(Revised) Bershidsky Wrong on Video Game Market

In a last month’s Bloomberg view article, Leonid Bershidsky wrote “Why Sony’s Playstation 4 is Really a Loss“. The article outlined the reasons that the newest Playstation won this round of “console wars” after the Nintendo’s Wii U was a flop and they are outselling Microsoft’s XBox One. Bershidsky’s view was that this was a fruitless victory as the console video game market is shrinking.

While Bershidsky presents some data to back up his opinion, there is other data that would point to the opposite conclusion; that the console gaming industry is in fact thriving. Bershidsky’s article itself points out that Sony has already sold six million Playstation 4 units (as of March 11) and is on track to beat the 9.1 million that the Playstation 3 took a year to sell. Beating previous sales marks is, by definition, not a declining market.

He also brings up a valid point that more of people’s gaming time is devoted to smartphone and tablet games rather than console games. While flappy birds and fruit ninja certainly take up some time spent gaming, I don’t think that playing one of these games is a substitute for console gaming. While the truly dedicated gamers will spend a few thousand dollars on a gaming computer and the most casual will only have the “free trial” version of some games on their smartphone, in between these two extremes are the millions of people who play console games. Given the increased sales of the Playstation 4, there is a market for consoles that has continued to thrive as the sales data alone for the most recent generation of consoles demonstrates. This market hasn’t declined and doesn’t appear to be declining in the future.

As Bershidsky correctly pointed out, the Playstation 4 still has competition from the Playstation 3 on sales, but I don’t doubt that effect will start to wear off as game developers begin to release more games that are only for the new systems and avid gamers will want to be part of it.

Even with negative publicity and bad reputations that games such as Grand Theft Auto have received, their sales are still massive. Just last year, Grand Theft Auto V broke the single day sales record for any video game ever. That certainly doesn’t sound like a declining market to me. While this game was released for the last generation of consoles, I am sure that Rockstar (the maker of the Grand Theft Auto series) will release something for this generation of consoles. While this may be a few years down the road, there will be people who buy this generation of consoles just to play the next Grand Theft Auto game, just as many people bought an XBox 360 or Playstation 3 to play GTA V.

In short, despite articles like Leonid Bershidsky’s, the console gaming market is not declining as strong sales push the Playstation 4 (and the Xbox One to a lesser extent) into the homes of millions of consumers, spelling out profits for console makers and incentives for them to keep innovating so that the Playstation 5 and next XBox can impress consumers just as much.

One thought on “(Revised) Bershidsky Wrong on Video Game Market

  1. bdinger

    Great post, I do not think that the video game market is declining either; rather the video game retailers are going to get the axe as the console makers themselves are going to cut out the middle man. I also think that virtual reality is the next stop with sony’s project morpheus leading the way. As for the smartphone competition, I think that sony and msft need to do a better job of allowing people to use their smartphones as in game accessories and embrace the fact that they arent going anywhere.

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