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Exclusive: Wii Software Growth Peaking, Falling Behind PS2
by Matt Matthews [PC, Console/PC, Exclusive]
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July 14, 2010
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[Gamasutra analyst Matt Matthews examines the "consternation" around Wii lifetime game sales, showing they plateaued in 2009, and fell behind PS2's software sales trajectory -- despite having 5 million more systems on the market.]
When the retail video game sales figures for May 2010 were released by the NPD Group earlier this month, analysts highlighted the role that Nintendo Wii software sales played in the software revenue picture.
For example, analyst Michael Pachter of Wedbush Securities pointed out that the hardware base for the Wii had expanded by 44 percent since May 2009 but its software sales were down 29 percent, year-over-year.
Meanwhile, analyst Doug Creutz of Cowen and Company noted that launch sales of Super Mario Galaxy 2 came in at only 564,000 units, well below their expectations of 700,000 units during the title's launch month.
In our own examination of the figures, we noted that Nintendo had indeed ceded share to Sony's PlayStation 3 in the current-generation console market during the first five months of this year.
Whereas Nintendo claimed 43 percent of that market's software dollars during the January to May period in 2009, its share fell 9 points to 34 percent during the same period in 2010.
To shine more light upon the situation, we spoke further with Pachter and he provided market share data on the history of software sales. We extrapolated into software unit sales estimates (reproduced below).
Note that the estimates shown below are only for retail U.S. software sales and does not represent data for software packaged with hardware (like Wii Sports) or sold through online distribution portals like Xbox Live Marketplace, the PlayStation Store, or the Wii Shop Channel. Moreover it does not include data from 2010 for the Xbox 360, PlayStation 3, PlayStation 2, or Wii.
We believe this graph makes it somewhat more evident why there is some consternation regarding Nintendo Wii software sales. Compared to the PlayStation 2 -– which clearly has earned its reputation as a software-selling platform – software for the Wii ramped up even more quickly, reaching over an estimated 70 million units during its second full calendar year on the market.
However, it then appears to have hit a plateau in 2009 with sales inching up only marginally, and falling behind the estimated trajectory of PlayStation 2 software sales.
By the end of its third calendar year on the market, the Wii had sold just slightly more software than the PlayStation 2 had done by the end of its third calendar year.
However, the Wii moved that much software on an installed base 5 million systems larger than what the PlayStation 2 had. (For those familiar with the term as used by the NPD Group, this means the PlayStation 2 had a higher tie ratio, more units of software per system.)
And it appears somewhat unlikely that Wii software sales in 2010 will reach the same level they achieved in 2009. The way Wedbush's Pachter looks at it, the Wii may shift fewer than two units of software per installed system in 2010, its fourth full calendar year on the market, a rate he termed “unprecedented”.
Indeed, if we were to compare the Wii to the PlayStation 2, the system whose sales ramp looks most like that of the Wii, our estimates indicate that it did not fall below two units of software per installed system until its sixth or seventh full calendar year on the market (2006 or 2007).
It appears that the GameCube fell below that rate during its fifth full calendar year, as did the original Xbox. In the latter case, we note that that was the same year that Microsoft's successor platform launched, which no doubt affected original Xbox software sales.
There is another possibility we can consider. Given the longer lifecycle for which the Xbox 360 and PlayStation 3 seem destined, perhaps the Wii will also see an extended middle age during which its software sales maintain a strong but flat level. The Wii would retain its place as the system with the greatest software sales were it to maintain the 60-70 million unit level this year and next.
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The PS2 was a game system that was built for the gamer. They knew what they wanted and bought plenty of games. Thus the high amount of sales and high tie ration.
The Wii on the other hand, is a game console for the masses. There are plenty of gamers out there that own them and are buying a lot of software thus the high sales numbers. But the sales numbers and tie ratio are not as high as they could be relative to the PS2. This is because of the high number of people who bought the consoles that are not your more traditional gamers. They do not have the same purchasing habits of traditional gamers and thus bring down sales numbers and tie ratio.
As a Wii owner, I love it. Unfortunately, I do not get to buy as many games as I would like. I have owned mine since this past Christmas and have only been able to buy 3 games. 2 of which are fitness games my wife wanted and still plays regularly. The 3rd is New Super Mario Brothers. There are a lot of games I want to buy, but because budgets are tight, I am unable to make any purchases like that.
If I had plenty of disposable income and time to play games, I would certainly be buying a game or 2 a week.
But looking at the sales chart again, the 360 has some steady and healthy growth. It is pretty nice to see that. I look forward to seeing if they can keep up those sales increases over the next few years.
It is interesting to see the Wii and the PS2 being compared here as they were both the highest selling consoles of their respective generations and at the same time seeing the PS3 barely out selling the GameCube, both of which are the least selling consoles of their respective generations. I would hope that the PS3 has not peaked.
For my part I feel sorry for the many great Wii games that aren't getting played. This year has been particularly good for the console in terms of games, but great games from Tatsunoko vs. Capcom to Nintendo's own SMG2 are not selling well. I always find it sad when good stuff goes un-noticed.
However, the cause is likely that many Wii owners are not gamers in the traditional sense, and if that is true, the total software being sold is actually more impressive than it would be otherwise.
Even more important question, why do professional analysts not see this? It's right there... in that chart. But they're all too busy repeating the "Nintendo is doomed" mantra off course. Completely ignoring that a huge part of last-gen market literally disappeared. If you compare sales from last-gen and this gen, Xbox360 and Playstation3 are the cause of any kind of general decline. Both of them only absorbed very small portions of the PS2-crowd. Thank god the Wii existed or this industry would have gone the way of the gutter.
Yesyes, I know, I'm reading it wrong, probably a part of the GameCube crowd and the Xbox crowd didn't got absorbed as well, and the PS3-crowd is probably consists mainly of PS2-people and the Wii probably absorded some portions of GC/PS2 crowd, but that's a slim margin as well. Someone should make a bar-chart of these figures. One with the PS2-Xbox-GC as one big bar and next to it the PS3 and Xbox360 as one big bar and next to that a bar with PS3, X360 and Wii combined. Actually, just imagine it using the distances from this chart. You'll notice very quickly, a really big chunk of last-gen crowd just left, foetsie, verschwonden
Also, could we please stop harping on Nintendo who practically stands alone to sell their console and makes games that take advantage of the expanded audience while everyone else is just wanking around.
I think you missed something.
If you add the Year 3 numbers for the GC, XBox and PS2 and add up the numbers for the PS3, 360 and Wii, you get roughly the same number of software units for both generations in their 3rd year.
With the Wii audience having brought in Millions of people who were not gamers last generation, why are we seeing no real overall growth in terms of software sales? I think Tim has a valid point.
But I would like to make a comment, I was a PS2 gamer last generation. I purchased a good number of games. However, I did not join this generation of consoles until this past December. So my hypothesis is that a good portion of PS2 gamers have not upgraded to the current generation.
It seems a monkey could do their job, if it could read numbers off a screen. No critical thinking involved(sorry to the monkeys that critically think!).
Maybe part of the issue is that Wii brought in millions on the hardware side, but those new-to-gaming Wii owners might have not purchased one single game beyond what was packaged in the box, and the bulk of Wii software sales are from traditional gamers who owned a PS2/Gamecube/Xbox the previous console generation.
Now that's a long stretch statistically considering averages. With all those millions not buying a game and then a minority bumping the average up that much.
It's also a long stretch because the Wii added tens of millions of new players just because it has games like Mario Kart Wii, WiiPlay, WiiFit, New Super Mario Bros Wii and so forth
@Ephriam
Also a good point, a good part of the PS1 crwd only moved over because the PS2 dropped in price below 200 dollars and was getting some good games (the first generation PS2-games were utter crap) only later on. The problem is, The Wii is at pricepoint now, the Xbox360 (arguably) also for quite some time, so when is the shift happening? I fear it won't because the "traditional" gamer audience is in decline. The economic crisis and the HD-consoles lacking variety in videogames (no, having 25 shooters and 15 GoW-clones is not variety...) compared to the PS2.
Another issue that hasn't been mentioned is the shift from VHS to DVD during last generation while the shift to Blu-Ray this generation is not as huge (and nowhere near as affordable, either, of course, between the cost of a new HD TV plus a PS3 console / Blu-Ray player).
As was mentioned, there are also far more options available. These include online gaming as well as portable gaming. Gamasutra and others have pointed out that the markets are currently supporting more systems and associated software than has ever been accomplished before in the entire history of electronic gaming.
Ephriam's point about longer life cycles and the fact that various PS2 owners have not (or cannot) move to the new systems for various reasons and are still playing their PS2s is valid. I know people like that, too, and one of several local GameStops has told me that the vast majority of their sales comes from PS2 rather than the newer systems.
I think this will slowly change, but it takes time. It also takes resources, and like many people, I do not have the resources I need in order to pursue all the different hardware and software options I wish to research.
I'd definitely argue that. The version of the Xbox360 that most people care about is not $200, and is in fact the same price the PS2 and Xbox launched at. Neither is really at a mass-market price yet, and probably wont be this year, especially if you think the mass market wants a PS Move or Kinect with their console.
As for the Wii, it seems like it actually launched at a mass market price. Given the novelty factor and the bundled game, it doesn't seem like the price was at all a barrier for the larger market. Perhaps what the Wii needs (and what the PS2 had late in its life) is a larger collection of high-quality, cheap games. What that chart above doesn't show is the average price of the games sold, and I'd have to imagine that over time it goes down.
Yes, to me the PS3 is too expensive, and I want a PS2, that is a fine game machine!
My richer friends all have PS2, and they play PS2 a lot, and buy lots of PS2 games...
Actually, if you compare year 9 of PS2 (that is a "bad" year, as the cycle is "ended") you will see that it still beat early years of other consoles, and if you compare the last year of PS2 and PS3 (thus, both in 2009), you will notice that the PS2 is not much far behind.
The graph itself explain where the "missing" PS2 gamers are: Still playing PS2.
I am only not one of them, because my last console was a NES... (:/)
When it turned out that the Wii was a phenomenon and selling out, 3rd parties were baffled. They immediately thought it was a fluke or a "casual bubble". They responded by releasing tons of crappy "casual bubble" shovelware. They still were investing very little into these titles.
This strategy worked in 2007 and 2008 as games like Game Party and Carnival Games were selling well and keeping software sales in a state of growth.
In 2009, 3rd parties believed they could try to extend this "casual bubble" by releasing sequels of their crappy shovelware. Customers could not be fooled into buying another Game Party or Deca Sports. Software sales plummeted and they immediately started claiming "the casual bubble had burst".
In 2010, 3rd parties are STILL investing very little into the Wii, even though the install base is twice that of PS3 or 360.
Through all of this, the only company that has decided to spend money and release actual quality products on the Wii has been Nintendo, and that's because it is their system.
And yes, people will try to tell you that House of the Dead or Dead Space: Extraction are quality products. But then lets look at metacritic (since that apparently has an effect on sales). How many 3rd party games on the Wii do you see with a 90 or more? The only games I see are Rock Band 2, Resident Evil 4, and Okami... all ports!!!
Thankfully, 3rd parties finally might be getting the picture this year. I think games like Epic Mickey, NBA Jam, and Goldeneye look like quality 3rd party games that Wii-owners will want. The success of Just Dance has certainly proven that there is an active Wii audience out there seeking new, fun experiences. It's just hard for Wii-owners to commit to buying games when there is so much shovelware on the shelves.
In any case, there is a goldmine out there just waiting for 3rd parties to come along and start digging. They just have to get over the fact that the Wii is not a bubble and that they have to start releasing quality titles if they want to see good sales results.
SMG 2 was mentioned as having underperformed, but that is said about a lot of Wii titles that then go on to meet their expectations or exceed them.
I am only not one of them, because my last console was a NES... (:/)"
Also a good point, but there is some relativity connected to it, because the ratio total userbase (which goes up every year) compared to yearly game sales has been falling since year 5 for the PS2. A good portion of the non-transited PS2 crowd is indeed still playing PS2, another portion still just vanished.
All of this has also a certain consequence linked to it. If a big chunk of the PS2 crowd is just still playing their PS2's...doesn't this not mean that the Xbox360, PS3 and in far lesser extent, the Wii (again Wii is more about a expanded audience, not a existing one) failed at capturing tens of millions gamers their interest.
If a industry can't re-capture it's audience...isn't the logical conclusion: it's declining...reasons for this can be various off course (economy, disinterest and so forth)
Also, why can a few commenters on Gamasutra make a better and more correct analysis then the guys who get paid for it? Really, where is our money!!!
At the end of the day, we wouldn't have the data or place to all be discussing this if it wasn't for them!
Watch the growth of the PS3 and Wii. Wii in particular is on rocky ground. Sure there are some good games on the way but alot of casual gamers new to games may have already been burnt thinking that all games are typical shovelware. On the otherha d, it may swing the other way.
Also I noticed that the PS2 hasn't flatlined the way XBox and GC have. This wouldn't make it the longest lived console ever?
Also with no backwards compatibility on PS3's now the PS2 is still forced to stand on its own whereas the 360 and wii are still compatible with their older siblings.
Does NPD not do these numbers ?
The DS in particular would be interesting to see on this same chart.