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Video Games and Consoles - UK - October 2016

“Continued migration to current-generation consoles is driving growth in the value of the UK video games market by pushing the average value of video game software sales up. With new hardware launches in the near future likely to grow the potential market for video game software, the prospects for the market are positive going forward.”
– Mark Flowers, Consumer Technology Analyst

This report covers the following topics:

  • The continuing influence of previous-generation consoles
  • Sony strengthens position as market leader with new gaming technology

The handheld segment has not enjoyed the same level of success, with sales flattening in 2016. The popularity of the mobile game Pokémon GO stimulated temporary interest in the Nintendo 3DS and the Pokémon games it supports. This revival of interest was not sustained, however, according to data from VGChartz.

For the purposes of this Report, Mintel has used the following definitions:

Static consoles are devices designed primarily for gaming in the home. They require connection to a television or external monitor. Static console alternatives are static consoles that are not manufactured by any of the three major players in the static console market – ie Microsoft, Sony and Nintendo. Steam Machines fall under the definition of the term static console alternatives.

Steam Machines, NVidia Shield devices and other static console alternatives are not included in Mintel’s market size and forecast.

Current-generation static consoles are the Xbox One, Wii U and PlayStation 4.

Previous or last-generation static consoles are the Xbox 360, PlayStation 3 and Wii.

Handheld consoles are devices designed primarily for gaming outside of the home. Handheld devices have a built-in display (ie do not need to be connected to a TV or external monitor) and support cartridges or smaller discs. Smartphones and tablets are not included in the definition of handheld consoles.

Current-generation handheld consoles are the PlayStation Vita and Nintendo 3DS.

Previous or last-generation handheld consoles are the Nintendo DS series and PlayStation Portable.

AAA is a term used to describe games developed by major studios, which tend to have multimillion-pound development and marketing budgets. AAA is not an acronym; it is a broad classification, akin to the term ‘blockbuster’.

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Table of contents

  1. Overview

    • What you need to know
      • Products covered in this Report
      • Executive Summary

          • The market
            • Migration to current-generation consoles keeps declines in the software segment low
              • Figure 1: Value of the UK console video games market, 2011-16
            • Hardware segment to be boosted by new wave of consoles
              • Figure 2: Forecast for the value of the UK video games market, 2011-21
            • In 2016, seven out of every 10 consoles sold in the UK is an Xbox One or PS4
              • Figure 3: Estimated share of the UK console hardware market, by volume, 2015 and 2016 (to date)
            • Microsoft and Sony adopt a new upgrade paradigm for static consoles
              • Software for the previous generation still accounts for a third of software sales
                • Figure 4: Estimated platform share of the UK console software market, by volume, 2015 and 2016 (to date)
              • Pokémon GO gives minor boost to the ailing handheld segment
                • Static console alternatives arrive on the scene
                  • The consumer
                    • PS4 is the UK’s most popular console; Wii U continues to lag behind competitors
                      • Figure 5: Ownership of gaming devices July 2016
                    • Digital sales fail to catch physical
                      • Figure 6: Mode of video games software purchase, July 2016
                    • Disengaged console owners are disproportionately female
                      • Figure 7: Ownership of games consoles and frequency of playing, by gender, July 2016
                    • More than one in 10 have never owned a current-generation static console despite gaming regularly
                      • Figure 8: Ownership of current-generation consoles among regular gamers (once a week or more), July 2016
                    • Sony’s innovation scores points with gamers
                      • Figure 9: Console ownership, by interest in new gaming technology, July 2016
                    • What we think
                    • Issues and Insights

                      • The continuing influence of previous-generation consoles
                        • The facts
                          • The implications
                            • Sony strengthens position as market leader with new gaming technology
                              • The facts
                                • The implications
                                • The Market – What You Need to Know

                                  • Migration to current-generation consoles keeps declines in the software segment low
                                    • Growth expected in 2017 and beyond
                                      • In 2016, seven out of every 10 consoles sold in the UK is an Xbox One or PS4
                                        • Software for the previous generation still accounts for a third of software sales
                                          • Pokémon GO gives minor boost to the ailing handheld segment
                                            • Static console alternatives arrive on the scene
                                              • Microsoft and Sony adopt a new upgrade paradigm for static consoles
                                              • Market Size and Forecast

                                                • Migration to current-generation consoles keeps declines in the software segment low
                                                  • Figure 10: Market value for the UK console video games market, 2011-16
                                                • Growth expected in 2017 and beyond
                                                  • Figure 11: Forecast for the value of the UK video games market, 2011-21
                                                • Average price increase set to reinvigorate hardware value growth
                                                  • Figure 12: Forecast for the value of the UK video games hardware market, 2011-21
                                                • New hardware to stimulate software sales
                                                  • Figure 13: Forecast for the value of the UK video games software market, 2011-21
                                                • Forecast methodology
                                                • Market Drivers

                                                  • Microsoft and Sony adopt a new upgrade paradigm for static consoles
                                                    • Cloud gaming technologies bring the console gaming experience to PCs
                                                      • Static console alternatives arrive on the scene
                                                        • Continuing support for old systems
                                                          • Pokémon GO gives minor boost to the ailing handheld segment
                                                            • eSports struggles to establish itself on the console platform
                                                            • Market Share

                                                              • Seven out of every 10 consoles sold in the UK is an Xbox One or PS4
                                                                • Figure 14: Estimated share of the UK console market (hardware), by volume, 2015 and 2016 (to date)
                                                              • Software for the previous generation still accounts for a third of software sales
                                                                • Figure 15: Estimated share of the UK console market (software), by volume, 2015 and 2016 (to date)
                                                            • Launch Activity and Innovation

                                                              • The Nintendo NX: A two-in-one for gaming
                                                                • Quantum Break tries to marry video games and television…
                                                                  • …while GINX gives gaming its own TV channel
                                                                    • PlayStation leads the way in console VR
                                                                      • Microsoft to link Xbox and Windows gaming platforms with ‘Play Anywhere’ programme
                                                                        • Nintendo goes after the retro market with the NES Classic
                                                                          • Indie games break into the mainstream
                                                                          • Advertising and Marketing Activity

                                                                            • Publishers account for more than half of advertising expenditure
                                                                              • Figure 16: Total above-the-line, online display and direct mail advertising expenditure on video games (hardware and software), 1 September 2015-1 September 2016
                                                                            • Nielsen Ad Intel coverage
                                                                            • The Consumer – What You Need to Know

                                                                              • PS4 edges out Xbox One as UK’s most popular console
                                                                                • An abundance of exclusive titles on the Wii U fails to compensate for the lack of cross-platform AAA titles
                                                                                  • Digital sales fail to catch physical
                                                                                    • Disengaged console owners are disproportionately female
                                                                                      • More than one in 10 consumers have never owned a current-generation static console even though they game once per week or more
                                                                                        • Sony’s innovation scores points with gamers
                                                                                        • Console Ownership

                                                                                          • PS4 edges out Xbox One as UK’s most popular console; Nintendo falls behind in living rooms but continues to dominate the handheld segment
                                                                                            • Figure 17: Ownership of gaming devices, 2015 and July 2016
                                                                                            • Figure 18: Purchasing intentions, July 2015 and growth in ownership, July 2015 and 2016
                                                                                          • Key static console-owning demographics
                                                                                            • Figure 19: Key demographics for static console ownership, July 2016
                                                                                        • Factors in Console Purchasing Decisions

                                                                                          • An abundance of exclusive titles on the Wii U fails to compensate for the lack of cross-platform AAA titles
                                                                                            • Figure 20: Console purchase decision influences, July 2016
                                                                                          • There is a retro market, but it’s not based on nostalgia
                                                                                            • Figure 21: Backwards compatibility as an influence on console purchase decision, July 2016
                                                                                        • Ways of Buying Console Games

                                                                                          • Digital sales fail to catch physical
                                                                                            • Figure 22: Software purchase modality, July 2016
                                                                                          • Single-channel buyers prefer physical copies
                                                                                            • Figure 23: Software purchase modality repertoire, July 2016
                                                                                          • Frequent gamers favour the same channels as other consumers
                                                                                            • Figure 24: Software purchase modality, by gaming frequency, July 2016
                                                                                          • Second-hand retail keeps gamers’ libraries fresh and fosters engagement
                                                                                            • In-game incentives can help turn console owners into frequent gamers
                                                                                            • Gaming Frequency

                                                                                              • Half of gaming device owners play more than once per week
                                                                                                • Figure 25: Gaming frequency, July 2016
                                                                                              • Disengaged console owners are disproportionately female
                                                                                                • Figure 26: Ownership of games consoles and frequency of playing, by gender, July 2016
                                                                                                • Figure 27: Attitudes towards gaming among disengaged female console owners, July 2016
                                                                                                • Figure 28: Genres of games played – Females vs all, July 2015
                                                                                              • 12% of consumers have never owned a current-generation console despite gaming once per week or more
                                                                                                • Figure 29: Console ownership among regular gamers (once a week or more), July 2016
                                                                                                • Figure 30: Gaming PC ownership and agreement that “consoles offer a better gaming experience than PCs’ among regular gamers who don’t own current-generation consoles, July 2016
                                                                                                • Figure 31: Interest in social interaction and agreement that playing games online can be fun among regular gamers who don’t own current-generation consoles, July 2016
                                                                                            • Attitudes towards Gaming

                                                                                              • Some 45% would play video games more if they had more time
                                                                                                • Figure 32: Preferences and interests in gaming and gaming technology, July 2016
                                                                                              • Sony’s innovation scores points with gamers
                                                                                                • Figure 33: Interest in new gaming technology, by console ownership, July 2016
                                                                                              • General population not engaged with gaming
                                                                                                • Figure 34: Attitudes towards gaming, July 2016
                                                                                              • eSports
                                                                                                • Figure 35: Interest in eSports coverage, July 2016
                                                                                            • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                • Abbreviations
                                                                                                  • Consumer research methodology
                                                                                                  • Appendix – Market Size and Forecast

                                                                                                    • Forecast methodology

                                                                                                    Video Games and Consoles - UK - October 2016

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