PS4 to dominate console war through 2016

Last Updated: January 1, 2014


Michael Pachter, a financial analyst for the video games industry who we’ve written about many, many times in the past has some new predictions and recently revealed his thoughts on the next generation of consoles through to the year 2016.

Pachter recently sent the email you can see quoted below to various investors and other people who like to know about these matters, but the gist of it is as follows:

  • 37.7 million PS4 consoles will be sold by the middle of 2016.
  • 29 million Xbox One consoles will be sold by the same time.
  • The Wii U will do fairly poorly with sales of under 20 million by that date too.
  • The PS4 will drop to $299.99 by the year 2016.
  • The Xbox One will be $349.99 by the middle of 2016.
  • Brand new games will still cost $59.99 in 2016.

We expect Sony’s and Microsoft’s new consoles to thrive over the next three years, with cumulative worldwide sales of 37.7 million PS4 and 29 million Xbox One consoles by year-end 2016. We do not expect Nintendo’s Wii U to fare as well, with cumulative sales of under 20 million by 2016.

We expect a modest reversion to more normal software attach rates or “tie ratios,” with software sales of approximately 3 units annually over the next three years for each Xbox One and PS4 sold, and with tie ratios of just over 2 units for the Wii U and just under 1 unit for the 3DS. We think that Nintendo consoles are more susceptible to competition from mobile and tablet games, as we believe that a disproportionately high percentage of Nintendo customers play more casual games, and are therefore more likely to view mobile and tablet games as close substitutes to software developed for Nintendo’s platforms.

Software sales for the next-generation consoles are expected to grow to $12.2 billion by 2016. In contrast to the last cycle, we expect software sales for PS4 ($5.9 billion) and Xbox One ($4.9 billion) to dominate, with Wii U software capturing market share of only 11 percent. We expect overall software sales growth (including PC) in the U.S. and Europe combined (the addressable market for the publishers we cover) of 10 percent in 2014, 7 percent in 2015, and 6 percent in 2016.