PORTLAND, Ore. (TheStreet) -- Enjoy setting up your pre-purchased Playstation 4 and Xbox One consoles this week and lording it over your friends, gamers. It may be the last time you're that excited about a home video game console, if not the last time you see one.
Sony's (SNE - Get Report) integration of the PlayStation 4 with other forms of entertainment, cloud-based gaming, the PlayStation Vita handheld gaming system and even a gamer's existing mobile devices -- as well as Microsoft's (MSFT - Get Report) use of similar connections for its Xbox One -- continues a drift away from dedicated gaming devices that continues to alter the video game industry. While some new hardware should boost an industry that saw sales of consoles, games and accessories slide 22% last year and 9% the year before -- with console sales through October already down nearly 19%, according to VGChartz -- there are far greater threats ahead.
Video game streaming through services including Valve's Steam and OnLive are pressing console makers into increasing online offerings from the already substantial content available on their online services. Meanwhile, the introduction of third-party streaming hardware including Mad Catz's Google (GOOG) Android-powered M.O.J.O., Nvidia's (NVDA) Shield and Valve's own experimental Steam Machine are threatening Sony, Microsoft and Nintendo with both content and pricing.
Handheld consoles aren't going to save console makers, either. Nintendo has found tremendous success with its 3DS handheld console, but its nearly 37 million sales since 2011 are troubling when compared with the nearly 30 million iPhones Apple moves in a quarter. Flurry Analytics estimates that Nintendo's share of the handheld gaming market has decreased from 70% in 2009 to just 36% in 2011 as smartphones ballooned from 19% to 58% of the mobile gaming market during the same period. Mario still has some clout in the market, but the $1 to $4 app is crushing him like a toadstool.
The gaming world has changed drastically since the Nintendo Entertainment System breathed new life into a video game industry that crashed in the early 1980s under a glut of bad product. The NES' more than 61 million console sales were like nothing the industry had ever seen -- its ensuing Nintendo 64 and Game Cube combined never hit that mark, nor did the Sega Genesis or original Xbox -- but it was only the beginning.
As a bit of nostalgia and perhaps a primer for things to come, we're taking a look back at the five best-selling consoles of all time. The original NES didn't make the cut, but those that did tweaked the industry and changed the way the world looked at gaming forever.
5. Microsoft Xbox 360
Global sales: 80 million
Microsoft found its legs as a gaming company with this system, but it wasn't always smooth sailing. The original Xbox was plagued with technical difficulties, but even the original version of this console was hampered by the "Red Ring of Death" that indicated hardware failure and, in many cases, the demise of your several-hundred-dollar investment.
But Microsoft's Xbox Live online network, the performance of its Halo series and the rise of multiplayer gaming all kept the 360 afloat until 2010, when help arrived in the form of a new, slimmer, somewhat more technically sound console box. When Microsoft added the Kinect motion-control device to the mix, it only helped stress the system's advantages over the competing Nintendo Wii and helped vault it to the top spot in North American sales.
While hard-core gamers had always been Microsoft's focus -- with Call Of Duty, Grand Theft Auto and Halo titles making up the overwhelming majority of its Top 10 best-selling games -- fixing the problems and throwing casual gamers a bone gave both the system and Microsoft a much-needed boost. Need proof? The best-selling game in console history is still the packaged-in Kinect Adventures!, with roughly 20 million copies sold.
4. Sony PlayStation 3
Global sales: 80.4 million
Sony was in the driver's seat when this generation of consoles first hit stores, yet somehow found a way to drive its new piece of hardware into a wall in its earliest days.
The original version of the PS3 had great little features including a Blu-ray disc player and backward-compatibility with the wildly popular PS2, but it was incredibly expensive compared with the other systems on the market. Even a few years into its release, the PlayStation 3 was being outsold by the PS2 here in the U.S. Security issues with the online PlayStation Network didn't help, nor did the fact that it never quite caught on in the U.S.
Sales in North America sit at roughly 27 million, which still trails not only the more than 40 million sales apiece of both the 360 and Nintendo Wii, but the nearly 33.5 million Nintendo Entertainment Systems sold here from the mid- to late-80s and early '90s. It is the least-popular PlayStation home console ever sold in the U.S. and owes a whole lot of its strength to the European market, where sales of Sony's Gran Turismo and Electronic Arts' (EA) FIFA Soccer series helped vault them into the PS3's best-selling games of all time.
The PS3 still lags behind the Xbox here in the states, but it's basically become Europe's Xbox. If the PS4 can get a better start out of the gate than its predecessor, the world may again be Sony's for the taking.
3. Nintendo Wii
Global sales: 100.3 million
The geeks and fanboys still froth over this. How can a console that didn't have high-definition graphics and wasn't home to much third-party content beat the ever-loving snot out of competitors who'd cornered the market on "serious" gamers?
Because Nintendo remembered the one constant of its existence: That the world is full of non-serious casual gamers who have fun in short bursts and aren't opposed to cute, happy little unarmed characters on their screens. Oh, and they don't mind moving around a bit.
While Sony and Microsoft played to the multiscreen, multi-hour, multiplayers huddled in dark rooms with their headsets on and cans of Monster (MNST) Energy in hand, the Wii found its way into familiar Nintendo territory such as family rooms and little kids' playrooms. It also made new friends in retirement homes, physical rehabilitation facilities and other places that weren't so much interested in leading a fake SEAL team through a rubble-strewn battlefield as they were in playing a game of golf or keeping fit through a series of video game exercises.
Nintendo's underpowered underdog drew much of its power from homegrown games such as the Wii Sports and Wii Fit series, but its Top 7 titles have outsold any game released for the Xbox or PS3. Yes, Wii Play was the game you got with a spare controller, but Wii users played it. Yes, Mario Kart, Super Smash Brothers and New Super Mario Brothers Wii are just rehashes of old franchises, but what number Call of Duty release are we on again?
Nintendo admittedly has a tough road ahead of it with the next-generation Wii U, but the continued success of its 3DS and the fact that the original Wii still outsells the PlayStation Vita here in the U.S. suggests Mario and Co. still have some magic left.
2. Sony PlayStation
Global sales: 102.49 million
Then again, Sega was considered a Nintendo-caliber gaming company right around the time Sony's PlayStation came onto the scene.
Sega and Nintendo had run neck-and-neck with their 16-bit Super Nintendo and Sega Genesis systems a generation earlier and Sega had put a lot of time and considerable capital into building its 32-bit Saturn. Nintendo had 32-bit plans of its own and partnered with Sony to make a disc-based add-on to the Super Nintendo. The folks at Nintendo didn't like the fact that a contract between the two companies gave Sony complete control over software titles made in the new disc format, but had plans to release a "Play Station" that played both new 32-bit discs and existing Super Nintendo cartridges as recently as 1992.
A lawsuit and resulting agreement finally divided the two companies, and the PlayStation went forward without Nintendo in 1994. Sony ended up more than doubling the sales of Sega's Saturn and Nintendo's ensuing, cartridge-based Nintendo 64 combined. The games got grittier, with gamers introduced to the dark horrors and terrible voiceovers of Resident Evil, the battlefield conditions of Metal Gear Solid, the near-arcade quality of Tekken 3, the racing realism of Gran Turismo and the long, layered quests of the Final Fantasy series. And memory cards were there to save all of it.
Sony did what Nintendo wouldn't do and what Sega paid too much to do with titles including Virtua Cop, Daytona USA and Virtua Fighter -- it grew up. It brought video games out of the realm of childish things and arcade nostalgia and into their own as a potent, grown-up entertainment option. It gave console gaming its hard core and set the stage for even greater growth.
1. Sony PlayStation 2
Global sales: 155 million
This is the one that changed everything.
Gamers with clouded memories tend to think of the Nintendo Entertainment System as ubiquitous, but it didn't occupy any central portion of a gamer's life. The games in arcades still had better graphics than the NES could provide, the system itself didn't do anything other than play video games and the hours dedicated to games weren't any more than perhaps the Legend of Zelda series and early role-playing games commanded.
The PlayStation 2 blew all of that right out of the water. There's a reason that the last of the great arcade games came in the late 1990s, and it's largely because this console made them unnecessary. There was nothing that a quarter-fueled cabinet could do that the PS2 couldn't do just as well or better -- and in more compelling fashion. The Grand Theft Auto series from GTA III on wasn't embraced simply because it allowed gamers to pick up hookers and take on a city full of cops -- though it didn't hurt. Those games presented gamers with the sprawling, seemingly limitless landscapes, minigames, "easter egg" hidden features and other elements that would prepare the gaming world for the massive, multiplayer future ahead.
The Medal of Honor series seems dated and limited now, but it was the window onto the world of first-person shooters that awaited in years to come. Also, while archaic, the PS2 introduced some of the earliest forms of online gaming and brought games out of the living room and into the rest of the world.
It was also the first system for which being a video game console wasn't enough. While the original PlayStation could play CDs, the PS2 was -- in many cases -- a gamer's first DVD player. The controls were a bit clunky, but it got the job done for roughly the same price as midrange DVD players of the time. It wasn't just a home gaming system; its functionality and outputs could make it the core of a home theater system.
How beloved was the PS2? Not only did it outsell the PS3 for years here in the U.S., but worldwide sales of it didn't end until this year. Even after that happened, a handful of developers were still making versions of new games for it. By making it about more than just fun and games, the PS2 became a central fixture in both living rooms and lives. It also may have represented the beginning of the end for console gaming.
-- Written by Jason Notte in Portland, Ore.
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