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Analysis: Wii Overtakes Xbox 360 LTD Software Sales
Analysis: Wii Overtakes Xbox 360 LTD Software Sales
January 20, 2010 | By Matt Matthews

January 20, 2010 | By Matt Matthews
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More: Console/PC



[Gamasutra analyst Matt Matthews looks at 2009's NPD U.S. console retail results, with his final analysis for the month comparing software sales across the three major consoles and finding Nintendo's Wii ahead, life-to-date.]

When we examined U.S. game software sales at the end of September 2009, we noted that year-to-date Wii software sales were essentially flat at that point when compared to the same period in 2008. With the figures for the full year now in, and further illuminating comments from Michael Pachter of Wedbush Securities, we now estimate that Wii software sales grew by a modest 1.0 1.5% in 2009.

While the Wii had been showing year-over-year declines in both October and November, we expect that December sales more than made up for those misses. By our estimates, well over 30 million units of Wii software were sold in the final quarter of 2009.

In fact, Nintendo's utter software dominance becomes manifest when we combine our software sales estimates for all platform stakeholders, including Microsoft and Sony, during the last quarter of 2009.

With Sony claiming an estimated 22% (across three platforms) and Microsoft 20% (with only the Xbox 360), the remaining 58% of all software units we estimate were sold for Nintendo's console and handheld.



Perhaps the bigger story that we perceive in our estimates is that Nintendo Wii has finally overtaken Microsoft's Xbox 360 in life-to-date sales.

Recall that the Xbox 360 launched a year prior to both the Wii and PlayStation 3. With that headstart Microsoft has often touted its strong record in selling a high number of units of software per system owner (also known as a tie ratio). According to Microsoft's latest press release on Xbox 360 sales, the system now has a tie ratio of 8.8, suggesting LTD software sales of 164 million units after 50 months on the market.

While the Nintendo Wii has historically had a lower tie ratio, even when sales were launch-aligned, the system's extraordinary hardware sales have yielded similarly strong overall software sales. According to our estimates, the Wii has now sold in excess of 175 million units of software in a mere 38 months.

After 38 months on the market (December 2008), the Xbox 360 had achieved software sales of around 112 million units.

The diagram below makes clear just how the Wii has achieved this feat. With annual software unit sales tens of millions of units above the competition, it was merely a matter of time before the Wii surpassed Microsoft's console.



Again, going by our own estimates, we believe the PlayStation 3 is closing in on LTD sales of 75 million units of software. This suggests total Wii software sales exceeded PS3 sales by 100 million units in the same period of time.

As Michael Pachter is fond of saying, strong hardware sales can drive software sales. Both the PlayStation 3 and Wii experienced accelerating hardware sales at the end of 2009, and both also saw increasing software sales. Should robust Wii and PS3 hardware sales continue through the beginning of 2010, we fully expect the software sales to follow.

Furthermore, the Xbox 360 has a dedicated hardware base that is enthusiastic about buying software. Therefore, Xbox 360 software sales should be strong through much of 2010.

This would set the stage for increasing total software sales in the coming year.



As the figure above shows, the industry experienced a contraction in software unit sales in 2009. However that loss was modest about 5% and we can easily see sales matching and even increasing beyond the 2008 level during 2010.

We caution that the rise of digital distribution, sales of software through each system's online store, could temper any growth in software sales. With the exception of the Nintendo DS Lite, every system currently on the market permits owners to purchase and download software.

We sincerely hope that in the coming year some party if not the NPD Group itself, then individual publishers or platform stakeholders will begin releasing reliable information on digitally distributed sales and not the facile top 10 lists that are currently available.


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Comments


Mark Harris
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I'm curious to know how much of the Wii sales is 3rd party.

Simon Carless
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Mark, I asked Matt Matthews that exact question and he didn't feel secure enough to estimate it, not having enough data on hand, but it's a really interesting point.

E Zachary Knight
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The best estimate would be to add up the Wii titles in each month's top ten and make an estimate from there. It certainly wouldn't be accurate, but it could paint a broader picture.

Matt Matthews
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Mark, the most recent known values I'm aware of are on this page, from November 2008:

http://www.gamasutra.com/view/feature/3841/the_mushroom_growth_pl
an_inside_.php?page=6



Cannot make live link, apparently. :P

Jamie Mann
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The initial pie-chart is a bit confusing - it doesn't make it clear that both Nintendo and Sony have two platforms (Wii/DS and PS3/PSP). A breakdown by hardware would have been more interesting!



Beyond that, I'd echo Mark's question on the Wii's third party figures. VG Chartz pegs Wii software sales as follows:



Wii sports: 58 million

Wii Play: 26.6 million

Wii Fit: 22.6 million

Mario Kart: 20.8 million

Wii Sports Resort: 12.8 million

Mario Bros: 10.5

Wii Fit Plus: 9.0

Smash Bros: 9.2

Super Mario Galaxy: 8.4

Mario and Sonic: 7.5



Pegging standalone sales of Wii Sports at 3.5 million (the most recent estimate I can find for the Japanese market where it wasn't bundled), that means the top ten games all involve Nintendo IP and account for 131 million units - or about 75% of all software sold. Extend it to the top twenty and you get 15 Nintendo games, 1 Nintendo/Sega title and 4 non-Nintendo games, for a total of 170 million units.



(which goes to show that VG Chartz data isn't amazingly accurate! But still, even if you knock 20-30% off all their numbers, it's still a staggering level of domination by Nintendo)



Meanwhile, on the Xbox 360, 4 of the top ten are Microsoft IP, and the top ten accounts for 66.5 million units - or approximately 40% of all software sold.



Overall, if I was a third-party developer, I know which platform I'd prefer to target...

E Zachary Knight
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Here are my estimates for the Wii 1st vs 3rd party software based solely on the 2009 figures. My estimates come from the Top 20 lists posted here on Gamasutra so not all software is accounted for. For the most part only Top 10 software had any real numbers so slots in the 11-20 positions are estimates unless they were listed with actual software sales totals for the month.



Total 2009 Wii software sales as listed above: 72 Million



Total Estimated 2009 Top 20 1st Party Titles: 22.363 Million



Total Estimated 2009 Top 20 3rd Party Titles: 5.1351 Million



Total Estimated 2009 Top 20 1st and 3rd Party Titles: 27.4981 Million



Difference left after removing Top 20: 44.5019 Million



So we have 44.5 million titles left over that could be split either way for 1st and 3rd. Considering the majority of Nintendo's first party titles made it into the Top 20 each month I think it could be safe to say that a fairly large chunk of that consists of 3rd party sales.

Uyiosa Iyamu
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Actually, ignoring the success that Nintendo's top software usually pulls in as a measuring stick, for the investment, I think a few third parties do fairly well on the Wii.



Shaun White's snowboarding sold well enough for its sequel to be exclusive for the Wii. The emerging "Fitness game" market must being doing well enough considering how many games are created for it and the fact that several of the older ones have or are in line to get sequels. Certain multiplatform games (usually licensed games and those of rhythm/music genre) probably do comparable numbers to the other HD releases. Third parties do make more on the other two platforms from the big releases, but the fact is, the biggest 3rd party exclusive releases on the Wii from third parties would be niche on the 360/PS3 games with the budget to match.

E Zachary Knight
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I might add, based on the Life to date tie ratios from November 2008, we can make another estimate.



The Tie ratio for 1st party titles was 2.4 games per console owned.



The Tie Ratio for 3rd party titles was 3.1 games per console owned.



If that trend continued for 2009 the estimates for 1st and 3rd party tiles would be as follows:



1st Party games: 31.68 Million games



3rd party games: 40.32 Million games



Again, these numbers are all estimates based on information at hand.

Mark Harris
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Thanks for all the responses, guys. Sheesh, I put my head down to work for a couple hours and BAM! Answers.

Carl Chavez
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Also, keep in mind that there are a lot of 3rd-party titles that seem to have 0 sales on vgchartz, which skews the 3rd-party sales estimates if you're using them to make your numbers.

Bob Hope
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@juice uk



Wii sports: 58 million

Wii Play: 26.6 million

Wii Fit: 22.6 million

Mario Kart: 20.8 million

Wii Sports Resort: 12.8 million

Mario Bros: 10.5

Wii Fit Plus: 9.0

Smash Bros: 9.2

Super Mario Galaxy: 8.4

Mario and Sonic: 7.5



^These are worldwide numbers. The estimate in this article is US only.

Prash Nelson-Smythe
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Excellent point, Homer.



You could look at best-selling 360 games with the same pessimism for stealing sales if you wanted to launch a game not part of a large franchise. The fact that the best selling games on the Wii are made by Nintendo does not imply that they are selling well just because they are made by Nintendo, since correlation does not imply causation. It could be that Nintendo make games that sell. Deciding on either scenario as a certainty is rationalising above and beyond the evidence.

Nathan Verbois
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Bear in mind that Nintendo software only exists on the Wii and DS platforms (obviously), whereas third parties typically develop for more than one rival platform, so of course Nintendo will have their best teams working on Wii and DS products. For third parties there's much greater risk involved, especially when trying to compete with first party sales on the Wii. While there's certainly a strong arguement for creating an exclusive IP for the Wii with an experienced team and a substantial budget, it's a safer bet to work on a cross platform game for the Xbox 360 and PS3 market. The systems' capabilities are still neck and neck, so all assets are shared, they get to target two install bases AND they don't have to directly compete with Nintendo.



Nintendo's Wii is not really in the same market as the PS3 and Xbox 360. Nintendo has created their own market and they are indisputably king of that market. Third parties without a rhythm or music or party game should probably just steer clear. They'll continue to do well in the gamer and casual markets on the other platforms. Leave the non-gamer market to Nintendo and their Wii for the time being. Although it will be interesting to see what effect, if any, Natal will have on the Wii market.

Prash Nelson-Smythe
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Nathan, I think that's mostly true but there's another risk for third parties: being pushed further into their PS360 niche, whilst failing to cater for potentially a new "generation" of gamers. This one is harder to calculate since it's longer-term. It's obvious that Nintendo would not be currently capable of making Modern Warfare 3 or Metal Gear Solid 4. They are just not technically set up to create such games or know how to make them appealing to fans of the franchises.



By the same token, third parties do not know how to make Nintendo games, where a large part of the budget apparently goes to coming up with a premise that they think will sell to everyone, rather than picking a generic or personally-motivated premise and adding good graphics and good gameplay. The mistake often made here is to look at what sold in the past as an indicator of what will sell in the future. This leads to sequel mentality, which can be profitable in the short-term. However, it also a self-fulling prophecy: "People bought Halo therefore we will make more Halo and polish and market it like hell."... "Oh look, people bought more Halo so we will rinse and repeat". Obviously people bought it because it was the most polished and advertised game out there. (Note: this is not an attack on Halo's quality). But one type of gamer bought it more and more, while an increasing number of disenchanted gamers complained about yet more "space marines".



The mistake is effectively asking people what they want and then giving it to them. In entertainment, you have to give them what they don't know they want. In Nintendo-land, sequels don't work as well and third-parties won't be competing with Nintendo by just copying their games. They assumed it would be an easy ride. They will only succeed by thinking about what people might want to play and showing those people how the games can become a part of their life. It sounds ridiculous to an experienced gamer, but people do need to believe that they can become gamers before they do. This requires an image of games that is inclusive rather than exclusive. This is where Nintendo has been really creative for most of their history: in their marketing.



It will be interesting to see if MS can get people to buy a 360 for Natal games. I think it will depend entirely on the quality of the games, and by that I mean how well it will meet the purpose of the target gamer. If they do this well then they might do alright from word of mouth. But an Xbox 360 is still an *XBOX 360!!!* with all the connotations that come with that for the non-gamer, which have been ingrained in them for years. I suppose there are a lot of them already in households with target-gamer residents so there is potential (kids might get pissed off at parents stealing their game time!), but I personally can't see it selling a lot of 360's.



Sorry, I always mean to make my point in a paragraph and then this happens ^

Jonathan Gilmore
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I see Prash and Ephraim hard at work on the new news story about Wii software trying to spin that as well. If you want a return to 80s and 90s gaming, where video games and Nintendo were synonyms, and video games were for kids, more power to you.



I am still hoping to see video games broaden in terms of content, where they can be taken seriously culturally. Maybe the modern controller is an obstacle to that-I don't think so, since my wife loves to play Boggle and DOA4. Rather, the real revolution in games needs to be in terms of more mature, sophisticated and adult content. I don't see the Wii bringing that at all. When the "mainstream" thinks of the Wii, they think Wii Fit/Play/Sports and Mario, and the sales charts reflect that. I also don't see the Wii as being a bridge to non-gamers. People play Wii in a very specific context. They don't see it as a means to interactive experiences. It's a party toy for the vast majority of purchasers, and Wii console owners haven abysmal attach rate relative to the other two consoles.

Prash Nelson-Smythe
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I never actually expressed any wish for gaming to go in any particular direction despite what you read into my comments. Just that it reaches everyone who wants to be a part of it. In fact, I haven't mentioned a single game that I have played or haven't played, liked or disliked, because I recognise that it's not about me. If I wanted a return to 80s and 90s gaming, writing comments here wouldn't help. I am writing for my own amusement and to help undo what I see as spin, while gaining other perspectives. Your comment stands out on the page as it's mostly about a completely different topic than the rest (i.e. what you want as opposed to sales).



Now let's move onto the relevant part!:

"I also don't see the Wii as being a bridge to non-gamers. People play Wii in a very specific context. They don't see it as a means to interactive experiences. It's a party toy for the vast majority of purchasers"



You make a lot of assumptions about the way people use their Wii. Local multiplayer does not necessarily mean parties. It can also be with people who live together, such as families. There are a lot of people who live with their family in the world. Thus there is a lot of scope for regular local multiplayer outside of occasional parties. Recently consoles have commonly been something that kept family members out of each other's way. Nintendo seemed to have recognised this as limiting sales and tried to make something that might bring people together.



I don't know why you can't see Wii gamers moving on to more complicated games on the Wii or elsewhere. No-one is suggesting that all of them would, just a proportion. I think this is an unknown so we can only speculate. Also, I don't know what you specifically mean by "interactive experiences".



"Wii console owners haven abysmal attach rate relative to the other two consoles."

Yes it would make sense that is lower, since the target-audience generally wouldn't get through as many games. I'm not sure why this is "abysmal". The difference in attach rates is not enough to claim that most people buy a Wii only to play Wii sports and nothing else. What's the purpose of this metric in the conversation? In terms of trying to sell games, the installed base makes up for the attach rate anyway and the overall Wii game sales reflect this.

Guy IL
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The first issue of concern here is that I understand 175 million units of software for the Wii include the WiiSports that comes with the console, as well as WiiPlay that comes with the extra controller (they are derived from tie ratios and hardware sales, and not from cumulative software sales).



I believe that people buy bundle games such as WiiFit because of the game, and not because of the hardware alone, and same for guitar games. But I hardly believe anyone buys WiiPlay because of WiiPlay. It will be interesting to examine just how well actual software sold on the Wii without these two games.



Another interesting question is how did you account for the 2006 year-end sales when the Wii and PS3 were launched (and similarly for 2005 year-end on the X360). When I tally up the numbers on the Wii for example, 2007-2009 add up to 174M. Does this means less then 1 Million units of software were sold for the Wii in it's first two months in the market (including bundles)? I highly doubt that.

Prash Nelson-Smythe
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I think in terms of software sales analysis probably fair to discount Wii Play sales. Wii Play + remote is generally the same price as the remote so it's more of a free giveaway than a sale. But it may have nudged some people into to buy an extra remote when they wouldn't have otherwise, thus upgrading the vanilla purchase to a multiplayer system.



I wonder if Gamasutra are going to go beyond unit sales and analyse the revenue/costs of manufacturers from particular products. I imagine it would be a lot more complicated and uncertain but certainly interesting.


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