Games industry enjoys a bumper 2007

Recession? What recession?

While the US markets teeter on the edge of financial meltdown, the games industry has just enjoyed its strongest year ever, with record sales of $18 billion - up from $12 billion in 2006.

Year-end figures from US market research firm NPD and analysis from the next-gen.biz website show that the three leading console makers - Microsoft, Sony and Nintendo - all had a bumper 2007.

An obvious winner

Nintendo was easily the biggest winner of the three. It took top-spot in terms of sales in all but one month of the year, when on the back of aggressive price cuts the Wii was temporarily outsold by Microsoft's Xbox 360. Overall though, Wii sales rose by a robust 124 per cent year-on-year, as demand for the Wii far outstripped production rates.

Interestingly, during December last year Nintendo sold more Wii consoles worldwide than it claimed it could actually produce. This has led to some speculation that the company may have stockpiled consoles earlier in the year. While that charge remains unproven, the Wii was by far the most in-demand console over Christmas 2007, with total December sales in the US of over 1.3 million units, with a further 670,000 sales in Japan.

Sales of Microsoft's Xbox 360 console rose from a total of just under four million in 2006 to well over four and a half million in 2007, an annual increase of 17.7 according to NPD's figures. This surge was despite the very public admission from Microsoft that hardware failure rates were much higher than they had envisaged.

Consumer fears over the 'red ring of death' clearly didn't materialise into a drop in sales then.

PS3: the comeback kid

Sony also enjoyed a successful 2007, although sales of its PS3 console lagged some way behind that of its main rivals. Like Microsoft, Sony was able to turn the console's fortunes around mid-way through the year with some aggressive price-cutting and the introduction of the cheaper 40GB PS3 model.

Sony's PS2 console also continued to sell surprisingly well, no doubt on account of its low price-tag and huge back catalogue of games.

So, what are the predictions for 2008? Well, by plotting all the data and comparing the resultant graphs next-gen.biz predicts that the 12-month head-start enjoyed by Microsoft means that its 360 console will remain the leader in terms of sales by the close of 2008.

Nintendo's Wii console won't be far behind though, with Sony's PS3 some way behind. Of course, should consumer interest in Blu-ray suddenly take off, then that could all change.