Sony has had a rough 6 months. To add insult to injury, last week the electronics behemoth announced a 4th quarter loss of $563 million, largely due to development costs and poor sales within it’s gaming division, with an equally dismal outlook for the first quarter of 2007. Sony certainly isn’t giving up on the PS3 yet, but does the console have much further to fall?

The chart above illustrates online retail demand for next generation consoles by month, based on the number of people shopping at SKU level pages for each console.

• For the first time since launch, PS3 demand remained relatively stable, indicating that Sony may finally be seeing the bottom of their declining demand.
• Demand for the Wii grew 9% in April. This seems to signal that Wii demand may be stabilizing at a significantly higher rate than the other two consoles. April also marked the point that Wiis became more available for online purchase, which could have caused a lift in shopping activity.
• Driven by interest in the elite model of the 360, demand for the Xbox 360 jumped 22% in April. This spike put demand levels squarely in Wii territory and almost twice that of the PS3.

Despite a $563 million loss in the fourth quarter of 2006, slow sales, and slight demand for the PS3, Sony remains optimistic that the system will make a dramatic rebound this year. This seems like an overly optimistic goal, but looking at traffic to the most trafficked gaming sites, this prediction may have some merit. The chart below shows the share of traffic to console specific areas of major gaming sites in April.

• Across every site, the xBox 360 section captures the most traffic. On average, the 360 receives nearly twice the traffic of either the Wii or the PS3. This large share of visits is expected given the 360s larger owner base and game selection.
• While traffic to Wii and PS3 related sections of these sites varies across the group, on average, the PS3 and Wii receive comparable share of visits.

Traffic to these sites helps to measure interest from potential console buyers, and also engagement of console owners, since people visit gaming sites to gain information on consoles as well as games. The comparable Wii and PS3 traffic seems to indicate that, despite having significantly less console sales and demand, there is considerable interest in the platform and its content. The billion dollar question: How well can this interest convert?

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