Xbox Will Take 45% Next-Gen Market Share At Most, Says Michael Pachter

Microsoft have taken some big steps in preparation for next-gen that seem to have put them in a very strong position for years to come, from Xbox Game Pass to launching a cheaper next-gen Xbox variant to having bolstered their first party lineup incredibly with multiple studio acquisitions over the past couple of years- including, most recently, all of Bethesda (which in particular could have significant impact on the industry).

But the question is- with everything that they’ve done so far, are Microsoft in a good position to capture a chunk of marketshare from PlayStation and inch ahead of its competition? Industry analyst Michael Pachter of Wedbush Securities doesn’t believe that that will happen. Speaking to GamingBolt in a recent interview, Pachter said that while Microsoft will surely see an increase in marketshare, they would at most take 45% of the market.

Pachter first spoke about the Xbox Series S, commenting that the lower-end console will likely drive mainstream sales eventually. “It’s really going to be interesting to see what happens with that cheaper Xbox, because purchase intent looks very low for that thing,” he said. “Mostly because I guess there’s some awareness that it has only a third of the teraflops the Series X does. And I don’t even know what a teraflop is, so I don’t know what that matters. What I do understand is that the Series S will play next gen games, just not at 4K and 240fps or whatever.

“And I would say more than two thirds of gaming households still don’t have a 4K TV, so if I don’t have a 4K TV, then I don’t really care about the higher end one, unless I buy a new TV – because even on 1080p, the games will look stunning. So I think that price point might be a differentiatior, even though right now, early adopters and hardcore fans don’t seem to be too interested in it.”

Pachter also taked about Xbox Game Pass and Microsoft’s strengthened first party pipeline, but said that Xbox will still probably go over 50% marketshare, owing to the strong presence PlayStation has in the Japanese and European markets.

“I think Game Pass makes the Xbox audience bigger,” Pachter said. “I think that for $40 a month, getting Game Pass, Xbox Live Gold, and an Xbox console will get them some marketshare, so I would say best case Xbox takes 45% of the market, and Sony keeps 55%. And worst case, 60-40. It will be hard for Microsoft to go over 50, because Sony just has a great brand and loyal fans in Japan and Europe. I think you’ll win a few of those customers with the cheaper Xbox, a few from Game Pass, a few from the Bethesda acquisition, a few more from the other acquisitions they have made. But it will be hard for them to go over 50% overall.”

Finally, Pachter highlighted Microsoft’s Xbox All-Access program, which allows purchasers to get an Xbox Series X / S with 24 months of Xbox Game Pass Ultimate for monthly instalments over the next 24 months. He noted that Xbox All-Access and Game Pass collectively the Xbox system more convenient and accessible.

I think the instalment purchase, which is really what most cellphones do, makes consoles more affordable for a lot of people, because most people may not have $500 lying around for a new console,” Pachter said. “So that $40 a month plan that gets you Xbox Live and Game Pass, you don’t need to buy very many games, you can do a $40 a month plan and get a Series X, and then buy 2 games a year that aren’t on Game Pass, let’s say FIFA and Call of Duty, and that’s really it, otherwise you’re always going to have something to play. And that’s a pretty good deal. So, we’ll see how it goes, I’d be curious to see if it gains them more than 5 percentage points of marketshare.”

Xbox All-Access is only available in 12 nations for now, though hopefully, Microsoft will be working on bringing it to more parts of the world as well. Meanwhile, the fruits of Microsoft new first party portfolio’s labour won’t ripe for a couple of years yet, but looking at the sheer talent of disposal, there’s certainly cause for optimism.

During our interview, Michael Pachter also spoke to us about whether (and how) he thought Sony could respond to the Bethesda deal with an acquisition of their own. He also discussed the PS5 Digital Edition, and the issues he sees with it.

Our full interview with Pachter will be live soon, so stay tuned for that.