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Game Console HDD Demand Plunging from a Record Quarter

2.5” CE HDDs for game consoles hit a record high unit shipment level in CQ3 ’16, ramping up for what appears to be another strong holiday season for console system sales. With mid-cycle upgrades by Microsoft and Sony, along with price cuts to modified original systems and what appears to be a popular VR accessory for the Sony platform, game console HDDs for the year will hold essentially flat for the third consecutive year. This bucks the normal trend of double digit declines year-over-year after the first full year of a console release. Apparently, the appeal of the current systems – Sony’s PS4 and, to a lesser extent, Microsoft’s Xbox One – continues to draw users with compelling software, services and downloadable content.

The only concern, currently, about the durability of game console demand are data points indicating a sharper drop in CQ4 console HDD demand versus historical norms. Based on current information, 2.5” CE HDD shipments to game consoles in CQ4 ’16 may be down by more than two-thirds compared to the prior quarter. Perhaps the run up to the holiday season with revised systems drove more of a build-ahead this year compared to other years, but a post-holiday analysis of system sell through will be needed to see if the current generation of systems, despite the refreshes, has peaked.

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