For Xbox 360, European hardware sales seem to have hit a wall. The target market is still too focused on adult males and the brand does not enjoy the same cachet in non-Anglo Saxon markets as it does in the US and, to a lesser extent, the UK. The FPS / shooter genre is well served on the Xbox 360 with numerous high quality titles, so satisfying the adult male demographic is not a concern, but failing to break out of a small number of genres and thereby appealing to groups outside of hardcore gamers is.

A scratching of heads has started over questions concerning the long term viability of the platform in some territories. With the UK underpinning European performance and without year on year sales improving across the rest of the region, the platform could be in jeopardy on a global basis. Despite this, some of the most eagerly awaited titles for Q4 cited by consumers are on the 360 (eg, Halo 3, Bioshock).

Xbox Live! (6 million users globally) is the beacon of hope until the end of year catalogue arrives. Publishers are keen to develop smaller more nimble games for the arcade service as they enjoy 70% of sales for much smaller development costs and often high consumer take up – money for old rope? So be it: it is a proven business model. However the question remains as to how long can the XBLA catalogue grow while maintaining high or even worthwhile levels of profitability for publishers?

While some commentators have bet their farms on the outright winner of the next gen war being Nintendo’s Wii, others are more cautious, with some suggesting the current market of casual gamers could dry up. Hence the Wii’s target market could be saturated more quickly than its competitors as the technology looks increasingly tired by comparison.

Publishers in the past have been loath to invest in Nintendo consoles to the same degree as Nintendo 1st party, so 3rd party titles have often not been as competitive. This time round, on one hand some publishers are investing much less saying they will leave the platform drivers to Nintendo and ride their coat tails by spending very little on mediocre quality titles but ones which will give some return. “We’re running a business, not to win awards but to make money – if we make breakeven plus on Wii then we are happy”, said one of the largest Japanese publishers. On the other hand, some publishers recognise the unique gaming experience of the Wii has attracted a wider, more casual market. The combination of lower development costs and fastest growing next generation installed base confers significant economic advantages in publishing games for Wii relative to competitive consoles, and this has lead to some third party publishers increasing investment levels in developing for the platform – see EA, Disney and UbiSoft (whose net income is up 70%).

One banker has concerns that lower publisher revenues from taking a bet on Wii will reduce the pot to invest in the other two platforms. “Viewed at a macro level, the share shift currently taking place where the Wii, and even PS2, are the share takers, our concern is that if software sales also begin to skew along those lines that publishers will be trading higher wholesale revenue for lower wholesale revenue,” he said. “This is coming at a time when publishers are continuing to increase R&D spending for the more expensive platforms.”

Nintendo has announced a forecast of 14 million global shipments of Wii during fiscal 2007/08. To end March 2007, global sales had reached 5.8 million. There are still concerns over Wii hardware supply constraints throughout 2007. Nintendo expects a strong summer line up from third parties. 40% of Wii owners are connected to the net and have proven enthusiastic in their adoption of online delivered, back catalogue games through the Virtual Console service, downloading over 4.7 million as at the beginning of June 2007. However online multiplayer gaming has only just begun with Mario Strikers (this is the first online Wii game to be launched).

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