At this juncture, the console industry should be experiencing a significant resurgence. Six years into a hardware generation, with one of the most highly anticipated video game launches on the horizon, platform holders should be capitalizing on this moment to expand their mature install bases and attract new audiences who have been holding off on purchasing hardware.
However, despite the high demand for the PS5 Pro leading to shortages and inflated prices in the resale market, the overall market data paints a bleak picture. According to Circana’s latest figures, Xbox hardware unit sales have declined by 33% year-over-year, reaching an all-time low. Similarly, PlayStation sales are down by 25%, marking its weakest performance since 2013 – a period that preceded the launch of the PS4, as consumers awaited the new system.
The reason behind this decline is clear. The average price of a PlayStation this year has soared to $597, a significant increase from the $399 price tag of the digital edition at launch in 2020. Analysts do not anticipate any improvement in the coming year, with 2028 being the projected timeline for potential stabilization of prices and a gradual recovery in global console sales, as indicated by Circana and S&P Global forecasts.
Despite the challenges in console shipments, the demand for games and entertainment remains resilient. As consumers navigate the market conditions shaped by the hardware crisis, it raises the question of where this demand will shift if consoles become unaffordable. If consoles are priced beyond the acceptable range for the target market, where will consumers turn for their gaming experiences?
Traditional high-end PCs are not a viable alternative, as the pricing crisis affecting consoles is even more pronounced in this segment. Recent reports suggest that the RTX 5090 graphics card may be discontinued, with prices exceeding $5,000 for a card that originally launched at $1,999. Lower-end cards and previous-generation models also command exorbitant prices, further limiting consumer options.
Looking ahead to 2028, there is uncertainty regarding the resolution of these pricing challenges. If dedicated gaming hardware remains unaffordable for the foreseeable future, it could have profound implications for the gaming industry as a whole.
If new hardware becomes too expensive, existing hardware becomes the primary platform
In such a scenario, the hardware that consumers already own becomes the focal point for gaming experiences. This shift in focus could lead to significant changes in the industry landscape.
For Sony, the prolonged freeze in the market could work to its advantage. With over 95 million units shipped, the PS5’s dominance is solidified, and the company may benefit from an extended period of software sales and digital revenue on its existing platform. In contrast, Microsoft, facing challenges in hardware sales and brand perception, may struggle to adapt to a market freeze.
Furthermore, as consumers gravitate towards their existing devices for gaming, smartphones emerge as a prominent platform due to their widespread adoption and regular upgrades. The potential for mobile gaming to bridge the gap between casual and core gaming experiences is gaining traction, with games like Fortnite and Genshin Impact leading the way.
As the gaming landscape evolves, the shift towards gaming on existing devices could also benefit other platforms, such as Mac computers. The widespread use of Apple laptops among younger demographics, coupled with advancements in Apple Silicon technology, presents an opportunity for Mac gaming to gain prominence.
The market may pivot towards different devices in the coming years
By embracing these changes, the gaming industry could undergo a significant transformation, with new platforms and devices taking center stage. The duration of the current market freeze will determine the extent of these shifts and the lasting impact on consumer behaviors and preferences.
While Sony may benefit from the current market conditions in the short term, the long-term effects could reshape the gaming landscape permanently, challenging established norms and paving the way for new opportunities.