Headlines last month all suggested that Sony's (NYSE:SNE) PS4, which recently hit 6.1 million units on a strong Japanese launch, was outselling Nintendo's (NASDAQOTH:NTDOY) Wii U and Microsoft's (NASDAQ:MSFT) Xbox One by a healthy margin.

However, recent numbers from Japan and the U.S. strongly suggest that it's not too late for Nintendo and Microsoft to mount a comeback. In Japan, Sony actually sold fewer PS4 units than the Wii U during its first three weeks on the market, according to Japanese research firm Media Create. Meanwhile, new NPD numbers in the U.S. indicate that the Xbox One is catching up quickly to the PS4 despite costing $100 more.


(Source: Sony)

A second chance for Nintendo?
Nintendo is frequently criticized for its poor support of the Wii U after its lackluster launch in November 2012. The ill-advised naming and marketing of the console, the confusing form factor, and the lack of strong first- or third-party titles all took their toll on sales. This led to Nintendo slashing its Wii U sales forecasts for 2014 by nearly 70%.

However, one market that Nintendo understands better than either Sony or Microsoft is the Japanese gaming market. Japanese gamers love party games, dating sims, and monster training games -- all niche genres that Nintendo excels at with its handheld 3DS, currently the best-selling console of this generation with 43.4 million units sold.

When we compare the number of Wii U units sold in its first three weeks on the Japanese market (Dec. 8-29, 2012) to the PS4's performance over the past three weeks, Sony's problems become crystal clear:


Wii U units sold

PS4 units sold

Week 1



Week 2



Week 3



Total sales



Source: Media Create.

Therefore, the PS4's "strong" Japanese launch, which pushed it over the 6 million mark, was actually much weaker than the Wii U's launch. Although PS4 sales in the first week came in slightly higher than Wii U sales, the huge 79% drop the following week suggests that the console is having trouble winning over audiences in Japan.

This could mean that Nintendo's Wii U still has a chance to catch up to the PS4 with stronger exclusive titles such as Bayonetta 2, Hyrule Warriors, and X throughout 2014. However, gamers might just be holding off on purchasing the PS4 until Konami's (NYSE:KNM) Metal Gear Solid V: Ground Zeroes PS4 bundle arrives on March 20.

PS4 barely edges past the Xbox One in the U.S.
Meanwhile, new data from research firm NPD and Microsoft suggests that the Xbox One is catching up to the PS4 in the U.S. Microsoft just reported that it sold 258,000 Xbox One units in February, 61% higher than sales of its seventh generation Xbox 360.

NPD suggests that those numbers are equivalent to 90% of PS4 sales during the same time, a huge improvement from last month, when the PS4 outsold the Xbox One by nearly two to one. That big jump in sales was widely attributed to the eagerly anticipated release of Electronic Arts' (NASDAQ:EA) Titanfall on March 11 for the Xbox One and Windows.

The first-person multiplayer shooter will also be released for the Xbox 360 on March 25. Microsoft unveiled a $500 Titanfall bundle across multiple markets prior to the game's release, essentially giving away the $60 game for free.


Microsoft's Titanfall bundle. (Source: Microsoft)

Titanfall has been well received critically with an 86% rating at review aggregator site Metacritic, and could hit sales of 2.5 million units (half on the Xbox One) between March 11 and the end of the month, according to Sterne Agee analyst Arvind Bhatia. Those numbers suggest that the Xbox One could actually outsell the PS4 in the U.S. in March if Titanfall is a hit.

However, neither EA nor Microsoft has announced any sales figures for Titanfall. By comparison, Take-Two (NASDAQ: TTWO) was quick to boast that GTA V hit $1 billion in sales (nearly 17 million copies) to customers within three days last September. Activision Blizzard (NASDAQ: ATVI) also announced $1 billion in Call of Duty: Ghosts sales within its first 24 hours on the market, but that figure was actually the initial number sold to retailers, and not to customers.

Therefore, it's a little troubling that EA and Microsoft have kept quiet regarding Titanfall's initial sales figures nearly a week after its launch, but both companies could just be waiting for the title to hit the Xbox 360 before reporting concrete sales figures.

The bottom line
These recent developments in Japan and the U.S. reinforce a key point I made in a previous article -- that although Sony has won the early battles of the eighth generation console race, the war is far from over.

If Sony fails to gain traction in Japan, which is widely considered to be a microcosm of Asian gaming, it could lead to Nintendo's Wii U gaining market share on the back of its robust 3DS sales. If Titanfall is a bigger than expected exclusive hit, Sony's PS4 could experience an unexpected slowdown in Western markets, since many of its top launch titles (Call of Duty: Ghosts, Assassin's Creed IV: Black Flag, Battlefield 4) can also be found on the Xbox One.

Investors should note that it's far too early to call a winner or loser for the eighth generation. The seventh generation concluded with 101 million original Wiis, 81.1 million Xbox 360s, and 82.5 million PlayStation 3s sold -- which means that the Wii U, Xbox One, and PS4 still have a lot of additional gamers to woo before one can be definitively proclaimed the victor or loser.

Welcome to the next level, gamer
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Leo Sun has no position in any stocks mentioned. The Motley Fool recommends Activision Blizzard and Take-Two Interactive. The Motley Fool owns shares of Activision Blizzard and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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