With the upcoming launches of next-generation consoles from Nintendo, Sony and Microsoft on the horizon, analysts at Piper Jaffray estimate hardware sales for each console will be down significantly compared to current-gen consoles.
Analysts Michael J. Olson and Andrew D. Connor expect an average decline of 53 percent for software sales in the first 14 months of the next-gen console cycles from the three companies, based on "meetings with industry sources."
The Wii U, which Olson and Connor expect will ship in the fall of this year with a price tag of $299 or greater, is forecast to sell only 35 percent of the volume of the original Wii during its first 14 months, due to "disappointing" hardware specs and competition from the mobile games industry.
Sony's next console will launch during the 2013 holiday season, suggests the analyst firm, and will only sell 50 percent of the volume that the PlayStation 3 managed -- again, due to competition from tablets and smartphones.
Finally, Microsoft's next Xbox will launch in 2014 says Piper Jaffray, and will sell only 55 percent of the volume that the Xbox 360 has before it. The firm believes that this will be down to the next Xbox being "an incremental improvement, not a quantum leap" over its predecessor.
"Unfortunately, we do not expect a console refresh to fully offset the secular declines in console gaming," the firm said.
"We believe console gaming will continue to be a time-share donor to social networks, mobile games and tablets. We, therefore, favor companies with increasing exposure to social/mobile gaming, including Zynga and EA."