Big 4 Videogame HW & SW Shipments from 1983 to 2009...and beyond - News

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Jacob Mazel

Introduction:

In recent months, Vgchartz has attempted to reconstruct videogame hardware trends of earlier eras. After weeks of research, we now have estimates for the following videogame machines between the years ending 1983 and 2009.

Nintendo: NES, SNES, N64, GC, Wii, GB (includes Game Boy Color and others), GBA (includes GBA SP and others), and DS (includes DS Lite and DSi)

Sony: PS1, PS2, PS3, and PSP (includes PSP, PSP 2000, PSP 3000)

Microsoft: Xbox, Xbox 360

Sega: Master System, Genesis, Saturn, Dreamcast

Intentionally excluded from this list are the systems which failed (shipments < 4 million units in all three world regions), systems which were “add on” based (ask a Sega fan), systems which are hard to classify (Pocketstation, Virtual Boy) and systems made by companies which had an earlier hay-day (Atari), or a product successful only in one region (Wonderswan, PC Engine).

In the tables below all figures are in millions of units shipped. Orange figures are production shipments from Sony. Black figures are unit sales to retailers (shipments) and from financial reports for the year ending March 31. Blue figures are educated guesses based on attach rates, and archived information from sources like the New York Times , they are not official figures taken from financial reports. Red figures are estimates of shipments Nintendo, Sony and Microsoft will see for the year ending March 2009 based on either VGC figures or guidance laid out by the companies to inform stock holders.

Microsoft fiscal years end in June, but shipment figures for hardware and software are adjusted to be through March for Microsoft as well.

In the year ending March 1991, Nintendo had a seven month financial year because from 1982 to 1989 its financial years ended on August 31. Prior to 1990, shipment data estimates for Nintendo cover the year ending August 31.

Nintendo, Sega, and Microsoft use what VGC calls ‘shipments’, labeled as ‘unit sales’ in financial reports, for all figures. Unit sales are the number of goods bought by retailers like Walmart. Sony used ‘production shipments’ through March 2006. In the year ending March 2007, Sony provided ‘production shipments’ and ‘unit sales’ in the same year for PS2, PSP and PS3. The unit sales and production shipments figures are significantly different, and should not be combined despite the way they are listed in the table below. Units produced by Sony are not necessarily sold to retailers in the same year. Combining production shipment figures and unit sales to retail is simply not a good idea since in the year when figures from the two systems are available the listed totals vary by millions.

Additionally, for PSP the figures under the ‘unit sales’ total 35.4m from April 2006 to December 2008. Production shipments for PSP through March 31, 2006 total 17.03m. However, Sony just announced that as of January 31, 2009 PSP sales to retailers had topped 50 million units . Software is the same way, production shipments of software for PSP through March 2006, added to software unit sales to retailers from April 2006 to December 2008 does not quite equal the 200m games Sony stated it had shipped through January 2008. Just as in the table above, Sony production shipments appear to be above and below unit sales to retailers in various instances.

Still, all Sony figures prior to March 2006 are production shipments so those will be the figures noted below rather than estimates of unit sales to retail. Our assumption is that most units produced do in fact get sold to retailers eventually.

The following sections estimate total industry contributions by platform for both hardware and software shipments. Generally speaking, contributions are analyzed chronologically, by company, and to the industry as a whole. After that, the major industry shifts – going from an era of monopoly Nintendo to 70% market share Sony and then back to Nintendo as the majority player are depicted.

Once all of that is laid out, software trends are examined on platforms which have finished up their life cycles to attempt to project final software totals for the machines still relevant to the world market namely PS2, PSP, PS3, DS, Wii, and Xbox 360.

Hardware Shipments from FY 1982 to FY 2009 for the Big Four

The system to ship the most units in the financial year is bolded in the table below. Remember that blue are estimates, black is from financial reports (unit sales to retail), red is projected for the year ending March 2009, and orange are production shipments from Sony (rather than unit sales to retail) which should not be combined with unit sales figures.

Per the chart above, here is how long the following consoles have been ‘viable’ on the market when ‘viable’ is set to shipments of over one million in a financial year:

NES – 11 years

SNES – 8 years

N64 – 5 years

GC – 5 years

Wii – At least 3 years

GB – 13 years

GBA – 8 years

DS – At least 5 years

PS1 – 10 years

PS2 – At least 10 years

PSP – At least 5 years

PS3 – At least 3 years

Master System (MS) – 6 years

Genesis – 8 years

Saturn – 2 years

Dreamcast – 2 years

Xbox – 5 years

Xbox 360 – At least 4 years

To date, the machines to stay viable longest are GB (13), NES (11), PS2 (>10), PS1 (10), and SNES/Genesis (8 each). The PS2 probably has at least two more years of unit sales to retail in excess of one million units even though Sony will probably stop making new PS2 systems sometime before then. So PS2 will likely overtake NES, and may over take GB with the most years of over 1m units sold to retail. The Wii and DS, both with higher sales to retail in a year than PS2 at its peak stand an excellent chance at having 8, 10, 12 or more fiscal years with shipments of over 1 million units.

In light of the historical data, it is fair to say that systems in second or third place tend to have a life span about 30%-50% shorter than the lead machine. A scenario of Wii lasting 10-14 fiscal years where shipments are over 1m units, and Xbox 360 and PS3 meeting the 1m unit threshold criteria five to ten years appears reasonable.

There are a few trends in the hardware chart above which are somewhat hidden without some help from charts. The one which caught my eye most is this one:

*production shipments are added to unit sales to retail for the purpose of the chart

From the launch of the Famicom (NES) in Japan in July 1983, video game consoles were predominant over video game portables until the fiscal years ending 2006 and 2007. In the years ending March 2006 and March 2007, portable systems, that is the Game Boy Advance, the PSP, and the DS managed to outsell the PS2, Xbox, GC, PS3, Wii and Xbox 360 combined. Not by a small amount either. In the year ending March 2006, portable shipments totaled over 8.5m units higher than console shipments worldwide. In the year ending March 2007, consoles began to catch up again with the launches of Wii and PS3, but portables still saw shipments 5.2m units greater than the consoles did. In the year ending March 2006, the figures are mixed – production shipments and sales to retail. Nonetheless, Sony had systems using both figures so the impact should be minimal. Additionally, the March 2007 figures are all sales to retail meaning that there was in fact at least one year when the portables beat the consoles on a worldwide basis by a huge margin.

Another useful chart is the growth in total hardware shipments from the big four manufacturers. The year ending March 2009 is poised to see videogame hardware sales top 100m units. Nintendo will account for ~56% of the total but the remains left for Sony and Microsoft machines are still bigger than the hardware totals per year for the entire industry in previous eras.

*Years 1982-1989 end August 31 for Nintendo, March 31 for Sega. Shipments to retail and production shipments are added together in the chart.

As recently as the year ending March 2001, videogame hardware shipments totaled only 43.96m. In the year ending March 2009 Sony and Microsoft systems will ship ~44.3m units.

A cursory glance at the chart above reveals huge dips and bumps. The bump centered on the years ending March 1992 to March 1994 is the peak of the 16 bit generation. However, the NES was still going strong through March 1993 when Nintendo shipped over 5m NES worldwide for the seventh time in a row. The slow decline of NES and the strength of Sega allowed for a huge peak in this period compared to the one seen in 1988 to 1990 when Nintendo had a monopoly in Japan and the USA. Additionally, the original Game Boy peaked in the year ending March 1992 with shipments of over 10m.

*Years 1982-1989 end August 31 for Nintendo, March 31 for Sega. Shipments to retail and production shipments are combined out of necessity for Sony systems.

When the Super Nintendo, Sega Genesis, NES, and Game Boy all began to drop sharply after early 1994, the videogame industry had a tough few years. Nintendo dropped from shipping over 12m consoles in the year ending March 1994 to only shipping 4.8m consoles in the year ending March 1995. Sega had launched the Saturn in the year ending March 1995, and since Nintendo had not launched the Nintendo 64 yet this is the closest Sega ever came to becoming the biggest videogame hardware manufacturer in the world. Although Sega only shipped 4.75m consoles for the year, Sony’s entrance into the market with nearly 1m PS1s shipped ended Nintendo’s streak of shipping more than half the videogame machines worldwide in a year dating back to 1985.

The years ending March 1996 and March 1997 were transitions. Both the PS1, and especially the Saturn had soft launches in the west. In Japan though, the systems were well entrenched by the end of 1995 and the Japanese developers began to support the CD-based systems with a user-base lead of millions over the cartridge based N64 which cost most to develop for. Super Nintendo was still stronger than the PS1 or Saturn in the year ending March 1996 with shipments of nearly 6m, but with the failure of the Virtual Boy (less than 1m worldwide); Nintendo was just about out of time to stop Sony’s momentum. The Nintendo 64 launched with tremendous momentum anyway in the USA and Japan though. However, the PS1 had seen its second wave of new game franchises and in the year ending March 1997, Sony and Nintendo consoles sold roughly the same amount worldwide. Equaling Nintendo with only one console on the market compared to the 99% dead NES, dying SNES, and launching N64 made it clear that Nintendo was losing its position to Sony as the top console manufacturer.

The PS1, N64, and new Game Boy models pushed videogame hardware sales in the year ending March 1997 to the highest level since the previous all time unit sales peak at the height of the 16 bit war (FY 1993). All three machines saw increased demand in the year ending March 1998, and videogame hardware shipments topped 40m units for the first time ever. Competition from Sony and Nintendo, in conjunction with previous mistakes hurt Sega’s financial situation gravely in this era. In a final effort to become consistently profitable Sega launched the Dreamcast in Japan in 1998. The increased competition pushed hardware shipments even higher in the year ending March 1999. In the following March, as PS1 began to decline Sony launched the PS1 in Japan. Nintendo’s share of the console market began to decline much more rapidly after the PS2 launch as the N64 did not have the long tail of the SNES or NES.

With Dreamcast and Nintendo 64 just about dead in the year ending March 2001, and PS1 dropping faster than PS2 had grown, hardware sales dropped even though this was the year Game Boy Advance launched. Sony consoles outsold all other consoles by a margin of 10:3 this year. Out of fear that Sony could get an NES like share of the videogame market with every machine using non-Windows based operating systems Microsoft began planning its entry into the videogame market.

The year ending March 2002 was an attempt to contain Sony. The Gamecube, Xbox and Game Boy Advance joined the PS2 in pushing the videogame industry to massive heights. Hardware sales grew 30% from the previous year. PS2 shipments were over 18m for the year, and GBA shipments were over 17m. Despite the launches of Xbox and Gamecube though, Sony consoles once again outsold all others by a 3:1 margin. Strong software pushes by Nintendo and Microsoft trimmed this margin slightly in the year ending March 2003. Sony consoles still outsold all others combined at a 5:2 rate though. The year ending March 2003 remains Sony’s strongest to date – with production shipments of over 29m (for PS1 + PS2) this year. Nintendo portables had a comparable peak in the year ending March 2002, with almost 22m Game Boys and Game Boy Advances shipped worldwide.

The year ending March 2004 was the beginning of a three year dip in console shipments worldwide. Sony’s PS2 began to decline after peaking in the year ending March 2003. Game Cube dipped a bit as well offsetting a slight increase in Xbox shipments. Per historical norms, the trailing consoles dipped faster than the lead machine. Not surprisingly, Sony consoles once again went back to out-shipping all others by a 3:1 margin. The Game Boy Advance had its best year in the year ending March 2004 with shipments of nearly 18m.

The year ending March 2005 saw two important launches in the portable space. Sony launched the PSP. Nintendo responded in a way no one expected – with a gimmicky looking two screened portable thought to be severely underpowered. DS appears to have been designed to take advantage of what had worked for GBA up until this point, while ironing out its flaws in a way specifically designed to catch Sony off-guard. With three viable portable systems on the market, portable hardware shipments grew larger than ever before. Console shipments continued to decline though, as PS2 and GC fell.

Later in 2005, the Xbox 360 launched. While the system improved Microsoft’s share of the console market console shipments in aggregate declined once again in the year ending March 2006. As analysts focused on the upcoming HD battle between Sony and Microsoft, Nintendo had its worst year in the console market since the year ending 1985 when its brand had yet to be established in the west with the NES. Only 25.2m consoles were shipped in the year ending March 2006, but Nintendo shipped less than 10% of them – 2.35m. Unnoticed by most though was the explosion in the portable sector during the year ending March 2006. DS and GBA unit sales to retail and production shipments of PSP combined to total over 33 million units, a total which came in a staggering 30% higher than all console shipments combined. Prior to this, portable shipments had never even come close to topping console shipments.

The year ending March 2007 is going to be one that is studied for a long time in this industry. First of all, the PS3 and the Wii launched worldwide. Secondly, portables absolutely dominated despite these new launches. DS shipments topped 23m units this year, beating the PS2 production shipment peak. PSP shipments were 9.5m units. Analysts had expected the opposite situation to occur before DS and PSP launched. When that assessment proved to be wrong, some of the same analysts began to wonder whether Wii could top PS3 or Xbox 360. After a run from the year ending March 1998 to the year ending March 2006 where Sony’s console market share never dipped below 60% in a year, Wii and Xbox 360 had whittled Sony’s console share down to 55%. The only hint prior to the March 2007 that Sony’s stranglehold would fall apart was that in the year ending March 2006, Sony consoles had only seen shipments of 16m. Though that is still more consoles than Microsoft or Sega have ever shipped in a year, it was less than what Sony had shipped in any year since the year ending March 1997.

As the year ending March 2008 opened, it was clear there was a full war between the big three. A few trends in the year have gone unnoticed though. From Microsoft’s entry into videogames in FY 2002 to FY 2007, Microsoft console shipments had grown every year. Even though the console market grew nearly 50% in FY 2008, Microsoft shipped fewer systems than it had the previous year. The year ending March 2008 saw Nintendo nearly triple its console shipments for the second time in a row on a worldwide basis to lead the growth in hardware, targeting demographics apparently off-limits to Sony and Microsoft.

The second trend to note is that consoles returned to being larger than portables. However, DS shipments totaled a staggering 30.31m for FY 2008. With the decline of PS2, the slow ramp up of PS3 and the lower attach rates of PSP and DS the Wii allowed Nintendo platforms to become the biggest in the world for software shipments once again. As will be detailed below, software changes are of huge significance. Nintendo systems went from seeing software shipments of 142m in the year ending 2006, to software shipments of 347m in the year ending 2008. Software on Sony systems remained nearly stagnant at 260m despite the introductions of PSP and PS3. When PS2 software completely dries up in the next few years, Nintendo platforms are going to see hundreds of millions of more games sold than Sony platforms. Microsoft also used FY 2008 to position Xbox 360 as the cheap, mass-market friendly-ish HD machine. Angling for this position has cut into the number of PS3 exclusive projects and will almost assuredly prevent the PS3 from reaching the user base and total software shipments of the PS2, while insuring the Xbox 360 sees a higher amount of software sold than the Xbox saw.

Even with the advantage in portable software in eras before the PSP, Sony platforms had seen more software shipped than Nintendo platforms had from FY 1998 to FY 2007, an entire decade (April 1997 to March 2007). Sony consoles still had more games shipped in the year ending March 2008 than Nintendo consoles did though. After peaking at a 19:2 advantage in favor of Sony console software in FY 2002, Sony console software shipments topped Nintendo console software shipments by 4:3 in FY 2008.

The current fiscal year looks like it will cement Nintendo’s position as industry leader. Nintendo expects to ship 26.5m Wiis, an all time record for a console. The company also expects to ship 31.5m DS portables, an all time record for a portable. About the only claim Nintendo may not be able to take this year is top console for software shipments. It is going to be close, but PS2 + PS3 software shipments should come out to 195m or so, while Wii software shipments are forecast by Nintendo to total only 193m. PS2 game shipments have totaled over 250m in a single year as well, so Wii will need a year or two to be able to top that peak. Still, with DS shipments also forecast to be 193m, Nintendo platforms are going to set the all time record for software shipped on a manufacturers portfolio in a year – 386m - as production shipments of Sony platform games never topped 268m in any year. The Xbox 360 will also beat PS3 for the year ending March 2009. Mostly, this is because Microsoft had much stronger holiday sales worldwide. Sony is doing fine with PS3 - it has shipped 8.45m PS3s in the nine months ending December 2008, but Microsoft has shipped 9.5m Xbox 360s in the nine months ending December 2008.

*Years 1982-1989 end August 31 for Nintendo, March 31 for Sega. Shipments to retail and production shipments are used interchangeably for Sony systems. The chart includes portables and consoles.

Software Shipments 1982 to 2009 from FY 1982 to FY 2009 for the Big Four

The giant software shipment chart below follows the rules of the of the giant hardware chart. Blue figures are estimates based on old source and attach rate estimates. Red figures are projections for the year ending March 2009. Orange figures are production shipment figures from Sony as opposed to unit sales to retailers. Nintendo had a seven month financial year in 1990, because up until 1989 its fiscal years ended in August, while from 1990 on its financial years have ended in March.

Where to begin?

The NES is a good indication of how small the videogame industry used to be. In its time, with 85-93% market share of the USA & Japan videogame markets the NES never really came that close to topping 100m units of software shipped in a single year. It is fair to say that the NES was the main catalyst for lifting the world videogame software market to over 100m for the first time in FY 1988 when other small systems (made by Atari, NEC and others) are added into the software totals above. The dip in FY 1990 is artificial - it was 7/12 of a year for Nintendo. If that is the case, then the videogame industry has never seen software shipments dip below 100m since the late 1980s, although FY 1995 is a tough call. This is a testament to the stability provided by the NES.

Platform software relevance to the world market is more difficult to determine then hardware relevance to the worldwide market. But if accounting for 5% of the world software market in terms of software shipments in a fiscal year is used as the criteria, the platforms in the chart above were relevant for the following number of years:

NES – 11

SNES – 8

N64 – 5

GC – 4

Wii – 3+ (I’d wager at least 10)

GB – 13

GBA – 6

DS – 4+ (I’d wager at least 8)

MS – 3

Genesis – 7

Saturn – 3

DC – 3

PS1 – 9

PS2 – 9+ (I’d wager 10)

PS3 – 2+ (I’d wager at least 5)

PSP – 4+ (I’d wager 6)

Xbox – 3

Xbox 360 – 2+ (I’d wager at least 5)

In FY 1991, with the NES still performing adequately, the SNES launch, and Game Boy still ramping up Nintendo became the first videogame company to see retailers buy 100m games in a year for its systems. By FY 1996, retailers had bought over 1 billion games for Nintendo systems.

Sega launched the Master System and Sega Genesis in the 1980s to try to dent Nintendo’s gaming empire. Although Sega briefly came close to becoming the world’s largest manufacturer of videogame consoles in FY 1995, with Saturn launching and Genesis still performing fairly well, Nintendo was never seriously challenged by Sega in terms of software shipped. From FY 1987 onward Nintendo has not seen software shipments on its platforms total less than 50m. Sega, in its software hay-day four times got north of 35m games shipped in a year but Sega’s platforms also never got over the 50m hurdle.

The 158m games shipped on Nintendo platforms in FY 1993 was a record that stood for years. Sony platforms did not overtake Nintendo platforms in terms of software shipments until FY 1998, and the 158m record did not fall until FY 1999 when the PS1 was entering its peak.

The videogame industry likely saw software shipments top 200m for the first time in FY 1993. Sega’s Game Gear, and other players like NEC probably accounted for the last 4.2m units of software needed to hit 200m outside of the big players (NES, SNES, GB, MS, Genesis). FY 1994 dipped below 200m units of software shipped as slight rises in SNES and Genesis software shipments were offset by a sharp decline in NES software shipments and a modest decline in GB and MS software. FY 1995 saw a much greater drop in software shipments. Although this is the year the PS1 and Sega Saturn launched, those machines did not offset big declines in SNES, Genesis and GB software shipments. Software shipments dipped to 87m for the big four this year. Even with Game Gear, 3DO, Jaguar and the other failed devices of the time it is unlikely software shipments were outside the range of 95m to 105m. Part of the reason for this last dip to ~100m is that a) Nintendo was busy developing content for the oft-delayed Nintendo 64 and the failed Virtual Boy while b) Sega was supporting too many devices and preparing more Saturn software and c) Sony was still in the process of gaining a foothold into the videogame market and could not offer salvation for struggling developers quite yet. When splitting portables and consoles it is clear just how bad things were in FY 1995.

FY 1996 saw a massive recovery, with software shipments up 50% from the previous year. Most of this was due to rises in PS1 and Saturn software. SNES also had increased hardware sales in FY 1996 which accompanied a last gasp increase in software. Sega Genesis software continued to decline, but Saturn was on solid footing in Japan allowing games on Sega platforms to perform nearly twice as well as in the previous fiscal year. FY 1997 saw the introduction of the Nintendo 64 and new Game Boy models. Both contributed to increased software shipped for Nintendo systems. However, Nintendo had already had six fiscal years where more Nintendo platform games were bought by retail by this point (FY 1991-1994, FY 1988-1989). FY 1997 was also Sega’s second best year in terms of software, with 43m Genesis and Saturn games bought by world retailers.

In FY 1998, the transition was over. Sony game production shipments accounted for over 50% of all videogames bought by world retailers. Sega software shipments dropped by over half as Genesis and Saturn games both began to disappear off shelves. Nintendo platforms saw a 30% increase in total software shipments as Game Boy and Nintendo 64 offset the SNES software decline. However, Sony production shipments for PS1 games were 138m for the FY, while Nintendo software shipments were only 93m for the FY. Even as more games were getting sold on Sony’s one platform to Nintendo’s three platforms, Nintendo was able to benefit from the long tails of its original growth engines, the NES, GB and SNES. In contrast, Sega was forced to scramble to come up with a new platform as its only reliable source of income; the Genesis was quickly drying up by the late 1990s.

The Dreamcast launched in FY 1999 to try to prevent a complete collapse of Sega. Unfortunately for Sega though, the Saturn and Genesis were almost completely dead when the Dreamcast launched. As a result, software shipments for games on Sega machines dropped to 11.5m from 18.5m in the previous year. At the same time, Nintendo 64 software shipments peaked, and new Game Boy models boosted Game Boy software. PS1 also saw an increase in software production shipments for the year. So even as Sega software shipments declined, Nintendo software shipments increased 20% from the previous year, and Sony software production shipments increased 40%. FY 1998 saw software shipments on platforms for the big three (Sony, Nintendo, Sega) reach 250m. With the increases on Nintendo and Sony platforms, FY 1999 saw software shipments for the big three top 300m worldwide. Industry software totals have not fallen beneath the 300m shipped level in any year since FY 1999. One way to look at this is to recognize that over 3 billion videogames have been bought by retailers since April 1, 1998.

FY 2000 was Sega’s last hurrah. It is the last time games shipped on Sega platforms came anywhere close to accounting for 10% of the world total. The excellent marketing of the Dreamcast in the west allowed Sega systems to ship 27m games. However, this was fairly irrelevant to Nintendo and Sony. Sony production shipments of software were 7.5 times greater than the amount of software shipped on Sega platforms – and only 1% of the Sony software was even from the newly launched PS2 in Japan. Even past its peak, N64 game shipments were double Dreamcast game shipments. Nintendo software shipments were over 125m units this year – nearly fives what Sega managed.

The following year, in January 2001, Sega announced it was exiting the hardware market. However, the growth in Dreamcast hardware shipments prevented a rapid decline in Sega software shipments in FY 2001. Games on Sega platforms would eventually total 350m units shipped worldwide. In addition to Sega’s exit from the hardware market, the PS2 and Game Boy Advance were introduced to some markets in FY 2001. More specifically, the GBA launched in Japan as the first real update to the Game Boy, and the PS2 launched in western markets. Nonetheless, the software market dipped to about 310m games shipped for the year. The primary culprit was a large dip in PS1 software not getting offset by a comparable rise in PS2 software. Nintendo 64 also declined sharply for the year, but in total, the number of games shipped for Sony platforms declined by over 32m, while the number of games shipped for Nintendo platforms only declined by 11m. The perception of a narrowing gap between Nintendo and Sony, alongside Microsoft’s entry into the market alongside the Game Cube launch later in 2001 led some analysts to speculate that Sony was in a bit of trouble for the first time.

However, FY 2002 showed that Sony was just fine. What was happening though was that Nintendo’s position in the console software market was slipping pretty fast.

In FY 2002, Sony consoles accounted for production shipments of 213m games. Nintendo consoles accounted for 22m games over the same period of time. Microsoft does not provide software shipments with any kind of regularity, but in June 2002 the company announced it had shipped 20m Xbox games. If not for the scraps of the N64 market, Microsoft would have overtaken Nintendo in FY 2002 as the second largest ecosystem for console games.

Nonetheless, the invigoration of the portable market continued with both GB and GBA doing well. As a result, retailers still bought over 100m games for Nintendo platforms in FY 2002, as has been the case in every fiscal year since FY 1999.

FY 2003 was Sony’s best year to date for software production shipments. This software coincided with the peak year of PS2 hardware. It was the first time software shipments for a single manufacturer topped 250m. Game Boy Advance, GC, and Xbox also saw increased software shipments though. Videogame software shipments totaled nearly 400m as a result, with only ~145m of the games not made for Sony systems.

FY 2004 is the first time software shipments did top 400m. In the years since, software shipments have not fallen below the 400m level. PS2 (222/408) and GBA (75/408) were the two single biggest pieces of the software pie. Console software shipments for non-PS2 platforms (PS1, GC, and Xbox combined) totaled just over a quarter of the pie (109/408). Given the changes which occurred in the videogame market over the next few fiscal years, keep these totals in mind.

In FY 2005, the DS and PSP launched. Not surprisingly, the portable software market topped 100m for the first time in FY 2005. Despite the growth in the portable sector, Sony still managed production shipments of 262m games for PS1 and PS2. Combined, Sony console game shipments topped Nintendo and Microsoft consoles games shipments by an almost exact 3:1 ratio. PS2 (252/451), and GBA (85/451) remained the two biggest pieces. Console software shipments for non PS2 platforms (PS1, GC, and Xbox combined) in this year totaled only 22% of all software shipped (98/451).

But, all was not lost for Nintendo and Microsoft. In FY 2006 the DS began to shake up the status quo. Though the amount of total software shipped slipped in FY 2006, the portable sector continued to grow by leaps and bounds. Across DS, PSP and GBA 151m games were shipped. Console game shipments were only 289m for the year. In the previous year, 100m portable games shipped against shipments of 350m console games. The growth in the portable market allowed Nintendo to survive the decline of the Game Cube software market without selling less software. So while PS2 remained the largest single largest piece of the pie once again (223/440), portables were suddenly more relevant (151/440) than non-PS2 consoles as a segment even with the launch of the Xbox 360 (66/440). Historically, a system has never accounted for more than half of all industry software shipments for more than three fiscal years since the NES monopoly was disbanded. So as March 2006 ended, the question was which machine would lead in FY 2007?

The answer was that no platform accounted for more than 50% of all software shipments in FY 2007. Just as FY 2000-2003 had seen no platform account for 50% of all software during the PS1 to PS2 transition, no platform accounted for 50% of all software shipments during the PS2 to DS/Wii transition. PS2 remained the single biggest piece of the pie though (194/510) with DS gaining quickly (124/510). Non PS2 consoles were still rather insignificant though, as in total Wii, PS3, Xbox 360, GC, Xbox, and PS1 accounted for less than 20% of all software shipped (100/510). It is also worth noting that the portable software market (217/510) grew larger than Sony’s stake in the console software market (208/510). With Wii and Xbox 360 ramping up software shipments more quickly than PS3, and the ongoing explosion of the DS, it was clear Sony was to lose a lot of ground in the next fiscal year.

Fiscal year 2008 ended with a completely different market than the one seen as recently as fiscal year 2004. In fiscal year 2008, DS became the biggest individual platform for software shipments in the world (186/707). No portable had ever had a year where it was the largest software platform in the world, and this was the first time a Nintendo platform emerged as the largest software platform since FY 1996. PS2 for the first time since FY 2001 (when PS1 was still a bigger platform for software) dropped into second place (154/707) in selling software. What makes FY 2008 different though is that Wii (148/707) had nearly as large a share of the world software market as PS2 did. In most previous years, one system accounts for 40-60% of the software market. But in FY 2008, DS was the leader to emerge out of the plurality…but with only 26% of all video games shipped for the system. As recently as fiscal year 2005, the PS2 had accounted for 56% (252m) of a much smaller videogame software industry (451m). Non PS2 consoles accounted for over 40% of the software market this year as well (299/707) a huge change from the previous year (100/510). Software shipped for Nintendo platforms reached 347m the year, shattering Sony’s industry record of 268m in FY 2005. Nonetheless, Sony console software shipments (212m) were still significantly ahead of Nintendo console software shipments (151m) with the Wii just starting to ramp up and the PS2 software market just beginning to really decline.

Fiscal year 2009 ends this March and projections for the big three for that year are included in the chart above. The year will likely see software on Nintendo platforms (~387m) account for over half the industry total (~760m). DS and Wii are forecast by Nintendo to come in with 193m games shipped in the year (GBA may bring in an addiont 1m too). In future years, perhaps as early as fiscal year 2011 with Xbox 360, PS2, PSP, and DS set to see simultaneous declines based on their age, Wii is likely to emerge from the FY 2007-2009 transition as the console where 40-60% of all industry software is consumed. However, with so many strong platforms now in such a large industry it is also possible that no single platform will ever account for more than 50% of all software shipped in a year. The case against Wii software taking 50% in a year is fairly strong, as a new Sony or Microsoft console will likely launch if Wii continues to be a run away smash, and the next DS and PSP will likely launch soon as well. Nonetheless, historically speaking Wii does appear to be heading for three to six years where software shipments will top 200m, and within that peak, there could be a couple years over 300m. Xbox 360 and PS3 should be able to top 140m units of software shipped in their best years, but the user bases are never going to be high enough to have the kind of software peak Wii will see.

Since the year ending 1982, over 6.7 billion games have shipped for Nintendo, Sony, Sega and Microsoft platforms.

From fiscal year 2005 to fiscal year 2009 software shipments for Nintendo and Sony platforms are remarkably close after being quite different in earlier years:

Nintendo platforms totaled 1.104b games shipped from April 2004 to March 2009, while Sony platforms totaled 1.045b games over the same period. Prior to this time frame, Sony platforms had shipped software at a much faster rate than Nintendo platforms as can be seen in the chart below.

When the long term is considered it is quite remarkable how Nintendo has been able improved its software shipment rate to a point where it could over take Sony’s pace. In a different way, Sony’s consistency in the industry – shipping 250m games a year for a decade – is also quite remarkable. With the videogame industry likely to see 700m units of software shipped per year for quite some time though, Sony is going to need to find a way to increase its share of the total.

How to Use History to Estimate Software Peaks

One way to estimate software peaks is to see how many games “the total hardware user base” bought in a financial year. Increased hardware sales bases mask an overall decline in interest in a system as a hole. It is similar to how during the day the Earth gets the most heat from the sun at high noon; even though the temperature will increase until late in the afternoon because the heat gained is still greater than the heat lost until the sun gets near the horizon. For videogames, hardware shipments are the sun and software is the heat. As long as the hardware keeps climbing at a significant rate, more users buying games will mask the fact that on average a user is buying fewer games. As a result, software shipments peak after hardware shipments even though the new users on average are buying less software. Since Wii and DS are still peaking in terms of hardware, both systems are going to see software peaks over 200m at least once or twice as a minimum even assuming healthy declines in the number of games average users will purchase.

The purple figures highlight the deterioration rate of game purchasing by the total base.

With the Nintendo 64, the average user bought 2.7 games in FY 1, and 3 games in FY2. As the types of gamers included within the average user expanded, “the base” as a cumulative total bought games at a slower rate each year. So even though the Nintendo 64 had over 32m users in FY 5, the average N64 user bought only 1.1 games in the period. The SW FY/ HW LTD column therefore allows us to properly average out purchasing patterns of the new users (likely to buy a lot) with the old users (likely to buy little) to come up with what the entire base is doing.

PS1 follows a similar pattern (using production shipments).

With a wider selection of games, and a much wider total audience, the average PS1 owner through FY8 was still buying about one game per year. Wii follows a similar pattern to PS1 so far, with SW FY/HW FY fluctuating on the introduction of new types of games aimed at new demographics, but the Wii SW FY/ HW LTD pattern is a little surprising:

FY2 and FY3 under the SW FY/ HW LTD column average out to almost exactly the same figure as FY1. It is likely then that in the first year Nintendo specifically targeted everyone, the second year was for the Nintendo base, and the third year was for the masses. If the FY4 number does return back toward 4 to 5 then it is probably safe to say Nintendo targeted both bases in the year ending March 2010. But given the deterioration after FY2 or FY3 base purchasing software peak for all other systems it is more likely that the 3.78 rate will just flat line for a while instead of rising or declining rapidly. Greater interest in Wii among traditional gamers later in Wii’s life, rather than early on should offset the severity of the normal declines in game purchasing by the existing audience.

Portables are slightly more stable and appear to follow a slower pattern of decline:

Systems which launch late in a fiscal year in a big region, like the DS and PS3 (both launched in March in Europe), see the SW FY/HW LTD peak in FY3 instead of FY2 like other machines. PS2 peaks in FY3 as well given that it was only out for one month in one region in FY1, and only out in western regions for a few months in FY2.

The numbers continue to fall after FY 7, if unit sales to retail are added to the production shipment numbers above. Even though the two are different, it looks like stores only bought a game for 2 out of every 3 PS2 owners in FY 2009.

PSP, the only successful non-Nintendo portable follows roughly the GBA pattern:

With 50m PSPs bought by retail as of January 2009 and 200m games alongside those games, the average PSP owner bought only game in fiscal year 2009.

PS3 follows the DS and PS2 in peaking in its third fiscal year due to the late launch in the west (Europe in this case).

All figures used above are from a single method of tracking (either production shipments or unit sales to retail) and based on figures found on the Nintendo and Sony IR websites.

Using the Method of SW FY / HW LTD to Predict Future Software Shipments

At the end of March, videogame hardware totals (PSP and PS2 are adjusted to unit sales sold to retail based on statements from Sony) will be:

PS2 ~ 137.5m

DS ~ 102.1m

Wii ~ 50.95m

PSP ~ 50.7m

X360 ~ 30.3m

PS3 ~ 22.85m

For the year ending March 2009, software shipments for the platforms above should roughly total:

DS ~ 193m

Wii ~ 193m

360 ~ 125m

PS3 ~ 105m

PS2 ~ 90m

PSP ~ 53m

Using the method of software shipped in the fiscal year divided by hardware shipped lifetime, we see that among the six systems still selling large quantities of software, the average PS3, Xbox 360 and Wii owners are still quite active, purchasing 3, 4, or 5 games in aggregate. Given that every platform shown above sees the games purchased/total users rate decline after FY2 or FY3, it is possible to project FY 2010 software shipments with some estimates for hardware shipment totals through March 2010.

Whether the hardware figures used for FY 2010 pan out (4.5m PS2s, 29.9m DS, 33.05m Wii, 13.3m PSP, 9.7m Xbox 360, and 11.15m PS3) come true, the figures are unlikely to be miles off given the way machines have performed so far. Short of Nintendo shipping less than 20m Wiis in the next fiscal year, Wii software bought by retailers is going to top 200m. Similar reality checks apply for PS2 and DS. Short of Sony completely stopping PS2 production and PS2 getting squeezed off shelves, it is not hard to imagine stores buying games for the 38/100 active PS2s in homes next fiscal year (Guitar Hero, Madden, etc will still be popular on PS2). As for PS3 and Xbox 360, faster declines in average game purchasing should come as poorer demographics begin to buy those machines in larger numbers, but in the short term this will be offset by the sheer number of people buying the machines compared to earlier periods.

Continuing the trends outward as in the chart above hints at the totals each machine could reach. Declining the number of games the average user of platform x purchases through the next decade gives the following totals when reasonable hardware shipment estimates are used to determine how big the audience will be.

If these projections are accurate, the new DS and PSP should arrive in the year ending March 2011, while the next Playstation should come out in the year ending March 2012. The next Xbox would likely release in the year ending 2011 if the software trends above are accurate, but the Xbox 360 software figures are estimates so a FY 2012 could be viable too if that is when the decline starts. Nintendo could probably get away with launching its next console in the year ending March 2013, but it would be wiser to launch with the next Xbox and Playstation in the March 2012 year. Next generation machines tend to launch when the decline in ‘old hardware’ software shipments is just starting to become pronounced. Ideally, the new hardware system is supposed to allow the software peak from the previous generation to be maintained through the decline of the older system. In Nintendo’s case, the estimate above has 540m units of software shipped in the year ending March 2011. But DS will be in an accelerating decline by that point. That is why Nintendo is likely to launch the next DS that year, so that the 493m figure for March 2012 for Wii and DS can be enhanced by the new system. Transitions in the videogame industry from one manufacturing power (Atari to Nintendo, Nintendo to Sony, Sony to Nintendo are the three main transitions) to another tend to happen when a system launches too late, and with too little oomph to recreate or grow the software peak seen in the previous transition.

Conclusions and a Stab at the Future Economics of the Industry

Combining the projections for FY 2010 and beyond, production shipments for PS2 and PSP, unit sales to retail figures, and estimates for FY 2009 from Nintendo and Sony we get the following chart. Blue are estimates, green projections, red projections for the year to end this March, and orange production shipments, with black figures unit sales to retail from the big three.

Note that PS2 launched in only Japan for fiscal year one. In its first full year of availability worldwide, fiscal year three, PS2 software production shipments were 122m. In the first full year when PS3 was available worldwide, fiscal year two, PS3 software shipments were 58m. Six months of PS2 availability in fiscal year two in the Americas and Others markets added to full year availability in Japan allowed Sony to ship 61% as much software as Sony shipped for PS3 in all three world regions while available for the entire year. Another note – DS software had been tracking faster than PS2 software through fiscal year four – 370m to 350m. However, in fiscal year five, the PS2 software total will overtake DS software if only 193m DS games are shipped for the year. Given the DS slowdown, there will likely be certain years when Wii software shipments drop below PS2 software shipments. Nonetheless, through three fiscal years – partly because Wii launched in all three regions in fiscal year one while PS2 launched in one region in fiscal year one – Wii software totals are over 200m units ahead of PS2 software totals in the same number of fiscal years. Since Wii hardware sells faster than PS2 hardware, even with a slow down and a lower attach rate, it is difficult to imagine Wii software totals falling behind PS2 software totals before fiscal year seven. The more likely scenario is that PS2 eventually reaches ~145m unit sales to retail with about 11 games shipped per console, while Wii reaches ~190m unit sales to retail with about 10 games shipped per console.

With much better hardware sales and a longer life, the Xbox 360 should greatly outperform the original Xbox in terms of software. The PS3 will likely sell far less than the PS2 did, however among the base it does acquire, the users probably are going to buy more games. As a result, even though PS2 shipments will come close to tripling PS3 shipments (145m to 54.5m as a best guess at the moment) PS3 software (735m?) will only be a little less than half of PS2 software (~1570m) on an attach rate of about 13.5. Xbox 360 and PS3 hardware and software shipment totals will likely end up within 10% of each other, with the Xbox 360 ending up with a slightly higher (13.88) attach rate and marginally higher unit sales to retail (56.5m as a best guess for the moment). As for the portables, DS is much more successful than GBA ever was. DS software has already had three years guaranteed over 100m, GBA had zero. In all likelihood, DS will have six years where stores buy 100m of its games simply because the user base for hardware is roughly 100m already, and in aggregate the average DS user in FY 2009 bought 1.9 games. Next March, it will likely be ~130m DS users averaging 1.5 game purchases, so there will not be a quick fall. The PSP can probably reach GBA software totals as well if Sony chooses to support the device for another two to three years so that the hardware base can reach 75m+.

Graphically, the deterioration in games bought by the total base per year, offset by rising hardware shipments tends to result in a big peak in FY4-7 for software.

Despite the projected higher Wii peak and higher Wii software totals, the PS2 will likely have a slower decline, resulting in Wii beating PS2 software by only ~530m instead of the 630m it reaches before the brown line cuts ahead of the dark blue line in fiscal year nine. DS had greater hardware shipments (31.5m vs. 22.5m) than the PS2 at its peak, but the PS2 software market will remain bigger than the DS software market. This will largely be a function of attach rates (187 * 6.6 for DS compared to 145 * 10.8 for PS2) where PS2 will end up with over a ~64% advantage to DS, offsetting the ~29% advantage DS will have in hardware shipments.

What does it all mean?

Well, if we run out the peaks and declines of the platforms and take a stab at the introductions of new software markets based on timing the declines of the current machines, here is an estimate of how the big three manufacturers could perform through fiscal year 2016:

The transition out of the Wii generation is likely going to be very important for publishers. Normal transitions are important, but this one will be especially relevant for three reasons. First, digital distribution will probably begin seriously undermining retail shipments after the year ending March 2011. After peaking at 900m in a single year (!) software shipments to retail will likely begin a slow, but steady decline. Traditional gamer centric publishers like Square-Enix will need to make the transition to publishing digital games because that is where the technophile audience will be. Second, PS2 and PSP software totals will likely total less than ~60m combined after March 2011. PS3 will likely be at or just off its software peak still in the year ending March 2012. Nonetheless, new platforms – likely the PSP2 and PS4 – will be needed to prevent Sony from shipping less than ~150m units of software in a fiscal year after averaging 250m units of software shipped per year for over a decade. Choosing whether to publish a game on a disc, or by digital distribution, and for which platform will be essential for publishers supporting the new Playstations. Lastly, consoles are likely to begin approaching parity with portables in terms of software. The jump from DS and PSP to DS2 and PSP 2 will likely be noticeable and relevant to consumers in terms of graphics and features in the traditional way that console jumps used to be. New portable systems will still be significantly differentiated from a PC or a home gaming console, while retaining the benefits of the current consoles (downloadable music, games, movies, etc) and current portables (cheap hardware, touch screen, small, cheaper games). As a result of the increases in downloadable games and portable games, the console market for ‘physical’ retail games will begin to shrink at an accelerating pace once the DS2 and PSP2 take off.

With fewer licensing fees on downloadable games, and lower licensing fees on portable games, consoles will not be economically viable as technical behemoths anymore. Since portables will be nearly identical in power to consoles at some point in the next ten years, consoles will rapidly begin to lose their purpose toward the end of the next decade unless a new innovation, like virtual reality, which is not possible on a portable, emerges.

Contact Vgchartz at jmazel@vgchartz.com

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Solid_Snake4RD (on 04 February 2010)

huge article.time well spent

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TheSource (on 03 March 2009)

Because working down from the year ending March 2009...there were about 68 out of 100 PS2 sold worldwide (based on what stores are buying) for the year and the rate will decrease further next year. I estimated the decreased rate to be a little less than half the current rate - 38/100 in the year ending March 2010.

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Kai Master (on 02 March 2009)

Very interesting, so you guess on 190M Wii, 187M DS and 145M PS2...
Just one question : "it is not hard to imagine stores buying games for the 38/100 active PS2s in homes next fiscal year" : how do you know there's 38% still active PS2?

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mike_intellivision (on 26 February 2009)

Is there any way to estimate a total shipped number for PS2 and PS3 -- since they appear to be the only systems with both types of Sony data? I would guess it would mean making some decrement on the 2006 figures.

Mike from Morgantown

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TheSource (on 26 February 2009)

Game Gear only did about 5m worldwide so it isn't included. Only devices to top 10m worldwide or 4m in a single region are.

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saibotex (on 25 February 2009)

egad !!! my nose bled !

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City17 (on 25 February 2009)

Awesome!

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Johann (on 25 February 2009)

Wall....of.....text....too......big!

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Haggy (on 25 February 2009)

Simply amazing!

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Cheebee (on 25 February 2009)

Good grief, what an insane amount of awesome stuff... O.o
I think my head hurt now. I don't know, can't think, too much information. :p
Wow man. Congrats on this fine piece of research and writing.

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crumas2 (on 25 February 2009)

Very nice. This really helps to put certain trends into perspective.

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CATCHORA (on 25 February 2009)

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llewdebkram (on 25 February 2009)

Poor dreamcast with only 2 years.

It was a great machine, ahead of its time and superior to all last gen's consoles.

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bobbo19 (on 25 February 2009)

i agree with Arsenal, outstanding from Sony. Looks like Nintendomination will continue until 2016 then

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Games fanboy (on 25 February 2009)

Awesome article :)

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TheSource (on 25 February 2009)

Sony predicted 10m PS3s shipped for the year ending March 2009 and I see no reason why they'll miss their target. Through March 2008 they had shipped 12.85m PS3s.

As for Microsoft, they had shipped 28.5m Xbox 360s through December 2008, and so I think it is reasonable to expect them to be at 30.3m shipped through March 31.

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Hephaestos (on 25 February 2009)

I hardly see how you can justify that the Wii and PS3 SW curves are the only ones with such a sharp decline.... The lenght in FYs is relative to the peak point in every graph but these 2 have a shorter peak than others...
I can understand a DC senario for PS3 as the userbase will not be extravagantly large, but when you estimate 190M users of Wii, how can you have SW sales drop so radically....


One more point.... probably due to the data being a bit outdated...did I see your march 2009 prediction at 22.83M PS3 and 30.3M 360?? how do you figure PS3 will outsell 360 by 600K in 6 weeks? Let alone any of these 2 sell 2M in that periode... (or the Wii 4M...)

Besides that, I liked browsing through your analysis, good job. (and interesting data for older years...)

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Galaki (on 25 February 2009)

TMI

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HCS (on 25 February 2009)

Awesome article but the past isnt a good way of telling the future. No matter how u spin it. Or Nintendo wouldnt be 1st, and Sony wouldnt be last. From this year to 2016 Sony and Nintendo will consistently outsell microsoft in hardware and SOFTWARE? Seriously doubt it and 360 will more then likely keep its lead over the ps3. No one expected the wii to take off like it did and the ps3 to still be behind considering it's predecessor. Something as strange could happen next gen, u never know.

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Commando (on 25 February 2009)

wow thats a lot of reading. Thanks guys! Great work.

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MasterZack (on 25 February 2009)

Nintendo is back... thank god.

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nordlead (on 25 February 2009)

crap, I could handle reading the test version of this article, but it is way to late now, and it is way longer, so I'll have to come back to this later.

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puffy (on 24 February 2009)

This is awesome!

This is what seperates VGChartz from the rest. Excellent work Jacob!

With your analysis on software sales leading to new systems, do you think that perhaps the manufacturers will instead try to prolong the life of their hardware as the recession may get them to think twice about launching new hardware?

I don't know I just see some of those hardware releases to be a bit earlier than they need to be..

Great analysis though!

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TheSource (on 24 February 2009)

Arsenal...the years end in March. So its really PS2 sw shipments topped Wii in the year ending Mar 2008 (mostly 2007)

PS1 sw production shipments were 10m for the year ending March 2005 Averyblund...thats nothing for a company as a big as Sony frankly. Its like calling a crumb a pie for them.

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ph4nt (on 24 February 2009)

Excellent article! It's stuff like this that caused me to come to this site =).

Keep up the good work!

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Destroyer (on 24 February 2009)

This is very insane. For persons like numbers in the VG.

Loucura total esse artigo pra quem curte numeros nos vg.

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averyblund (on 24 February 2009)

Nice report. The one thing that really surprised me was how well the PS1 was doing even up until 2005. Holy crap what a monster.

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arsenal009 (on 24 February 2009)

Wow, great job! Lots of info here. Looking at sales figures on this site week in week out, i would have never thought ps2 sold more software than Wii in 2008.

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Elite1 (on 24 February 2009)

WOW

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outlawauron (on 24 February 2009)

My oh my. This is overflowing with awesome info!

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tarheel91 (on 24 February 2009)

drool Why wasn't this available when I was writing my term paper about this stuff last year? Still amazing, nonetheless.

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1337 Gamer (on 24 February 2009)

nice job! very good read

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elgefe02 (on 24 February 2009)

excellent work Jacob!!!

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sonyfanatic (on 24 February 2009)

Finished the whole article in an hour this is amazing!!

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Neptune (on 24 February 2009)

great stuff! I thought 1 simple chart and some writing would have been sufficient but you went above and beyond.

Segan never had a chance, they never even came close. The Genesis was their only hope.

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TWRoO (on 24 February 2009)

You weren't lying when you said you were one of those things Pachter is (can't remember the term) meaning you like to analyse things down to the minute details and forsee any eventuality.

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NintendoMan (on 24 February 2009)

Well done TheSource. That was well written and researched. Bravo old bean. Its articles like this that make VGChartz great.

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TheSource (on 24 February 2009)

Digg please :)

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BengaBenga (on 24 February 2009)

This is insane!
Awesome article, incredible amount of work!

I'll need at least tomorrow as well to finish.

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Slimebeast (on 24 February 2009)

Wow that is a sick amount of data. Is there any way to sticky these kind of articles?

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TWRoO (on 24 February 2009)

Ok my eyes hurt, I will have to read this later.

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TWRoO (on 24 February 2009)

Holy crap.

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TheSource (on 24 February 2009)

Alright...its all working now

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TWRoO (on 24 February 2009)

What's the difference between red, blue and black in that spiffy table?

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nordlead (on 24 February 2009)

I would say no. It looks like graphs are missing, but interesting none the less.

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