Can Wii prolong winning streak?
As it raced past rivals to become the hottest new video-game console, some analysts predicted that Nintendo Co.'s Wii was little more than a fad.
Try telling that to Geoff Allen, who hasn’t grown sick of playing the Wii after almost five months. He, his wife and his father all are hooked on “Wii Sports.”
“Within minutes, I can have fun,” said Allen, a 36-year-old technology entrepreneur from Potomac Falls, Va. “I don’t have to spend hours crawling through dungeons and learning all the complex button combos to become proficient. I love the Wii. It makes me happy.”
U.S. consumers have snapped up 2.5 million Wii consoles since they hit the market in November. It’s a sharp turnaround since the last round of the console wars, when its GameCube got wiped out by Sony Corp.'s PlayStation 2 and Microsoft Corp.'s Xbox.
But Nintendo isn’t taking its initial success for granted. At an event here last week, it unveiled a series of games, such as “Mario Strikers Charged” and “Big Brain Academy,” aimed at keeping a wide range of players interested, not just teenage boys and traditional video-game enthusiasts. The Osaka, Japan-based company also is relying on girls, women and older players to continue its growth.
Some analysts think the novelty may wear off and, when it does, consumers will stop buying new games for the Wii. The difference between the Wii’s graphics and those of its rivals, the PlayStation 3 and Xbox 360, also may become more noticeable as developers create new games that take advantage of the more powerful consoles’ processing power.
“Its appeal is primarily to casual gamers, and there’s a serious question about how long casual gamers will stay engaged with the platform,” said Van Baker, a consumer technologies analyst with Gartner Inc., which is headquartered in Stamford, Conn. “It wouldn’t be surprising to see them lose interest after a relatively short amount of time.”
So far, demand is outstripping supply. Stores are selling out of the Wii within hours of getting them. Sales of the Wii are so hot, the Japanese company is widely expected to increase its annual sales forecast of 14 million units for its current fiscal year.
It helps that the Wii is $249, compared to the PS3 at $599 and the Xbox 360, priced from $299 to $479, depending on the features. Last month, U.S. consumers bought 360,000 Wii systems, versus 174,000 Xbox 360s and 82,000 PlayStation 3s, according to NPD Group.
Reginald Fils-Aime, president and chief operating officer for Nintendo’s North American division, said at the press event last week that Nintendo in April had taken the No. 1 spot for sales of consoles, games and hand-held game devices, with its DS portable player. The last company to accomplish that feat, he said, was Nintendo itself -- in the 1980s. “We have become a viral and cultural phenomenon,” Fils-Aime said.
To bring in more casual gamers who don’t have the time or patience to learn their way around a 16-button controller like the PS3, Nintendo developed a novel remote that uses a motion sensor to let players use their arm movements to control the action on the screen. For example, to swing a club in “Super Swing Golf,” players swing the controller.
That’s what hooked Allen and his family. When he showed the games to his 63-year-old father, Allen had to pull him away from the TV screen. “He was so into it, he forgot he was playing a video game,” Allen said.
The controller, Allen explained, makes games such as the Wii version of tennis much more intuitive to play.
“If I want a cross court shot, I start low and rotate my forearm, and I get a nice cross-court spinning shot, just like real tennis,” he said. “I don’t have to learn anything new.”
That ease, combined with realistic physics, has led the Wii to pop up in some unexpected places. The Glenrose Rehabilitation Hospital in Edmonton, Canada, uses the Wii to help physical therapy patients improve movement and balance. Norwegian Cruise Line, which caters to seniors, has purchased the system for all of its ships.
The Wii’s popularity has made it an attractive system for game publishers, whose ability to crank out fresh games for the device is vital to keeping consumers interested. It also generally costs less to create games for Wii than for the Sony and Microsoft systems, especially since it shares technology with its predecessor, the GameCube.
Wii games can cost anywhere from $1 million to $7 million and take less than a year to make, whereas a typical PS3 and Xbox 360 game can cost more than $20 million and take more than a year to produce because of the complexity and high-level graphics involved in those consoles.
“The console with the greatest momentum now is the Wii,” said Brian Farrell, chief executive of THQ Inc., the Calabasas-based game publisher. “The controller is highly innovative. The price point is attractive. The demographics are broad. And the cost to develop games on the system is relatively low. There’s a lot to like about the Wii.”
Developers also like the Wii because it frees them to focus less on making games look visually beautiful and more on just making them fun to play.
“Coding for the PS3 and the 360 is a daunting challenge,” said Kevin Ray, chief technology officer for Majesco Entertainment Co., a game publisher in Edison, N.J., that found the Wii business model so attractive that last year it decided to make games exclusively for that console. “With the Wii, we can afford to get creative and develop something really fun and bizarre.”
Nintendo’s in-house games studio plans to release its own stable of titles later this year, such as “Metroid Prime 3: Corruption” and “Super Mario Galaxy.”
While this coming holiday season is shaping up to be a blockbuster one for Nintendo, some analysts question whether the Wii has enough steam to last longer. The sophisticated hardware for PS3 and Xbox 360 is expected to keep those consoles relevant for another decade.
“The Wii in a couple of years is going to look like old technology with low resolution, slow performance,” Baker said. “People may not be accepting of that.”
But 31% of Wii owners surveyed in March by Frank N. Magid Associates, a media consulting firm, said they expected to play the Wii more often a year from now, compared to 21% of Xbox 360 owners.
“We don’t see it fading,” said Mike Vorhaus, a managing director with the Sherman Oaks firm. He credits the success to families who play together, as well as singles who get together for Wii parties.
That’s what Nintendo is banking on. While the Xbox 360 and the PS3 are played primarily by young men, the Wii is played on average by more people in each household. That means Nintendo has a good shot at selling more games per console than its rivals, said George Harrison, Nintendo of America’s senior vice president of marketing.
“Before, it was the teenage boy playing by himself,” Harrison said. “Now, the whole family is playing.”