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Analysis: Xbox 360 Software Sales Overtake Wii's In First-Half

As part of his <a href=http://www.gamasutra.com/view/feature/6433/npd_behind_the_numbers_june_2011.php>monthly analysis</a> of NPD's U.S. retail estimates, Gamasutra analyst Matt Matthews gives the "first clear look at Wii software unit sales falling belo

Matt Matthews, Blogger

July 20, 2011

4 Min Read

[As part of his monthly analysis of NPD's U.S. retail estimates, Gamasutra analyst Matt Matthews gives the "first clear look at Wii software unit sales falling below Xbox 360 software unit sales during a six-month period after 2007."] During the initial rush for the Nintendo Wii, retail sales of hardware and software were both exceptionally high. To demonstrate just how hot Wii software got at the beginning, let us review some historical figures. From January to June of 2007, over 2 million Wii systems were sold (bringing the installed base to just over 3 million) and, by our estimates, nearly 8 million units of software were sold. During that same January - June 2007 period, only 1.25 million Xbox 360 consoles were sold (bringing its installed base to 5.8 million) but software sales reached over 11 million units. At this point, more Xbox 360 software was being sold than Wii software. Within a year, however, the Wii's hardware base would more than triple and its software sales during the January - June 2008 period would more than triple the 2007 rate. By the end of June 2008, the Wii had just surpassed the installed base of the Xbox 360 (despite the latter system launching a full year earlier) and its software sales were 30 percent higher on that comparable installed base. The figure below shows our estimates for first-half retail software sales for the Nintendo Wii, Microsoft Xbox 360, and Sony PlayStation 3 for each year from 2007 to 2011. It represents a composite of data from a variety of sources, including official NPD Group data, company press releases, and data presented to investors by Nintendo. As the figure above shows, PS3 and Xbox 360 software unit sales during the first six months of each year have each trailed behind the total for the Wii up until 2011. We have known for some time that Wii software was declining year-over-year on a dollars basis, but this is the first clear look at Wii software unit sales falling below Xbox 360 software unit sales during a six-month period after 2007. There are two dynamics at play here, and each is notable for what it suggests about the remainder of 2011. First, we continue to believe that Wii software sales were and are driven by new Wii owners, those who have obtained a Wii in the last six months. So the outstanding increase in the Wii installed base from 2007 through 2009 drove the system's corresponding outstanding software sales. Since that period, however, its hardware sales have cooled and so have its software sales, and we expect this trend to continue throughout 2011. While Nintendo is still capable of surprising us, the Wii software release slate through the next year looks insufficient to slow the erosion of the platform's software sales. Second, Microsoft appears to have found a winning formula for promoting not only sales of its hardware but also software. Without an explicit price drop, Microsoft has produced year-over-year increases in Xbox 360 sales for every month so far this year, for a cumulative year-to-date increase of 26 percent over 2010. (The figure below shows hardware sales in the first half of each year from 2007 to 2011.) There have been ongoing offers at retailers involving gift cards, and in particular a recent deal offering an Xbox 360 with the purchase of some Windows 7 computers. While the effect of that latter deal is difficult to assess, it did apparently give a small lift to sales in June according to Wedbush analyst Michael Pachter. In his opinion, the difference wasn't close to changing the ranking of the consoles for the month, where the Xbox 360 was about 228,000 units ahead of the second-best PlayStation 3. Without any change in these two trends (weakening Wii sales and a strong Xbox 360), it seems quite likely that the Xbox 360 will be the top-selling console during all of 2011, by most any measure, units or dollars, hardware or software. Moreover, the gap between the total software units sold for the Wii and for the Xbox 360 is now shrinking. At the end of 2010, the Wii had a lead of nearly 17 million units over Microsoft's console, but that has now shrunk to just above 15 million units. It is conceivable that the Xbox 360 will end its run in the United States having sold more units of software than the Wii. Before leaving the subject of console hardware and software, we should note that the PlayStation 3 has had its best opening half of a year ever, with hardware sales near 1.7 million units (up 6 percent over 2010) and software sales up slightly (just over 2 percent). If Sony had had a hit on the order of 2010's God of War III to bolster its software lineup, it would have probably done better, but instead had scheduled lower-key releases like LittleBigPlanet 2 and Infamous 2, each a sequel to a new property, and each of which charted in the top 10 for its respective launch month.

About the Author(s)

Matt Matthews


By day, Matt Matthews is an assistant professor of Mathematics. By night and on weekends, he writes for Gamasutra, Next Generation, LinuxGames, and on his personal blog, Curmudgeon Gamer.

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