Wii will rock you: How Nintendo's Wii is beating out Sony and Microsoft

[Natoma]

http://money.cnn.com/magazines/fort...6/11/100083454/index.htm?section=money_latest

Nintendo's legendary videogame designer Shigeru Miyamoto is lying face down on the floor in Kyoto, Japan, hobbled by a right cross and struggling to regain his composure. The man some credit with the very existence of the $30 billion videogame industry, the Walt Disney of our generation, has taken one blow to the face too many. I'm standing over the creative force behind Donkey Kong, Super Mario, Nintendogs and his latest worldwide sensation, the Wii. I goad him to get up for the rest of his beating.

Clearly, one of us is taking our boxing match a bit too seriously. After all, it's not really Miyamoto who has crumbled but rather his avatar - his Mii, in Nintendo parlance. "Ohhh" is about all the man can muster as the clock runs out. Miyamoto puts down his controller and concedes defeat to finish a photo shoot.

I may have beaten him at his own game, but we both know who's the real winner here. Nintendo's newest contraption has performed exactly as designed, creating yet another Wiivangelist, this time a gloating gaijin 5,000 miles from home who not only got up off the couch to play a videogame but actually worked up a sweat. With this little victory Miyamoto and company gather more momentum in their quest to conquer worthier competition.

I have some issues with his characterizations of gamers as leaning toward slightly anti-social teenagers, but other than a few things here and there, it reads like an article written by a smitten financial author who's never gamed in his life.

Quite a few eye-opening facts and figures in this article however. For one, I didn't realize that Nintendo was making at least $50 profit on the hardware when sold at $249. I thought it was closer to $10 or so. For two, I didn't realize that Wii games cost roughly $5 million to develop, whereas they cost roughly $20 million for PS3 and 360.

And lastly, this comes from Iwata himself:

Until Nintendo gets more Wiis on retail shelves, all that is theoretical. Iwata says no single bottleneck has caused the shortage, and that has made the problem harder to solve. Because it was targeting a market that didn't exist, the company had no idea how popular the machine would be. And nobody could have known the Wii would still be selling so well as summer approaches.

That kind of thing just doesn't happen in the Christmas-centric world of gaming. "We cannot simply make 1.5 times as much or two times as much," he says. "When you're making one million a month already, getting to 1.5 million or two million is not very easy."

This is why I expressed my doubts with respect to Nintendo meeting that 35 million mark in the US by 2011/2012. I don't even think the DS manufacturing is above 2.5 million a month, and it's 3 years old at this point.

Anywho, I thought it was an interesting article.

 

[RancidLunchmeat]

Well, they needed the hardware to be profitable from the start and they needed software development costs to be drastically lower because the lifespan of the Wii is going to be half that of the other systems you are comparing it to.

Nintendo simply couldn't afford to take an initial hardware loss for the first couple of years and expect to recover those costs later in its life cycle.

 

[Shifty Geezer]

Well, they needed the hardware to be profitable from the start and they needed software development costs to be drastically lower because the lifespan of the Wii is going to be half that of the other systems you are comparing it to.

Though that's a common view, Nintendo seem to think the contrary. Can't find the quote, but there was an article on oneof the gaming biz sites where they (Nintendo) were talking about an extended lifecycle this gen.

 

[tongue_of_colicab]

Ever since E3 nintendo said the Wii is supposed to last around 5 years (probably longer if they can keep making lots of money off it, just like sony with the ps2). People who still think the opposite are stuck in the ''console needs uber gfx'' cycle.

 

[DeadlyNinja]

Ever since E3 nintendo said the Wii is supposed to last around 5 years (probably longer if they can keep making lots of money off it, just like sony with the ps2). People who still think the opposite are stuck in the ''console needs uber gfx'' cycle.

It would be hilarious if thing turn the other way with the 360 and PS3 having shorter life cycles due to Sony and MS rushing to try and implement motion controls in their next console and to reduce cost of their systems.

 

[tongue_of_colicab]

I dont think that will happen. They've spend so much money on designing these consoles that releasing a new console +/- 3 years after launch would be stupid. Especially MS seems to have a decent market atleast with the x360 so they dont have to cut the x360 short even though it might not sell as well as ms had hoped due to nintendo. Even if montion sensing turns out to be the only way to earn a buck (wich is extremely unlikely to happen) bundeling the console with a new controller or releasing a ''new'' model with a other controller but the same hardware is more likely.

 

[dobwal]

Though that's a common view, Nintendo seem to think the contrary. Can't find the quote, but there was an article on oneof the gaming biz sites where they (Nintendo) were talking about an extended lifecycle this gen.

Its my personal opinion that Nintendo strategy of profitability, software development cost and product offering has nothing to do with the Wii's lifespan.

I believe that Nintendo was convinced that it couldn't compete using the model currently used by MS and Sony. They've been garnering less market share with each generation since the SNES while trying to keep pace visually.

There is plenty of evidence that high end graphics aren't necessary to compete in the gaming market and if one offers a compelling feature other than graphics and at a low cost then its possible to attract the majority gamers who aren't necessarily graphic mongers.

I think Nintendo wanted to compete with the current rival consoles not on graphics but on another level. That level being user input which compared to graphics has been moving forward at a snails pace prior to this generation. Besides adding more buttons, little has been done to enhance how we play games.

One only has to looked at the PC market as evidence that high level graphics at a high cost don't attract the majority of PC gamers for whom the majority enjoy gaming on low end and midrange GPUs.

One can look at Nintendo portable systems and see that sales wise heldhands hold up pretty well against their console brethen. Portability allows handhelds to compete even with the huge disadvantage in visual quality. Portability shows that there are other features, combine with lower cost, other than graphics that attract gamers to a gaming system.

 

[DuckThor Evil]

Quite a few eye-opening facts and figures in this article however. For one, I didn't realize that Nintendo was making at least $50 profit on the hardware when sold at $249. I thought it was closer to $10 or so.

I personally think that it could be even more than 50$ at this point.

 

[RancidLunchmeat]

Portability shows that there are other features, combine with lower cost, other than graphics that attract gamers to a gaming system.

I agree with what you've said to a degree, but I think its your final point that needs emphasis.

Anecdotal evidence seems to show that despite all the talk of the Wii hitting a 'new market' and 'different group of consumers', the people responsible for the Wii's sales up to this point are gamers.

Supporting evidence also would indicate this, as most 'casual gamers' feel the $250 price level is too extreme, they won't start buying enmass until $199.

Additionally, the Wii is sold out. It is still very difficult to find. Those that have one didn't just accidentally walk into a store and pick one up on a whim. They had to search for one, and make it a purpose to find one. Not necessarily a huge task, but one that is still greater than most 'casual gamers' are willing to complete.

Forums, friends, friends of friends.. those that have already purchased a Wii are gamers. Not grandmothers, despite what Nintendo wants you to believe.

And to throw more cold water on the Wii flame of fortune, more than half of those gamers that have purchased a Wii have either already sold it or are talking about it. I've had three people in the past month or so ask if I wanted to buy their console.

I think the Wii is having greater success than Nintendo (or anybody) expected, but I think the reasons for the success that are being put forth are off base. And I firmly disbelieve Nintendo is under the impression the Wii can still be a competitor in 5 years.

Nintendo needed large sales and immediate profits for the opposite reasons that Sony isn't panicking right now. The Wii's lifespan is going to be horrifically short. The PS3's lifespan will be incredibly lengthy. Sony can recover their costs later, while Nintendo needs to enjoy their ride now (and more importantly, wisely reinvest that capital) because it's not going to last very long.

 

[quest55720]

I agree with what you've said to a degree, but I think its your final point that needs emphasis.

Anecdotal evidence seems to show that despite all the talk of the Wii hitting a 'new market' and 'different group of consumers', the people responsible for the Wii's sales up to this point are gamers.

Supporting evidence also would indicate this, as most 'casual gamers' feel the $250 price level is too extreme, they won't start buying enmass until $199.

Additionally, the Wii is sold out. It is still very difficult to find. Those that have one didn't just accidentally walk into a store and pick one up on a whim. They had to search for one, and make it a purpose to find one. Not necessarily a huge task, but one that is still greater than most 'casual gamers' are willing to complete.

Forums, friends, friends of friends.. those that have already purchased a Wii are gamers. Not grandmothers, despite what Nintendo wants you to believe.

And to throw more cold water on the Wii flame of fortune, more than half of those gamers that have purchased a Wii have either already sold it or are talking about it. I've had three people in the past month or so ask if I wanted to buy their console.

I think the Wii is having greater success than Nintendo (or anybody) expected, but I think the reasons for the success that are being put forth are off base. And I firmly disbelieve Nintendo is under the impression the Wii can still be a competitor in 5 years.

Nintendo needed large sales and immediate profits for the opposite reasons that Sony isn't panicking right now. The Wii's lifespan is going to be horrifically short. The PS3's lifespan will be incredibly lengthy. Sony can recover their costs later, while Nintendo needs to enjoy their ride now (and more importantly, wisely reinvest that capital) because it's not going to last very long.

I am sorry but I don't see the Wii having a short life span. The Wii will be in the kids play room or game room. It will be atleast 5-10 years before those TVs get upgraded to HD-TVs. Most families do not put the game machines on the main TVs any more. They have nice little set ups for the kids with the 20-27 inch TV with the 30 dollar DVD player and the video game machines. By the time the masses are upgrading their second and third TVs to HD it will be atleast 5 years just in time for the Wii2. Sure gamers might get bored and move on but the masses won't. I love my 360 but it was kind of eh until I got an HD-tv to play it on.

Also how many people who are casual and enjoy stuff like Wii sports/play and mini games are going to want to mess with the complicated 360/ps3 controllers.

I think there are many casuals who are buying the Wii the sales are showing this. If the Wii was not selling to casual gamers or non gamers the sales would of slowed down by now. If it was not selling to casual gamers it would be hitting the same wall the 360 has hit the last 3 months. The Wii is going to over take the 360 very soon with no signs of slowing down in the least. I have yet to see a Wii in a store and it is freaking almost june.

 

[Shifty Geezer]

I am sorry but I don't see the Wii having a short life span...

I disagree on two points. Firstly you don't need an HD set to appreciate the better visuals of the other consoles. Even Little Jonny with his bedroom SDTV will like the look of what he sees on His Mate Jack's PS3/XB360 and wish he had such graphics. He may prefer the gameplay of Wii, but he will also wish he had better graphics.

Secondly you don't need to mess with complicated controllers on the other machines. There's lots of simple gameplay mechanics that don't need all the controls to be used, and Wii itself has plenty of controller complexity - independent motion in two hands + analogue thumbstick + buttons + analogue trigger. The only areas Wii's controls are simpler are in simpler games; It's not a result of a simpler control scheme in itself. There's titles that would be no more complicated on the other machines, such as Zelda or Paper Mario. There is an extra intuition possible with Wiimote, reducing the learning curve, but that's a per-game effect. In some cases it's excellent, like Wii-Tennis. In others one could argue that it's more complicated than the conventional schemes, such as guesture recognition to perform moves. Rather than remember which button to press, you have to remember and execute accurately enough a guesture. The control scheme isn't tied to the controller. Developers can choose to use as few or as many buttons as they want. LocoRoco showed to excellent effect a simple, intuitive system ignoring all the buttons of PSP. Wii probably has the advantage of more devs targetting simpler controls, but the hardware itself isn't what keeps things non-gamer friendly.

Wii is successfully marketted as being centered around key points that the other two consoles can actually compete with on occassions. We have families playing Live Arcade games for example. That's major kudos for Nintendo, but the box itself isn't the only place to serve casuals on their level. The variety of Wii's software just supports them a little more alongside the heavy advertising, and unique controller. What Nintendo provide is a marketted package with the appeal of the motion control, which is not the only way to serve casuals (see PC and mobile phone for conventional controlled, casual gaming), but which does a lot to attract them it seems.

The longetivity of Wii isn't dependent IMO on appealling uniquely to casuals. The machine sells due to motion control, and not simple-games-for-simple-folk (even though the motion games are simple to date). Longevity will depend on whether the Wiimote appeal is lost or not over time. If games can stay fresh and original, it'll keep attracting more customers. If after a year or however long people lose interest and move on to other things, it'll fizzle out. High current sales can't tell us what will happen in that respect. Going forwards, Wii will face stiffer competition from the others in terms of casual content from eDIs, and better pricing. There's a good chance Wii can ride the market positioning it's secured, but if either other console can establish a name for casual gaming, it should be able to compete when prices are closer, especially offering a far more complete package. There is a big question-mark over if casuals, or at least the Wii crowd, will shun conventional controllers or not. Perhaps like to move around and be unhappy with stationary gaming. Again though, the PC and mobile market suggests this isn't a big problem for casuals.

 

[ninzel]

I really think it's too early to predict any winners or losers at this point .As a Wii owner and Nintendo fan I'm happy to see the Wii doing well,but I know it's far from over.
Edit: I will say this about Nintendo again,they are going after the right people in terms of getting press. Ever since the Wii was announced and advertising has begun, if I'm not mistaken it looks to me like they are putting much more emphasis on real mainstream press and less on the traditional hardcore gaming press.And this is exactly what they need to do.
They had to know the hardcore gaming press would rake them over the coals and be the harshest critics. And the Walmart crowd generally doesn't read sites like IGN.

 

[pc999]

I think that the life cycle of Nintendo will depend only on two things 1) market saturation 2)MS/S next (XB3/PS4) gen, ie I do doubt that if eg MS launchs a new XB with improved sensor or any other new interface that are fun with a low-mid end fusion chip (that will easly surpasse XB360, and the many gameplay possibilitys that this opens) and a 250$ price that Nintendo will still be the only contender to that market and they may need a new machine to keep in the race.

 

[myzhi]

It's all about price. I want to see what will happens when X360 Premium hits $199 vs $100/150 Wii.

Forget about PS3, Sony's always going to be at huge price disadvantage given their insane starting price.

 

[Nesh]

I doubt Wii is going to have a short life span too.

For hardcore gamers and people at our age it will surely get "old". But parents are extremely attracted to it to buy it for their children.

PS3 and 360 is not that console of choice for them

Its similar to the DS. I sometimes might stay a bit in a game store and watch some customers. Everytime I saw a parent with his kid who wanted to buy a "present" for he/her would always ask "what handheld should I buy for my kid". Before the employee answered I told to myself "get a DS". Indeed that was the handheld of choice after the PSP and DS was presented and explained. The kid loved the DS. So did the parent.

PSP simply doesnt have the games that a parent (or a child) find interesting, fun or unique. PSP is infested with "mature" content and too challenging titles, it has a bunch of functions that doesnt make the gaming experience any more interesting and it is more expensive. Children want to have fun with games. They are excited with the content and the touch screen. They also love Pokemon and Mario.

Wii is similar. It is small, cheap and it is FULL of games a youngster can enjoy. And on top it has a function that excites children. I would have been extremely exited too if I were a youngster. And if I were a parent thats the console I would have bought for my kid. I cant afford to buy a $400+ console with tons of complex functions and games that arent appropriate for my child in content or that arent simple enough to play.

Newcomers or non-frequent gamers of various ages are also excited with the Wii too . I ve heard many times peope refering to Wii "this is the future of games". They love the illusion that they have complete control of the motions. And they also love fun and simple games.

Whereas I prefer playing Devil May Cry and VF trying to figure strategies or buying games that have these or that technical achievements and visual expressions, these people want to play simple fun games. There is nothing more into it.

These people are the ones who still play 2D games, Pac-Man, retro titles, flash games for hours and the likes. These are the people who cant stand having to learn difficult learning curves, skill etc


For these people Wii will live for many many years

 

[m1nd_x]

Sure, Nintendo is making lots of money, I thought that was a given when they released the console... it's basically an Xbox with a tad more RAM and no DVD-player as far I'm concerned. It's nice for them not to be getting totally shafted this time around but, I just don't see the console making it too far, the console sales are killer now, but I think it's the software that is going to suffer. The controller is just a big gimmick as far as I can tell from what I've played, Nintendo is the only developer doing it justice, which kinda makes it an overhyped accessory in my eyes... I think light-guns work a billion times better for shooters, wheels work better for racers.. so on and so forth, the standard controller is just a lot more versatile and to me seems like it would be easier to use for a lot more people. I just found it to be a way to inaccurate for my tastes and it made playing games more like guess work. They can sell as many consoles as they want, but if the majority of people are only buying it for a handful of Nintendo games (those parents who're buying it for their kids that was reffered too), I can't see that being good in the end for the third-party developers or the other consoles which will probably look dwarfed if you're counting consoles but will more than likely reign no matter what as far as software and real innovation goes.

I'd still have to hand it to 360 or PS3 for the real win in those respects if things keep going the way they are.

 

[tongue_of_colicab]

Than maybe you should have spend a bit more time on Wii because exite truck shows how controlls can really be more fun, godfather shows how a GTA like game could benefit alot from a wii controller, Red steel, though not perfect, shows how, atleast in my opinion, the wiimote can work alot better than analoge sticks for shooters and zelda shows how you can have a ''normal'' game controll good with the wii controller.

The Wii controller isnt a big gimmick and people should stop calling it that. Its defenitly a device than can offer (alot) of benefit over your normal controller but as with everything, devs need to use it the right way to show that. No ofcourse all those cheap cash in ubi games dont make you feel like the Wii is anything great but if you play the more decent games you'll defenitly notice the wii isnt just some gimmick party console.

Ofcourse everything comes down on the quality of games, but atleast its not the Wii itself limiting the quality of games.

 

[Skrying]

Shocker: Playing a game on the Wii is fun.

Call me crazy, but each time I've played a Wii game it was damn fun, even the crappy ones.

Nintendo also makes another gaming device, they call it the DS.... might have heard of it.

 

[Anvil]

I just don't see the console making it too far, the console sales are killer now, but I think it's the software that is going to suffer. The controller is just a big gimmick as far as I can tell from what I've played, Nintendo is the only developer doing it justice, which kinda makes it an overhyped accessory in my eyes...

Why can't people just give Nintendo some credit for coming out with something new and different? Rather then the repeating of "its a gimmick" comment? I have both ther Wii and the 360 and I love both consoles.

However the truth of the matter is that my young kids (4 under the age of 10) absolutely love the Wii and its so-called gimmiky controller. They spend hours creating Mii's, playing Wii sports, elebits, excite truck etc... The only game the kids play on the 360 is Viva Pinata and Kameo (good thing MS got Rare or there would be nothing out there for the kids on the 360).

As for graphics I find the Wii to be fine in what it offers. I am not a pixel peeper and if the graphical design of the game works (regardless of whether it has all of the 21st century technology included) then the game works. Of course the game has to be FUN......

As a parent of young kids I am glad that Nintendo is doing well as Nintendo does get the majority of good games for the younger crowd (as well as a nice selection of mature games).

I remember looking to buy an original xbox console a few yars back and I told myself I would get one if I could find 3 games on the shelf that were gears for kids. Needless to say I could not find any.

 

[Phil]

I find playing on the Wii remote as fun as... playing EyeToy for the first time. Lots of fun, party potential, but as a primary gaming device to play demanding games such as MGS and racing games: No thanks.