For the second year in a row, Wii sales have fallen.
For the fifth year in a row, journalists have seemed to completely misunderstand the console industry.
Xbox 360 and the PS3 gambled that being HD would be enough to put make them the top two consoles but that didn’t happen. Superior graphics can be a huge advantage for any console and the difference between HD and SD games is huge. So why did the Wii outperform the superior consoles? HD penetration. PS3 and 360 were competing with each other for the HD market. In 2006 not everyone had the desire or the money to buy a new HDTV as well as a console. HD consoles came to market too early. The PS3 in particular was held back by the HD-DVD / bluray format war. Sure Sony won, but too late to help the PS3 gain dominance.
It’s taken four years for the HD market to mature to the point where sales of PS3 and 360 *combined* are just barely outnumbering sales of the Wii. The latest figures show that not even 1 in 2 homes in the US have an HD television.
I’m not too worried about Nintendo. Given their track record of releasing a new console every 5 years, in another year or two they’ll announce a new HD console that will likely be technologically superior to the 360 and PS3. Keep in mind the Wii is four years old.