Jarrod, if Nintendo meets its Wii forecast, this will be the third year in a row of Wii SW shipments at almost 200m units annually. The Wii is certainly seeing purchasing rates decline per user, but in terms of units sold the market is as robust as ever, especially if you look at shipped figures.
Wii SW (Bundled & Non Bundled SW Total)
FY 3 2/2009 - 202.5m
FY 3/ 2010 - 191.8m
FY 3/2011 Forecast- 197m (165m*)
* Iwata said the 165m does not include software bundled with hardware. Given 16m Wiis will be shipped outside Japan, and two games are bundled, you can reckon the bundled figure is about 32m, depending on when the new Wii sku with two games reached the USA.
One way to look at it is if new users get two games included and buy two additional games in the FY on average, then you have 18m new Wii owners buying (16m * 4) (2m * 2) 68m games, while the existing base entering the fiscal year of 70.93m (through for Mar 2011) buys 129m / 71m games on average, or 1.82 games.
Its only when new hardware sales fall below 8-10m ( ((9m * 4) (1m *2)) = 38m) and existing users only support a 40m market or so that the Wii will really decline, and thats a bit away yet, as most third parties (who have less than 2% of the Wii sw market annually) will start to really struggle to break even at that level.