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Game Console Vendors Fail To Capture Emerging Market Sentiment
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Monday, July 23, 2012:
Game console penetration (7th generation) is highest in North America at just over 50% of TV households (end of 2011), followed by Western Europe with nearly 30% - the next closest is Asia Pacific at just over 3%, with Japan a significant contributor. With the next generation of consoles around the corner (Nintendo Wii U will be first to market late 2012) the replacement cycle will start anew, with these three primary regions expected to consume the majority of units.
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Senior analyst Michael Inouye comments, “Some regions such as Latin America continue to see growth opportunity, but high prices, due to taxes and tariffs, still put a damper on expectations. Other regions like Middle East and Africa have limited fixed broadband penetration which reduces the value proposition from features like multiplayer gaming, downloadable content, and services like over the top video. In addition, other large markets like China have regulatory issues that prevent Microsoft, Nintendo, and Sony from conducting normal operations in the country.”
The current and next generation of consoles will continue to emphasize content beyond gaming; although, unlike in generations past, the 7th generation of consoles is expected to have a longer lifespan at retail and in consumers’ homes. New features such as Microsoft’s SmartGlass and services like Sony’s PlayStation Mobile are also better integrating the gaming platforms with mobile devices – a necessary step to remain competitive in an increasingly mobile world.
Inouye added, “The expanded role of non-gaming content delivery, such as over the top video, over game consoles is also strongest in North America, Western Europe, and Japan. Most premium game developers for consoles are situated within these regions; adding cultural and language affinity required for games to create pull for the consoles. The next generation of consoles could bring expanded opportunities to engage with new developers with downloadable content and cloud gaming. This, together with changes in taxation, regulation, and consumer behavior could increase the game consoles potential on a more global scale – a prime example might be a dedicated Android game set-top box such as upcoming Ouya.”
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