Nintendo Gains Share on Microsoft in Game Console Market

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Consumer spending on game consoles increased by a third in 2017 as the top makers all released new products. Total spending rose 18% on hardware, games and services to $41 billion, the highest total spending on gaming since 2011.

The Nintendo Switch lifted the Japan-based console maker’s share of the market to 22%, up nine points year over year, while Microsoft Corp. (NASDAQ: MSFT) posted a share decline of six points to 25%, even after the release of the company’s new Xbox One X console. Sony Corp. (NYSE: SNE) remains the leading console vendor.

The data were reported in a note released Wednesday by IHS Markit and cited at CNBC.

The largest portion of the total spend on gaming came in the games and content section, with sales of $23.6 billion. Spending on services including subscription fees rose 11% year over year to $3 billion.

Analyst Piers Harding-Rolls of IHS Markit said:

We are now approaching a tipping point in consumer behavior, where the digital share of full game sales has started to accelerate away from the transitional norms. This accelerating picture and the rapid shift to games-as-a-service monetization models is fueling growth in content spending.

The hybrid nature of Nintendo’s Switch has allowed it to flex to the buying needs of consumers in different regions, thus making it a globally attractive and relevant product. Nintendo’s content release slate was also exceptional in 2017, acting as the catalyst for rapid adoption of the console.

For 2018, IHS Markit expects Nintendo’s share of the console market to overtake Microsoft’s, while overall spending slips in 2019 as the new consoles enter the later stages of their life cycles. Sony is expected to remain the console market share leader.