According to Money DJ, citing the latest data from Japanese gaming media Famitsu, overall console sales in Japan (including Switch, PS5, and Xbox Series X/S) dropped 19% to 79,962 units during the week of September 2-8, compared to the previous week (August 26-September 1), driven by a sharp decline in PS5 sales.

Famitsu reports that sales of Nintendo’s Switch series (standard Switch, Switch Lite, and OLED Switch) rose 6% week-over-week to 67,473 units. The standard Switch saw a 14% drop to 5,723 units, while Switch Lite sales jumped 12% to 15,271 units, and OLED Switch sales increased 7% to 46,479 units.

Sony’s PS5 series (standard disc version and digital edition) saw Japanese sales plunge nearly 70% during the same week, hitting a new low for 2024. Total PS5 sales slumped 67% to 11,007 units. The standard PS5 dropped 66% to 9,097 units, and the digital edition saw a 73% decline to 1,910 units.

Meanwhile, Microsoft’s Xbox Series X/S sales in Japan surged 90% week-over-week to 1,482 units, with Xbox Series X sales jumping 87% to 759 units and Xbox Series S up 94% to 723 units.

Sony Interactive Entertainment (SIE), Sony’s gaming subsidiary, announced on August 27 that it would raise PS5 prices in Japan starting September 2. The standard PS5 price was hiked 19% (an increase of ¥13,000) to ¥79,980, while the digital edition saw a 21% increase (also ¥13,000) to ¥72,980.

Meanwhile, rumors of a new Nintendo console have been making the rounds. According to Notebookcheck, leaked details regarding the price and launch date of the anticipated Nintendo Switch 2 have surfaced, fueling speculation that Nintendo could be gearing up for another blockbuster release.

(Photo credit: Sony)

Sony’s gaming console, the PlayStation 5, is showing robust sales momentum. According to Reuters, a senior games executive stated that the cumulative sales of PS5 have surpassed 50 million units, and this year’s “Black Friday” sales performance has also set an all-time record.

The entertainment giant is now counting on the PS5 to continue its strong performance during the year-end shopping season, aiming to achieve the record-breaking goal of 25 million units sold by the end of this fiscal year in March.

Eric Lempel, Senior Vice President for Global Marketing, Sales, and Business Operations at Sony Interactive Entertainment stated as follows, “Given the momentum we’ve had in November and a lot of what we’re seeing in December, just in general we’re feeling very good about sales overall.”

Lempel further indicated in an interview that, “We’ve done some good promotions this year. I will say we’ve done fewer promotions at this stage of the lifecycle than we ever have in the history of the company.”

Despite recent discussions in the gaming industry focusing on the future of gaming consoles due to advancements in cloud technology, freeing games from reliance on bulky hardware, current gaming consoles continue to attract players.

In the initial release phase, the PS5 faced challenges due to disruptions in the supply chain, impacting sales. Nevertheless, this issue has since eased, and the positive reception of the game “Marvel’s Spider-Man 2,” launched on October 20th, is contributing to the increased momentum in the sales of this gaming console.

In the coming months, key games like “The Last of Us Part II Remake” and the timed exclusive “Final Fantasy VII: Remake” will be sequentially released on the PlayStation platform in January and February.

As for Sony’s competitor, Nintendo’s Switch console, despite being on the market for several years, has maintained strong sales this year, driven by the release of new games such as “The Legend of Zelda” series.

(Photo credit: Sony)

Sony has provided more information about the release of its PS VR2 through its official blog. According to its latest blog post about this product, the new VR headset, which is the main part of a PS VR2 bundle or package, will hit the market on February 22, 2023. The retail price of the entire bundle is now set at US$549. The bundle comprises the PS VR headset, two Sense controllers, and a set of stereo headphones. While the price of the PS VR2 is higher than that of the PS5 (i.e., US$499 for the standard PS5 and US$399 for the Digital Edition of the console), it is worth noting that the previous generation of the PS VR headset—the PS VR—priced the same as the PS4 Pro (i.e., US$399). Also, if we include two previous-generation PS VR controllers (i.e., the Move controllers) that cost US$49 each, then consumers would pay a total of US$497. Hence, the price difference between the older PS VR bundle and the PS VR2 bundle is almost US$50; and this is actually a fairly reasonable reflection of the cost of the new hardware. After all, the PS VR2 and the Sense controller incorporate quite a few new features and components such as eye-tracking and haptic feedback.

Generally speaking, Sony’s plan is not about making the PS VR2 more expensive than the latest PS console, per se, but rather about following a pricing strategy that is specific to its VR devices. It should be pointed out that for the previous generation, Sony sold the headset separately from the supporting controller. There was no bundle back then. Now, the company only sells the PS VR2 in a package deal that includes the headset and two motion controllers. Because of this change in sales strategy, consumers feel a price hike. As for the possibility of Sony selling standalone PS VR2 headsets in the future, TrendForce believes such move will be unlikely mainly because Sony is focusing on gaming experience rather than instinctively trying to raise the market penetration rate of the PS VR2.

When the PS VR was launched, the gaming experience that it provided was affected by the low market penetration rate of the PS4 Pro. Learning from this lesson, Sony has removed forward compatibility from the hardware and software designs of the PS VR2. Therefore, the combination of the PS VR2 bundle and the PS5 console is now the only way to get the most ideal VR gaming experience from Sony. And with this approach, Sony hopes to raise the market penetration rate of the PS VR as a whole. Moreover, the gaming experience for users of the PS VR2 will be mainly immersive. So, in addition to the specially designed video and audio content, the PS VR2 will also feature a wider range of operations and a greater variety of feedback mechanisms. Additionally, the game content for the PS VR2 will be designed specifically for the Sense controller. All these details again reveal a strategy that insists on a total package for consumers.

PS VR2 Shipments Are Forecasted to Reach 1.6 Million Units for 2023

While pricing will definitely affect the sales volume of the PS VR2, it is also important to remember that the game console market targets a just few particular subsections of consumers. VR gaming is thus a narrow segment within this niche market, and VR gaming devices are never going to reach the same scale in sales when compared with the more typical consumer electronic devices. Furthermore, game console users as a group tend to be willing to spend more than do most other consumers. Hence, providing a proper gaming experience is a much more effective way to grow the VR gaming market as opposed to trying to keep hardware prices down.

And for the reasons described above, we can also anticipate that the cumulative sales volume of the PS VR2 will unlikely be comparable to that of Meta’s Quest 2, which has reached the level of tens of millions. However, the PS VR2 should have no problem reaching the 5~10% market penetration rate that is already attained by the PS5. TrendForce projects that the cumulative total sales volume of the PS5 console will surpass 30 million units by the end of 2022. Considering the impact of the weakening economy on consumer spending and the lack of VR games in the initial period of adoption, some gamers will put off purchasing the PS VR2 until they believe the time is right. Still, shipments of this device are forecasted to reach 1.6 million units for 2023. The key factor that could push sales of the PS VR2 even higher is whether its games have the content that complements its hardware and thus provide an exceptionally immersive experience.

（Image credit: Pixabay）

Sony stated in an earnings call that PS5 shipments totaled only 11.5 million units in the last fiscal year (2Q21 to 1Q22), missing the target of 14.8 million units. Increasing PS5 game console production will be the company’s main task for now and sales are expected to rise to 18 million units this fiscal year. In addition, Sony also stated that it will strengthen live broadcast services and extend game services to other devices, as well as step up its VR business.

PS5 sales will continue to grow in 2022 but market instability remains

Although Sony had high expectations going into the launch of the PS5 and market reception was good, the PS5’s final sales volume was stifled by production hamstrung as a result of component shortages. Therefore, Sony specifically mentioned in the Business Segment Briefings, comparing US retailer events sold PS4 to the PS5, the PS4 sold an average of 6 units per minute, while the PS5 now sells approximately 1,000 units per minute, demonstrating the strong market demand for PS5.

At the beginning of the PS5 release, there were reports of an insufficient supply of components. When the PS5 was released at the end of 2020, it had been in production for several months and accumulated a certain amount of inventory. Even if production capacity was in short supply when the console was released, Sony could still meet some market demand in the first year with its inventory and then increase production capacity in 2021 to make up the difference. However, in 2021, semiconductor production capacity was also in short supply. Not only game console products, but numerous other products experienced a shortage of components. Naturally, Sony was unable to further increase the supply of PS5 consoles, resulting in PS5 sales coming in lower than originally expected. Sales even declined in 1Q22. As the imbalance between supply and demand of semiconductors gradually eases in 2022, Sony predicts that PS5 production will begin to increase to fulfill market demand and announced a sales target for this fiscal year of 18 million units.

Even so, there remain many uncertainties in 2022. First of all, although pandemic lockdowns in China have yet to directly affect the assembly and production of game consoles in Shandong, the risk of potential fallout still exists given the uncertainty of pandemic development. Secondly, demand from the overall consumer market may be exhausted in 2022. This is due to unfavorable factors such as inflation, wars, pandemics, and rising energy prices. Disposable income in 2022 is forecast to shrink as a result and force consumers to give up some non-essentials or delay purchases. So this may cause consumers to delay replacing their current console with a PS5. A combination of the original dearth of PS5 supply and the impact of the scalper market seriously depleted the stock of products on the market. Some consumers who were eager to enjoy new console games may have switched over to buying an Xbox Series X/S first which may contribute to PS5’s 2022 annual sales volume falling short of Sony’s estimate. TrendForce expects that volume will only reach 14.34 million units. Even if this forecast references the range of Sony’s fiscal year (2Q22 to 1Q23), estimated sales volume will only increase to 16 million units.

（Image credit: Pixabay）

Sales of gaming consoles underwent palpable growth in 1H21 thanks to the release of new consoles as well as demand that had previously been deferred in 2020 due to material shortages. Moving into 2H21, however, disruptions in logistics/transportation and the further spread of the COVID-19 pandemic led to less-than-expected sales volumes during the holiday season, estimated in total annual sales of 51.257 million consoles for the whole 2021. While the Nintendo Switch remained the market leader with sales of 26.19 million units, about 14.31 million units of the Sony PS5 were sold, compared to 8.14 million units of the Microsoft Xbox Series X|S.

As the aforementioned issues related to the pandemic, logistics, and shortages gradually become resolved, TrendForce expects gaming console sales for 2022 to reach 57.94 million units, a 13% YoY increase. Although the Switch will likely retain its market leadership, sales will hold flat and begin to show signs of decline, as the console enters its fifth year. TrendForce expects Nintendo to release a refreshed version of the Switch console in early 2023 in response to gradually declining sales.

After expanding the PS5 user base, Sony is expected to make a heavy push for its next-gen VR products, the PS VR 2, which will likely be released at the end of 2022. At the same time, Sony will continue to strengthen the development of both games with VR content and VR-related accessories, which can further improve the gaming experience of PS VR users. Microsoft, on the other hand, has placed an emphasis on not only its Xbox Cloud Gaming streaming service, but also the acquisition of game development studios to increase its exclusive game titles, attract consumers, and weaken its competitors. Hence, Microsoft may potentially release its own affordably priced game streaming boxes this year to be used in conjunction with cloud-based game streaming services. However, due to the nature of Xbox Cloud Gaming as a cross-platform service compatible with, among other devices, the previous-gen Xbox One, consumers may in turn be less willing to purchase the Xbox Series X|S, thereby lowering annual sales of these consoles and widening the sales gap between the Series X|S and their competitors.

Switch-like handheld gaming consoles will continue to appear

Rising sales of the Nintendo Switch consoles have led other brands to release similar products in response. In addition, the barrier to entry in the handheld gaming console market has been significantly lowered now that Qualcomm is able to supply chips, reference designs, and dev tools. With brands now willing to cross over to this space, the market may see the emergence of multiple Switch-like handheld gaming consoles in 2022.

Unlike prevailing gaming consoles which have closed ecosystems, products such as the Steam Deck are based on open platforms that are compatible with gaming contents and streaming services available on PCs and mobile devices. As such, these handheld gaming consoles are not an absolute requirement for consuming game content, and consumers may still prefer using their existing PCs or mobile devices for such content.

As well, brands that look to release their own handheld gaming consoles will not look to compensate for reduced hardware profitability through software sales. As a result, these consoles will be priced relatively high, at an expected US$399 and up, which may negatively affect consumers’ willingness to purchase them. Even if certain brands make an attempt at handheld gaming console production, sales of these consoles are expected to remain mediocre, without making much of an impact on the current gaming console market.

（Image credit: Pixabay）