The Portable Software Market

The slide below demonstrates just how robust the Nintendo DS software market currently is in the United States.

Despite the relatively flat portable hardware market in the U.S. this year, overall software unit sales are up around 7%, from 42 million to about 45 million for the first nine months of the year.

While Nintendo DS software sales grew 39%, year-on-year, Nintendo's percentage of the software market (measured in units) actually declined slightly because of the diminished GBA software sales.

In fact, software for the PSP was up around 18% from just under 10 million units during the first nine months of 2007, to around 11.5 million units in 2008. Regardless, the Nintendo DS remains the strongest handheld platform with 31 million software units this year, more than 2.5 times the size of the market on the PSP.

Software sales for the PSP are nearly invisible to the wider market, because few PSP titles make the top 10 or top 20 software lists released by sales trackers. However, with PSP unit sales up (as shown in the figure above), a revised hardware model on store shelves, and a newly affirmed commitment from Sony to push the platform, the PSP may make a much stronger showing in 2009.

(Regrettably, PSP software sales in 2009 may actually be harder to gauge, since Sony's focus on online distribution will make it very difficult for retail tracking firms like the NPD Group to report how much software has actually been sold through to consumers.)

There are some interesting contrasts when we shift to a view of the portable software market in Europe.

While PSP software sales were up 18% in the United States so far in 2008, it appears that PSP software sales in Europe have actually declined around 7-8% during the same period.

Concurrently, Nintendo DS software sales are up by about 27%, which mirrors the growth of Nintendo DS hardware sales in this region. By comparison, the United States saw Nintendo DS hardware shoot up 20% and software up nearly 40%.