“Nintendo has done a great job with the Wii in bringing console games to new audiences,” says David Mercer, Principal Analyst and report author. “But its sales are now falling, particularly in mature markets, and its installed base will peak in 2011. Ownership of both the PS3 and the Xbox 360 will hit their highest points between 2012 and 2014.”

The report predicts that worldwide TV games console sales in 2010 will fall by 9% to 47.5 million units; sales of the Wii are expected to reach 17.5 million units, the PS3 14.0 million, the Xbox 360 10.5 million and the PS2 5.5 million.

In spite of falling sales, the global installed base of consoles continues to grow, reaching more than 220 million by the end of this year. However, Strategy Analytics models indicate that ownership of current systems will peak in 2011, at which point vendors will need to introduce new systems in order to maintain industry growth.

“Console industry cycles have given the industry major planning challenges for many years,” says Mercer. “There are signs that this volatility may be moderating as platforms add home entertainment and social networking services beyond pure gaming.”

Lifetime PS3 sales are predicted to reach 127 million units, compared to 103 million Wii units.