The leading company for tracking Japan video game sales is Enterbrain. According to data collected by Enterbrain’s Famitsu magazine, the portable Sony PSP started to outsell the Nintendo DS in March and outsold the DS in Japan every month until August. In August, the DS slightly outsold the PSP in Japan, but much of that was possibly attributable to consumers waiting for the October release of the PSP-3000. Life-to-date, the DS has still outsold the PSP in Japan by more than 2 to 1, but in July, the PSP passed the impressive 10 million units sold mark in Japan.

So what do the 2008 Japan sales tell us about the market, both in Japan and on a global basis? Is Sony making a major comeback? Is Nintendo slowing down? Is it some combination of both? Or do first half 2008 Japan sales even have any relevance to long-term market trends? The answer to those questions is of course open to debate and opinions are likely to vary. However, DFC Intelligence looks closely at these trends to help adjust forecasts. Right now we see no indication that Japan 2008 sales trends would cause a major change to our forecasts, for either Japan or the global market.

From DFC Intelligence’s point of view the PSP is tracking closely to forecasted and the DS is slightly below expectations, but not by much. DFC Intelligence had expected the DS to outsell the PSP in all major markets, including Japan. However we also forecasted that the PSP would finish in a strong second place and over the next five years actually end with an installed base of half the DS in Japan. Currently the DS has outsold the PSP by 2.4 to 1 in Japan so the PSP needs to gain some ground to meet the DFC forecasts. Right now it looks that for calendar 2008 the PSP may actually outsell the DS in Japan. But, not by much, and thus we feel no need to alter our forecasts.

The other issue is what this means for global trends. Are there any big changes coming out of Japan that would cause us to reassess our forecasts? The short answer is once again no. The Japan sales of the PSP just emphasize that this is very much a multi-platform world. It is also still very much a hits driven world. Much of the PSP increase can be attributed to the strong performance of Capcom’s Monster Hunter portable franchise. Whether or not this carries over to the rest of the world, DFC Intelligence has forecasted that, with a few more must-have hits and new form factors like the PSP-3000, the PSP will see a resurgence and end up selling over 70 million units worldwide by 2012. This only looks bad if you do a direct comparison with the DS. The Japan 2008 performance of the PSP just reaffirms our confidence in this forecast.

The other major point of DFC Intelligence forecasts is that no system in this generation will have the dominance that Sony had with the PlayStation 2.

In Japan, DFC Intelligence forecasts that the Wii will end up outselling the PlayStation 3 by a ratio of 2 to 1. However, currently the Wii is outselling the PS3 by a ratio of 3 to 1. From this perspective, Nintendo seems to be going stronger than expected. But in the end, DFC currently does not see any need to adjust its long-term forecast.

Reprinted courtesy DFC Intelligence.