The gaming console market has long been dominated by the top three firms of Nintendo, Sony, and Microsoft. Since the departure of Atari from the market, these have been the only firms with mass produced consoles for consumers to buy. This is due to the console industry being very fixed cost based, and the consumer base is very loyal to their brands. Even as new generations of consoles have come out, these three firms have been the ones to come out with new consoles instead of new firms entering. However, with the newest generations of consoles coming out: Sony’s Playstation 4, Microsoft’s XBOX One, and Nintendo’s Wii U, Sony has taken over control of half the market.
The main competitors in the video game market are Sony and Microsoft since Nintendo’s console is much different in nature and appeals to a different consumer base. In the previous generation, the Playstation 3 and XBOX 360, sales for each were almost identical worldwide. However, with the new generation consoles, Sony has dominated Microsoft. The Playstation 4 has had over 25.3 million shipments worldwide, while the XBOX One has had only 14.32 million shipments. The result is that when the shipments of all three consoles are compiled, Sony has a remarkable 50% of all worldwide new generation console shipments.
While the actual sales of consoles is generating less revenue for Microsoft, publishers are also gaining less revenue from Microsoft’s XBOX One as well. One for example, Ubisoft, made similar revenue off of the XBOX 360 and Playstation 3, about 450 million euros off each console. For the new generation of consoles, Ubisoft has gained only 394 million euros off the XBOX One and 660 million euros off the Playststion 4. It is important to project what might occur due to this. Microsoft may lose deals with publishers if Sony continues to beat them this badly. If Microsoft loses deals with publishers and gamers cannot play their favorite game on their system, Microsoft may lose even more customers to Sony.