Xbox - still second to the Playstation 2

In 2002 cash from consoles exceeded box office receipts but a report by market analyst In-Stat/MDR predicts that the feat will not be repeated this year.

It said revenues would fall more than $2billion (�1.18bn) as console makers sell two million fewer units than 2002.

The decline looks set to continue until the end of 2005 when console makers will launch next generation machines.

Console clash

Rampant competition between Sony, Microsoft and Nintendo resulting in price cuts is responsible for the fall off in revenue said In-Stat analysts.

Lower prices have meant that Microsoft and Nintendo will ship more consoles this year but this will not offset the reduced numbers of Sony Playstation and Playstation 2s reaching the shops.

Nintendo: faces stiff competition

In September Sony confirmed its place as console king when it shipped its 60 millionth Playstation 2.

In-Stat bluntly said that Microsoft and Nintendo have no hope of reaching such high numbers before their current consoles reach the end of their life.

The analyst firm said that Microsoft and Nintendo face significant challenges in the future.

It said that Microsoft had done well to establish the Xbox online service in the US, but faced hurdles to do the same in Europe and Japan, largely because of the success of Sony's rival online games service.

But In-Stat believes that Nintendo faces the most uncertain future because sales of the GameCube have been low, its marketing strategy is in question and some game makers are scaling back their commitment to the console.

"With two solid, deep-pocketed competitors, Nintendo faces the biggest challenge in its corporate history," said In-Stat in a statement.

Life looks set to get better for all console makers in late 2005 when the new versions of consoles are set to be released.