Video game gift guide: Making the right play

• Wii U system out Nov. 18
• Deals likely on Xbox 360, PlayStation
• Game systems top teens' wish lists

Nintendo's new Wii U video game system arrives in less than two weeks, timed to officially kick off the holiday shopping season for tech-gadget lovers.

Demand for Wii U is so strong that it is already sold out in preorders. And when limited supplies of the consoles begin hitting store shelves Nov. 18, expect to wait in line, literally, at retail chains such as GameStop and Best Buy. By Black Friday, most shoppers may be out of luck.

"The Wii U will most certainly sell out," says Wedbush Securities analyst Michael Pachter.

Video game systems still top many holiday wish lists. And among teens, game systems are the most desired gifts this season, according to the Consumer Electronics Association.

So what's a shopper to do if a new game console is a must? You can hold out for a Wii U, or opt for a competing system such as the PlayStation 3 or Xbox 360, which will likely be plentiful and selling at bargain prices because they are older –
6 and 7 years old, respectively – and new versions are expected to roll out in 2013.

The good news is that game makers will be courting shoppers because sales have been slow this year. During the first quarter of 2012, total consumer spending on video games – retail, online, digital, rental and used – fell 15% compared with the first quarter of 2011, according to The NPD Group.

The new Wii U console, which starts at $300, is Nintendo's first to display games in high-definition and tosses into the mix a wireless motion-sensitive game-pad with a 6-inch touch-screen. Nintendo, which is selling the game system at a loss, hopes to revolutionize home game play with the Wii U's game-pad, just as the original Wii did with its untethered Wii remotes. "It offers a different way to play," says Nintendo's Krysta Yang.

Don't bet against the initial interest in Wii U. Past Nintendo system launches have resulted in long lines, sellouts and back orders – and that's likely to happen this time around, too. With no more than about 1.2 million Wii U's expected in the U.S. this holiday season, Pachter says, "you won't be able to find one until February or March."

That provides an opening for competitors Microsoft and Sony to sell a few more Xbox 360s and PlayStation 3s.

And Nintendo hopes to sell a few more of its current Wii systems, already discounted to $129 for a console with two games, Wii Sports and Wii Sports Resort. Another $129.99 deal offers the new Just Dance 4 game instead. And there's a $149.99 package with the Skylanders Giants game.

"The 2012 holiday season will be considered the last big push for this generation of consoles," says EEDAR analyst Jesse Divnich.

Not all video game trends are down, however. On the rise are sales of downloadable games for systems and devices, as well as in-game transactions and subscriptions. But those are not rising fast enough to offset declines in retail sales.

Still, the industry expects its total revenue to fall slightly below 2011's total of $24.75 billion. The arrival of the Wii U could be the boost the industry needs. "The new console," says NPD's Anita Frazier, "has the potential to reinvigorate retail sales of hardware."

Breaking down the Wii U

When the original Wii launched six years ago, it welcomed casual gamers into the fold by making its console and games easy to set up and use. No special skill required. The Wii U seems to take the opposite tack, courting the hard-core gamer devoted to Nintendo products. When the system reaches stores, there will be 23 new Wii U games available, with an additional two dozen or more arriving before March 31.

Games such as New Super Mario Bros. U ($59.99, all ages) and Nintendo Land ($59.99, ages 10 and up) build on a three-decade legacy while adding innovations that allow multiple players to get into the action at once. In Mario, those using the game-pad can help the other four players make their way through levels. In Nintendo Land, the game-pad user can aim and shoot arrows to take out enemies while other players swing Wii remotes as swords.

There are some other family-friendly titles, including Skylanders Giants and Disney Epic Mickey 2: The Power of Two. But many of the other initial releases, such as Call of Duty: Black Ops II, Assassin's CreedIII, Batman Arkham City Armored Edition and ZombiU, more likely appeal to the longtime gamer than the casual Wii player.

Price: $299.99 for a white console with 8 gigabytes of storage and white game-pad or $349.99 for the deluxe 32 GB black console and game-pad, plus Nintendo Land game.

Selling points: New game-pad lets you play some games directly on the touch-screen, so others can use the TV. You can also use the device to select movies, TV shows and other content available on Netflix, Hulu, Amazon and even a TiVo DVR.

The entrenched competition

Microsoft and Sony have 35 million and 22 million systems, respectively, in U.S. homes, and it will not be easy this holiday season for them to expand that foothold, Divnich says. But for shoppers who have considered but put off buying an Xbox 360 or PlayStation 3, there could be deals because "some of the best hardware starter bundles in this cycle's history" are likely, he says.

Retailers will begin having weekly specials, says P.J. McNealy of Digital World Research, "but the focus will be on Black Friday sales." Shoppers goals, he says, should be "to get the most amount of games with the hardware, the biggest bang for the buck. There will be some of those deals around."

Microsoft Xbox 360

Price: $99 and up, depending on the features. It packages a 4 GB Xbox 360 with Kinect hands-free motion-detecting sensor for $99 with a two-year Xbox Live commitment of $14.99 a month. Otherwise, bundles with the Kinect usually start at $249.99. A new limited edition Halo 4 Xbox 360 ($349.99) has Halo-inspired art on the system and two wireless controllers plus a copy of Halo 4.

Selling points: The Xbox 360 library has an estimated 1,000-plus games released at retail — hundreds more online — including new cinematic blockbusters such as Halo 4, Assassin's Creed III and Call of Duty: Black Ops II (out Nov. 13). The system also has many games that use the Kinect motion controller. Recent releases Nike+ Kinect Training ($49.99, all ages) is a home workout program that tracks your progress and Dance Central 3 ($49.99, ages 13 and up) lets up to eight players compete with a list of current dance songs such as OMG and Moves Like Jagger and older tracks including '70s hits I Will Survive and Disco Inferno.

Dance Central 3 is also one of the first games to work with Microsoft's SmartGlass, which turns Windows tablets and phones -- and eventually other non-Windows devices -- into a second screen where you can create playlists that can then be moved into the Xbox 360 game.

Family-oriented games include Kinect Adventures, Kinect Sports 2, Harry Potter for Kinect and educational titles Kinect Sesame Street TV and Kinect Nat Geo TV that let kids insert their likenesses thanks to Kinect's camera.

Online service Xbox Live also serves as a one-stop hub for Amazon Instant Video, Netflix, Hulu, HBO, ESPN and even content from a pay-TV service, as well as the new Xbox Music streaming and cloud subscription service ($9.99 monthly after a free 30-day trial). More users are catching on to the console's non-gaming apps, too. Usage has doubled year over year, Microsoft says.

Sony PlayStation 3

Price: $249 and up. Packages with the Move motion controller start at about $300. A new $299.99 Assassin's Creed III package includes the new game and a 500 GB hard drive -- twice as big as that found in other packages -- for only a little more.

Selling points: For starters, the PS3 is the only game system that also plays Blu-ray Disc movies. It also competes well against the other systems' streaming video offerings, working with Amazon, Netflix, Hulu, Vudu and NFL Sunday Ticket. And it has a Music Unlimited subscription service ($4.99-$9.99 monthly) for streaming music across various devices.

The PS3's 1,000-plus retail releases already available include high-def remasters of games such as The Killzone Trilogy and God of War Saga ($39.99 each).

New games include Sports Champions 2 ($40, ages 10 and up) which uses the Move remote controllers for sports including skiing, archery, golf and boxing; LittleBigPlanet Karting ($59.99, out this week, all ages), which lets you race your customized Sackboy character and create new race tracks and vehicles; and the augmented reality popup book Wonderbook: Book of Spells (Nov. 13, $39.99 or $79.99 with Move controller and camera) that brings to life a 3-D Hogwarts teaching tome, created with the help of Harry Potter author J.K. Rowling.

Some games also connect to the PlayStation Vita handheld. For instance, MLB 12: The Show lets you play on the Vita and upload to the PS3. PlayStation All-Stars Battle Royale (Nov. 20, $59.99, ages 13 and up) lets PS3 players compete against those who have the game on the PlayStation Vita handheld.

Tablet, smartphone competition

When it comes to video games, there are still many questions about how this holiday season will play out.

One wild card is that desire for portable devices, such as Android and Apple iOS tablets and phones, is cutting into demand for game systems, especially handhelds such as Sony's PlayStation Vita, which starts at $249, and the Nintendo 3DS ($169.99 and up).

"Tablets and smartphones are going to be huge again, especially with lower pricing for the iPad Mini, Samsung Note and Kindle Fire," Pachter says.

Still, video game systems fall just below tablets, smartphones and computers -- and money and happiness -- on adults' holiday shopping lists. "While video games are down slightly from previous years," CEA's Steve Kidera says, "demand remains high."

Retailers are gearing up for all scenarios. Because of the economy, Best Buy and GameStop expect to see plenty of customers taking advantage of their device and game trade-in credit programs.

And retailers will be attempting to woo shoppers with special deals on systems in the coming weeks. "Definitely be watching for those exclusive offers that will give you value and the games you really want," says Tony Bartel, president of GameStop, which has 4,400 stores in the U.S.

One given is that demand for the Wii U will outstrip supply. "The No. 1 holiday gift in the game section is going to be the Wii U," McNealy says. "Line up now, the sellouts are coming."