Current State of Video Game War: Nintendo Reclaims Its Glory Days?

From both a business as well as a technology perspective, the video game industry is treading in unprecedented waters. For the first time in its short history, the industry has 3 viable systems competing against each other and each one different enough from the others to carve its own audience. Since 1995 with the release of the Playstation, aka PSX, Sony has been the dominant force in the industry. Up until that point, Nintendo had been the prominent company in gaming with the successes of the Nintendo, Super Nintendo, and Game Boy. However, Nintendo clearly lost its luster in the Playstation era with neither the N64 nor the Gamecube able to compete with the Sony platforms. It may have taken 12 years, but Nintendo is finally back on top dominating the hardware and software sales charts across the globe. The DS is shaping up to be the fastest selling video game system of all time (absolutely dominating Japan where it is perceived similar to a cell phone in America...you just have to have one) and the Wii is unquestionably a bona fide success. Let's examine the situation; below is the latest sales (approximation) for all platforms in the U.S and Japan:

Japan
Hardware - This Week | Last Week | YTD | LTD
1. NDS - 150,584 | 154,504 | 4,557,874 | 18,563,553
2. WII - 77,169 | 86,786 | 2,303,940 | 3,223,583
3. PSP - 35,068 | 32,894 | 1,221,633 | 5,753,762
4. PS3 - 28,829 | 12,187 | 560,131 | 1,017,689
5. PS2 - 11,757 | 14,059 | 476,086 | 20,630,945
6. 360 - 3,872 | 2,664 | 130,431 | 395,133
7. GBA - 532 | 461 | 42,830 | 15,340,909
8. NGC - 102 | 131 | 8,932 | 4,178,400

North America
Hardware Weekly Total
DS 140,151 (-4%) 13,730,938
Wii 95,171 (-3%) 3,974,505
PSP 59,483 (-9%) 8,864,934
PS2 54,701 (-10%) 44,524,847
PS3 43,498 (-4%) 1,738,147
X360 34,174 (+5%) 6,607,403
GBA 23,725 (-0%) 40,768,173
GC 1,656 (-2%) 12,697,057
XBOX 11 (-58%) 15,933,106

Global Totals:
X360 = 10.27 million
Wii = 9.88 million
PS3 = 4.01 million
PSP = 22.66 million
DS = 46.45 million



So what do we have here? Well, in short NINTENDO OWNS JAPAN. Nintendo hardware accounts for more than 75% of all hardware sold in the past week in the Japan. In addition, if you were to look at the top 50 selling games in Japan for last week, you will see that over 40 of them were either on the DS or Wii (only 8 were Wii games and nearly 35 were for the DS). The DS is a social phenomenon in Japan. Its not a kid's toy there in the least. Professionals can be seen playing it on their bus or train ride to work, parents may bring it out while they wait to pick up their kids from schools, and a high school student without a DS may be expelled for being "too different". It's simply unbelievable and most in the industry would agree that for the next few years, Nintendo will remain untouched in Japan.

That's not to say that no other systems are doing well in their own right. The PS2 is clearly past its prime there but has had a great run with nearly 20 million units sold since 2000. The PSP is also doing fairly well with a healthy 35000 units last week alone. The PS3 has been suffering since its release averaging less than 10000 units a week. The primary reason being that there was no software for the system that the Japanese gamers were really interested in to help justify its high cost. However, that all changed this past week with the release of Hot Shots Golf 5, an extremely popular franchise in Japan. The PS3 sales spiked significantly the past two weeks as a result, with a nice 30000 units sold last week. The situation should only get better as there is a host of excellent software slated to be released by the end of the year. The Xbox360 continues to be a non-issue, performing even more poorly than the 1st Xbox did in Japan (It's been suggested that the X360 still has not sold its initial shipment launched back in November 2005). Apparently, the Japanese do not like game systems from American companies. Go figure!

In America, while not quite as lopsided, the story is very much the same. The interesting thing to note is that the PSP and DS battle is much closer. But the real story with these numbers is that the PS3 has handily outsold the X360 last week. In fact, following the $100 price drop to $499 earlier in July, the PS3 sales have nearly doubled in the US and it has outsold the X360 every week in July except the first week (This represents the 1st time that the PS3 has outsold the X360 in the US since its release). With the successful E3 that Sony had not to mention the flood of games coming to the system this Fall, expect the PS3 sales to really ramp up as the year moves on. The X360 has been steady for most of 2007 with slight decreases in recent weeks. Can this indicate that the X360 has indeed reached its apex in sales?

In summary, with its 1 year head start the X360 is technically still the leader in terms of next-generation hardware (X360, PS3, Wii) sales globally. The PS3 is on the rise and has probably seen its worst days. While its interesting to see a Sony system actually lag behind the competition, its important to remember that the PS3 is not selling poorly by any previous standard, including that of the highest selling system to date (PS2). The Wii is STILL sold out everywhere in the U.S. I have STILL yet to see a Wii box on a store shelf. In fact, with only 8 months on the market, the Wii is a mere several hundred thousands units away from surpassing the X360 in global sales (the X360 has been out for 20 months). This is BIG! That will likely happen in the next few weeks making the Wii the #1 next-generation system. WOW! Meanwhile, at this rate you can expect the PS3 to surpass the X360 before the end of the 2007 fiscal year (ending March 2008). Mark my words!

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