As Nintendo shatters its own sales records, a lack of supply is hurting third-party software vendors, making this holiday season ripe for a blockbuster releases on Microsoft's Xbox360, according to one analyst.

Nintendo's latest home-system, the Wii, sold 350,000 just shy of the record set last year when the system debuted. The Japan-based video game maker is moving ahead of rivals Sony and Microsoft in the rush towards Christmas so effectively, it is not able to keep up with demand.

Third-party developers have seen isolated successes on the platform, but Nintendo has dominated software sales, and will continue to do so through the holidays, explained analyst Todd Mitchell of Kaufman Brothers. The reality is third-party developers are just getting a smaller slice of the pie.

This shortage is opening opportunity for developers to focus on other platforms. With Nintendo dominating Wii software sales, Wii and PS2 games selling at a lower prices, and too few PS3s to drive large software volumes, the X360 is the deepest market for third-party releases, Mitchell said.

Gears of War was the X360's first $100 million opening week, and Halo 3 saw this figure rise nearly threefold, he continued. With the strongest line-up of games we expect a feedback effect to positively impact the X360's momentum though the holidays.

The Redmond software maker is also expanding on its video-game library by making older Xbox games work on the new Xbox 360, recently porting over 84 new titles from its first system.

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