Surprise Winner in the Video-Game Console Wars

Three new video-game systems are battling for dominance: Microsoft's Xbox 360, Sony's PlayStation 3 and Nintendo's Wii. Who's on top? None of them. It's actually the older PlayStation 2.

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STEVE INSKEEP, host:

Now Asian companies were among the big winners during a record year for the videogame industry. New figures show record U.S. sales in 2006. Three new devices have been duking it out in the $30 billion console market: Nintendo's Wii, Microsoft's Xbox 360, and Sony's PlayStation 3. NPR's Jessica Smith reports on the winner.

JESSICA SMITH: The winner is none of the above. It's actually the PlayStation 2, which has been out for seven years. Market research firm MPD estimates that despite the hype over the new consoles, Sony sold 1.4 million PlayStation 2s in December. That compares to about half a million PlayStation 3s and about 600,000 Wiis.

These newer consoles did face supply problems but PlayStation 2 still appears to dominate, which is why Sony keeps nurturing that market by creating and licensing software for PS2 owners. Analyst Michael Goodman is with the Yankee Group.

Mr. MICHAEL GOODMAN (Analyst, The Yankee Group): There's a lifetime value of that PS2 customer, and you're making money off of them, you're making royalty payments off of them. The market has not been a go cold turkey. Let's say I bought a PS2 last year. I would be pretty upset at Sony if all the sudden you told me we're not producing any more software for this. Thank you very much for spending that money with us, but now you got to buy a PS3 if you want to continue to play games.

SMITH: One reason the PlayStation 2 is still so popular is price. It costs about $130 now, which is much cheaper than Nintendo's Wii or Microsoft's Xbox 360. And PlayStation 3 is well over $600.

Jessica Smith, NPR News.

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