In-Depth Technical Brief

Sony's Playstation 4

The PlayStation 4 has some pretty impressive specs that remain competitive today even though the console is now 4 years old. The PS4 CPU remained clocked at 1.6GHz and contains a similar custom AMD 8-core CPU with x86-based architecture. PS4 boasts a 1.84 teraflop GPU that's based on AMD's Radeon technology. Both the PlayStation 4 and the Xbox One come with 8GB of RAM overall. One place where PlayStation 4 beats the Xbox One is that PS4 games can achieve a 1080p resolution at 30 or 60 frames per second where their Xbox One counterparts run at 720p or 900p at 30 or 60fps. The PS4 has a more distinctive angular shape with an overall stylish design; it consists of a half-matte half-gloss console that measures a slimmer 10.8 in x 12 in x 2 in at its widest regions. These dimensions make Sony's machine more media cabinet-friendly, at least next to Xbox One. The new Xbox also weighs a heftier 3.56 kg vs. PS4's 2.75 kg. Overall the PlayStation 4 is seen as a more sleek and versatile console in the market place, which has led to the PlayStation 4 holding a dominant place in the gaming console market.

Sony's PlayStation 4 Market Share

Sony dominated the game console hardware, software, and service market in 2016, capturing a total of 57 percent share, or $19.7 billion of spending by gamers, according to market researcher IHS Markit. The overall console market hit $35 billion in revenues in 2016, counting hardware, software, and services. Sony’s share was almost double that of Microsoft and its Xbox One. The PS4 ended 2016 with an installed base of 53 million consoles sold to date, compared to 27.6 million for the Xbox One. As of May 22nd 2016, Sony announced that it sold more than 40 million PlayStation 4 units, continuing to make it the fastest-selling console in the company's history. It is clear that Sony is the world leader in terms of market share and they have poised themselves to continue to be dominant into the future by attempting to always stay one step ahead of their competition.

Microsoft's Xbox One

The original Xbox One's dimensions make it a menacing gaming beast that measures 13.5 in x 10.4 in x 3.2 in. It's also riddled with vents, a design decision to avoid another Red Ring of Death overheating scenario, which was a major drawback of the previous Xbox 360. Xbox One also supports both the 2.4GHz and newer 5GHz channels that are compatible with dual band routers, whereas the PS4 limits connections to 2.4GHz, which is likely to have more interference due to the amount of traffic that is flowing through the 2.4GHz channel. Both systems launched with 500GB hard drives and now have 1TB variants, but only PS4 allows user-replaceable internal drives. Xbox One has a custom 1.75GHz AMD 8-core CPU, a last-minute upgrade over its original 1.6GHz processor, which gives Microsoft the slight edge over Sony in terms of processing power. The PS4 and Xbox One specs have similar AMD architecture at their core, but contrast like apples and oranges when it comes to memory. Only developers can determine how this battle is won in terms of how all the pieces come together to form one cohesive unit. Even though the storage on the Xbox One is not upgradable it does support the use of an external use of storage meaning consumers can buy another hard-drive or solid-state drive and connect it to the console via USB 3.0. This was Microsoft’s attempt to respond and compete with Sony’s ability to have user-replaceable internal drives.

Microsoft's Xbox One Market Share

When looking at the total console hardware market with regard to Microsoft’s Xbox One, Microsoft holds a 26 percent share of the market, estimated at $9.1 billion. Another report showed that the Xbox One sold about 57 percent as many systems as the PS4 (21.49 million vs. 37.7 million). That lines up broadly with numbers leaked by EA at the time, which suggest the Xbox One had sold about 52.9 percent as well as the PS4 (19 million vs. 35.9 million). Although Microsoft holds a significantly smaller market share in comparison to Sony, they are the only other company in the industry, which even comes close to competing with Sony in this gaming market.

Mobile Gaming

According to research firm Newzoo, 2016 marks the first time mobile game sales will account for more revenue ($36.9 billion, or 37% of the $99.6 billion market) than console gaming ($29 billion, or 29% of the market). The console games business is up 4.5% over 2015—not bad. But the mobile games business is up more than 30% from the previous year. The Mobile gaming industry is continuing this trend of growth and it is estimated that the industry will generate $46.1 billion this year, or 42% of all global game revenues. More than three-quarters of this, or $35.3 billion, will come from smartphone gaming, with tablet games accounting for the remaining $10.8 billion. Tablet unit sales have plummeted over the years, but with 280 million tablets used actively, the segment contributes significantly to the success of mobile games. The mobile gaming industry is showing growth in many different places around the world, the most substantial growing market is China. Most of China’s growth in mobile gaming will come from two corporations, Tencent and NetEase leading the way. Mobile gaming revenues from these two companies alone reached $7.7 billion in 2016. As a result, we increased our previous 2016 mobile revenue estimates for China from $10.0 billion to $11.2 billion. We expect growth to continue toward $14.6 billion in 2017 for China alone.

Growing Markets

Although it may seem that the gaming industry has been well established around the world for multiple years now, research shows that the industry is nowhere near reaching its maximum potential. The largest growth will be seen in Asian Pacific territories, which is estimated to generate $51.2 billion this year, or 47% of the total global game revenues. This growth represents a 9.2% year-on-year increase. China alone will take one-quarter of all global game revenues, reaching $27.5 billion this year, well ahead of the U.S., which is estimated to reach $25.1 billion. Despite this, the evidence shows that the fastest-growing region in the coming years will be the Rest of Asia (not including China, Japan, and Korea), with total game revenues growing to $10.5 billion in 2020, up from $4.5 billion last year. North America is the second-largest region, with estimated revenues of $27.0 billion in 2017, a year-on-year increase of 4.0%. Most of this growth will come from smartphone gaming, a mature market, but certainly not saturated. Growth in all of these territories is fueled by a combination of a higher share of spenders as well as an increase in the average spending per paying gamer. We see this same trend in EMEA, which we expect to reach $26.2 billion in 2017.

Conclusion

In conclusion the gaming console industry is in a state of constant change and growth and with the constant rise of new innovations it is impossible to tell what direction this market will head in the coming years. One thing for certain is that the industry shows no signs of slowing down regardless of which direction it ends up heading. With the rise of all the growing markets around the world, especially the Asian Pacific area, and China, it is very clear that this market is set for even more growth in the coming years. Companies like Microsoft and Sony are set to lead the way in these innovations and are holding onto a large portion of the worlds market share for the foreseeable future. The future of these and other companies depends on the company’s ability to identify areas of opportunity and be able to capitalize and respond to the changing marketplace.

References

  1. Alexander, J. (2016, May 26). Sony has sold more than 40 million PlayStation 4 units worldwide. Retrieved May 10, 2017, from https://www.polygon.com/2016/5/26/11783776/sony-playstation-40-million-units
  2. Entertainment, S. I. (2016, May 26). PlayStation®4 Sales Surpass 40 Million Units Worldwide. Retrieved May 10, 2017, from http://www.prnewswire.com/news-releases/playstation4-sales-surpass-40-million-units-worldwide-300275350.html
  3. Kyle Orland - Jan 18, 2017 4:57 pm UTC, Kilroy420 Ars Scholae Palatinae jump to post, Legion6789 Wise, Aged Ars Veteran jump to post. (2017, January 18). Reports: PS4 is selling twice as well as Xbox One, overall. Retrieved May 10, 2017, from https://arstechnica.com/gaming/2017/01/reports-ps4-is-selling-twice-as-well-as-xbox-one-overall/
  4. Swider, M., Porter, J. (2017, April 13). PS4 vs Xbox One: which is better? Retrieved May 10, 2017, from http://www.techradar.com/news/gaming/consoles/ps4-vs-xbox-720-which-is- better-1127315
  5. The Global Games Market 2017 | Per Region Segment. (n.d.). Retrieved May 10, 2017, from https://newzoo.com/insights/articles/the-global-games-market-will-reach-108-9-billion-in-2017-with-mobile-taking-42/