Microsoft has sold 18.5 million Xbox Series X and Series S consoles since launch, according to market research company Ampere Analysis (via VGC). If Microsoft no longer shares console sales numbers, Sony announced in its latest earnings report in February that PlayStation 5 sales have crossed 32 million units.
According to Ampere Analysis analyst Piers Harding-Rolls, 2022 was a “challenging year” for the console market due to console shortages and other factors. The global console gaming market declined from $60.9 billion in revenue in 2021 to $56.9 billion in 2022. Sony claimed a 45% share of the market (console hardware, games, and services) in 2022, which is down 1.3% from 2021. However, Microsoft’s share of the market grew from 25.5% to 27.3% in the same period due to increased spending on console hardware and services like Game Pass.
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“Microsoft’s dual product strategy for its Xbox Series devices, which include the lower specification and more readily available Series S, means that it was able to maximise some of Sony’s supply chain challenges and marginally increase its share of unit sales over the year,” explained Piers Harding-Rolls. “However, the level of demand for Series S during the holiday season, even with pricing promotions, suggests that it does not have the high-end pull of its bigger brother.”
Microsoft dropped the price of its Xbox Series S to $250 during the holiday season, and the cheaper console remains much easier to find than the $499 Xbox Series X. While Sony recently announced that PlayStation 5 supplies were finally going away, Microsoft has yet to make a similar announcement for the Series X. As the company is also using Xbox Series X components in its Xbox Cloud Gaming server racks, this may also play a role in supply issues.
Overall, Microsoft started this new console generation in a much better position than the previous one when the Xbox One was $100 more expensive than the PS4. However, Microsoft having the cheapest current-gen console with the Series S won’t be enough to turn the tables. Sony’s PlayStation brand just enjoys better mindshare and brand loyalty. However, Microsoft has a plan to make Xbox the best platform for gamers, and it doesn’t exclusively focus on Xbox consoles.
To Microsoft’s own admission, acquiring Activision Blizzard will allow Microsoft to bring massively popular IPs such as Call of Duty and Diablo to Game Pass and Xbox Cloud Gaming. However, this acquisition is also about mobile gaming, which is the fastest-growing segment of the gaming market. Microsoft aims to launch an Xbox mobile game store on iOS and Android, and it’s hoping to leverage Activision, Blizzard, and King mobile games to spearhead that effort.