http://www.gamasutra.com/php-bin/news_index.php?story=21917

Interview: NPD's Klotz Explains Top 10 Sales Pressure

"Basically, Pareto's Principle indicates that roughly eighty-percent of the effects of something comes from twenty-percent of the causes," explains NPD analyst Michael Klotz to Gamasutra in an exclusive interview examining U.S. game retail trends.

Following December 2008's NPD results, he discussed a key trend that's changing over time: "Looking at game sales from 2000 to 2008, 29 percent of the SKUs [individual game releases by format] that were in the market accounted for 80 percent of the sales."

"Looking forward to year-to-date 2008, it's actually down to 20 percent," continues Klotz. "Another way of looking at this is by examining the top 20 SKUs per year."

According to NPD data, in 2005, the top 20 SKUs accounted for 11 percent of the total unit sales. In 2008, the top 20 SKUs accounted for 18 percent of the total unit sales, NPD has found.

"You're really seeing that those top hits are the most important thing in the industry. And getting into that top-tier release is more important than ever before."

When Klotz looks at platform-by-platform, the Wii numbers are most significant. "13 percent of the SKUs that were released on the Wii account for 80 percent of the sales." The other platforms, he says, are closer to the 80/20 principle.

And in 2008, Wii produced some especially stunning numbers, according to Klotz: "When you're looking at the Wii, what's really interesting is, when you look at 2008, the top ten SKUs accounted for 44 percent of the sales. There were 432 titles available in the market for the Wii... strictly retail."

"You're looking at 422 titles that are competing for the remaining 56 percent of the sales," Klotz tells Gamasutra. He compares that to the PS2, PS3, and Xbox 360, where the top ten games only account for 31 percent to 32 percent of the sales.

"Those top ten games are such a huge piece of the Wii business," says Klotz. "And if you look at the top ten titles for the Wii, it's Mario Kart, Wii Fit, Wii Play.

"It speaks to the amazing job Nintendo does, producing games for their own platforms," concludes Klotz.

The highly hit-driven business is tough for developers, Klotz tells Gamasutra, concluding: "There aren't as many games that are selling a lot of units... To become one of those industry-driving titles is becoming tougher. Especially on the Wii."

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So what are we to conclude from this? I immediately see two things that this data tells us; first, at least in the U.S., the masses don't seem to buying all that shovelware, as many folks here have hypothesized. Second, at least in the U.S., the sales aren't as widely spread on the Wii as I had originally thought.

What makes this last fact especially puzzling is that we know from the NPD that (at least in the U.S.) the Wii is selling more software, first and third-party, than any other system, and yet the top Wii software is invariably dominated by Nintendo itself.

Since few third-party titles are in the top ten for the Wii, and since the opposite is true of the 360, how large does the Wii software pie have to be to for it to still beat out the 360 with only 56% of its total software sales?

This is why I have been saying all along that the Wii will have trouble matching the number of million sellers of the Xbox360.
The top titles draw a lot of the sales...

Reading from this, it sounds like the wii is quite front loaded while they have 400 games fighting for a little bit of the pie. That's not good.

The 360 to me is the most balanced of the 3 systems, and they sell from all aspect.

Not good if the result of this is cannibalization of sales for the lesser-selling titles. That's what it would seem to point to, which is very unhealthy for the leading console.

Well there are a bunch of crap wares out there that i didnt even know existed.

I would agree, except for the second part I alluded to: "What makes this last fact especially puzzling is that we know from the NPD that (at least in the U.S.) the Wii is selling more software, first and third-party, than any other system..."

Which again is part of what confuses me so much; the two pieces of data seem to be contradictory, unless we assume that the Wii is a complete beast when it comes to selling software. Considering the fact that it's "tie-ratio" is fairly high (still above the PS3's) despite moving such massive amounts of hardware, it seems safe to assume that. And yet, how big can that pie actually be?

It looks like the data backs up your first paragraph, and yet we keep seeing (on this site and from publisher's releases) that several Wii games sneak in sales under the radar. So do we then assume that of the remaining 56% of software, a few dozen titles are raking in disproportionate shares of sales as well? Honest question: I don't have the answer yet.

Not completely sure what your second paragraph means, so I'll await further clarification before comment.

True, although I would like to point out that the situation is only modestly worse on the Wii than the other systems (13% for the Wii, as opposed to "closer to 20%" for the others). And again, it appears that the Wii pie is larger than the other systems.

Nonetheless, your point is well taken.

As I've stated in the past, due to this fact, the Wii will need to obtain at least 60% marketshare before the 3rd parties even consider ditching their PS360 projects in lieu of Wii exclusives.

If/When the Wii hits that, there will be a landslide of great titles for it. But not before, with the exception of titles from small publishers/Japanese devs.  60% marketshare is not out of the question, but it is a high bar.  If the Wii doesn't hit it soon, it will start to lose momentum against the PS360.  

Demographic scatter is the main downfall of the Blue Ocean strategy.  We all knew this, didn't we?

The problem is as my signature says.

95 percent of wii games are terrible.

The other 5 percent are quite good.

But wii is a system where you could be given a bag of 100 games for it, and all of them are unplayable.

But look at the numbers again. That 13/80 versus the standard 20/80 means that there's a 65% higher likelihood of your Wii title seeing poorer sales due to canibalization. That 7% difference is huge in the grand scheme of things, because skews data strongly in favor of the Nintendo evergreens and major casual, non-Nintendo successes.

Well this hasn't been unusual for Nintendo consoles. Nintendo is the only developer in the world that has games that can dominate all others. Great for them but not so great for anyone else. But, it does seem to be getting better as our sales are showing more and more 3rd party games are selling better on the Wii. I mean up til Mario and Sonic at the Olympics on the Wii, the best selling 3rd party game on a Nintendo platform was Street Fighter II. So at least progress but its hard to take down the most powerful developer in the world. The other consoles are lucky to not have that competition.

Mrstickball- yea it's not great for a leading platform but it would be worse for a losing one. Because if it was a smaller userbase then that leaves less to be sold while even if those percentages stay it still leaves a large portion of sales left over for the rest. So I'd bet if that same scenario was for the GC, which it probably was and worse, the situation was probably not as good as it is with Wii.

But it's something that needs to be worked out in the long run, but there isn't ANYTHING Ninty can do about it. Nor should they do anything about it. It's up to the 3rd party developers to try and capitalize and get sales. They have to try to beat out Nintendo. Good luck but its there responsibility. That Ninty is even trying to help them is nothing short of a good grace considering they are their competition. But they are going to have to make "Nintendo level" games as Ubisoft put it to do that. Good luck.