June NPD In-Depth

The Great Console Race

Nintendo definitively moved ahead of the Xbox 360 this month, with an installed base of 10.9 million Wii systems in the United States. Microsoft’s Xbox 360 now stands at 10.5 million systems, more than twice the PlayStation 3 base of 4.9 million.

Given current trends, we expect the Nintendo Wii to be near 13.5 million systems in October, as the industry heads into the holiday season. At that time the Xbox 360 should be near 11.4 million systems and the PlayStation 3 reaching 5.8 million systems.

For the year, the Nintendo Wii has sold 3.5 million systems while the PlayStation 3 is in second with 1.6 million systems. The Xbox 360 is in third with 1.34 million systems.

Market Revenue Continues Blistering Pace

For the first half of 2008, industry revenue was $8.3 billion, up from $6.1 billion for the same period in 2007 and $4.3 billion in 2006.

To get a rough estimate of annual sales, it often suffices to multiply the 1H revenue by three. That rule applied in 2006 would have predicted an annual revenue of $12.9 billion while the actual annual revenue was $12.5 billion. In 2007 we would have predicted $18.3 billion while the actual revenue was $17.9 billion.

Given $8.3 billion so far in 2008, one would predict almost $25 billion for the full year. However, several factors could influence sales, including the slowing U.S. economy and fewer blockbuster software launches. In her notes to the press, Anita Frazier, industry analyst for the NPD Group, commented that the industry could break $22 billion in 2008 even if growth slows in the second half of the year.

The biggest segment of the market this year has been software, which generated almost 52% of all revenue this year, up from 47.5% for the same period last year.

Both hardware and accessories were a smaller portion of the market this year, with hardware down to 34.8% in 1H08 from 38.4% in 1H07.

Finally, let us end with the usual historical look at industry revenue since 2005.

As the above graphic shows, the videogame industry in 2008 has generated as much revenue as it did for the first 11 months of 2005. Given the current pace, the industry will have almost doubled its revenue in only two years.


Thank you to the NPD Group for its regular release of sales data, without which we would have a far lesser understanding of the industry. In particular, we wish to thank David Riley of the NPD Group for assisting in the preparation of this work, and Anita Frazier, industry analyst for the NPD Group, for sharing her comments.