Shall Wii dance?

Nintendo focuses on simplicity and fun

Nintendo’s upcoming Wii can’t match the hi-def graphics of the Playstation 3 and the Xbox 360. It’s not meant to be a multimedia device, and it doesn’t even play DVDs.

But coming out of this year’s E3 conference, many predicted that it would be the hottest new product of the year.

With an innovative motion-sensing wireless controller, and a $249 price point, Wii — which bows in November — is reviving Nintendo’s stature in the vidgame biz with a laser-like focus on simplicity and fun.

The company hopes it will reverse its fortunes in vidgame consoles. Ever since the 1980s, when it revitalized the videogame biz with the Nintendo Entertainment System, each of Nintendo’s consoles has sold fewer units than the one before. Its newest, the GameCube, has actually ended up in third place, behind Microsoft’s first try in the market.

The company has largely stayed afloat thanks to the handheld business, where its Game Boy products are hardly cutting edge, but have been hugely popular, especially with kids.

More recently, Nintendo’s handheld DS has brought back core gamers to the market and even appealed to a large audience of women who don’t typically play games. With over 20 million units sold worldwide, the DS has easily beat Sony’s first handheld device, the PSP (Playstation Portable), which has sold just over 5 million.

Given those trends, many predicted Nintendo would abandon the console business to focus on handhelds and publishing games. But instead, Nintendo surprised many in by developing the Wii.

“In the ’90s there were a couple of trends that didn’t work in our favor,” admits Nintendo’s senior VP of marketing George Harrison. “Looking at the new landscape (Nintendo topper Satoru) Iwata said we needed a radical change to reach beyond the narrow audience the industry has been going after.”

Not only are gamers more excited about Nintendo than they have been in a while, but outside publishers look likely to return to the fold. Many stopped releasing titles for the low-selling GameCube, but are now developing for Wii after seeing gamer excitement at the E3 confab.

“Nintendo recognizes they’re not going to win the graphics war, so they have done a fantastic job of creating a product that’s very well differentiated,” notes Bobby Kotick, CEO of Activision. “We didn’t end up doing a lot of games for GameCube, but this time we’re making a big commitment to all the platforms, including Wii.”

It remains to be seen whether the originality of the Wii’s controller will eventually fade and leave consumers unimpressed by a system that doesn’t have much power.

But Nintendo doesn’t necessarily need a smash hit. It just needs Wii to make it competitive with Sony and Microsoft again. Wii’s focus on fun over power offers Nintendo one big business advantage its competitors don’t have: It won’t lose coin on every unit sold.

“Videogames are our only business,” says Harrison, “and we have to make profits in everything we do.”

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