Analysis of the 2008 World Videogame Market

Market Changes from 2006-2008

After a 2007 in which Nintendo dominated hardware sales and software sales worldwide, many questioned whether that success would be sustainable into 2008. For many industry analysts, 2007 had been a very difficult year to predict because there were three transitions taking place. Sony’s PS2 was in the process of being replaced by Nintendo’s DS as the top machine for total software sales worldwide. Nintendo determined that it could handle supporting two platforms better than three or four in 2005, and this allowed for all the top software from the firm to concentrate on only two platforms over a period of two years. Sony at the same time had the challenge of expanding its resources to support three platforms, and trying to determine which platforms to place the projects on. The major trend in Japan in 2005 of PS2 dominance waning due to the emergence of DS dominance left the 2006 videogame sales muddled. In a year when 60 million videogame platforms were sold, Nintendo managed to juggle its four platforms just well enough to grab over 50% of all videogame hardware units sold. For 2007, many expected that a) the market would grow, and b) that with price cuts Microsoft and Sony would be able to drop Nintendo’s share by attracting more mainstream consumers. The Wii began to explode in 2007, selling over 16 million units and becoming the first console more expensive than PS2 to outsell it in every world market in the same year. Videogame sales did grow tremendously in 2007 though – over 81 million units of videogame hardware sold. DS held firm at 35% of all sales, leading Nintendo’s charge to 55% hardware market share in the year. If Game Cube, Xbox, and Game Boy Advance sales are included as well, Nintendo’s market share jumps up another percent, mainly because GBA sold over 2m units in 2007. Despite Nintendo’s growth in total market share, the change did not really come at the expense of Sony or Microsoft market share, since it was mainly Game Boy Advance, PS2, GC, and Xbox users migrating to the newer machines. In 2008, the expectation was that the videogame market would be up once again, and that as Wii aged and rival machines began peaking, Nintendo’s market share would slip a bit. Instead, it was Sony’s market share which slipped to Nintendo and Microsoft, despite having the most platforms on the market. DS market share did dip from 35% to 32%, but the market grew so much in the year, that its sales were still up from 2007