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Jul 31, 2014

New Console Sales Strong Opportunities Abound

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Like many gamers, when the new Xbox One and Playstation 4 became available at the end of 2013, I was excited to add another system to my household.  It is now eight months later and I can report that although I enjoy the new platforms I am still waiting for that defining game.  So when I look at the latest sales figures it does not surprise me to see that the tie ratio of games sold to systems is down from the previous console launches.

On average, Canadians so far have purchased approximately three games for every PS4 or Xbox One sold; that number is 11 percent less than when the PS3 and Xbox 360 launched.  And while digital is growing in importance, the lack of truly compelling content at this time in either digital or physical format is what’s at play. This is a short-term issue seen during new platform launches, but it will be resolved in time for the holidays.

Despite this drop in average number of games being sold for each system, the sales results for the latest consoles remain very strong eight months after launch.  Comparing the launch this past year with the previous launch of the Xbox 360 and PS3, console sales in Canada have never been stronger.  Combined these two systems have outsold their predecessors during launch by 127 percent.  Along with strong console sales, software sales have doubled versus previous launches, with sales up 102 percent.  Accessory sales, although up 29 percent, remain the softest area of growth for these new systems.  So despite the overall Video Game market showing negative growth these past eight months, the latest consoles are delivering very strong results and pushing the market to positive revenue results overall.

As noted in the title, there remains more opportunity for this market, and with the announced titles planned for release over the next six months, it seems likely that the market will build off this early growth momentum. There are potential areas of growth, including  increasing the tie ratio between games and consoles, which will improve as platform libraries (games) grow, and accessory sales, which will depend on a myriad of factors, including the continued push towards new market opportunities (e.g., toy-based games).  So far, neither have been a focus from either the PS4 or Xbox One, but we can expect to see momentum on all fronts in the near future.


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