Interesting article explaining the Wii's success.

[Readykilowatt]

*Warning* It is a long read. Describes Sony and the Japanese third party devs dire situation in Japan compared to Nintendo perfectly IMO.

http://malstrom.50webs.com/birdman.html

The article also explains in detail why this is happening in Japan right now...

PS3 install base --> 1,980k
Wii Fit sales --> 1,750k

Here is an interesting snippet... (Funny but true )

I admit I find myself in astonishment. This is the process I am seeing:

Nintendo: “We are following the strategy of disruption!”
NPD: “Nintendo wins!”
Journalist: “How are you winning, Nintendo?”
Nintendo: “We are following the strategy of disruption!”
Journalist: (ignores Nintendo) “What is going on here, analysts and third parties?”
Analyst: “It is a casual gamer boom!”
Third Parties: “OMG! Easy money! Quick guys, everyone start making casual games!”
Nintendo: “We are following the strategy of disruption!”
Journalist: (philosophically) “Will casual games cause the downfall of the hardcore games? Let me write many editorials about this!”
Analyst: (philosophically) “Is the casual game boom a fad? Let us pontificate over this.”
Third Parties: “Hey guys! How you like my casual games? They sure are snazzy! I will make millions! I am such the business whiz!”
Nintendo: “We are following the strategy of disruption!”
Journalist: (scratches head) “You hear something?”
Analyst: “It was just Nintendo speaking. They are saying the same thing.”
Journalist: “Yeah! Haha! Same old marketing speak. I am so much smarter about business than Nintendo. In my next interview with Iwata, I’ll give him some business lessons.”
Third Parties: (cries) “Oh no! My casual games are not selling!”
Journalist: “Obviously, this is because people buy Nintendo consoles for Nintendo games.”
Analyst: “Nintendo needs to assist these third parties in getting their casual games to sell.”
Third Parties: “That’s right! They need to do what WE want them to!”
Nintendo: “We are following the strategy of disruption!”
Journalist: (yawns) “Is that all they say? (becomes excited) Ohhh! Look! A new hardcore game is being made with fresh textures.” (runs off)
Analyst: “Obviously, Sony and Microsoft are branching with casual games themselves. Poor Nintendo. Too bad they are out of tricks. I expect Playstation 3 to be surpassing them in a year or two. The market revolves around technology you know.”
Third Parties: “My casual games aren’t selling? Why!? I do not understand!”

Is it not amazing how everyone talks about the casual gamer boom except Nintendo? Instead, Nintendo keeps talking disruption while everyone either ignores these quotes or misinterpret ‘disruption’ to mean ‘change’ or ‘innovation’.

 

[Zaphod]

Oh, my... And he's got seven more planned:

• Description of Disruption: “Disruptive Storm”.
• Nintendo’s Execution of Disruption: ”Three Phases of the Revolution”
• Disruption Confusing the Mainstream Consumer: “It’s Called Disruption, Mr. Hardcore.”
• Fuel Behind the Nintendo Disruption: “Surprise! High sales of Wii and DS is because of large software library.”
• Microsoft Responds to the Disruption: “The Blue Ocean Turns Red; Microsoft Strikes Back.”
• Sony Responds to the Disruption: “Sony Flees and Takes Refuge in High End Market.”
• Disruption’s End: “Why Nintendo Must Destroy the Wii Before it Destroys Nintendo.”

 

[Shifty Geezer]

Some elements of interest in a quick skim, but also some elements of sensationalism that seems to blight all analysis...

What no one is pointing out that this deliberate upstreaming process, of ‘gateway drugs’, is the big picture of Nintendo’s strategy. The hardcore gamer, enraged that all these “non-games” are coming out and his beloved HD consoles are struggling, screams “This is madness!”

Struggling in what way? Tell the fans of Halo3 and GTA4 and LBP and Warhawk, who have ponied up money for their hardware of choice, that their consoles are struggling. They selling hardware, growing the user base, providing a profitable though competitive market for developers who are continuing to support their machines with the games these people want to play. Once again an analysis divides the entire market into one winner and everyone else as losers. The key point of the article seems to be developers aren't targeting their software properly, but I'll like to see the author try to convince Epic that they shouldn't make GeoW2 and instead should make a Pikmin... It seems to me that the author's use of the word 'disruption' is kind what everyone means by 'casual game' under a different name. Games with simpler controls and dynamics. Where Nintendo have the upper hand is creating these titles and packaging them in a box that people want to buy. Their last attempt with buckets of Mario Party games still sold well, comparable with Nintendo game sales on Wii, but didn't drive the hardware as Wii is being pushed. If VGChartz is to be believed, short of Sports and Play, Nintendo's Wii software isn't selling better than other key titles on other platforms, especially when you consider the larger install base.

The media and industry makes a big deal of it, but it doesn't seem so complicated to me. There's an existing 100+ million strong gamer market. There's an unknown market of people who didn't buy into last gen games who can be attracted to play games now through alternative game offerings. The consoles are selling different amounts to the different markets, and the console companies will reach out in whatever directions they try. No console is dead and dying. None is doomed and no developer looking to publish on XB360 and/or PS3 is looking at financial suicide because Wii has become the viable platform. And the idea of Wii as a 'gateway drug' works in the other consoles' favours too, because when the gamers introduced to gaming on Wii want something on the next tier or two, the other platforms will be in a far better position to offer it.

 

[Shifty Geezer]

Oh, my... And he's got seven more planned:

• Sony Responds to the Disruption: “Sony Flees and Takes Refuge in High End Market.”

What's LBP and EOJ then if not 'Disruption'? Or is 'disruption' just 'an original game implementation that sells exceedingly well' rather than a gaming concept that goes against the grain and doesn't something different in a way that appeals to a different audience?

 

[Zaphod]

Or is 'disruption' just 'an original game implementation that sells exceedingly well' rather than a gaming concept that goes against the grain and doesn't something different in a way that appeals to a different audience?

Without plowing through the rest of his stuff, I think he means 'disruption' as in financial terms. As in a situation where (a) market(s) cease to function in a regular manner. Basically, I think he's saying that Nintendo is looking to keep screwing with what the audience see as the concept of being a 'game'; because flocking to follow a trend (i.e 'the old way') isn't the way to win big. Consequently, Nintendo themselves must eventually kill the Wii before some competitor figures this out and erm... out-disrupts them.

He's saying Nintendo wants to be the Warren Buffett of gaming.

Edit: I'd say the author is a disciple of this guy's marketing ideas.
Edit-edit: Ironically, TBWA used to be one of (if not*the*) main Sony marketing partners through the Playstation era up until last year.

 

[acaeus]

Some elements of interest in a quick skim, but also some elements of sensationalism that seems to blight all analysis...
Struggling in what way? Tell the fans of Halo3 and GTA4 and LBP and Warhawk, who have ponied up money for their hardware of choice, that their consoles are struggling. They selling hardware, growing the user base, providing a profitable though competitive market for developers who are continuing to support their machines with the games these people want to play. Once again an analysis divides the entire market into one winner and everyone else as losers. The key point of the article seems to be developers aren't targeting their software properly, but I'll like to see the author try to convince Epic that they shouldn't make GeoW2 and instead should make a Pikmin... It seems to me that the author's use of the word 'disruption' is kind what everyone means by 'casual game' under a different name. Games with simpler controls and dynamics. Where Nintendo have the upper hand is creating these titles and packaging them in a box that people want to buy. Their last attempt with buckets of Mario Party games still sold well, comparable with Nintendo game sales on Wii, but didn't drive the hardware as Wii is being pushed. If VGChartz is to be believed, short of Sports and Play, Nintendo's Wii software isn't selling better than other key titles on other platforms, especially when you consider the larger install base.

The media and industry makes a big deal of it, but it doesn't seem so complicated to me. There's an existing 100+ million strong gamer market. There's an unknown market of people who didn't buy into last gen games who can be attracted to play games now through alternative game offerings. The consoles are selling different amounts to the different markets, and the console companies will reach out in whatever directions they try. No console is dead and dying. None is doomed and no developer looking to publish on XB360 and/or PS3 is looking at financial suicide because Wii has become the viable platform. And the idea of Wii as a 'gateway drug' works in the other consoles' favours too, because when the gamers introduced to gaming on Wii want something on the next tier or two, the other platforms will be in a far better position to offer it.

True, not even mentioning PS3's key role in winning the HDM format for Sony and partners. Which could be priceless in only a couple of years.

 

[AntShaw]

null

 

[NERO]

The Wii is a now a toy and is cracking (or may have already cracked) the buyer's lexicon. It is not, "let's play some videogames!", but "let's play Wii". Nintendo has accomplished what they did when I was a child. They are making the Wii what Nintendo was in the late 80s. Let's play Nintendo.

 

[vazel]

The Wii is a now a toy and is cracking (or may have already cracked) the buyer's lexicon. It is not, "let's play some videogames!", but "let's play Wii". Nintendo has accomplished what they did when I was a child. They are making the Wii what Nintendo was in the late 80s. Let's play Nintendo.

interesting.

 

[wco81]

The Fit will probably sell well to casuals, even at its ridiculous price.

They will get the Fit as the first or second game they purchased for their Wiis.

But will it have the same party game appeal as the Sports?

People get together to have real casual competitions of bowling or tennis or whatever but can you really compete on doing calisthenics or whatever it is the Fit is suppose to do for you?

People are playing Wii when they get together rather than say board games or Texas Holdem.

 

[Urian]

I am with Malstrom when he talks that the Casual Gamers don´t exist.

I was a hardcore gamer whan I was a teen, now I am 25 years old and I have less time for playing and another interests for my life, gaming is now like movies, music... in other words another entartainment.

When I bought the Wii I was very skeptic about the possibilities but I found myself playing Wii Sports and my friends and part of the family enjoying it, then is when I saw the good part of Wii, even if its nothing more than a Gamecube Turbo (something that is only interesting for the people with technical knowledge) its concept is making more wide the videogame market after it became blocked in the last generation.

When I see an old woman playing Brain Training or even New Super Mario Bros (believe me, I have seen a few) is when I smile because this situation was impossible 4 years ago.

 

[dobwal]

What's LBP and EOJ then if not 'Disruption'? Or is 'disruption' just 'an original game implementation that sells exceedingly well' rather than a gaming concept that goes against the grain and doesn't something different in a way that appeals to a different audience?

Nintendo strategy of "disruption" attacks the market two fold.

One is where the Wii and its motion control which is a fundamental part of the console disrupts the status quo of introducing more powerful console each generation that focus on graphical upgrades.

The other is where Nintendo introduces its low cost innovative technology at a price point that attracts customers who are not enticed by the graphical improvements of the 360/PS3 and/or their price points. Nintendo introduced the Wii near the mainstream price points and basically took advantage of Sony and MS's desire to attract the highend market (the hardcore gamers), which required costly consoles. Nintendo is basically using innovative and cheap hardware to eat through the mainstream market before the 360 and PS3 even have a real chance to compete there.

What even more daunting is that Nintendo has taken such a foothold in the minds of gamers that the Wii is now able to out compete the 360 in some markets without a price advantage.

For LBP and EOJ to be disruptive they would have to sell extremely well, enough to up end the status quo.

 

[Shifty Geezer]

Nintendo is basically using innovative and cheap hardware to eat through the mainstream market before the 360 and PS3 even have a real chance to compete there.

That statement will be true if the mainstream market, when PS3 and XB360 are in that price range, don't care to buy PS3 or XB360 because they have a Wii. Otherwise what we're seeing here is more like Wii selling at mainstream rates (PS2) at a mainstream price. Or putting it another way, would Wii have sold as well as it is as £250? If the other platforms see great sales at the Wii's price-point, than it isn't that Wii has stolen that market; only given those only willing to pay less something to do until the PS360 become available to their budget.

We're not quite comparing like with like pricing here, so can't compare markets that are naturally different in size due to budget. You wouldn't expect a £300 PS3 to be selling in crazy numbers. Not is the £200 PS3 doesn't well and everyone's playing Wii instead, Nintendo's plan worked. Otherwise what they've really done is fill an interim role, a stop-gap product between the conventional console generations. Something that those who didn't buy a PS2 until it was £170 and won't buy a PS3 until it's £170 can buy into now.

I'm not saying that's the be all and end all explanation of Wii's sales! Only the flaw as I see it in the idea that Nintendo is disrupting the market and stealing sales.

 

[dobwal]

The Fit will probably sell well to casuals, even at its ridiculous price.

They will get the Fit as the first or second game they purchased for their Wiis.

But will it have the same party game appeal as the Sports?

People get together to have real casual competitions of bowling or tennis or whatever but can you really compete on doing calisthenics or whatever it is the Fit is suppose to do for you?

People are playing Wii when they get together rather than say board games or Texas Holdem.

Nintendo is successful because its focus is mainstream gamers and not simply casual gamers. Last generation franchises like GTA and Halo would be far more likely to be in a casual gamer's library than Dance Dance Revolution.

Health is a very important concern in today's society, the Wii Fit targets that concern and is its selling point. But every thing else about Wii Fit would seem to point to a niche title because the physical work requirement is beyond any other any typical game in any traditional genre and in no way can be considered "casual".

 

[dobwal]

That statement will be true if the mainstream market, when PS3 and XB360 are in that price range, don't care to buy PS3 or XB360 because they have a Wii. Otherwise what we're seeing here is more like Wii selling at mainstream rates (PS2) at a mainstream price. Or putting it another way, would Wii have sold as well as it is as £250? If the other platforms see great sales at the Wii's price-point, than it isn't that Wii has stolen that market; only given those only willing to pay less something to do until the PS360 become available to their budget.

We're not quite comparing like with like pricing here, so can't compare markets that are naturally different in size due to budget. You wouldn't expect a £300 PS3 to be selling in crazy numbers. Not is the £200 PS3 doesn't well and everyone's playing Wii instead, Nintendo's plan worked. Otherwise what they've really done is fill an interim role, a stop-gap product between the conventional console generations. Something that those who didn't buy a PS2 until it was £170 and won't buy a PS3 until it's £170 can buy into now.

I'm not saying that's the be all and end all explanation of Wii's sales! Only the flaw as I see it in the idea that Nintendo is disrupting the market and stealing sales.

Nintendo is engaged in a low end disruption strategy. What you have is MS and Sony introducing highend products to be the best of the generation feature wise with inclusion of costly components. But they created a scenario where they over shot the needs of the mainstream gamers and presented Nintendo with an opportunity to introduce a disruptive technology which is the Wii. The Wii is disruptive because it is focusing on the market currently ignored by Sony and MS by offering lower performance but a lower cost product. However, Nintendo introduce a revolutionary innovation with motion control in the Wii, which increase its attractiveness and make its a more formidable competitor making it easier to chew through the mainstream market.

The market is finite so it kind of hard to imagine that a console can sell at the same rate of what was by far the most dominant console of all generations only to have another competing console show up at that price point at a way later date and sell at the same rate. By the time the PS3 shows up with the current price of the Wii, Wii will have dove deeper into the mainstream market with a lower price points eating up additional sales. The majority of the market is not made up of multiple console owners, so the more consoles you sell the smaller the pool of potential console consumers becomes for you as well as your competitor. The bottom has to fall out on the Wii for the PS3 or 360 to gain PS2 like sales, which is going to be hard because at every new price point the Wii with its growing library will offer more than it did at any previous price point.

Regardless of what sub markets that the console are currently competing in due to price, the market as a whole is the most relevant because no console has been successful relying simply on highend segment of the market. MS and Sony limited to the highend market is a disadvantage when the Wii is selling strong with higher market penetration. When the 360 Pro and the PS3 reaches the $250 price point it will enter a smaller market than the Wii did when it release at that price point.

 

[Shifty Geezer]

Nintendo is engaged in a low end disruption strategy. What you have is MS and Sony introducing highend products to be the best of the generation feature wise with inclusion of costly components. But they created a scenario where they over shot the needs of the mainstream gamers

No, they overshot the price of mainstream gamers. The price that a console sells 20 million a year.

The Wii is disruptive because it is focusing on the market currently ignored by Sony and MS

It's not really ignored by Sony who already offer a mainstream priced PS2 console. The difference is Nintendo have revitalised that lower-priced market by offering a new gaming experience. If they had released a Wii spec console at the Wii pricepoint without the novelty of new controls, despite no 'overshooting the needs of mainstream gamers' and not creating an expensive product, they wouldn't have sold because they wouldn't be offering over and above what mainstream gamers already experienced with GC/PS2/XB.

by offering lower performance but a lower cost product. However, Nintendo introduce a revolutionary innovation with motion control in the Wii, which increase its attractiveness and make its a more formidable competitor...

Yes, but a competitor in the $200 console market, in which the other consoles aren't contenders.

The majority of the market is not made up of multiple console owners, so the more consoles you sell the smaller the pool of potential console consumers becomes

That was true for all prior generations, but consoles are no longer just games machines. They all had the same approximate performance, games, and features. This gen the Wii stands apart as offering a discrete experience from the other machines. If the gamer market is a homogeneous lump of 'want to play games, don't care what they look like, don't care how the controls work' then yes, the Wii will be consuming potential customers, satisfying their game-playing desire and eliminating them from being potential buyers into PS360. But the real market consists of people with different tastes, desired functionality, and is ever changing. Thus before, if you had a SNES, there was no reason for you to buy a Megadrive unless the exclusives attracted you. So for mainstream, single platform owners, you bought Nintendo and that sale was eternally lost for Sega. Same with PS1 - if you bought one, there was no point in getting an N64. Same with PS2 - why get a GC? Not so with Wii, as you can buy a Wii now and yet still want to play HD games, play media/BRD, or have decent online experiences, maybe in a year or two's time when you've bought a new HD set and the consoles are much cheaper. Where before all the consoles were remarkably similar, the differences now provide different choices for consumers and the PS360 options are still valid for existing Wii owners, and vice versa.

 

[theafu]

PS3 is struggling in comparison to any of the other psx systems. Things don't change this year sony is gonna end up in 3rd. MS isn't struggling when you look at 360 vs Xbox performance of the numbers but the console lost it's lead to Wii might quick and this will lose any market share advantage in hardware. Software wise npd is showing Wii is actually doing decent in US only a matter of time before it takes over completely even if 3rd parties keep lobbing garbage on to it.

BTW price isn't gonna matter in the end doesn't ms offer arcade at 275$ compared to 250$ so it's not as if the system is the problem in terms of hardware. Wii simply put is bringing in new gamers and it's still selling like hot cakes the other two companies might wanna examine why instead of the excuses I always see out of the pr mouths.

There was plenty reason to get a n64 as it had the best platforms of the gen, goldeneye, the new tetris, and the better arcade racers of the gen like world driver and top gear rally.

 

[Lucid_Dreamer]

Personally, I believe you are witnessing two different strategies being implemented.

Nintendo's strategy: bottom to middle sales strategy
- They are selling like the PS1 and PS2 was selling after their major price cuts because that was Nintendo's starting point/target audience. That translates into a shorter activate period in the marketplace, especially with HDTVs becoming the norm.

Sony and MS's strategy: top to bottom sales strategy
- Sony or MS will end up with selling to the entire spectrum of customers. Sony, in particular, knows how to have a long lifespan for consoles (trickle down sales). Start at the top. Grab the lion's share of the "price is no object" crowd and let the "keep up with the Jones" scenario kick in. Then, as the price comes down, you have more and more sales.

People want the BEST at the lowest price they can get. Even though it won't be the best by the time it gets to them, they will still buy it because of what it was. That's why the PS2 continues to sell as well as it does. People don't even remember the rough start it had until that one magical holiday season (when GTA, GT, and SOCOM hit around the same time) the PS2 sold 8.5 million in 2 months.

Of course, negative viral marketing wasn't in the driver's seat at that time.

Anyway, I believe you will see the final results of where this will end in the next 2 years. That's when you will start to see the "X" in the sales graph start to happen.

 

[Gamington]

WII is the perfect consol for non games who want to be cool and say they play video games.

 

[PARANOiA]

LOL. Since when is gaming cool? If anything gaming is cooler because of the Wii.