Game developers still feel the pull of next-gen consoles

Well, this is strange. Try as they might, console manufacturers and game developers can't escape the weight of the Xbox One and PlayStation 4.

I've been slow to pass judgment on this generation of game and console sales because, no matter how you look at it, this has been the the strangest generational shift in the history of the video game industry. It took place during the height of the COVID-19 pandemic, when more people were spending more time indoors, and amid a technological shift that made it possible to play AAA games on portable devices like the Nintendo Switch and portable PC devices like the Steam Deck.

This has made it more difficult to make direct comparisons with previous launches, but over the past week we've received a lot of data to confirm one important fact: current-generation console sales are slowing, and the latest generation of consoles is partly to blame.

The three main data points are these: Xbox reported a massive decline gaming hardware sales that could mean Xbox Series X|S sales have peaked. Sony has revealed that PlayStation 5 sales are going strong, but they are on track to fail to achieve the planned goals which could impact their overall sales hopes for this generation.

These facts seem deeply intertwined with the reason why Electronic Arts announced the last-gen port Star Wars Jedi: Survivor will arrive in September.

I'm glad more people can check it out one of my favorite games of 2023But this port undeniably shows how developers need the latest generation of consoles to sell games.

Not even a Jedi can escape the past

Despite the success From Star Wars Jedi: Survivor EA has decided on a next-gen porting of Jedi Survivor could increase the game's revenue. It would take a tremendous cost/benefit analysis to make that decision, because it's not like there's a button somewhere at EA that just says “press the button to transfer the game.” It's a lot of work to take a game that's optimized for newer consoles and optimize it for older hardware.

EA was likely looking at similar data to what our colleagues at Omdia have seen. As you can see in the chart below, the active install base of Sony and Microsoft’s next-gen consoles only surpassed the previous generation in 2023, three years (actually two and a bit, given how late the consoles launched in 2020) after their debut.

This shift accelerated in 2024, but Omdia predicts that 25 percent of gamers will still be using older-gen consoles in 2025. Analyst James McWhirter pointed out to me that Sony reported in early 2023 that 30 percent of active PS5 users had never used a PS4, which is “both good and bad” for the company.

“What we’ve seen in the first half of the PS5 cycle is that PS5 adoption has outpaced the decline of active PS4 systems,” he said. “That tells us that a lot of PS5 buyers have never owned a PS4. While that’s positive in itself, it does shed light on the extended intergenerational period that we’ve seen continue into the second half of this year’s cycle.”

In other words, some PlayStation 4 players were happy to stay on their last-gen console.

Why? It's unclear. One obvious answer might be that Sony and Xbox have both been slow to release games that take full advantage of their new hardware, but third-party games like Jedi Survivor could have convinced many gamers to take the plunge, and the excitement around the new consoles seemed as strong as in previous years.

Other analyses indicate that this slow adoption is due to games like Grand Theft Auto Online, Fortnite and MinecraftWhile both games have received graphical upgrades on PS5 and Xbox Series X|S, their previous-gen versions look and play great. Younger audiences accustomed to playing these games with friends may not see the need to upgrade if their online social spaces aren’t dramatically impacted.

This is probably partly true, but certainly mobile gamers have eclipsed console gamers for the last two titles, and younger gamers wouldn't have the purchasing power to drive that shift anyway.

It is likely a combination of these and other factors, all exacerbated by events no one could control: the economy and inflation have increased. Strange right when these consoles were being launched on the market.

I say “weird” and not “bad” because, on paper, the post-COVID-19 recovery (at least in the U.S.) has been strong. There's a reason people have called this a “vibecession.” Inflation, “flationary greed,” and Russia’s invasion of Ukraine are all films that have hit the market, but people have not stopped spending money on entertainment yet.

Spending on travel, concerts, and Barbenheiemer has exploded over the past two years, each generating a knock-on economic boost for tourist attractions and the areas surrounding concert venues. Once again, platforms like Ticketmaster have jacked up prices to capitalize on this interest, and are now reaping the rewards of presumably fleecing concertgoers in the post-lockdown frenzy.

So, if your family is spending hundreds of dollars on must-see tickets to Taylor Swift’s show and buying custom Barbie outfits for repeat trips to Barbenheimer, while Kroger and other supermarkets force you to buy basic groceries… upgrading your already impressive gaming console might not seem like such a big deal.

What does this slow adoption mean for game developers?

I have no idea what this slow adoption means for game developers.

For now, it is clear that developers are planning to release both last-gen and current-gen versions of their games. Just this morning, Future Friends announced that it is bringing Vampire Survivors on PS4 and PS5. It’s a fantastic title for both generations. PC gaming, already very popular, doesn’t need high-end, sophisticated graphics, so trying to conquer PlayStation simply means making the game available to people anchored to that platform.

Some entrepreneurial minds in the sector are keeping their fingers crossed for Grand Theft Auto VI to attract players, as the series is expected to generate millions of dollars in sales within 24 hours of launch.

And it's not like spending changes in 2022 and 2023 have permanently turned consumers off gaming. Musicians are suffering from a massive economic hangover, with world-famous artists canceling shows because tickets aren't selling. Disney's Deadpool and Wolverine have given the box office a boost, but it's still a bad summer for AMC and Regal. The economy is slowing down a bitbut we're nowhere near anything like the financial crisis of 2008. Every end of the entertainment world is looking left and right, trying to figure out what the hell is going on.

For now, the best we can do is stay connected to gamers on the latest devices. Gamers don't care about the economic needs of a particular company. They want good games on the platforms they own.

Game Developer and Omdia are sister organizations to Informa.