It seems that Microsoft’s Xbox is closer to Sony’s PlayStation in terms of revenue and market share than both Microsoft and Sony think they are.
This was one of the more interesting findings shared by the CMA in their final decision ‘preventing’ the Microsoft – Activison deal.
On pages 97 to 98 of the document, in the section discussing the market share distribution between the console companies, CMA revealed that Microsoft and Sony both believed that Microsoft was a distant third to Sony and Nintendo. This is both in terms of the global market, and the UK market that the CMA was interested in.
But the CMA then drops this bombshell in page 99 of said document:
“We used data from the Parties and third parties to estimate market shares for different gaming consoles. We found that, depending on how these shares are measured (ie, by total gaming console revenues, installed base or yearly active users), Microsoft is the second-largest gaming console provider in the UK, and the second or third largest gaming console provider globally.
We also found that Microsoft’s shares by gaming console revenue and volume of console units were higher than estimated by the Parties. While still smaller than SIE, the difference between the shares of Microsoft and SIE, both in the UK and globally, is significantly smaller than suggested by the Parties. We consider that the discrepancy arises because the Parties do not have access to third party data, which shows that [REDACTED].”
They then lead to this conclusion on page 100:
“We therefore consider SIE to be the largest supplier of console gaming services both globally and in the UK. Microsoft is smaller than SIE, but the difference is smaller than suggested by the Parties, particularly in the UK. Nintendo also has a significant share in the console gaming market globally. However, Nintendo has lower shares in the UK relative to both PlayStation and Xbox in console gaming revenue.”
Now, we cannot disregard the possibility that these results are partly tweaked because of how the CMA interprets data, and that their interpretation may have errors that they do not recognize because of an unfamiliarity with the market.
However, we should consider that they were given access to private information from both companies, and they also had information from third parties, including data analysts. CMA had the enviable position of peeking behind the curtain, so to speak, to a degree that no single individual or entity may have been able to.
So it is highly likely that the CMA’s claim here is correct. They have the sales figures from all three companies, and they can tell who has been selling well on hardware and software.
Sony recently reported selling a record number of PlayStation 5 units. It’s a huge contrast to Microsoft, who have chosen to partially hide their sales numbers for the Xbox, in such a way that the public can no longer make one-to-one comparisons. For one, Xbox hardware and software sales are literally hidden away under hidden categories in their financial reports. But on another end, Game Pass has also obfuscated how much revenue Microsoft actually makes.
But what’s interesting here is that Microsoft also doesn’t know the full picture, even as they are the party that is hiding more information from the public. If any fans have this narrative in their head that Sony is leading Microsoft by a wide distance, it’s highly likely that that isn’t true at all.
