David Cohen – Harry Dempsey
The video game industry fears that its most important quarter will be a disappointment, with a lack of new releases aimed at the mass market. Therefore, the two Japanese game giants, Nintendo and Sony, are preparing to enter the crucial holiday season this year, without offering anything new to consumers.
The first is responsible for the sale of the Switch gaming device, which has been released for 7 years, and the second is responsible for attracting only enthusiastic players with their new PlayStation 5 Pro device.
The “PlayStation 5 Pro” was recently released at a price of $700, and received mixed reviews, while Nintendo lowered its sales expectations for the “Switch” device from 12.5 million to 13.5 million devices for of the fiscal year ending in March.
Nintendo usually receives revenue in the quarter ending in December, equal to doubling the revenue of the quarter ending in September. In this context, Gareth Sutcliffe, head of gaming at Enders Analysis, said: “This year is looking bleak, and it’s hard to imagine a more unsuccessful holiday season than this year.
The picture also looks bleak for video game releases, as no major games are expected to be released this year. Many developers are waiting for the launch of a new generation of Nintendo devices, the details of which will be announced next year. Bernstein analyst Robin Chu said: “For many reasons, perhaps the most obvious of which is the life cycle of the PlayStation and Switch devices, the game industry has entered a state of stagnation. He said: “It looks like the release of new games will remain limited until the end of the year. The most prominent PlayStation games are those released in the past six months, such as “Black Meth” and “Wukong.”
The life cycle of the generations of home gaming devices usually extends for five years, but the “Switch” device has entered its eighth year, achieving great sales, reaching 146 million devices since its launch in March 2017. Despite the shipment of more than 65 million devices “PlayStation 5” since its launch In November 2020, however, manufacturers and game developers wondering about the future of the application, especially with both devices reaching the final stages of their life cycle.
Speculation is growing that the gaming industry is heading towards a “post-hardware” future, with an obvious shift towards cloud gaming, making games available on different platforms, and thus , the only gaming devices planned for the mass market will be mobile devices.
Microsoft is trying to sell more games on competing platforms, and to develop its “Game Pass” subscription service, which gives access to hundreds of games that can be played on the Xbox, on the personal computer, or online on other devices, for a monthly fee. New consoles, such as the PlayStation 6 or Xbox, could evolve into high-margin products, rather than being core parts of the business.
So far, Nintendo seems to be leading the hardware market, and the success of the Switch, which combines being a portable device with its ability to connect to a TV, is making companies others to reconsider their position on portable devices, although some of them are afraid. Nintendo may take time to launch a new device.
Serkan Toto, the head of Kantan Games, a consulting company, said, “Nintendo is going through a critical transition phase, because it has to continue to support the current device, but it also has to postpone important releases, so that it can successfully launched. new machine … and it looks like it’s ready to hold up a few quarters.”
For device manufacturers, the problem lies in the high cost of production of traditional gaming devices, and the user base has remained stable for years. Gareth Sackliffe of Enders Analysis said, “Devices seem to have reached a peak in demand, and cannot exceed it. The only model that has crossed the threshold is mobile devices. this, and here comes the role of the Switch device. ” Sony’s recent results showed strong sales of gaming software, including those developed by third parties, but the PlayStation 5 has yet to surpass the sales of the PlayStation 4 before, when comparing their life cycles. The PlayStation 5 Pro is unlikely to change this dynamic, with Sony continuing to aim for sales of 18 million devices this year, including the “Pro” version.
Sony President Hiroko Totoki recently emphasized that “the Pro device is aimed at professional users, so we do not expect it to contribute significantly to overall sales from the beginning to negatively affect our plans. “
Although the PlayStation 5 Pro is not considered a major revenue driver, it may be a clear indicator of the future direction of the industry, as the device offers graphics and performance better, and its cost is $ 200 more than the standard PlayStation 5, which makes it closer. to some gaming computers Even before adding accessory costs, such as a driver or stand. Therefore, Sony’s strategy seems to be to maintain high profit margins for a given product, knowing that regular gamers are willing to pay for a 67% increase in computing power, which Sony claims to provide perform 45% faster while playing.
Robin Chu, an analyst at Bernstein, said, “The $700 price of the PlayStation 5 Pro seems to be a price differentiation strategy, similar to the GTI version of the Volkswagen Golf, because it represents the popular version of A premium product aimed at gaming enthusiasts. .”
However, he noted that the social media uproar over the price at the recent Tokyo Game Show, with critics questioning whether the upgrade justifies the cost, could could give Nintendo a chance, noting that “in terms of public perception, it should “Is online hype around PlayStation 5 Pro prices giving Nintendo cover to sell the Switch 2 at $ 400, or maybe $450, without suffering a negative backlash. “
Nintendo shares also received a boost a few days ago, after its president, Shuntaro Furukawa, revealed that the new device, which is expected to be announced by the end of March, will be backward compatible, allowing games Current switch to play.
The industry hopes that if Nintendo succeeds in setting the right price and attitude for the Switch fan, it will provide a model for other companies to follow, and that the holiday season could next year will be very different.
Miguel Angel, a developer at Lapsus Games, said while attending the Tokyo Game Show, “What happens with the PlayStation 5 and other devices depends on how people respond,” adding that “games has become expensive… and people generally don’t tend to buy gaming devices unless every few years.”
