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Friday, May 09, 2014
Microsoft To Unbundle Kinect and Xbox One, PlayStation 4 Wins the Game Console Race: IDC

International Data Corporation (IDC) predicts that Microsoft will unbundle the Kinect sensor from its Xbox One console in 2015, Nintendo's Wii U will receive the equivalent of a $50 price cut and Sony's PlayStation 4 will enjoy the largest global installed base of any console by the end of 2016.

The forecast additionally expects that, together, eighth generation consoles - Xbox One, Wii U and PS4 - will generate about 10% less retail revenue from console hardware and disc-based games than did seventh generation consoles - Xbox 360, Wii and PlayStation 3 (PS3) - combined through their first six years on the market.

IDC estimates that total eighth generation console hardware revenue will be above the comparable seventh generation total at the end of this period as a result higher average selling prices (ASPs). Disc-based software revenue is expected to be far lower. The number of eighth generation game discs sold to retailers (sell-in) is, in fact, projected to be 45% below the seventh generation total through six years of availability.

If digital games and related online console revenue streams are included in the picture, however, the outlook for eighth generation consoles improves substantially. The inclusion of digital console game spending, subscription revenue and other content/service/app purchases billed through online eighth generation console stores pushes total revenue up to within a few percent of the seventh generation total through the first six years of availability. Rising digital revenue is forecast to nearly offset the fall in disc-based revenue.

"If Microsoft unbundles the Kinect sensor from the Xbox One console as we expect in 2015, this should lead to rough price parity with the PS4 and reset the sales dynamic at retail," explained Lewis Ward, Research Director, Gaming at IDC. "We project this change will lead to enough of a console sales bump that Xbox One will emerge with the largest installed base of any console in North America by the end of 2016. The PS4 should still lead globally, but the unbundling of Kinect and Xbox One should move the sales needle enough to give Xbox One the installed base edge in the United States and Canada before the end of 2016."

Microconsoles -- such as Amazon's Fire TV that support TV-based gaming -- aren't considered in IDC's forecast, but it appears that these devices will only erode demand for disc-playing consoles at the margins in the next few years.

China remains the biggest global wild card; despite the console ban repeal, early indicators suggests that eighth generation consoles will face large barriers to success in China.

In addition, IDC says that revenue is shifting towards developing economies despite limited Chinese demand; North American console gamers' share of all console hardware and disc-based spending, for example, is forecast to slip 5% from 2014 to 2018.

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