Current-gen console sales take a hammering as PS5 and Xbox Series X approach – Blog – 10 minute

In a nutshell: There’s plenty of excitement surrounding the upcoming Xbox Series X and PS5 consoles, with many fans already saving up to buy one of the machines, but it’s having a negative effect on the video game industry. According to new figures, sales of the PS4 and Xbox One plummeted last month, down 35 percent compared to one year earlier.
Market analysts NPD Group reported that video game hardware sales in the US were at $129 million in January, $70 million lower than in January 2019. The news comes after Sony’s financial results showed PlayStation 4 sales were down 25 percent over the holiday season.
Niko Partners analyst Daniel Ahmad notes that there are several reasons behind the drastic decline, including the Xbox One and PS4 both “having held at current price points for a number of years.” He also blames the early announcement of the PS5 and Xbox Series X—15 months before launch, in the case of the PlayStation 5—and the fact that both consoles are backward compatible with the current generation of games.

It’s a combination of multiple factors.
PS4 and XB1 have both held at current price points for a number of years.
Impact of early announcements for PS5/XSX with BC.
Shift to HD gaming across multiple devices.
Delays in key titles planned for 2020.
etc…
— Daniel Ahmad (@ZhugeEX) February 14, 2020

Ahmad also points out that the move to HD gaming across multiple devices won’t have helped, neither will delays to some of 2020’s biggest titles, such as Cyberpunk 2077 and The Last of Us 2.
It seems sales of both Sony’s and Microsoft’s machines are falling faster than the last time a new generation was released. “An interesting takeaway from the US NPD report is that PS4 and XB1 hardware sales in Jan 2020 are considerably lower than PS3 and 360 were in Jan 2013,” tweeted Ahmad. “Next-gen consoles are around the corner but both are declining sharper than expected. Switch continues to remain steady.”
Video game sales also took a hit last month, down 31 percent YoY from $451 million to $311 million. Total spending across video game hardware, software, accessories, and game cards totaled $678 million, down 26 percent from $918 million a year ago.
NPD also listed the best-selling games in the US for January. The chart was topped by Dragon Ball Z: Kakarot, followed by Call of Duty: Modern Warfare 2019. Grand Theft Auto V– the best-selling video game in U.S. history—reach number five, the highest it’s been since August 2019.
Make sure to check out our opinion on what the successors to the PS5 and Xbox Series X will look like, in the Future of Tech: game consoles feature.
Top ten selling games in the US for January, sorted by dollar sales—not number of units sold:
1. Dragon Ball Z: Kakarot
2. Call of Duty: Modern Warfare 2019
3. Madden NFL 20
4. Star Wars Jedi: Fallen Order
5. Grand Theft Auto V
6. NBA 2K20
7. Super Smash Bros. Ultimate*
8. Mario Kart 8*
9. Ring Fit Adventure
10. Red Dead Redemption II

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Deciding a price for the PS5 proving difficult for Sony – Blog – 10 minute

In a nutshell: Both the PlayStation 5 and Xbox Series X are due to arrive this holiday season, but for Sony, deciding what price its machine will sell for is proving difficult. Because of component shortages and their high cost, the build price of the console is said to be around $450, meaning the MSRP could be around $470 or more.
Bloomberg reports that Sony usually finalizes a console’s launch price in February of the release year, with mass production starting in the spring. But with the PS5, choosing the MSRP is proving difficult.
IHS Markit estimates that it cost $381 to manufacture the PS4, which sold at a retail price of $399. That would put the PS5’s release price at around $470, making it a lot more expensive than the PS4 Pro, which is $399 but often discounted as low as $299.
One of the biggest issues for Sony is securing a reliable supply of DRAM and NAND flash memory, which is in high demand thanks to smartphones such as the Galaxy S20, which come with a minimum of 12GB of RAM.

The PS5 dev kit
It’s been reported that the disruption caused by the coronavirus could impact or even delay the PlayStation 5 and Xbox Series X, but Sony says the outbreak hasn’t affected production, at least not yet.
Consoles were traditionally sold at a loss, with companies making profits from software sales and subscription services. Sony lost billions on the PS3 at launch but made sure the PS4 was profitable. Some at the firm believe it should take a loss on the PlayStation 5 if it means the price is competitive with the Xbox Series X, though others would prefer if it to make a profit like the PS4.
In addition to the expensive flash storage, the PS5’s manufacturing cost will be pushed up by the high-end AMD GPU. Sony is reportedly spending more than usual on the cooling system, too, ensuring all that hardware doesn’t overheat.
The report also states that a new PlayStation VR is being developed and will release soon after the PS5 launches. We’ve seen in previous reports that the PSVR 2 will be a major upgrade over the current headset, featuring an AR mode, eye/head-tracking tech, and cost $250.
To get our take on what the successors to the PS5 and Xbox Series X will look like, check out the Future of Tech: Consoles feature.

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The Xbox Series X and PS5 could be delayed by the coronavirus outbreak – Blog – 10 minute

Why it matters: The Xbox Series X and PlayStation 5 are set to arrive this holiday season, but disruption caused by the coronavirus could see the consoles delayed, according to an investment bank report. The outbreak has been impacting much of the tech industry, with Nintendo announcing that Switch production and shipments will be delayed in Japan.
The coronavirus has resulted in several manufacturing giants in China, including Foxconn, face disruption as they quarantine employees, ask some to work from home, or temporarily shut down plants. In a recent note from Jefferies Group (via Business Insider), the financial services firm warns that the longer these shutdowns go on, the more likely the next-gen consoles will be delayed or, at the least, suffer from restricted stock.

“The video game sector is currently manufacturing, or beginning to, a once-in-several-years’ product generation change for the 2020 holiday season,” reads the note. “If [company] shutdowns exceed a month or so, game schedules will be delayed. New consoles may likewise suffer supply issues from a prolonged disruption, ahead of their Fall 2020 planned launches.”
Although most games are developed in North America, Europe, and Japan, large sections get outsourced to China. According to the note, as much as 30 to 50 percent of art creation in Western games is done in China. Things are even more concerning when it comes to hardware manufacturing, almost 100 percent of which takes place in China.
Sony, Microsoft, and Nintendo said that 96 percent of consoles imported to the US in 2018 were produced in China, highlighting how the coronavirus crisis could affect PS5/Xbox Series X manufacture, resulting in limited stocks or delays.

Sony, Microsoft and Nintendo said that 96% of consoles imported to the US in 2018 were produced in China.
Hence why the coronavirus outbreak is having an impact on manufacturing. https://t.co/AAgQzF2JGM
— Daniel Ahmad (@ZhugeEX) February 6, 2020

Nintendo has already said Switch console, accessory, and game shipments have been delayed in Japan due to the virus, and the Switch version of The Outer Worlds has been postponed as Chinese developer Virtuos, which is behind the port, has temporarily shut down. The outbreak has also affected iPhone production, has seen tech giants restrict worker travel, and caused LG to pull out of Mobile World Congress.

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PlayStation 4 console and game sales decline as PS5 approaches – Blog – 10 minute

In a nutshell: The PlayStation 4 has been a resounding success for Sony, but with its successor arriving this year, sales declined 25 percent over the holiday season. There were 6.1 million units sold in the three months ending December 31, 2019, down from 8.1 million units during the same period one year earlier.
Sony’s Q3 results for the financial year 2019 show that sales in its Game and Network Services segment, of which the PS4 is part, was down 20 percent to 158.5 billion yen ($1.46 billion). The company blames the decline on falling PlayStation sales, a decrease in sales of non-first-party games, and the effect of foreign exchange rates.

14.7 million PS4 units were shipped in 2019, down from 2018’s 17.7 million. With many consumers holding on to their money until the PS5 arrives, PS4 sales are expected to decline faster in 2020. The machine has now sold 108.9 million units across its lifetime, making it the second-best-selling console of all time, beaten only by the PlayStation 2’s 155 million units.
Game sales also fell last holiday season, down from 87.2 million units in 2018 to 81.1 million in 2019. We also see that buying games digitally is becoming increasingly popular, with 49 percent of those sold in Q3 being digital versions, up from 37 percent last year. Across all of 2019, software sales reached 240 million, 110 million of which were digital downloads (46 percent).

As Sony previously confirmed, there are now 38.8 million PS+ subscribers.
This means that approximately 37% of total PS4 owners have a subscription to PS+.
PS+ value additions such as free games is a reason for people to stay with PS ecosystem next gen. pic.twitter.com/3pNNAiU7hc
— Daniel Ahmad (@ZhugeEX) February 4, 2020

While the PS4 is coming to the end of its life cycle, there are some first-party titles arriving this year that could encourage people to buy one of the consoles. The Last of Us: Part 2, Ghost of Tsushima, the Final Fantasy VII remake, and, of course, Cyberpunk 2077 all arrive in 2020. We might also see the PlayStation 4 receive its first price cut since 2016 at some point.

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No PS5 at E3: Sony rumored to skip the event, again – Blog – 10 minute

Rumor mill: Are you expecting Sony to show off the PlayStation 5 at E3 this year? You probably shouldn’t hold your breath. According to an industry analyst, the Japanese company will be skipping the gaming expo for the second year in a row.
Sony surprised many by announcing it wouldn’t attend E3 2019, but many expected it to return this year, especially as the PS5 is set to arrive during the “holiday season.” But in an interview with VGC, analyst Michael Pachter said he believes Sony will again avoid the show.
“As far as I know, they don’t plan to attend,” says Pachter. “I think that’s a huge mistake, as their ‘focus on the consumer’ is not inconsistent with their attendance at the premier industry trade show. I hope they change their minds, but am sceptical.”
While some other sources claim Sony will be returning to E3, VGC writes that Microsoft’s Xbox team is working under the assumption that PlayStation will not be at this year’s event and is upping its plans accordingly, which probably means we’ll see more of the Xbox Series X.

The PlayStation 5 logo. Inspirational.
If Sony really has decided to skip E3 for a second year, it’s likely because the company is planning a dedicated PlayStation event of its own, where it can show off the PS5 without distractions. But the firm’s absence would be a disappointment, and again highlight the declining importance of the event in many game companies’ eyes.
We already know quite a bit about the PS5, including its specs and features. We’ve also seen alleged images of the dev kit and DualShock 5 controller, while the internet had a good time tearing apart the next-gen console’s “new” logo.

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