Resurgent sales of Sony’s latest PlayStation and a strong line-up of blockbuster games led the console market back to growth this year after a post-pandemic slump.
Sony said on Wednesday it has sold 50mn PlayStation 5s almost as quickly as its last generation of the device, overcoming longstanding supply problems to outsell Microsoft’s Xbox by almost three to one in 2023.
The console market — including hardware, software and services — is set to rebound 7.2 per cent this year to $60.9bn, after a 7.3 per cent decline in 2022, according to data from Ampere Analysis, the research group.
The growth means the market is almost as large as it was during the pandemic boom year of 2021. The recovery came thanks to improved availability of the PS5 and a strong range of games including Sony’s Spider-Man 2, Microsoft’s Starfield and Nintendo’s The Legend of Zelda: Tears of the Kingdom.
After Sony launched the PS5 in late 2020, it was plagued by component shortages, with demand far outstripping supply until earlier this year.
Eric Lempel, head of global business at Sony Interactive Entertainment, said that with supply issues “solved”, its latest console was now on track to outsell PlayStation 4, which was first released in 2013 and went on to sell more than 117mn units.
“I think we have the ability to get there,” Lempel told the Financial Times. “Demand for the [PS5] going into this year was huge . . . Momentum is strong now and it’s continuing.”
Sony said it hit the 50mn sales milestone on December 9, 161 weeks after the PS5 launched. This compares with the 160 weeks it took the PS4 to reach the same point after its release. Microsoft has not published official Xbox sales figures for several years.
While Microsoft stole headlines this year over its battle to complete its $75bn acquisition of Call of Duty maker Activision Blizzard, its Xbox hardware has been beaten into a distant third place behind Sony and Nintendo.
PS5 sales grew about 65 per cent to 22.5mn units this year, according to Ampere estimates, while sales of the latest Xbox fell about 15 per cent to 7.6mn. Sales of Nintendo’s Switch, which debuted in 2017 and is likely to be replaced by a new console next year, fell 18 per cent to 16.4mn.
“There was a lot of pent-up demand [for PS5], so when the supply came in, [Sony] broke all records in the first quarter of this year,” said Piers Harding-Rolls, head of games research at Ampere.
Microsoft had its own supply problems for the more expensive Xbox Series X model in the first half of this year, Harding-Rolls added, while its flagship titles Redfall and Halo Infinite have also struggled.
The diverging fortunes of Sony and Microsoft also reflect a shift in the latter’s strategy away from hardware over the past couple of years, according to Carolina Milanesi, an analyst at Creative Strategies.
“Sony really cares about selling hardware but from a Microsoft perspective, it’s more about their subscription service,” she said. The US company’s Game Pass service includes access to hundreds of games that can be played on Xbox, PC or streamed over the internet to other devices, for a monthly fee.
Activision Blizzard games are expected to be included in Game Pass next year, though Microsoft has not yet set out its plans after closing the deal in October.
While hardware supply was disrupted during the Covid-19 pandemic, the development of several big games had been delayed in recent years too. Game creators grappled with production challenges as offices were closed, though many of those games finally saw the light of day in 2023.
Many critics and players declared it a vintage year among both big-budget and smaller independent releases, including Baldur’s Gate 3, Diablo IV and Harry Potter spin-off Hogwarts Legacy.
“The way we look at the market and when we talk to consumers, a lot of them are waiting for a specific game that’s the catalyst to make them jump into a next-generation console,” said Lempel, pointing to exclusive titles such as Spider-Man 2.
However, some of the world’s most popular online multiplayer games are available on every console, presenting a growing challenge to Sony’s strategy.
Epic Games’ Fortnite, which can be played on older consoles as well as the latest hardware, had a huge resurgence in November after the “Battle Royale” game revived its original island “map” and featured a live performance from rapper Eminem in early December.
Fortnite players jumped by 17mn to 52.9mn on Xbox and PlayStation in November, according to Ampere estimates.
Nonetheless, Lempel said the latest Black Friday sales period helped make it the biggest November for PlayStation sales, when measured by both units and revenues, in Sony’s almost 30-year history in gaming.
Accessories such as extra controllers and its new Portal device — a portable screen and controller for playing PS5 games away from a television screen — also sold well.
However, its latest virtual reality goggles, PlayStation VR2, have been a slower burn. “It’s a bit of a challenging category right now,” Lempel said, although its own sales were “going well”. Sony remained committed to virtual reality products, he said, but added: “I think there was a higher expectation generally for what VR would do to gaming.”
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