Sizing the PS5 Market - very difficult

Question

Hey,

with all the buzz going on with the new PS5, I assume that some interviewers might be inclined to ask a market sizing question regarding the playstation's market size.

I found this to be one of the most challenging market sizing questions for several reasons:

1) I know that it is a supply problem since demand < supply - however, guessing how many factories there are and how the output would be per day is close impossible (when trying to justify the assumptions made) - for instance, we would need to know how many months in advance sony started to produce the playstation

2) Segmenting by demographics is also quite daunting. I would assume that above the age of 40, the penetration is quite low. However, with the ages under it is really hard to estimate. The only way I could think about is a MECE issue tree like "want's to buy new console yes/no, buys xbox/ps/nintendo" but even that is not mece because people could also be potentially buying both

3) It is also hard to estimate a target market since the playstation has popularity across the globe - whether it be USA, Europe or Asia. The only segmentation I could think here is that the market will be centered on the developed world since it is a very pricy product.

How would you do that?

Answer 1

Keep in mind that you don't need to get to the right answer in market sizing questions. If you can outline 3 different approaches to the interviewer and then pick one for which you think through the details and make assumptions on the numbers, that is a very strong appraoch.

If you take any of the three options you have an then build a mathematical equation around it, you can just go ahead and estimate the individual input numbers. Make this collaborative and discuss it with the interviewer. That way you give them a chance to challenge you on some of the assumptions or push a level deeper if they think your estimation is still a bit too high level.

Bottom line: I don't think you'll need more than what you have already to make this a strong market sizing case.

Answer 2

Hello!

TBH I would go with something similar to #3.

Total population of the target markets (you can clarify this with the interviewer), total number of households, and then segment by puchase power and tastes to derive the ones htat have one.

However, this one seems too complicated for an MBB inerview tbh, where market sizings are embebeed in other questions too.

Best,

Clara

Answer 3

#1 and #3 are horrible ideas! (no offense).

Think about what you could reasonably estimate.

#2 is absolutely the way to go. In terms of demography segmentation, go with the same logic/approach demonstrated excellently here:

https://www.preplounge.com/en/consulting-forum/no-of-iphones-sold-marketsizing-us-8646

Answer 4

Hi,

I think you are overestimating how much consultants are up to date with the events. I doubt they have time for PS and the news about it:)

Best