Nintendo's Wii game console will displace Microsoft's Xbox 360

Wii to Displace Xbox 360 by End of 2008
Nintendo's Wii game console will displace Microsoft's Xbox 360 as the new-generation game machine, according to market research firm iSuppli.

Nintendo's popular Wii game console will displace Microsoft's Xbox 360 as the new-generation game machine, iSuppli said Thursday.

The market researcher forecasted that the global installed base of Wii game consoles will rise to 30.2 million units in 2008, up from 18 million in 2007, putting it ahead of the Xbox 360's projected 25.7 million units.

The Wii is already riding a wave of popularity that saw it win the greatest growth among new game consoles last year, according to iSuppli figures. There were only 3.2 million units in people's homes at the end of 2006, jumping to 18 million at the end of last year. The Xbox 360 retained its lead as the console in most homes last year by edging out the Wii with 18.2 million units, while the PlayStation 3 lagged rivals with 10.3 million, up from 1.8 million per year earlier.

iSuppli did not include older game consoles or handhelds in their report.

The market researcher chalks up Nintendo's success to a strategy of offering a lower-cost game console targeted at everyday people, rather than an expensive console with the latest graphics aimed at video game lovers. The main difference between the Wii and its rivals is the wireless controller and sensors that detect hand motion and speed. The innovation puts motion into gaming, because users swing the Wii controller to hit virtual baseballs and golf balls on their TV screens, go bowling and fight in boxing.

The Wii currently sells for $249.99 in the U.S., according to electronic retailer Best Buy's Web site, while the Xbox 360 costs $349.99 and the PlayStation 3 $399.99.

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Wii Expected To Take Installed-Base Lead From Xbox
If Nintendo succeeds, then it would be the first time that the Wii has taken the lead among new-generation home video game consoles.

The popularity of Nintendo's Wii among casual gamers is expected to power the video game console's installed base this year ahead of current leader Microsoft (NSDQ: MSFT) Xbox 360, a market research firm said Thursday.
The installed base of the Wii is expected to rise to 30.2 million units in 2008, up from 18 million last year, iSuppli said. This will take the Wii beyond the Xbox 360's projected total of 25.7 million this year.

If Nintendo succeeds, then it would be the first time that the Wii has taken the installed-base lead among new-generation home video game consoles, a market that consists of the Wii, Xbox 360, and Sony's PlayStation 3.

"The Wii's performance illustrates the success of Nintendo's strategy of targeting casual users with an inexpensive console and entertaining titles, rather than addressing hard-core gamers by offering highly sophisticated and spectacular titles and systems," iSuppli analyst Pam Tufegdzic said in a statement. "In this stage of the new-generation video game console market, consumers are showing they'd rather be entertained and pay less for their consoles than shell out more for the latest and greatest technology."

While hardcore gamers have been the traditional targets of console makers, the market is shifting as the number of casual gamers grows. A casual player is defined as someone who plays a video game occasionally for an hour or two.

However, hardcore gamers are expected to eventually push the installed base of the PlayStation 3 beyond that of the Wii, iSuppli said. By 2011, the PlayStation 3 is expected to have an installed-base of 38.4 million units, rising at a compound annual growth rate of 39% from 10.3 million units last year.

Wii's base is expected to grow to 37.7 million units by 2011 with a CAGR of just more than 20%. The Xbox 360 is expected to fall to third with a base of 32.3 million units in three years, rising at a CAGR of 15.4% from 18.2 million units last year.

Last year was a record year for the video game industry. Sales of hardware, software, and accessories soared by 43% from 2006 to $17.94 billion, according to the NPD Group.