Did anybody check to see if any big releases came out in the period? (compared to last year / previous years)?

Blaming easter for lower sales is funny, this would mean, that the March 2010 sales had to be up YoY much more, than they were, cause this year, all the easter gifts had to be bought in March instead of April like last year.

The reason I didn't buy any games in April was because I knew I was gonna be shelling out 120 bucks to play Alan Wake and Red Dead. It's not rocket science, there weren't any major releases last month, and there are quite a few this month. These analysts rarely ever look at reason and logic of the people (and I don't blame em).

The most I ever got for Easter as a kid was a chocolate bunny. I never got a video game. Since when did Easter become a gift-giving holiday?

I think this more has to do with the fact that January through March were crowded with huge releases that had been delayed to 2010. These regular big releases kept sales artificially inflated until April, when there was basically nothing coming out.

Some people say April was a fluke (Pachter). April's sales are normal, March and February were the flukes because of the unusual amount of releases. I think we'll continue to see these levels throughout the summer.

The analysis here seems to be just a search for excuses as to why April was a fluke, and that everything is going to be fine and dandy in May, June, and July. I implore everyone not to think this way. The industry is in real crisis. Sales are only going to get lower through the summer.

This just goes to show that YoY data is not the best way to measure video game sales trends. There has to be a better way. Maybe we should exclude the top 3 titles, this would eliminate the GTA release or COD release from obscuring the trend.

I'm not an an accountant, or an analysis so maybe the numbers people can come up with something more accurate.

I AM a game developer and you can read my blog where I talk all about this game dev kinda stuff:

http://aboutmakinggames.blogspot.com/

Mac

I think the simplest explanation is this. Wii Software sales are cratering while the 360 and PS3 are not growing fast enough to pick up the slack (the 360 is stagnant and the PS3 is growing only slowly).

I think we will see greater decreases as Nintendo makes up such huge marketshare now and has the systems with the least legs in the market: the Wii (Which is no longer as competitive against 299 hi-def systems and its software sales have imploded due to too many casuals).

I know Gamasutra is a game industry website. So you don't want to slam the game industry too much. But these articles are getting ridiculous. Month after month we receive more and more excuses. No one seem to be asking the hard questions.

Are games sales slumping because a lack of creativity has created a stagnant market?

Are consumers simply unable to sustain interest in console hardware without refreshes every five years?

Are the increasingly draconian steps taken by EA (forcing used game buyers to pay to receive all of a game's features) and Ubisoft (requiring constant Internet connections on PCs) simply turning away some gamers, who have decided to spend their entertainment bucks elsewhere?

There is this sense of misplaced hope that in these articles. Don't worry guys! It was just because of...uh...easter. And Modern Warfare 2. You have to actually find the problem before you can find the solution, and these head-in-the-sand pieces don't help.

I think Thomas pretty much summed it up. The console market was never "recession proof." Rather, the Wii was an out-of-the-blue crazy fad that has finally come to an end. People were always doing things like saving up to buy fewer titles, not buying titles they only had a passing interest in, waiting to buy used games to save money, etc. Except, for some crazy reason, people who were not into games were buying Wiis. They aren't doing that anymore. Those people that bought Wiis that aren't into games, as Pachter pointed out, might buy only two games a year. And now, one of those Wii games that was perenially in the top ten comes with the system.

Also, I do think that the PS2 genuinely helped grow the market for console games. I don't think the same can be said for the Wii, and I don't think Nintendo's gains will be felt by Microsoft or Sony, motion controls aside.

Price is what it comes down to for me and I would guess a lot of other people. As a Canadian, there is no way I'm paying $70 for a game. Just not going to happen, when I may not even get to it for 6 months at which time odds are a price drop has occured. $30 dollars is my threshold now, which is what I got Assassin's Creed 2 for and $20 for Brutal Legend. Haven't touched either yet, but I didn't pay $70 for each of them so it's all good.

I kind of doubt EA's "draconian" used game stuff is responsible for the April slump, seeing as it hadn't been implemented yet and only affects used games which aren't tracked by NPD to start with (I think). Probably ditto to Ubisoft's PC DRM... I don't know anything about it but PC game sales aren't typically well-tracked I believe.

If you believe that lack of creativity or boredom with hardware are the causes for this particular slump (which may be an outlier, we don't know yet), you'll have to provide some compelling evidence for this. PS3 exclusives in a surprising turn of events are actually selling well these days... I'd suggest this is evidence against boredom with the current hardware.

@Thomas and Jonathan

Guys, if Nintendo has been number 1 for four years in a row, they already won the console wars. Why are we still debating this? They did not make as much money as they have made before, that's the only problem. MS and Sony have barely made profit.

Why do people assume we bought Wii's because they were cheaper? The reason is because it is actually the better system. Apart from motion controls, there is a wii zen feeling about the whole system that the other systems lack.

Predictions of Nintendo doom have been there since 2006.... and we are still waiting for Nintendo to fail.

@Joseph-I will try to address you without speaking fanboy. Nintendo has been insanely successful this gen, making money hand over fist. They are probably making straight profit on every system sold, since it is essentially a retooled GameCube, and Nintendo is certainly not going to sell the motion controller at a loss. Nintendo's unanticipated success buyued (spelling) the industry for several years, leading people to speculate that video games were "recesion proof."

Nintendo now is selling fewer and fewer consoles every month, more or less. There is less and less excitement for the Wii, and it is no longer part of the mainstream conversation. Not surprisingly, videogame software and hardware sales are way down. I don't think much more exploration is necessary. We now know that video games are not "recession proof."

There were really two stories this gen, the Nintendo boom and the PS3 struggles. One was lightning in a bottle and I'm not sure it will ever be figured out, but the PS3's limp debut is pretty easy to explain. Don't try and sell a $600 video game console when there is an analogous product that has been out for a year that costs $300, and most of the mindshare at that moment is being captured by a $250 console.

Why are they ignoring the fact that nothing really worthwhile came out in April.
The only real sellers I can think of are Fifa and Splinter Cell, and whether or not SC has toned down the difficulty quite a few people have already put it off as being too damn hard or complicated.

The rest was fairly niche as far as I'm concerned. Record of Agarest war? Not even on the shelf from what I've seen. It has to be asked for. Nobody is really interested in Army of Twotwo it seems, and not 1 person I've talked to knew that Nier existed. Then there is Super Street Fighter 4, which most people would just see as a rerelease of a game they already have, like a GOTY edition of street fighter 4 with the DLC costumes or something. Whatever, they don't care to check it out they already own the game.

@Jonathan

Now I understand you better. Why are people waiting for Nintendo to fail. They're all good. I think this is the best videogame wars we have ever had. All 3 are successful.

Anyways, I doubt that Nintendo perceives this as a fluke. MS and sony do think it was magic and that's why they haven't been able to win. On the other hand, Nintendo just came out with a book called "Nintendo Magic: Winning the Videogame Wars" explaining their philosophy.

http://www.amazon.com/Nintendo-Magic-Winning-Videogame-Wars/dp/1934287229/ref=sr
_1_1?ie=UTF8&s=books&qid=1274122956&sr=8-1

Maybe, since the market is divided by 3, this is the reason everyone makes less than before. Not everyone can be 1989 nintendo (monopoly).

@Joeseph - I know this is hard for you to understand but most of us do not work for Nintendo nor do we benefit personally from Nintendo's success (unless you own nintendo stock). We are by and large developers and mostly third-party. The Wii was never that great for third parties. Many mediocre launch games did well like red steel (or whatever it was called) but it only did well in the sense that they were profitable. I think red steel only sold like 2 million copies which was probably far more than ubisoft expected. The RE4 remake sold over a million but it cost almost nothing to develop. We have not seen a single diamond hit that sells 10 million copies like COD4 or even a modest 3-4 million seller on the Wii that is third-party in recent years.

The wii is cheap to develop for but the downside is so great for third party developers with so many arguably great Wii games just completely bombing (Dead Space Extraction and Chinatown wars come to mind). The Wii is great for nintendo, but has not been great for developers or the gaming market in general. Nintendo has not truly expanded the market. It is the same gamecube audience + casuals ... casuals we now know do NOT buy games. Now the casual market is huge but it is difficult to make money from them.

Despite reaching what will probably be 80-100 million lifetime sales, the Wii is no PS2 in terms of its attach rate or its ability to drive the bottom line for the industry.

@ Thomas

There are about 60 titles from third party publishers for the Wii, that sold more than 1 million copies. If I take in consideration, that the developement costs are much smaller for a Wii title, I think it is a bold statement to say "The Wii was never that great for third parties."

What expensively priced high tech product launched in April in the US? The iPad...

I realize the NPD doesn't track it (or the iPhone), but considering they have literally tens of thousands of games combined, it's ridiculous to think they don't have any impact on gaming. Especially the handheld market.

@TheWon-I think the first problem with your logic that kills your conclusion is that units sold is not a one to one correlation to number of gamers. I'm not sure that there is a single individual that matches up to every single PS2 sold. Some people might have bought more than one PS2.

The second problem is that some people own more than one console.

@Christian-Almost all of the top twenty games on Wii are Nintendo games published by Nintendo. There are a lot of 3rd party million sellers but not many that sold much over a million and most of those are party game collections. I don't know how much room there is for more party game collections. THat is according to Wikipedia for lack of a better source.

@Thomas Lo:

As a developer, surely you must recognize that this statement you made is illogical: "The Wii was never that great for third parties." The converse is more correct, though still somewhat inaccurate: "Third parties were never that great for Wii."

Consider this: "The iPhone was never that great for first-party game developers." Even though Apple's first-party game sales numbers are basically nil, it's just a silly statement. Just because Apple doesn't develop game software for the iPhone doesn't mean it's not good for first-party games. It just means they haven't really tried or succeeded yet. It's more accurate to say, "Apple's game developers have not yet been great for iPhone."

Don't blame a piece of hardware for developers' lack of recognizing the target market and being too stubborn in existing business and development models to adapt.

nm

@ Thomas Lo

I hope you're not actually in a platform decision making position at publisher because what you're saying is seriously scary.

"Despite reaching what will probably be 80-100 million lifetime sales, the Wii is no PS2 in terms of its attach rate or its ability to drive the bottom line for the industry."
- This line is particularly distressing because as it stands the Wii is the only thing left driving any bottom line in the industry. MS and Sony are both sitting on $4billion dollar losses this gen and every major publisher is hurting. And it sure as heck ain't 'cause of the crazzy monnies they poured into Wii development or their Wii sales failing to meet their 'wild and pioneering' Wii sales expectations.

Anyway, I have three personal criteria for a game to reasonably expect sales success:
1. Has to be reasonably good.
2. Has to be well marketed or a mainline part of a popular franchise or both.
3. Has to be reasonably non-niche (niche being proven by several games fufilling criteria 1 + 2 and still failing to sell).

I think they're reasonable, and if you say them to yourself out loud they should sound reasonable to you too.

Play the game and see how many 3rd party Wii games fulfill that criteria. I count one; MHIII, which is now the second most successful 3rd party game in Japan this generation.

I'm disappointed programmers don't have more influence at publishers because I thought they were experts at spotting cyclical arguments.

@ Jonathan
I really don't care, in which genre the games fell, that sold over 1 million copies, with the same argument, I could say almost every game in the that sells in the 360 is a shooter, I don't know how room is for more shooters. Obviously, every console has it's preferred genre.

And by the way you say "There are a lot of 3rd party million sellers but not many that sold much over a million and most of those are party game collections."

First of all, with developement costs much smaller than on the HD consoles, a game with 1 million copies sold is a big commercial success.

But more important, I found only around 16 games of the 80 games, that sold over 1 million copies, to be party games (I included the Guitar Hero/Rockband games here as well), these 16 includ the 3 Nintendo titles Wii Play, Wii Sports and Wii Sports Resort. This leaves 13 party games from third party publishers (maybe I counted one to many or one to few, this may be possible). This means from the around 60 million sellers from 3rd party on the Wii, 47 are not party/music games, this is the vast majority of games.

In my opinion, the games industry would be in a much worse shape without Nintendo. I am sure many people who bought a Wii or a DS wouldn't buy a 360/PS3 or DS instead, that wouldn't buy any other console.
The HD consoles can be considered as a commercial failure so far, the losses that MS and Sony created can't be compensated in the following years. Developers and publishers should start thinking, where the millions of consumers are gone, that bought there games in the last generation. There are 2 possibilities, the first, these people bought a Wii and started buying only Nintendo games, this would mean, Nintendo is making something right, the others are making wrong. The second possibility is, the Wii owners are people who didn't played video games before or left games years ago, this would mean, Nintendo is working in a different market, than MS and Sony (this is the argumentation of most parts of the industry), but it would mean, that the larger part of the gamers from the PS2 generation isn't interested in games anymore, cause they offer them nothing new.

In both cases the industry has failed to deliver gamers something, they are interested in. If you take away Nintendo, the games industry is in the same state as the US Comics industry in the mid 90s. Comics were something, people bought in millions in the 70s,80s and early 90s, but with the rise of Image, the industry only focused on better paper, digital coloring, everything the rabbid comic fan demanded. This lead to a total alienation with the vast majority of customers, so they simply stopped reading comics and the whole industry nearly collapsed and after that, never got to the heights of earlier times.

Luckily the games industry has Nintendo, they expanded the market, when the others were shrinking down to a core audience. I wish developers and publishers would start thinking again, how they can make games, that don't only appeal to a core fanbase.

We know you are a huge nintendo fanboy Christian but the facts are facts. ALL the major publishers have seen a collapse in their casual (read: DS/Wii) divisions. The investment return is simply not there.

As for soooo many games having sold one million on wii, we already have the stats. Nintendo completely dominates software share on their console with party (rockband/guitar hero games) constituting the rest.

That tiny sliver is what third party developers have to fight over and there is no bottom to a third party game. Many great games can and do completely and utterly bomb. Chinatown wars is the most notorious example of this.

Meanwhile "failures" like darksiders on the high-def consoles still manage to sell over a million. The market for third parties in volume and revnue is simply higher on the high-def consoles.

Nintendo's wii is a great boom for them. They generate almost all the revenue and profits from it. It has been a middling success for third parties. Realistically, a Wii game should cost almost the same as a Gamecube or PS2 game to develop for but the lack of audience for games makes the Wii a mere shadow of the PS2.

Blatantly ignorant generalizations such as the high-def consoles not being profitable do not belong on a professional website. Microsoft doesn't even care if it is profitable; as evidenced by the 4-billion dollar hit it took during the xbox generation. Sony was more interested in having blu-ray be established as a dominant format than in having the PS3 have the same marketshare as the PS2. It doesn't even matter to developers anyways as it is sony and microsoft who are taking the losses, not developers.

All the boring, repetitive arguments defending the Wii are trite. The Wii audience simply DOES NOT BUY THIRD-PARTY GAMES. Arguing against such a simple, obvious fact with minutae is silly if not disingenous.

ALL the major publishers have seen a collapse in the profitability of their core (read: PS3/360) divisions. The investment return is simply not there.

All the boring, repetitive arguments attacking the Wii are trite. The Wii audience simply DOES BUY THIRD-PARTY GAMES. Arguing against such a simple, obvious fact with minutae is silly if not disingenuous.

Many great games can and do completely and utterly bomb. Chinatown wars PSP is the most notorious example of this.

Yes yes, very nice this game.

Games don't sell on wii -> no one should invest -> Games don't sell on wii -> no one should invest -> Games don't sell on Wii, except for the ones which do.

Investments were poor -> ROI was high -> Divest out of Wii to increase ROI -> Sales were low -> Divest out of Wii to increase ROI -> Sales were low -> Divest out of Wii

Invest in HD -> Sales were High -> ROI is tolerable -> Invest more in HD to increase sales -> Sales were High -> ROI is negative -> Invest more in HD to increase sales -> Sales were tolerable -> ROI is very negative -> File for bankruptcy.

This is looking like a death spiral on all fronts.

Look, the painful part for Nintendo fans is that the illogic and cherry picking is so numerous and diverse that arguing against it constantly makes us sound like complacent dicks, but the truth is plain and apparent: Nintendo's making money. Everyone else is losing or doing far worse than before. Most everyone bet the farm on HD and lost. No one actually invested anything serious into Wii (or DS). Nintendo's been a convenient scapegoat for 5 generations. "Oh they won't let us make what we want. Oh they're too expensive to develop for. Oh they're too good to compete with. Oh they don't like tits'n'gibs'. Oh they're beneath us. Oh, their audience don't like us now." Well...yeah.

http://www.joystiq.com/2010/05/11/ea-posts-677-million-loss-in-fy2010-alongside-
downed-revenues/
http://www.gamepro.com/article/news/215111/capcom-namco-bandai-post-losses/
http://www.totalvideogames.com/Red-Dead-Redemption/news/Take-Two-Posts-FY09-Loss
-Predicts-Tough-FY10-14804.html
http://www.google.com/hostednews/afp/article/ALeqM5hXe1EZL5wsD5fdMxWq3CFZd_oDuw
http://www.totalvideogames.com/Assassins-Creed-II/news/Ubisoft-Posts-Six-Month-0
910-Loss-Talks-Wii--Natal-14789.html
http://uk.gamespot.com/news/6262122.html?sid=6262122&part=rss&subj=6262122
http://play.tm/news/26081/eidos-purchase-sees-square-enix-post-loss/

You might be able to sporadically pin poor sales on Wii, but you sure as sh$t can't pin $100million quarterly losses on too much Wii investment. Not without being disingenuous. Anyone who says business is going great in games is currently an outlier. Or Nintendo.

@ Thomas
Spare me the fanboy accusation, I am arguing as an observer of the business as you do. You say
"Blatantly ignorant generalizations such as the high-def consoles not being profitable do not belong on a professional website. Microsoft doesn't even care if it is profitable; as evidenced by the 4-billion dollar hit it took during the xbox generation."
MS is a profit orientated company. They accepted the losses in the first XBox generation, cause they wanted to have a foot in the door, when the next generation comes. They won't take the losses infinitely, they can't do this, cause shareholders will start asking, what this whole console mess is all about. Ignoring the rules of the capitalistic market is the ignorant behaviour and not stating the fact, that neither Sony, nor MS made profit with this generation of consoles.

"Sony was more interested in having blu-ray be established as a dominant format than in having the PS3 have the same marketshare as the PS2."
But Sony had stand alone BluRay players on the market from day one, this argument doesn't make sense. They planned BluRay as a feature, for their console and they invested an unprecedented ammount of money to develop the console and to market it. In the end, the costs were so high, that they have to come up with a price of 600 US$ for their console. But this wasn't the problem, the 360 was always cheaper and sold not that much better. Both MS and Sony came up with no software, the average buyer was interested in. It's software, that sells hardware in the first place.

Chinatown Wars: Whenever somebody has no argument left, he comes up with GTA CW, but two questions, do you know, if GTA CW for the DS was not profitable for Rockstar/Take 2? I never heard anybody at Take 2 or Rockstar saying this and the second question, why did GTA CW performed so terrible on the PSP? Following your argumentation, the game had to sell better on the PSP, not worse.

"The Wii audience simply DOES NOT BUY THIRD-PARTY GAMES. Arguing against such a simple, obvious fact with minutae is silly if not disingenous. "
You simply ignore the facts Thomas, a normal Wii game has only a third of the developement costs of an normal PS3/360 game, it has much lesser marketing costs. If a Wii game sells 1 million copies or more, the profit for the developers and publishers is much higher, than the profit of an PS3/360 game selling 1 million copies.
In fact, there are more million sellers on the Wii (more first party and more third party) than on the PS3, so it is obvious to anybody, who can do the math, that 3rd party titles sell better on the Wii, than on the PS3, why don't you blame Sony in the same way, you blame Nintendo?

This has nothing to do with fanboyism, in a time of crisis, like this one, when the whole industry is shaken by collapses of studios, that were profitable in the last generation, it is wise to ask, if the industry made some serious mistakes. It was no Wii title, that killed Factor5, it was no Wii title that killed the Derby studio, it was no Wii title, that killed the Sega Racing studio. It were titles for the HD consoles, that cost to much to be profitable.

@Merc-Are you sure that MS is losing money on the 360? I highly doubt it, they've turned a profit on a per console basis for a while now and a lot of software has been sold for the 360. I'm not sure where your stats are coming from.

@Christian-Your arguments are nonsensical, of course the Wii has more million sellers, 1st, 3rd and otherwise than the PS3, it has a much, much bigger userbase. I notice you didn't compare Wii 3rd party sals to the 360, where 3rd parties have done very, very well. The bottom line is that the Wiis success has been good for no one but Nintendo with minor exceptions, primarily devs who want to make the next party/dance/minigame collection.

I know that sounds snarky but its true, and the faddish nature of the Wii has caught up to it, sales are in steady decline (something Nintendo had acknowledged a long time ago but was still denied by you and the rest of the Nintendo defense force like Ken Masters and Prash and Ephraim) and that has had a large ripple effect on the industry as a whole. But the PS3 has never done better and is poised to have a legitimate ten year run, maybe having turned the corner into profitability. It also helped Blue Ray gain a footing as Hollywoods prefered home video format. Meanwhile the 360 has continued to plug along as a solid revenue earner for MS, as well as continuing to be the portal into the living room that MS had long desired with robust non gaming entertainment media streaming.

@ Jonathan

"Your arguments are nonsensical, of course the Wii has more million sellers, 1st, 3rd and otherwise than the PS3, it has a much, much bigger userbase."
This is the way, the video game industry works since the days of the VCS. The console with the highest installed user base has the most games sold. This is not different in this generation. Face the fact, the publishers don't care, for what console they sell their games. They are interested in selling games and nothing else. You noticed right, that I didn't compared 3rd party sales of the Wii with 3rd party sales of the 360, this wasn't part of my argument. You are right, that on the 360 3rd party titles sell significantly better, than on the Wii or the PS3. But the price for this is, that MS, albeit being the clear number 2 in this generation made only a small profit in 2009, that can't compensate the gigantic loss, that was created in 2005-2008.
Many people on this site are too much focused on actual earning reports. But be sure, the people, who decide, if MS stays in the console business or the people, that decide, if Sony ever attempts to make a PS4 will be able to sum up the losses of this generation, in order to make a decision.

"But the PS3 has never done better and is poised to have a legitimate ten year run, maybe having turned the corner into profitability. It also helped Blue Ray gain a footing as Hollywoods prefered home video format."

Two points: PS3 sales today are back on the level of April 2009, so the effect of the price drop is gone. And even with PS3 sales up by 25% in 2009, they managed to cut the losses only by 5%. I leave it to you, to do the math, when profibility comes into sight. To me it is clear, that they are still selling their consoles at a loss.
Second, look at the DVD revenues versus the BluRay revenues and you will see that the BluRay market share today is 12%, so I wouldn't speak of Hollywoods prefered home video format, this is still the DVD.

"I know that sounds snarky but its true, and the faddish nature of the Wii has caught up to it, sales are in steady decline"
No, it doesn't sound snarky, it sounds boring. Yes the sales of the Wii are down, but they come from a very high level and they are still far above those of the HD consoles. I don't know, what you think people are making with the Wiis they buy today or have bought during the last 12 months? My guess is, they bought these consoles to play games on it and to buy games for it and this seems to be what they have done during the past 12 months and I think, it is what they will do in the future. And for the industry, this in the only thing that matters. The installed user base of the Wii is so much bigger, than the installed base of the 360 or the PS3. plus the fact that the development costs are much lower. These are the factors, game publishers are interested in, they don't care, if hardcore gamers are getting angry.
Look at Activision, they announced the next CoD for the Wii as well, a clear statement, that they think, the Wii will stay.
I heard people like you talking about the demise of Nintendo for the past 5 years now, since december 2006 Nintendo was the market leader in both, handheld and stationary consoles. They are still selling more consoles today, then their competitors, and all you can say is that Nintendo's falling sales had "a large ripple effect on the industry as a whole". This clearly don't make any sense. First you say "the Wiis success has been good for no one but Nintendo" and then you say falling sales are rippling the industry?
You say, the few devs, that can benefit of the Wii's success are "primarily devs who want to make the next party/dance/minigame collection." Apart from the fact, that this reveals a very arrogant attitude, you should check the facts. From the 80 games, that sold more than 1 million copies, only 16 are Party or Minigames.

Home and entertainment devices division financials going back a couple of years (and before that just their games division). They are now turning a fairly consistent modest profit (on the order of $100~$200 million a quarter), but the improvement's been slow and it's hardly made a dent into the astounding $3.8 billion loss they accrued since the 360 launched, let alone taking account of the prior development cost or the losses of the whole xbox endeavor. True it encompasses more businesses than just Xbox, but they're relatively minor and some should be profit making by now.

2000 -1,090,000,000
2001 -1,666,000,000
2002 -866,000,000
2003 -938,000,000
2004 -1,011,000,000
2005 -464,000,000
2006 -1,329,000,000
2007 -2,016,000,000
2008 267,000,000 $9billion dollars losses and 10 years' worth. The collapse of Sony's gaming financials were their own doing (and those are frighteningly staggering), and we've heard of MS genii grumbling at their insufficient smartness to pull a Wii.

Got cut off. Missing remark:

2007 -2,016,000,000
2008 267,000,000 $9billion dollars losses and 10 years' worth.

@Christian-I don't think the Wiis decline has much of an impact on the industry besides Nintendo, but it has a big impact on anylists who like to report on "the videogame industry." Third party publishers made it clear after last holiday that they were jumping off the Wii anyway. The Wiis precipitous year on year declines are only accelerating that. I wouldn't look for the next Call of Duty to sell millions on the Wii. Most people that want that game are going to buy it on a Hi-Def console anyway.

@Merc-Most of that money is from the original XBOX, which was never sold at a profit per unit. The 360 has been profitable per console for years now, and as you pointed out youtself the entertainment devices division also includes other aspects of MS' business, like the Zune. Really, MS thought that if they got out the door first they would hold first place. That was true regarding Sony but no one, I mean no one anticipated what would happen with the Wii. The price that MS paid by being first to market was a loss of close to $2 billion dollars repairing and replacing faulty consoles. I think this holiday will be a big one for MS and Sony, and they will both be doing quite well for the forseeable future.

Keeps getting cut off:

What I meant to say was:

2007 -2,016,000,000
2008 267,000,000 This is where they start turning it.

It's hard to see them walking away from this gen even close to flat, unless you can bank on a 10 year cycle and sustained undiminishing profits (and for MS we're already up to year 5). Turning a significant profit given is practically unthinkable for them this gen. There's nothing wrong with a loss leader (well, actually, legally there is if all you're trying to do is destabilise the market and destroy competitors - and Microsofts intentions towards Sony did actually point that way) - but if you're gonna take such a massive loss, you better be gaining something else massive tactically. They've gained something for sure, but not $9billion dollars and 10 years' worth.The collapse of Sony's gaming financials were their own doing (and those are frighteningly staggering), and we've heard of MS genii grumbling at their insufficient smartness to pull a Wii.

@ Jonathan
It seems to me, we aren't talking about the same market, you keep talking about "The Wiis precipitous year on year declines", completely ignoring, that they are still outselling the competition and that the decline in 2009 (the first since the release of the console) was 10% compared to 2008, a normal fluctuation in sales during a crisis like the one we are still facing right now.

"Third party publishers made it clear after last holiday that they were jumping off the Wii anyway."
This isn't the case, no major western publisher turned away from the Wii. Activision/Blizzard, Ubisoft, EA, Take2 and Atari are publishing games for the Wii and they didn't reduced the number of titles for the Wii in favor of the HD consoles, the sames goes for the japanese publishers, so I am not sure, what you are talking about.
If you think CoD won't sell on the Wii, then why is Activision/Blizzard is making the game in the first place?

"The 360 has been profitable per console for years now"
Wishful thinking, MS reported one full year profit for this division, it's easy to blame the Zune for all the losses, but lets be serious, the Zune is a much smaller product, the 360 is the heavy weight in this section of MS business and it was responsible for the losses in 2005-2008.

"I think this holiday will be a big one for MS and Sony, and they will both be doing quite well for the forseeable future. "
Any reasons for that assumption, or have you just took a look at your crystal ball? Sony's games section reported a massive loss for 2009, that was only 5% smaller than the loss for 2008 and this with 25% more PS3 consoles sold, how do you think they will manage the turnover?
MS on the other hand can only rely on hardware sales and licence fees, cause they aren't big in the software business. They managed to get good 3rd party sales in the last 24 months and that created a small profit for them in the last year. But to do "quite well for the forseeable future", the software sales (3rd party+1st party) and the hardware sales had to skyrocket, something, that simply didn't happen in the past 4 years, since the release of the console.

@Christian-You don't listen (read). The 360 has been profitable on a per console basis for years now. As far as publishers jumping shift, Take Two and Ubi have both made statements about how they are moving towards "AAA" and have expressed reservations about the Wii off the top of my head, there has been plenty of chatter about this. MS isn't big in the software business? Now you are just making **** up, I know they publish only a few games a year, but they have generally all been multi million sellers, like Halo 3, ODST, Forza 3 and the Gears games. Even Viva Pinata sold more than a million. And MS reported a full year of profit despite the $1.5 billion it announced as the expected loss for the extended warranty. Also, you are continually ignoring 2010 numbers. Were almost halfway through the year, I think it has been pretty apparent a trend is forming with MS, Sony and Nintendo sales. Even Nintendo would agree with my point.

@Christian-Also, you are also completely ignoring XBOX Live, which makes me doubt why I am even debating this with you, MS has created all sorts of revenue streams with the 360 that presumably will extend into perpetuity, as long as it doesn't abandon the service and/or the gaming business. MS has even used the 360 to make the Zune brand viable. And on top of that since 2008 (by your math) the 360 has been making them money. The only implosion going on the "industry" is the sputtering of demand for Nintendo's once insanely successful console which is now (going forward) merely "successful." This generation otherwise is still solid in relation to the previous one.

"I realize the NPD doesn't track it (or the iPhone), but considering they have literally tens of thousands of games combined, it's ridiculous to think they don't have any impact on gaming. Especially the handheld market."

Jeremy hit the nail on this one. iDevice games sales and revenue have skyrocketed, they should be included as one of, if not the main reason for this "decline". They should also be included in your Behind the Numbers features from now. The iPhone's success is the primary reason Sony is planning on a PSP phone for later this year, and both Sony's and Nintendo's portable distribution and pricing system for similar games suck in comparison. Even GDC recognizes iDevice games as a major player, giving it a dedicated summit.

Any predictions of the imminent tailing off of Wii hardware/software sales compared to other consoles seem to be based on barely statistically significant trends, combined with value judgements that it is a fad that will end exactlyyyyy.......now....no now...wait...NOW! etc. We will be able to judge the quality of this insight in the coming year as we see if the predictions were true. By the way, Nintendo seemed to have seen success in the past 20 years by creating a long string of fads. I'm sure any company would love to have such a fad right now.

The problem with trends is that the can turn around at any time so they guarantee nothing anyway. It's the basic problem of induction. The success of future software on any platform will depend 90% on the value of the software as determined by the customers, not by the platform, fad-perception, the rise and fall of casual/hardcore gamers etc. So really Wii software sales have dipped because there has been less of what people really want recently. No really big releases since New Super Mario Bros Wii. In fact the only thing propping up Wii sales (higher than 360, PS3) is the "evergreen" nature of previously released games like NSMBW and Just Dance, Sports Resort etc.

360 and PS3 on the other hand have had lots of big releases this year like Mass Effect, Bioshock, God of War, Battlefield, Final Fantasy, Splinter Cell. So it stands to reason that they will have to continue to have an average of more than one big game every month to maintain sales, with the the Wii having a big game every 3-4 months to maintain sales. I admit that's some very basic reasoning but it's at least based on data.

@ Jonathan
"The 360 has been profitable on a per console basis for years now."
Take a look at the earning reports of Microsoft, to see how the 360 has done in the last years, there was 1(!) year, where they reported a profit, EVERY other year, they reported losses. I can't understand how you are able to ignore this fact. You say "The 360 has been profitable on a per console basis for years now", but you don't come up with any kind of proof for this obviously (see earnings reports) false statement. XBox Live is included in the earnings reports, they only reported a profit in 2009, not in 2008, not in 2007, not in 2006, so if you say they are profitable, you say, they are lying in their earnings reports.

"This generation otherwise is still solid in relation to the previous one. "
Wrong, compare total sales of the last generation 54 months after start with this generation and you will see, that this generation has lower overall hardware sales.

"And MS reported a full year of profit despite the $1.5 billion it announced as the expected loss for the extended warranty. "
The billions for the extended warranty were reported in an earlier year, they don't count anymore, the warranty is already paid.

"MS isn't big in the software business? Now you are just making **** up, I know they publish only a few games a year, but they have generally all been multi million sellers, like Halo 3, ODST, Forza 3 and the Gears games."
Total sales of these games are only a fraction of the 3rd party sales, MS has to restrict itself in order to keep the 3rd party developments doing fine on their platform, this is their strategy.

"As far as publishers jumping shift, Take Two and Ubi have both made statements about how they are moving towards "AAA" and have expressed reservations about the Wii off the top of my head, there has been plenty of chatter about this."
You are right, there was plenty of chatter, cause everybody loves chatter and rumors, but neither Take Two nor Ubi showed any sign in slowing down releasing games for the Wii.

In the end, MS reported around 270 million US$ profit and as Merc Hoffner showed 10 billion US$ losses during the past 10 years. The 360 had an fantastic 2009, it sold better than expected and Software sold much better than expected, in the end all this generated 270 million US$ profit, how on earth should they be able to rise the profit in 2010 substantially?
In a capitalistic enviroment it doesn't make sense to go on with a product line, that created 9.7 billion US$ losses in 10 years. This is all I am saying, nothing more. Again, this has nothing to do with fanboyism, but with observation of the market development. In this market, there are three hardware manufacturers, one of them is actually earning money from day 1 and the other two don't. Only a fool can think, that the two companies are willing to loose money forever.