Losing the Console War

Ian Fox
C0000000

February 20, 2020

Figure 1. Xbox One Console (Arif, 2016)

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Table of Contents
Introduction............................................................................................................................1
Third Place..............................................................................................................................1
Mobile Gaming Cutting Market Share.....................................................................................2
PC Gaming Has Advantages....................................................................................................2
Xbox and Privacy.....................................................................................................................3
Conclusion...............................................................................................................................3
References..............................................................................................................................4

Introduction

Since the 1970s, there has been steady competition between video game console makers. Atari
vs. Coleco. Nintendo vs. Sega. Nintendo vs. Sony. Sony vs. Microsoft. Disaster often befalls
those game console makers that are left behind. Of all the game consoles released over the years,
only three remain standing, Nintendo, Sony, and Microsoft. Right now, Microsoft is the one that
finds itself in a precarious position, having dropped to third place in the game console market.
With strong competition from other console makers and from the PC gaming market, Microsoft
needs to turn around the fortune of the Xbox line. This report will cover:

 Xbox is now a distant 3rd behind PlayStation 4 and Switch

 Mobile gaming is overtaking console gaming
 PC gaming advantages
 Xbox and privacy controversies

Third Place

Microsoft’s Xbox is currently a

distant third place behind the
PlayStation 4 (PS4) and
Nintendo Switch. The chart to
the right shows current market
share data between gaming
consoles. 2018 is the latest
information currently available.
If we look at the 2018 statistics,
we can see the Xbox One market
share in light gray. Xbox’s
Figure 2. Console Market Share (Gough, 2020)
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market share is less than half of the two other major players, PS4 and Switch, and it is shrinking.
When Microsoft replaces the Xbox One for the next generation, it is critically important that they
make efforts to reverse this slide. It stands to reason that game makers would look at this market
share and decide that it’s not worth their time to make games for the Xbox, preferring instead to
go for the top two players, PS4 and Switch. If too many game makers decide that the Xbox isn’t
worth their time, their player base will continue to slide until they join the ranks of Atari and
Sega as former game console makers.

Mobile Gaming Cutting Market Share

In addition to
competition from
other console makers,
the mobile gaming
market is also gaining
popularity at Xbox’s
expense. The chart to
the right shows the
rise of mobile gaming
since 2012. As we can
see, the market share
for console gaming
has dropped from 45%
in 2012 to a projected
22% in 2021. As
Figure 3. Rise of Mobile Gaming (Wijman, 2018)
mobile games increase
in sophistication, many people will find that there is less need for consoles. In favor of mobile
gaming, most of the games are available on devices that people already own, like phones and
tablets. This can take many casual gamers, who are not interested in having a dedicated system
tethered to their TV, away from the console market. In short, not only is the Xbox market share
decreasing compared to other consoles, but they are also competing for a smaller part of the
gamer pie.

PC Gaming Has Advantages

Online gaming is also gaining popularity, and that is bad news for consoles. The Crazy for
Surprise gaming site states that “PCs are the dominant platform for online gaming, which seems
likely to continue for a while yet” (The One, 2019). Other data shows that spending on PC
gaming hardware is increasing, with Ars Technica noting that “The £9 billion that region spends
on gaming PC hardware is up 9.61 percent annually” (Orland, 2017). If PC gaming continues to
dominate and continues to offer advantages in the expanding multiplayer market, many people
might be encouraged to abandon consoles altogether. Microsoft, with its third-place position in
the console market, cannot afford to lose players like this. However, they do have a possible
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advantage here in that they own Windows and Xbox. Increased compatibility between these two
platforms in terms of multiplayer might help the Xbox market share.

Xbox and Privacy

Not helping the Xbox situation is the privacy controversy. According to Rolling Stone, when the
Xbox One was released in 2013, major controversy swirled around its required always on feature
that has the capability of recording conversations in people’s homes and making it near
impossible to sell games used (Shamoon, 2013). Microsoft’s efforts into data collection for the
Xbox One possibly doomed the console from the beginning, since, as we can see in Figure 2, the
Xbox One never had a higher market share than its main competitor, PS4. Now, it’s even worse,
since the Nintendo Switch came out taking even more of their market share. When Microsoft
releases its next Xbox, they would do well to avoid controversies that might cut into Xbox sales.

Conclusion

The next generation of consoles is coming soon. Xbox One cannot be considered a success,
considering its rapidly-declining market share and past controversies. They need a major success
with the next generation or they will not likely be a game console maker in the next few years.
Without players and games, game stores won’t sell their games, players will switch to different
systems, and the competition will be back down to two competitors.
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References
Arif, F. (2016, October 9). “Don’t Give Up on Xbox One,” Forza Horizon 3 Creative Director Says
[Image]. WCCFtech. https://wccftech.com/dont-give-xbox-one-forza-horizon-3/

Gough, C. (2020, January 8). Global unit sales of current generation video game consoles from
2008 to 2018 [Infographic]. Statista. https://www.statista.com/statistics/276768/global-
unit-sales-of-video-game-consoles/

Orland, K. (2017, January 23). As PC sales shrink, the gaming PC market grows faster than
expected. Ars Technica. https://arstechnica.com/gaming/2017/01/as-pc-sales-shrink-
the-gaming-pc-market-grows-faster-than-expected/

Shamoon, E. (2013, June 13). Xbox One Features Create Privacy Concerns. Rolling Stone.
https://www.rollingstone.com/culture/culture-news/xbox-one-features-create-privacy-
concerns-90317/

The One. (2019, July 31). PC VS Console Gaming in 2019 Article. Crazy for Surprise.
https://www.crazyforsurprise.com/pc-vs-console/

Wijman, T. (2018, April 30). Mobile Revenues Account for More Than 50% of the Global Games
Market as It Reaches $137.9 Billion in 2018 [Infographic]. Newzoo.
https://newzoo.com/insights/articles/global-games-market-reaches-137-9-billion-in-
2018-mobile-games-take-half/