3 Gaming Trends to Watch this Holiday Season
The global gaming industry is expected to grow at a 19.1 percent CAGR to reach $30.1 billion in 2018, according to Frost & Sullivan, while over half of all U.S. households have a dedicated gaming console. Contrary to cultural stereotypes, the average gamer is 30 years of age while women over 18 years old represent a significantly greater portion of the market than boys under 17 years old, suggesting gamers on the whole have a high level of disposable income. As a result, investors may want to pay attention to some key trends occurring this holiday season and moving into next year.
1. PlayStation4 vs. Xbox One vs. Wii U
Sony Corporation (NYSE:SNE), Microsoft Corporation (NASDAQ:MSFT), and Nintendo Co. Ltd. are the three largest competitors in the game console industry. While Nintendo’s Wii remains the best selling console over the past five years, Microsoft’s XBox and Sony’s PlayStation have become the dominant players over the past two years. The PS3 beat out the XBox 360 during the 2012 holiday season in a trend that could extend into 2013. IDC predicts that Sony PS4 sales will barely outpace Microsoft XBox One sales this holiday season while the entire gaming console industry is expected to show a slight uptick. Sony’s win is likely going to be due to a lower price point for its PS4 consoles, but growing gaming subscription revenues for multiplayer games makes overall ROI attractive. In fact, console subscriptions are expected to surpass PC subscriptions for the first time ever this year.
Perhaps more importantly, these new gaming consoles are extending their functionality into the home entertainment space dominated by companies like Apple Inc. (NASDAQ:AAPL), Google Inc. (NASDAQ:GOOG), and Amazon.com Inc. (NASDAQ:AMZN). Many popular gaming consoles can stream movies, TV shows, and other online content, while the Entertainment Software Association already reckons that over half of U.S. households own a console. It follows that a decent portion of these existing console-owners will be interested in upgrading to newer consoles with more capabilities. All manufacturers are moving in this direction, with the PS4 and Xbox One currently offering more entertainment features than Nintendo’s new Wii U.