In its May 2008 Dossier, DFC Intelligence is forecasting that the current generation of game consoles will exceed the installed base for the prior generation of consoles in 2011.
The company revised its earlier forecast of an installed base of 180 million current generation consoles by 2012 based on strong 2007 sales and is not concerned with the possible effects of a slowing economy.
"Ironically, a slowing economy can actually help the game industry. Videogames provide a high rate of entertainment return and high gas prices actually encourage people to stay at home and play games," the report said.
Overall, the Wii will lead the current generation as it "has enormous momentum and appeals to the broadest audience." DFC also thinks that in 2008 the Wii could set the record for the most consoles sold in a single year due to continued demand.
Even so, DFC's analysts note that most of the biggest software titles of the current generation - Halo 3, GTA IV, Gears of War, Metal Gear Solid 4 - aren't available on the Wii. Thus, for many third-party publishers, the more important race is between the Xbox 360 and the PlayStation 3.
Between these two, DFC forecasts that the PS3 will overtake the Xbox 360 in 2009 and finish in a strong second place behind the Wii. Software sales for Sony's console should surpass Wii software sales in 2012 according to their estimates.
"The Xbox 360 was unable to take advantage of Sony's struggles to build the type of large lead needed to maintain a long-term advantage," DFC said in its report.
DFC Intelligence assumes that new systems will launch in the 201-2013 time frame, based upon prior history, but it notes that this is all very hypothetical. With the success of the Wii, Nintendo may not be in any hurry to launch a new system. Given its losses, Microsoft may not decide to stay in games business. And if Sony is serious about a projected 10 year life cycle for PS3, it may not want to launch a successor any time soon.
Regardless of whether completely new systems will be released in that time frame - or if "new" game systems will simply be an extension of current systems with enhanced features and services - DFC Intelligence notes that the importance of consoles appears to be on the decline.
Not only was the PSP Sony's best-selling hardware, but the Nintendo DS blew out records for hardware sales in a single year. In addition, if online services are considered, the PC was the biggest revenue generator last year.