Covid-19 gives shot in arm to game console market

• Samsung and LG are targeting to increase sales of 8K TV units to generate higher revenues and profit margins.
• High cost and lack of content will delay 8K TV set adoptions and only around one per cent of worldwide flat panel TV shipments will be 8K TV sets in 2021 and only around 1% of worldwide flat panel TV shipments will be 8K TV sets in 2021.

Bengaluru: The Covid-19 pandemic is having different impacts on the consumer entertainment segment.

The pandemic boosted the game console market yet curbed flat-panel TV sales. The arrival of next-generation consoles combined with gaming entertainment demand driven by the pandemic will contribute to game console market growth in 2020.

Tech market advisory firm  ABI Research forecasts that 40 million game console units will ship in 2020, a six per cent increase from 2019.

Total game console unit shipments declined in 2019 as gamers waited for the launch of next-generation consoles by Sony and Microsoft in the holiday season of 2020.

The Covid-19 pandemic in early 2020 has boosted the gaming market overall. With millions of consumers forced to stay at home in the first few months, game downloads and the number of active gaming users significantly increased.

The demand for game consoles also increased in the first quarter of this year, but supply chain disruption resulted in lower unit shipments.

Travel restrictions

As operations resumed nearly back to normal in the second quarter, game console makers reported higher unit shipments in the second quarter.

In addition to increasing demand in gaming, Khin Sandi Lynn, Industry Analyst at ABI Research, said that long-awaited next-generation consoles are targeting launch in November 2020, which will further drive the game console market.

“Although governments are reopening economies, still imposed travel restrictions can impact logistics. Game console makers need to prepare for efficient production, content creation, and distribution plans to avoid supply chain shortages, especially during the holiday season when sales will peak,” she said.

Economic uncertainties

While the pandemic boosted the game console market, it challenged the flat-panel TV market. The worldwide flat-panel TV market is sluggish due to economic uncertainties, and the 8K TV market will remain low in 2020.

“There had been much anticipation of 8K TV market growth given the 8K broadcast content scheduled for Summer 2020 Olympics. However, 2020 Olympics’ postponement combined with the overall economic downturn has resulted in low 8K TV unit shipments in 2020,” Lynn said.

Despite the challenges, she said that flat-panel TV makers continue to promote 8K TV sets.

High-end TV makers such as Samsung and LG are targeting to increase sales of 8K TV units to generate higher revenues and profit margins. TCL announced 8K TV sets at CES 2020. 

Since consumers are struggling with the pandemic’s economic challenges, priorities on purchasing media devices have changed. Highly competitive pricing is essential to boost sales, as seen with Samsung’s promotional prices for its 8K TV sets to boost sales volumes.

“Although 8K TV set price points have declined from a year ago, the cost of most 8K TV sets is still relatively high ranging from $3,500 to $30,000. High cost and lack of content will delay 8K TV set adoptions and only around one per cent of worldwide flat panel TV shipments will be 8K TV sets in 2021,” Lynn said.