Powered by its strong appeal to casual gamers, Nintendo’s Wii this year is expected to displace Microsoft Corp.’s Xbox 360 as the new-generation video game console with the world’s largest installed base. The global installed base for the Nintendo Wii will rise to 30.2 million units in 2008, up from 18 million in 2007. This will put the Wii ahead of the Xbox 360’s total of 25.7 million units in 2008.

This will mark the first time the Wii has taken the installed-base lead among the new generation of home video game consoles, a market consisting of the Wii, Microsoft Corp.’s Xbox 360 and the Sony Corp.’s PlayStation 3.

Figure 1 presents iSuppli’s estimate and forecast of the global installed base for new-generation video-game systems. These figures do not include older-generation consoles or handheld game players.

Wii the people

"The Wii’s performance illustrates the success of Nintendo’s strategy of targeting casual users with an inexpensive console and entertaining titles, rather than addressing hard-core gamers by offering highly sophisticated and spectacular titles and systems", said Pam Tufegdzic, research analyst for multimedia content and services at iSuppli.

"In this stage of the new-generation video game console market, consumers are showing they’d rather be entertained and pay less for their consoles than shell out more for the latest and greatest technology."

Hard-core gamers traditionally have been the target for most video game console and software makers. However, this is beginning to change due to the rising numbers of casual gamers. A casual gamer is defined as someone who doesn’t play games every day, but occasionally will play for an hour or two. The types of games that appeal to such users are easy to play without much of a learning curve.

The Nintendo Wii is perfectly suited for the casual gamer with its mass-market appeal, its fun motion-sensor controllers and its quickly growing portfolio of games. The installed base for the Nintendo Wii will grow to 37.7 million units by 2011, rising at a Compound Annual Growth Rate (CAGR) of 20.3 percent from 2007.

Wii want to play

However, the hard-core users aren’t out of the game yet; in 2011, the installed base of the PlayStation 3 will exceed that of the Wii, iSuppli predicts. The PlayStation 3 will reach an installed base of 38.4 million units in 2011, rising at a CAGR of 39 percent from 10.3 million in 2007.

The Xbox 360 by 2011 will grow to 32.3 million installed base units, rising at a CAGR of 15.4 percent from 18.2 million in 2007.

While the PlayStation 3 will take the lead by 2011, the percentage of the installed base controlled by the three new-generation consoles will be remarkably even. The PlayStation 3 in 2011 will account for 35.4 percent of the installed base, while the Wii will take 34.8 percent and the Xbox 360 will be at 29.8 percent.

A coming Blizzard

Looking at the content side of the video-game market, the merger between software game makers Activision and Vivendi Games to become Activision Blizzard may presage further market consolidation. Blizzard is the branch of Vivendi responsible for the World of Warcraft (WoW), the world’s largest Massive Multiplayer Online Role Playing Game (MMORPG), with more than 9.3 million subscribers.

Activision already was on a path for growth with recent success with its Guitar Hero and Call of Duty franchises.

However, this deal, worth about $18.9 billion, has instantly created a new video-game software superpower that can compete with Electronic Arts (EA).

iSuppli believes this deal could spur a wave of industry consolidation as smaller game title companies try to keep up with the giants in the industry. iSuppli would not be surprised to see future mergers or acquisitions in the game title space this year.

Find out more about the mobile multimedia content market with Tufegdzic’s latest report entitled: Consolidation Begins in Computer Gaming.

Universe. For more information on this report, please visit: http://www.isuppli.com/catalog/deta....

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