The console race, which once had Nintendo’s Wii as the clear leader, has become a much tighter battle recently with Microsoft and Sony attracting more mainstream gamers to their consoles.
According to the latest research from video game tracking firm Strategy Analytics’ Connected Home Devices service, 43.7 million current generation games consoles were sold worldwide in 2010, down 3% from 2009. Wii remained in first place in terms of unit sales, with 17.2 million units sold. But both Xbox 360 and PlayStation 3 closed the gap: each grew at double-digit rates and were boosted by the introduction of new motion sensor controller systems.
“The race for console leadership is now more evenly balanced than at any time in recent memory,” said Jia Wu, senior analyst at Strategy Analytics.
“Global sales of the current generation of TV game consoles continued to fall in 2010 after peaking in 2008 when 46.5 million units were sold,” he added. “The largest decline was seen by Wii, whose unit sales fell by 24%. Both Xbox 360 and PlayStation 3 have been helped by the introduction of new motion sensor experiences, and have capitalized on the lack of continued innovation on the Wii platform.”
With its strong start, Nintendo still has the lead in the current game console space. Nintendo passed a milestone last month, crossing the 35 million sales mark in the United States, according to the NPD Group. More than 454,000 Wii consoles sold in February to put Wii across the 35 million mark faster than any other console in U.S. history.
Nintendo developed Wii exclusive games have been selling strong in the U.S. Donkey Kong Country Returns, which launched in November 2010, crossed the 2 million mark in February, while New Super Mario Bros. Wii, which debuted in November 2009, has sold over 8 million copies. But the company faces challenges, especially given the mainstream audience that the Wii has courted fails to purchase as many games as more core gamers.
“Nintendo must act quickly if it wants to avoid becoming an also-ran in the TV console market,” said David Mercer, principal analyst at Strategy Analytics. “The Wii’s time has passed and while the Nintendo 3DS will help to boost its position in the handheld market, the company cannot afford to let the TV market slip away.”
Nintendo does have a one-two punch in the gaming space, where it dominates the portable arena with Nintendo DS devices. There are over 47 million Nintendo DS portables in the U.S. alone. And games like Pokémon Black Version and Pokémon White Version have recently set records, selling over 1.08 million copies in the first 24 hours in the U.S. on March 6. Older titles like Pokémon SoulSilver Version, which debuted in March 2010, has passed 2 million units sold in the U.S. New Super Mario Bros. has sold over 9 million copies in the U.S. since it launched in May 2006.
Michael Pachter, video game analyst at Wedbush Morgan Securities, forecasts Nintendo will sell 10 million Nintendo 3DS devices a year worldwide starting this year. The 3DS has been flying off store shelves in Japan since it launched this year.
After a slow start, Microsoft has been closing in on Nintendo in the console war. Last month was the biggest non-holiday month of console sales in the U.S. in the history of the Xbox, according to the NPD Group. Xbox 360 has been the number one selling console in the U.S. for the first two months of 2011, selling over 535,000 pieces of hardware in February. Microsoft’s console sales were up 27% year over year in February, the fastest growth of any current generation console on the market.
Thanks to top-selling games like Activision’s Call of Duty: Black Ops, Capcom’s Marvel vs. Capcom 3, Epic Games’ Bulletstorm, and 2K's Sports’ NBA 2K11, total retail spending on Xbox 360 hardware, software and accessories reached $475 million in February in the U.S., which was the highest among current generation consoles.
“Microsoft’s Kinect was clearly one of the winners in 2010,” added Wu. “In the second half of 2010, the Xbox 360’s market share for the first time exceeded the 30% mark among the current generation fixed consoles, which was clearly driven by the Kinect launch.”
Microsoft has sold over 10 million Kinect for Xbox 360 devices worldwide in just three months and sold another 10 million Kinect games.
Sony, which currently is in third place, has seen an increase in hardware and software sales, thanks in part to its PlayStation Move motion sensor controllers. Sony has also been pushing its stereoscopic 3D technology, which turns ever PlayStation 3 into a Blu-ray 3D player and 3D gaming machine. Killzone 3, a February release that touts both new technologies, sold 280,000 copies in its first week at retail in the U.S. last month.
“All three console systems realized a unit sales increase over last February,” said Anita Frazier, video game analyst, The NPD Group. “All hardware systems realized a unit sales increase over January 2011.”
According to Strategy Analytics, the outlook for 2011 will hinge on two key questions: will Nintendo launch Wii 2?; and will Microsoft be able to sustain the early success of Kinect?
Billy Pidgeon, video game analyst for M2 research, believes Wii 2 will launch before the next Xbox. But he doesn’t expect the new consoles to hit the market until 2013 and 2014, at the earliest.