The Rise & Fall of Wii Sales

Thom Holwerda at OSnews proposed an interesting theory about why Nintendo saw a 52% profit drop in the first half of 2009 compared to the same period in 2008.  Basically, he claims that with the Wii, Nintendo abandoned hardcore fans in order to capture the casual gamer crowd.  However, as the novelty wears off and the casual crowd moves on to the next big thing, it's the hardcore fans that keep you going and keep sales strong.  Without support from the traditional customer base, those crazy sales peaks turn into plateaus or valleys. 

Thom's article is a good read and I encourage anyone with an affinity for the gaming industry to check it out.   But I'm going to somewhat challenge the premise: Nintendo didn't just suddenly abandon hardcore fans with the Wii.  Rather, Nintendo abandoned hardcore fans with the N64.  See, back in the Super Nintendo days, I had a Sega Genesis.  In those days, owning multiple consoles wasn't as common as it is today, and the fanbase formed camps around each platform--similar to the Mac vs. PC camps.  I stuck to my Genesis, but boy, there were times when I secretly craved that timeless gameplay from Nintendo classics like the Super Mario games, Mario Kart, Pilotwings, Star Fox, etc.  Through its exclusive franchises, Nintendo had moments of brilliance that suddenly made suffering through Nintendo's delays and draconian culture worth it.  Other game publishers were great, too, but Nintendo provided a gaming experience through its own exclusive titles that was hard to parallel on other systems. 

Nintendo is a lot like Apple: very secretive, very draconian, and obsessed with user experience.  Nintendo always thought they knew better than everyone else--including their fanbase--and, like Apple, relied heavily on hype and huge interest in (and sales of) comparatively few products a year.  While that culture can produce moments of brilliance, it also can lead to a disconnect between a company and its user base.  There is no better example of that than Nintendo's decision to stick with cartridge media when the rest of the industry was moving to CDs. 

Now don't get me wrong: I bit the bullet on the N64.  Some of my fondest gaming memories came from Super Mario 64, Super Mario Kart 64, and Wave Race--so much so that I bought a GameCube primarily for sequels to those classics.  And despite how initially expensive cartridge games were compared to CDs (try $70 for N64 games, while PS1 games could be had for around $45), I saw merit in Nintendo's decision.  CD load times on the Playstation 1 initially were ridiculous--a problem that just didn't exist with cartridges.

But in sticking with cartridges, Nintendo alienated third-party developers, particularly Square, who already was in a tenuous relationship with Nintendo.  Developers didn't want to do all the extra work required to port games to the N64, when porting between Playstation and the PC could be done relatively easily.  In Square's case, the storage constraints of cartridges prohibited the use of prolific full-motion video sequences, which were becoming a hallmark of Square games.  The effect could be somewhat replicated on N64 through real-time polygon rendering (think machinima), but required a lot of additional development work and still would never look as movie-like.  When Sony got the Final Fantasy franchise, Nintendo lost a huge swath of its core fanbase: RPG fans.  To make matters worse, Nintendo--known for its distaste for violent or mature-themed games--released a slew of G-rated games.  This went over great with the elementary school crowd, but basically shoehorned the N64 into being the "Pokemon console." 

Nintendo had an opportunity to reset and try again with the GameCube.  However, in true Nintendo fashion, they went with an uncommon mini-disc media format.  But most importantly, long-awaited franchise sequels were late to market and, when they did arrive, had a lukewarm reception.  The GameCube was a failure. 

But, I give Nintendo a lot of credit with the Wii.  When Sony and Microsoft proved to be viable competitors in the video game industry, Sega new it had to get out of the console game.  It couldn't keep up with the graphics-power arms race and certainly couldn't afford to make its consoles a loss-leader like Sony and MS.  So, Sega metamorphosed into purely a software studio.  Nintendo realized that it, too, could not win the graphics arms race and accepted that it likely would not attract hardcore gamers.  As a result, Nintendo focused on casual gamers with the Wii and sought to attract them through a simple, yet novel controller.  I applauded the logic because even for the occasional gamer, console controls had gotten crazy with the number of buttons, joysticks, and overall complexity. 

But, "novel" can lead to novelty.  I recognized that right away with the Wii and had the same sentiments as Thom: flailing my arms around and intently pointing at the screen did not seem that relaxing to me.  Sure, it can be fun for a while, but it's not sustainable.  Like Thom said and the sales figures show, the novelty wears off.

Like Apple, Nintendo is a software company living in a hardware company's body.  Aside from sleek industrial design, Apple's value-add comes from its software.  The software is what justifies the higher price for what is otherwise commodity hardware.  But ultimately, Apple's profits come from moving hardware units, as do Nintendo's profits.  But the video game market doesn't have the same planned obsolescence factor as in the computer or personal device markets.  And as revolutionary as the Wii controller scheme is, it can only distract from major graphical shortcomings for so long.  When the novelty wears off, people will want to play that cool new PS3 or Xbox game their friend has. 

The clamor to get a Wii is over.  To maintain steadier Wii sales and to continue making money from its installed user base, Nintendo needs a steady stream of quality titles.  The video game market is a marathon, not a sprint.  But as long as Nintendo identifies itself as a hardware company, it won't be committed to the long haul.  Whereas PS3 and Xbox 360 sales will remain steady, Nintendo will abandon the Wii and shift development to its next big device, again hoping to generate that initial boom of sales.  But whatever that new device will be, if you're a hardcore gamer, I wouldn't hold my breath for it.

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