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Wii and the casual gaming boom

Mike Doolittle's picture

Wii Sports Screenshot

According to at least one source, the Nintendo Wii has already surpassed the XBox 360 in worldwide sales, despite the 360's early launch. Not only is the Wii a really fast-selling console, it's the fastest selling console ever. Pretty impressive for a company that many gamers and pundits had written off after the merely decent sales and software lineup of the GameCube.

This article from UK rag The Telegraph really hypes up the Wii's success, saying that Nintendo has cornered the "casual gamer" market with a console that is seeing a lot of success with kids and families. Yet, Nintendo faces a pretty big challenge with the Wii, one that the article only briefly touches on—the challenge of turning casual gamers in hardcore gamers.

First, let me clarify—I do not think "hardcore" or "casual" has anything to do with the kinds of games people like. It is simply a matter of business. I consider myself a hardcore gamer because I play games on a regular basis and, more importantly, I purchase a game or two a month. I also pay subscription fees to a couple of MMORPGs, which I'm sure counts for something too. A casual gamer, on the other hand, doesn't play games regularly, and most importantly from a console makers' perspective, doesn't purchase games regularly.

The Wii is doing a great job of capturing people who are either non-gamers, or people who don't play games on a regular basis—maybe at a friends' house here and there, maybe they have an old PlayStation collecting dust under the TV. It's capturing kids and, for the first time, parents who want to play games with their kids. That alone is a big accomplishment.

A lot of people seem skeptical of the Wii's long-term success, and it's precisely because of the challenge Nintendo faces of turning those casual gamers into people who play and purchase software on a regular basis. In the Telegraph article, the family interviewed notes that they "love playing Wii Sports." That's great, except that Wii Sports was a free game that has been bundled with the console since its release last November. Will these kids and families be interested in new software? Will they be purchasing a game or two a month, like me? If so, the Wii is poised for huge success; third-parties will flock to the machine because of the potential market there.

But if casual gamers turn out to be more fickle about making that transition into hardcore, the Wii will ultimately end up like most other Nintendo consoles, with a limited selection of software driven primarily by Nintendo's own IPs. Sales of the console will slow as software selection begins to pale in comparison to that of Nintendo's competitors. There are a lot of hardcore gamers out there already, and they love to spend their money on new software.

With the PlayStation back in the 90's, Sony not only captured the hardcore market, but dramatically expanded the market to bring aboard many casual gamers, and the market hasn't been the same since. Can Nintendo really expand the market by retaining these casual gamers for years to come? Or is the Wii just playing its cards early? Time will tell, but the road ahead won't be easy for the big N.

Category Tags
Platform(s): Wii  
Articles: Editorials  
Topic(s): Pop-culture  

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A lot of people seem

A lot of people seem skeptical of the Wii's long-term success, and it's precisely because of the challenge Nintendo faces of turning those casual gamers into people who play and purchase software on a regular basis...There are a lot of hardcore gamers out there already, and they love to spend their money on new software.

According to Microsoft's spin of NPD data, it has, by a decisive margin, the most consumer spending and highest attach rate of either of its competitors--a feat which is not doing much to drive actual hardware sales at the moment. We ultimately cannot know how Wii will perform in its second year, but we are granted that benefit in 360, and 360 sales are actually down year-to-year for the month of July (from 205K to 170K, according to NPD data). I am not saying this to bash MS, but clearly what we have in 360, it would seem, a demonstration that a console populated with hardcore gamers with money to burn by itself is not necessarily the most stable path to ultimate market leadership.

Yes, but...

It's important to bear in mind that the number of consoles sold is only part of the equation. The final tally has more relevance for fanboy pride than a genuine evaluation of a company's success. Particularly since Microsoft and Sony have models based on selling hardware at a loss and recouping through software, I think it's safe to say that Microsoft would rather have a high attach rate than simply sell tons of hardware.

Microsoft's summer slump is pretty normal. They haven't released many major titles, and likely won't have a major system mover until Halo 3. Given the high failure rate of the current batch and the fact that the smaller-fabrication 360s are on their way very soon (which will significantly lower costs), they're probably just fine with not selling tons of consoles at the moment.

Mhh, i can´t imagine that

Mhh, i can´t imagine that the Wii will be as successfull as other consoles over a long period. Many kids and families buy the Wii because it´s "new" and "cool" but when kids get older I think they will be more interested in shooters or adventures on Playstation 3 or so. The games are funny for families, but older people won´t buy them. So it´s really difficult - if not to say impossible - to turn casual gamers into hardcore gamers. If there were more interesting games for older people, Wii could become a strong alternative to other consoles.

Best regards

Peter from http://www.hitflip.de

It's important to bear in

It's important to bear in mind that the number of consoles sold is only part of the equation. The final tally has more relevance for fanboy pride than a genuine evaluation of a company's success.

I think you are downplaying the relevance of the final tally. Correct me if I am wrong, but the fact that Playstation 2 has sold over 100 million units not only says more about the success of that console (and the division of the company which produced it) than any other single measure, but has the most to do with the rate of any other supplemental measure like profits, sales of controllers/memory cards, and ultimate shelf life.

I agree that there are other, albeit supplemental, measures to consider when it comes to evaluating the market success of console-makers. I also agree that the attach rate is part of the equation, but your thesis was essentially that skepticism of Wii's long term success was justified "because of the challenge Nintendo faces of turning those casual gamers into people who play and purchase software on a regular basis." Now, I happen to agree that we should hesitate before declaring a market leader just yet, but I do not think that yours is "the" reason to be skeptical of Wii, as you seem to be suggesting, rather "a" reason among many.

Many so called analysts are skeptical that Wii Fit can reach the success of Brain Age, but where is the man who predicted that Brain Age would be as successful as Brain Age? I am not referring to your piece specifically, Mike Doolittle, but the problem with the analysing of Wii's future is that most outside of Nintendo cannot coherently explain why it is successful in the first place, myself included. Even articles which praise it like the one you linked to seem to me off the mark.

I do happen to believe that Wii Sports has a lot to do with it, but even if casuals come for Wii Sports and little else, it is not as if Nintendo got stiffed on that deal--they still made a profit (probably $40 per console in regions that pack-in Wii Sports). In fact, Wii Sports is probably "the" driving force behind the sales of Wii-motes, which in turn is driving the sales of Wii Play, which itself has about a 1:2 attach rate. As long as we are considering other measures of success, consider the Wii Zapper, which is going to come with a game a la Wii Play. Look at the success of Guitar Hero and Wii Play. Indeed, casuals do love their novelities.

Anyway, I think that my point is that Wii can concievably attain market leadership on the backs of casuals without turning them into hardcores with respect to buying software.

That was me, by the way.

That was me, by the way.

Anonymous wrote: I think

Anonymous wrote:

I think you are downplaying the relevance of the final tally. Correct me if I am wrong, but the fact that Playstation 2 has sold over 100 million units not only says more about the success of that console (and the division of the company which produced it) than any other single measure, but has the most to do with the rate of any other supplemental measure like profits, sales of controllers/memory cards, and ultimate shelf life.

Well no kidding. I am saying that right now, since Microsoft is having high failure rates on the current build of their console, and since the console loses them money anyway, and since there is a new revision on its way that will presumably lower production costs and resolve the failure issues, they probably wouldn't mind a bit of a hardware sales slump for the time being.

You're also talking about a huge gap with the PS2. The XBox and GameCube were not remotely close. I think such a sheer dominance is extraordinarily unlikely this time around. And I think that hypothetically, because their business thrives on software sales, Microsoft would rather sell 25 million console and have a high attach rate than sell 30 million and have a low attach rate. Nintendo probably wouldn't mind selling 30 million consoles to people who buy one game a year, but the Wii would be a shadow of its potential. Ultimately though we're really talking about apples and oranges of business models.

RE: I think

Mike Doolittle: It's important to bear in mind that the number of consoles sold is only part of the equation. The final tally has more relevance for fanboy pride than a genuine evaluation of a company's success.

Adam Brown: I think you are downplaying the relevance of the final tally. Correct me if I am wrong, but the fact that Playstation 2 has sold over 100 million units not only says more about the success of that console (and the division of the company which produced it) than any other single measure, but has the most to do with the rate of any other supplemental measure like profits, sales of controllers/memory cards, and ultimate shelf life.

Mike Doolittle: No kidding.

I do not mean to be crass, but which is it? Just how much value do you accord the so-called "final tally." Are you really saying it is more than simply so much ammo in internet flame-wars or is it in fact a genuine measure of a consoles success?

I am saying that right now, since Microsoft is having high failure rates on the current build of their console, and since the console loses them money anyway, and since there is a new revision on its way that will presumably lower production costs and resolve the failure issues, they probably wouldn't mind a bit of a hardware sales slump for the time being.

I see your point. You are saying that your thesis should not apply to 360, as it should for Wii, because there are other factors holding back the sales of 360. But I think that goes both ways.

There is every indication that the limited supply is holding back the sales of Wii or that killer-apps are holding back the sales of PS3. Even if we lived in alternative universe where Nintendo was meeting demand, Metal Gear 4 were a launch title, and 360s were reliable, I suspect that the sales would be somewhat in proportion to what they are right now--as would consumer spending per console. Alas, ours is the only universe we know, and we can only go by what we have; whatever hindrances console-makers might be inflicting upon themselves--Nintendo's failure to meet demand, Sony's failure to deliver quality software, and Microsoft's failure to produce reliable hardware--they are all theirs. The prospect of each console marker alleviating themselves from those problems should be considered, but, for all practical purposes those aforementioned tics will remain firmly attached until 2008.

My point is as follows: if your argument is that greater-than-average consumer spending per console, by itself, necessarily leads to market leadership then I am afraid there is evidence which conflicts with that conclusion. The fact that 360s are unreliable is probably holding sales of that console back, but so too is Nintendo's failure to meet demand. There are, in fact, any number of factors which hold back the sales of any console at any time, but we need not hike that winding path when the one you were plotting was so direct. You were saying that A necessarily leads to B when there is evidence that A can also lead to C.

Nintendo probably wouldn't mind selling 30 million consoles to people who buy one game a year, but the Wii would be a shadow of its potential.

Some people are just only going to by a certain number of games per year no matter what console they own. If the console that person owns is a 360, then that bodes poorly for MS because, as you've said, their business model is such that they need owners with hardcore buying habits. However, if that person owns a Wii, then because Nintendo's business model is substantially more efficient (and, in my opinion, proficient) than Microsoft's, Nintendo not only gets the better part of that deal, but actually has increased incentives to appeal to casuals--even if they never play another game beyond Wii Sports, Nintendo turns profits from the Wii unit itslef, the sales of Wii-motes and the novelty software packed therein.

You are saying that Nintendo needs to turn casuals into hardcores with respect to software buying habits for Wii to attain market leadership. I am skeptical of that because (a) it does not prove true for 360 and (b) casual gamers will, by in large, probably never adopt the purchasing habits of hardcores, so exactly what potential would have been lost?

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