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Wii expected to displace Xbox 360 with largest installed base in 2008, says iSuppli
Press release, February 15; Ricky Morris, DIGITIMES [Friday 15 February 2008]
Powered by its strong appeal to casual gamers, Nintendo's Wii, in 2008, is expected to displace Microsoft's Xbox 360 as the new-generation games console with the world's largest installed base, predicts iSuppli. The global installed base for the Wii will rise to 30.2 million units in 2008, up from 18 million in 2007. This will put the Wii ahead of the Xbox 360's total of 25.7 million units in 2008. This will mark the first time the Wii has taken the installed-base lead among the new generation of games consoles – Wii, Xbox 360 and Sony's PlayStation 3 (PS3). "The Wii's performance illustrates the success of Nintendo's strategy 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," said Pam Tufegdzic, research analyst for multimedia content and services at iSuppli.
"In this stage of the new-generation 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." Hard-core gamers traditionally have been the target for most console and game software makers. However, this is beginning to change due to the rising numbers of casual gamers. A casual gamer is defined as someone who does not play games every day, but occasionally will play for an hour or two. The types of games that appeal to such users are easy to play without much of a learning curve, according to iSuppli. The Wii is perfectly suited for the casual gamer with its mass-market appeal, its fun motion-sensor controllers and its quickly growing portfolio of games, according to the research firm. The installed base for the Nintendo Wii will grow to 37.7 million units by 2011, rising at a compound average growth rate (CAGR) of 20.3% from 2007, iSuppli predicted. However, the hard-core users are not out of the game yet; in 2011, the installed base of the PS3 will exceed that of the Wii, iSuppli forecasts. The PS3 will reach an installed base of 38.4 million units in 2011, rising at a CAGR of 39% from 10.3 million in 2007. The Xbox 360, by 2011, will grow to 32.3 million installed base units, rising at a CAGR of 15.4% from 18.2 million in 2007. While the PlayStation 3 will take the lead by 2011, the percentage of the installed base controlled by the three new-generation consoles will be remarkably even. In 2011, the PS3 will account for 35.4% of the installed base, while the Wii will take 34.8% and the Xbox 360 will be at 29.8%, said iSuppli
Looking at the content side of the games market, the merger between Activision and Vivendi Games to become Activision Blizzard may presage further market consolidation. Blizzard is the branch of Vivendi responsible for World of Warcraft (WoW), the world's largest massive multiplayer online role playing game (MMORPG), with more than 9.3 million subscribers. Activision was already on a path for growth with the recent success of its Guitar Hero and Call of Duty franchises.
However, this deal, worth about US$18.9 billion, has instantly created a new game software superpower that can compete with Electronic Arts (EA), noted iSuppli. iSuppli believes this deal could spur a wave of industry consolidation as smaller game title companies try to keep up with the giants in the industry. iSuppli would not be surprised to see future mergers or acquisitions in the game title space this year, the research firm added. 
Source: iSuppli, compiled by Digitimes, February 2008
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