Entertainment

With Sony's Huge PS4 Sales Debut, Do Consoles Have Extra Lives?


An Amazon Fulfillment Center preparing for the delivery of Sony PlayStation 4

Photograph by Rick Scuteri/AP AP Photo

An Amazon Fulfillment Center preparing for the delivery of Sony PlayStation 4

After seven years of waiting for next-generation video game technology, there is apparently a lot of pent-up demand in the console market. Eager gamers snapped up more than 1 million of Sony’s new PS4 consoles in the first 24 hours of the product’s North American launch, an impressive sales display.

The last time Sony rolled out a new console, the PS3 in November 2006, it sold just 200,000 units in the U.S. over the first two weeks. In that iteration, however, the company was still rushing to crank out consoles when orders started flowing in. This time around, Sony has its supply chain warmed up and well oiled.

The buying frenzy lends credence to two possible dynamics in the $93 billion video-game industry. First, Sony might have grabbed a first-mover advantage by getting its gaming device on shelves a few days before Microsoft’s new console, Xbox One, which goes on sale Friday. Last time around, the company’s next-generation platform lagged behind the Xbox 360 by a full year. The other possibility is that pent-up demand—and interest from first-time gamers—is simply bonkers, and even in an age of digital distribution there’s still an extra life or two for the classic console setup.

The number of first-time buyers may ultimately decide who wins this round of the console wars. Colin Sebastian, an analyst at Robert W. Baird, said most core gamers have already decided which system they will go for. Pre-order rights for both consoles are selling on eBay for up to 60 percent more than their suggested retail prices (Xbox $499 and PS4 $399).

What’s more, both companies were smart to get their consoles on shelves before “Black Friday,” Sebastian said. The Thanksgiving shopping glut tends to soak up a lot of discretionary dollars that could otherwise go to next-generation games like Killzone: Shadow Fall and Assassin’s Creed IV.

In the current quarter, Sebastian expects both Sony and Microsoft to sell close to 3 million consoles—and Sony, of course, is already more than one-third of the way there.

Kyle-stock-190
Stock is an associate editor for Businessweek.com. Twitter: @kylestock

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