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And the winner of the console wars is ...

Much ink has been spilled over the so-called “console wars” between the new Nintendo Wii, the PlayStation 3 and the year-old Xbox 360. So now that the Christmas season is over and the numbers have been tallied, who won the home-console slugfest?
What was the best-selling home console of the holiday season? Believe it or not, the six year-old PlayStation 2.
What was the best-selling home console of the holiday season? Believe it or not, the six year-old PlayStation 2. Sony

Much ink has been spilled over the so-called “console wars” between the new Nintendo Wii, the PlayStation 3 and the year-old Xbox 360. So now that 2006 is over and the numbers have been tallied, who won the home-console slugfest?

The PlayStation 2.

That’s right. The PlayStation 2 outsold all next-gen consoles by a fairly wide margin. Sony moved 1.4 million of the six year-old systems in the month of December, according to year-end sales data from the N.Y.-based NPD Group.

The PlayStation 3 sold a respectable 490,700 units in the U.S. in December, and 687,300 since its November launch. And Nintendo moved 604,200 Wiis in December, and 1.1 million since its November release. But still — the PS2 continues to dominate the console scene.

A key factor? Well, price for one. At $129 brand-new, the PS2 is roughly one-fifth the price of its tricked-out younger sibling.

“The price point means it’s easy for those who are less actively involved in gaming to pick one up,” says NPD analyst Anita Frazier. “Or, pick it up as a second system.”

Another issue? Games. And that’s a big one: The PlayStation 3 shipped with just 12 titles when it launched on Nov. 17. It added a few more for the holiday season, but the numbers pale in comparison to the 1,319 games out there for the PS2 in North America.

OK. Cheap and lots of games. Did we mention that the thing was actually on store shelves, unlike the Wii and PlayStation 3? That was a big factor in the legacy system’s success this year, too.

It’s definitely a chicken-and-egg situation for new consoles, though: Buyers aren’t going to pick up a new system — particularly not one with a base-model price of $500 — unless there are games to play. But developers are leery of putting millions behind game-development for a system that doesn’t move lots of units.

“There’s more risk in newer platforms,” says Frazier. “If you publish for the PS2, you’ve got a nice base.”

Brian Lam, from Red Octane, the company that publishes the “Guitar Hero” series, echoes that sentiment.

“We’ll be on the next-generation systems — it’s a natural progression,” he says. “But you need to go where your fans are.”

Now, lest you think the “console wars” were a total bust, consider this: Sony and Nintendo would have undoubtedly sold far more systems if not for manufacturing shortages.

It’s those shortages that weigh heavily on the minds of game developers. Even though teams salivate at the thought of creating games for the latest and greatest hardware, it’s not always a good business decision.

“With [game] budgets in excess of $18 million, if you don’t have enough hardware in the market, you’re not going to make money in software,” says Capcom’s Chris Kramer. “It’s like making tires for cars that don’t exist yet.”

From a bean counter’s perspective, the PS2 is a slam-dunk. It boasts a monster installed base: 32 million in the U.S. alone, and an estimated 111 million worldwide. Sell to just 1 percent of that audience, and you’ve moved over a million games. That’s a hit from anyone’s perspective.

But it isn’t only the third-party developers that keep going back to the PlayStation 2 well:  The money generated by the cash-cow enabled Sony to plow resources into the creation of the PS3 — and numbers like the ones in December will help float the newer system for a good long while.

“We’ve got a full plate of games through the end of the year for the PS2,” says Sony’s PR chief Dave Karakker. “There’s still a lot of life left in this console.”

That said, don’t look for game studios to create marquee titles for legacy systems at this stage. While PS2 games may still sell well — two of the best-selling games this holiday season were, in fact, PS2 titles: Activision’s "Guitar Hero II" and Electronic Arts’ sports juggernaut "Madden NFL 07” — at some point, gamers and studios need to move on.

Rockstar Games, makers of the iconic PS2 franchise “Grand Theft Auto” released a PS2 game, “Bully,” late last year. But according to company spokesperson Rodney Walker, all development heretofore will be for next-gen systems.

Capcom isn’t pulling back that quickly, with PS2 titles slated until the end of 2008. “But after 2008? Not so much,” says Kramer. “As more PS3s and 360s come out into the wild, it’ll be easier for Capcom to get a return on its investment.”

Sometimes, a great game can move consoles, like “Halo” did for the original Xbox. But the notion of console-exclusivity is increasingly rare these days, unless, as Karakker puts it, the hardware company has a bag of money to give over to the developer. (Xbox and Halo are products of Microsoft Corp. and is a Microsoft-NBC Universal joint venture.)

“Gears of War,” the best-selling game of December, didn’t ship with the Xbox 360 when it launched in November 2005 — it hit shelves almost a year later. But its popularity and critical acclaim netted it a whopping 815,700 units sold in one month. It wasn’t “Halo,” but it was darn close, and probably had a good deal to do with the 360’s banner year-end sales of 1.1 million units.

Again, availability probably also played a part in the Xbox 360s popularity this holiday season. Microsoft definitely played up the fact that the Xbox 360 was well-stocked on store shelves — while the newer Wii and PS3 were as scarce as hen’s teeth.

But what could explain the other top-selling system of the season, the Nintendo DS? Yep, this pocket-sized handheld actually trumped all the home consoles this holiday, selling 1.6 million units domestically, and a whopping 10 million since its 2004 launch. That’s a lot of “Nintendogs.”

The success of the DS can largely be attributed to quirky little titles like “Nintendogs” and “Brain Age.” Frazier says that Nintendo was smart to focus not only on their established audience, but on a market that doesn’t necessarily characterize themselves as gamers. “Nintendo created innovative content that wasn’t necessarily core-gamer focused,” she says. “But at the same time, they didn’t abandon their current audience.”

Clearly, the audience for games is bigger than ever — and that’s not just evidenced by the console and software sales in December. Overall, the game industry saw a record year, with revenues of $12.5 billion, up 20 percent from 2005.

Will 2007 be another banner year? Or was the excitement of the console launches the high tide that lifted all boats? Too soon to tell. But one thing’s for sure: It’s a good time to be in games. And to be a gamer.