The good news for the industry in the Wii generation is this: despite higher initial pricing - $250-$600 for Wii, PS3, and 360 vs. $200-$300 for GC, Xbox and PS2 - each system is outperforming its 'true predecessor'. That is to say Wii is outperforming PS2 in first place, X360 is outperforming Xbox in second place, and PS3 is outperforming GC in third place. To be clear, this is based on the following criteria:

1) Equalizing system availability in weeks by region.

2) Ignoring launch timing. Remember PS2 launched in October 2000 in the USA, and March 2000 in Japan. PS3 came out November 2006 in Japan and the USA, but arrived in March 2007 in Europe. Comparing weeks 1-100 in Japan then is comparing March 2000-March 2002 for PS2 to November 2006 to November 2008 in Japan for PS3. That is a different time frame, even though the length is the same then what you have in Europe where weeks 1-100 for PS2 ran from November 2000 to November 2002 and March 2007 to March 2009 for PS3. So the 100 week launch period in Japan is over 6.5 years apart, while in Europe it is less than 6.5 years apart.

3) Ignoring the multiple launches in the Others region and focusing on Europe, Japan and the Americas. PS3 for instance launched in some Asian nations outside Japan between the Japanese and European launches.

4) X360 launched a year ahead of PS3 and Wii - so we have more data for X360 comparisons.

If you add the 150 weeks on the market the Wii generation systems have been available (estimates are used for PS3 at datapoints 140 & 150 in Europe) in Japan, the Americas, and Europe you can see that they are clearly outperforming their 'true predecessors' - the systems from the past selling most similarly.

Alot of the trouble publishers have had in this generation stems from the fact that in their first thirty weeks or so on the market, Wii performed similarly to PS2, X360 performed similarly to Xbox, and PS3 performed similarly to GC - but game development costs had sky rocketed and attach rates had remained comparable to last generation. After this initial hiccup though, Wii has begun to outperform PS2 substantially (except in Japan where it is 3m+ behind through 150 weeks), and PS3 and X360 are well ahead of GC and Xbox.

Sony has been hit hard this generation though. Even with aggressive price cutting, the PS3 distance from PS2 remains enormous through 150 weeks. The triple stands over 22 million units behind PS2 over a comparable time frame.

As with the previous price cuts, the PS3 stopped dramatically falling behind the PS2 pace with the most recent price cut to $300 and the introduction of the slim model. Bigger games will keep the yellow line around -22.5m for some time - but given the trend over the last 150 weeks the PS3 will continue dropping even further off the PS2 pace at some point.

Microsoft's trend is slowly becoming strongly positive. At 200 weeks the original Xbox was almost done selling. The X360 is still at or near its peak which is why it is over 8m units ahead of Xbox through 200 weeks after only being 1m units ahead through 100 weeks.

Nintendo's GC to Wii growth is rapid and will peak much higher than 36m - as the Wii is destined to sell far more than 58m units (GC shipments were 21.7m, Wii is 36m ahead to date).

In aggregate these trends are positive. Through 150 weeks, Wii + PS3 + 360 sales in Europe, Japan and the Americas are 20% higher than where PS2, GC and Xbox were at 150 weeks in the three regions.

If you break down the data further, it isn't quite as rosy. Europeans and Americans are driving the growth by themseleves - Japan is hindering it significantly.

The growth in Europe is most impressive of the three regions - 50% through 150 weeks.

Through 150 weeks, the Wii generation base is 12m higher in Europe, and 7m higher in the Americas than the PS2 base was over a comparable time frame. The European current generation console market through 150 weeks has gone from being 60% of the size of the Americas market to 79% of the Americas market. This ongoing emergence of a second huge western market has helped to offset the declining Japanese market through 150 weeks.

Nonetheless, as the Wii and PS3 bases get more compelling third party content there is still a shot that the Wii generation will overtake the PS2 generation in Japan as it has elsewhere in the world.

For some reason, the PS3 has been able to remain relatively close to the PS2 pace for in Europe for Sony even though PS3 has long ago fallen well off the PS2 pace in Japan and the Americas. This European development comes even though Nintendo and Microsoft have made strong inroads into the region. Note: PS3 positions for weeks 140 and 150 are estimated as PS3 has only been out for 137 weeks in Europe.

In Europe, the increased market share for Microsoft and Nintendo has not hurt Sony too much because the pie has grown from eight slices to twelve. This is the benefit of enormous industry growth. In the Americas, Nintendo and Microsoft are hurting Sony much more severely as the market is not growing as fast.

This bring us back to Japan. Microsoft has improved its position a bit in Japan, but the Wii effect has been least strong in Japan. PS3 continues to fall further and further off the PS2 pace as well. The net effect here is negative, unlike in the other two regions. With the PS3 and Wii price cuts there is some room for PS3 to flatline rather than drop lower against the PS2 pace and for Wii to grow move beyond the ~5m ahead of GC pace it has been stuck at for weeks now. Still, unless Wii gets close to PS2 again, it won't really matter than PS3 is going to beat GC and that X360 is going to beat Xbox in Japan.

If Japan ever rebounds to the point where the Wii generation machines are ahead of the PS2 generation machines - the current round of systems is capable of 30-40% growth over the last round.

Since week 150 in Japan, the blue line above has actually continue to curve and is now only very slowly trending down thanks to Sony's most recent price cut and new model. Nonetheless, at week 150 PS2 was only 7.97m units ahead of PS3 in Japan. Through week 156, the most recent week of data that had widened to 8.13m units. That is an improvement in the rate of decline though, as at week 140 PS3 was 7.20m behind PS2 in Japan. So instead behind PS2 by 797,000 in ten weeks from week 140 to week 150, it is looking like PS3 will drop off the PS2 pace by another ~265,000 going from week 150 to week 160.

Conclusions

Through 100 weeks, it looked like Sony's PS3 still was rapidly falling behind the PS2 pace despite aggressive moves by Sony.

This continued well into the current fifty week period. However, from week 125 to week 150 the PS3 has stabilized at about 22m units behind the PS2 pace. This is happening for two reasons - the PS2 peaked in the Christmas 2002 shopping season - right about 110 weeks into its western life. PS3 in contrast, has seen rising sales over the same period. That is why the yellow line is flat in recent weeks.

Nonetheless, the pattern has been slow fall, four month stabilizing pace, bigger fall, longer six month stabilization, huge fall, followed by the current nine-twelve month stabilization. Once the current stabilization period ends, PS3 will probably drop quick enough to end up close to 30m units or more behind the PS2 pace through 200 weeks. The interesting part of this pattern is that we have some idea how well PS2 is going to sell now - shipments will probably be a little short of 150m worldwide over the course of ~500 weeks.  If PS3 is off the PS2 pace by 30m through 200 weeks, that rate will likely accelerate over the next 200 weeks when PS4, X720/Natal, and Super Wii release. Even if those systems flop or never come to exist, Microsoft and Nintendo have meaningful pricing advantages over Sony. Conservatively, PS3 could be 60m behind PS2 through 400 weeks (still almost 70m ltd by that point), and a pace 75m behind PS2 through 400 weeks strikes me as about right given the likeihood of some new systems and the realities of the PS3 price.

We can make similar but less certain prognostications about the Wii. The Wii is 36m ahead of GC through 150 weeks after being ahead of GC by 24m through 100 weeks. Wii is also 3.5m ahead of PS2 through 150 weeks after being ahead by about 6.6m units through 110 weeks. The PS2 never had a 10m quarter - and Wii is going to have another one from Oct-Dec 2009 so Wii will end up more than 3.5m ahead at 170 weeks. For me the Wii vs. PS2 pace comes down to if Wii is ahead through 260 weeks (5 years) by 10m or so. My belief is the PS3/360 base will upgrade to new systems faster than the Wii base - and this will cause the HD software market to shrink faster than the Wii software market. The new systems will be released not because Sony or Microsoft want to put out new systems, but because software revenues from PS3 and 360 are probably going to peak in 2010, and there is no significant supplementary gaming revenue stream to offset that - PS2 and PSP are having their last big software years in 2009. Nintendo however can lean on DS in the way Sony leaned on the PS2 in 2006-2008 for what amounts to free money if it chooses to launch later/earlier than fall 2011. With cheaper development costs on the Wii, declining HD software revenues with costs still high in 2011, and a Wii base 85-100m ahead of new systems developers will have no choice but to ride out the Wii in the transition. If the Wii base is at 90m in the summer of 2011 and developers do make this switch, then the Wii has a real shot at making or exceeding the PS2 base. Any other combination of events, even flat HD software sales from 2010 to 2011 - would probably result in Wii falling between GB (118.7m) and PS2 figures (~147m) lifetime.

Microsoft is a wild card. Natal may yet be benched from this generation to differentiate X720 from Super Wii and/or PS4. But if it releases this generation I suspect it will have only a modestly positive or negative impact on X360 - either pushing the system ahead of PS3 for the rest of the generation or damaging the carefully cultivated brand Microsoft has developed. Microsoft can sell 50m-60m X360s as is - Natal can add or subtract 10% to that figure.

It is probably best to save Natal for the next generation as developers will not like developing for a PS3 motion set up, Wii, and a 360 motion set up late in the product battle after thinking of the machines in set ways for the previous four years. Even a 5m motion base on X360 by the end of 2011 probably is optimistic. On a new system, the device could easily be in 10m homes within two Decembers - a much better outcome for everyone as Microsoft would collect more royalty money and developers would have cheaper tools and a wider base.

Contact Vgchartz at jmazel@vgchartz.com