent lockdowns was an incredibly successful period for video game console manufacturers: sales of hardware and software (Animal Crossing: New Horizons, released in the very middle of the first lockdown, is now the second best selling Nintendo Switch game of all time) exploded in epic fashion. Paradoxically this surge in demand for electronics combined with facilities shuttered also created a global semiconductor shortage, which resulted in limited stocks of PlayStation 5 and Xbox Series X/S at their launches.

Nevertheless, Sony’s latest PlayStation appears to be the evident champion with a reported 17 million units sold worldwide, compared to 12 million for the new Xbox for the year 2021. Those results are consistent with the market share evolution of the two rivals over the years worldwide. In addition to that, the PlayStation 5 also overtook its competitor in two historical Xbox territories: North America and Australia & New Zealand.

War for contents?

However, in the time of sacrosanct content, competition does not only lie in numbers of sold hardwares, but also in the attractive, plural and exclusive game softwares they come with.

Microsoft recently announced the acquisition of Activision Blizzard, the leading video game developer, which is known for its franchises such as Diablo, Call of Duty and mobile game Candy Crush Saga. This acquisition should positively accelerate Microsoft’s growth in the gaming business, across consoles but also PCs, mobiles and cloud gaming. Moreover, this deal could also result in an exclusive development of certain franchises for the Xbox brand, which could represent a serious loss for Sony. Simultaneously, the latter officially launched the 2018 Deep Rock Galactic on PlayStation at the beginning of the year, which until now had been a PC and Xbox exclusivity. Since the launch, the number of players has more than doubled to 10 million.

New competitors are entering the race

Redefining console war mentality, Microsoft and Sony are further developing their subscription-based streaming and cloud gaming services, with respectively the Xbox Game Pass and PlayStation Now. Following Netflix’s recent launch into the streaming gaming industry and its stated growth ambitions (notably by hiring EA’s veteran Mike Verdu), Phil Spencer also expressed that they were seeing fiercer competitors in the streaming giant than in Sony, clearly marking Microsoft’s strategic interest to further develop its streaming and cloud businesses.

Could Microsoft be distancing itself from hardware in the future? It is not an option, and the rumour has it that both manufacturers are already working on their next generation consoles. The rivalry is naturally evolving, diversifying itself, and OTT platforms entering the gaming market will definitely be an opportunity for console manufacturers to create partnerships and integrate new content providers with their operating systems, concludes Dataxis.

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