The 2006 end-of-year holiday season was trumpeted as a make-or-break play for all the makers of video game systems, as each major manufacturer—Nintendo, Sony, and Microsoft—bet heavily on their next-generation systems seizing hearts, minds, and market share from the competition. And sure enough, each manufacturer has declared victory during the just-past holiday seasons, and publicly claims to see nothing but a rosy future ahead.
Troubled Sony, whose PlayStation 3 hit the market more than half a year behind schedule and at price points never before seen for a home video game system, proudly announced that it met its goal of shipping more than 1 million PlayStation 3 units to the U.S. by the end of the 2006 calendar year. And it seems true that demand for PS3 systems remains unslaked, as the gaming consoles are still hard-to-find in retail outlets even as the company struggles to ramp up production for a European release in March. PlayStation 3 shipments have been hampered by low availability of the blue laser diodes used in the systems’ integrated Blu-ray drive. However, a million systems shipped doesn’t equate to a million systems sold: market analysis firm the NPD Group says Sony sold just under 700,000 systems by the end of 2006, with early shortages, high prices, and lukewarm reviews driving consumers to check out other systems. In contrast, Sony’s now deprecated PlayStation 2 sold 1.4 million units during the holiday season, and its PSP portable game unit sold over 950,000 units.
Nintendo seems to have scored a hit with its Wii gaming console, selling more than 1 million gaming systems (“every Wii console available at retail”) during the 44 days between the system’s launch and the end of the 2006 calendar year. Nintendo also sold more than 1.5 million extra controllers for the Wii, and everyone knows the video game accessories market is a high-margin operation. Wii owners also opted for games, with the Legend of Zelda: Twilight Princess purchased by more than 86 percent of Wii buyers.
Microsoft is lauding itself as the big winner among next-generation home consoles—you know, all three of them—selling 1.1 million Xbox 360 systems in December along—and the company wants you to know that’s a higher sales figure for the month than sales of the Wii and PlayStation 3 combined. Although undoubtedly boosted by the popularity of the new Gears of War title, the Xbox 360 has had over a year to get into inventory, and one wonders if the phenomenon would have been similar had there been enough PlayStation 3 and Wii systems on hand to meet available demand…and it’s amusing to note that Sony’s PlayStation 2 seems to have given the Xbox 360 a solid run for its money.
But the big winner for the holiday season? According to the NPD Group, that would be the Nintendo DS handheld gaming system, moving 2.5 million units.
The overall conclusion seems to be that Microsoft’s Xbox 360 had a strong holiday season, but both the Nintendo Wii and PlayStation 3 sales suffered due to inventory problems. Nintendo tried to flood the channel and still couldn’t put enough Wii consoles in stores, and Sony doesn’t seem to have been able to sustain strong interest in the PlayStation 3 after the initial crush of the systems’ launch. Despite the hype, the 2006 holiday season didn’t make or break any of these consoles: they’re going to have to keep duking it out throughout 2007. And they will keep fighting: the NPD Group also reported that anual revenue for the video game industry in the United States was $12.5 billion during 2006, a 19 percent increase over 2005.
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