Ahead of expected Q4 holiday launches, gaming and tech enthusiasts are obsessing over comparing the oncoming PlayStation 5 and Xbox Series X consoles.
But in the midst of the pandemic, neither system has benefited from stay-at-home orders and a general need for virtual, social connection like the Nintendo Switch has.
This isn’t necessarily Microsoft or Sony’s fault. 2020 is the final year for their current-gen console cycles, so declining hardware sales were already a given and are reflected in the U.S. sales figures for January and February. Likewise, hardware sales are already returning to normal levels, with June exhibiting the first year-over-year decline since March, although total video gaming sales in the U.S. were still at their highest levels since 2009 (monthly sales figures for March, April and May topped previous records set in 2008, per NPD).
Unlike its competition, Nintendo’s current console efforts are off-cycle when it comes to the direct war between Sony and Microsoft. The mid-gen launch of the Switch in 2017 (PlayStation 4 and Xbox One had Q4 2013 launches) granted it much higher sales figures than its predecessor (over 61 million units as of June 30 vs. less than 14 million for the 2012 Wii U console, per Nintendo).
At this point, the Switch is largely seen as a companion console to PlayStation and Xbox loyalists, greatly helped by its hybrid status as a home and portable handheld-gaming system. Plus, its kid-friendly library of exclusive titles spanning “Super Mario,” “Legend of Zelda” and “Pokémon” made it substantially more appealing to parents desperate for help in keeping their children occupied throughout stay-at-home orders that bled into summer.
This would explain why Nintendo appears to be the only gaming platform to display a significant growth spike for Q1 2020, as opposed to Xbox’s barely-visible 2% increase and PlayStation’s drop in revenue. Still, PlayStation did experience the most significant growth during Q2 2020, but the reason why has next to nothing to do with hardware.
By Sony’s own admission, hardware sales actually went down in Q2 2020. Instead, the growth at Sony Interactive Entertainment (SIE) was almost entirely because of software sales, largely driven by highly-anticipated console exclusive, “The Last of Us Part II,” which released at the very end of the quarter, along with pre-orders for their next exclusive, “Ghost of Tsushima,” which dropped in July.
This was a stark contrast to Nintendo, as it saw significant growth in hardware sales for the Switch during both COVID-impacted quarters. The answer as to why PlayStation saw bigger growth in Q2 is simple: at the end of the day, PlayStation still has an over three-year headstart on unit sales and a larger base of gamers to sell software to (110 million units sold vs. Nintendo’s 61 million, per Sony).
However, hardware was not the sole factor behind Nintendo’s upticks in quarterly revenue. Like PlayStation, Nintendo can point to an exclusive title as well, which is on track to becoming the Switch’s best-selling game yet.
With just under five months on the market, the newest “Animal Crossing” is already the second top-selling Nintendo Switch game in the console’s lifecycle, and is about four million units shy of taking the No. 1 spot from “Mario Kart 8 Deluxe,” which released over three years ago. “Call of Duty: Warzone” may be the defining competitive shooter of the COVID era, but “Animal Crossing” is the defining game, full stop.
If there is one reason why Xbox has lagged behind Nintendo and PlayStation throughout the current generation and now COVID-19, it is simply the platform’s lack of an adequate pipeline for console exclusives. PlayStation is already renowned for single-player, story-heavy gaming experiences that have graced the PS4 best-sellers chart, but it’s a completely different story with Nintendo, whose top five performing titles are all console exclusives.
This is why the next console generation will be truly unpredictable, as Xbox Game Studios started and acquired nine first-party studios within the last three years, enabling them to expand their next-gen exclusives pipeline to include far more than than just “Halo” and “Gears of War” titles (by comparison, SIE only added one new studio to its roster of developers within the same timeframe).
With more exclusives populating its upcoming release pipeline, Nintendo is well poised to maintain its high performance as Sony and Microsoft prepare for an evenly-matched starting line when their next-gen efforts release in Q4. While no one could have predicted the global whirlwind of a year that 2020 would be, Nintendo’s decision to break away from releasing new hardware alongside its competitors is clearly paying off in the highest of fashions.
This is an expansion from Variety Intelligence Platform’s “Industry Impact: COVID-19” special report examining how the first three months of the pandemic provide ample data for beginning to comprehend the impact across a broad array of key performance indicators in TV, film, streaming, audio and other sectors. Subscribers can access the full 29-page report here.