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Upside Opportunities within the Cloud Gaming Market

The video game sector is constantly evolving to meet the expectations for product innovation. In a recent market study, Microsoft just beat out Sony for the top position in a game console competitive assessment -- based on expectations for the impact of Sony’s PS4 and Microsoft’s Xbox One game consoles.

ABI Research evaluated a number of companies across three device categories: game consoles, smart set-top boxes, and TVs/Blu-ray players. Several factors were used to score each company based on two main axes of innovation and implementation.

The assessment provides deep insight into consumer electronics ecosystems and modern video experiences in the connected home.

Sony fell to second place in the game console assessment in part because key PlayStation 4 (PS4) differentiators -- such as cloud gaming -- are still untested and won’t be fully available at launch. Besides, Microsoft has shown more features on the broader entertainment front -- as an example, hybrid premium or over-the-top (OTT) services. 

Nintendo secured the third position, but a significant gap remains between it and the market leaders.

"With the hardware specs between Microsoft’s Xbox One and Sony’s PS4 so similar this leaves Nintendo’s Wii U on the outside. If not for Nintendo’s wider distribution network, console heritage, and first party titles it would start to find itself in closer competition with many of the new market entrants," said Michael Inouye, senior analyst at ABI Research.

Not since the fifth generation of consoles have there been so many competing platforms, but unlike the past there is room for optimism.

In this analysis some new platforms scored fairly well due to relatively solid foundations – e.g. Android or Valve’s Steam.

Before these new entrants compete on equal ground with the incumbents; however, the markets (mobile in particular) will need to further develop and evolve.

As ABI looked at the distribution of companies in this analysis, it might appear as if they expect a bifurcation in console gaming -- a high=end populated by two premium platforms and a larger pool based upon mobile ecosystems.

While this might be true in the short term, ABI anticipates that the market will come to look more cohesive than not, as technologies like cloud gaming place less emphasis on the hardware and more on platforms and services.

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