Wii Won!
05-Nov-07
Computer games giant Nintendo is now out-performing Sony and Microsoft with its revolutionary Wii console. Is it game over for its rivals?
The computer gaming and peripherals market is worth some £15bn annually. Conservative estimates suggest that Microsoft has invested billions of dollars in its Xbox range in an industry that out grosses Hollywood. For a while Microsoft was established as the global sales leader, but the last quarter has seen the onset of a major commercial headache for both it and rival Sony and its Playstation3 brand. The cause of this headache? Nintendo’s wildly inventive Wii console — a gaming unit that has just eclipsed sales of the Xbox by selling in excess of 10 million units worldwide and one million in the UK alone, making it the fastest selling ever console in the UK.
HALO Xbox
Microsoft’s ‘Halo 3’ delivered the biggest hype yet seen in the £17.1bn (€24.6bn) global video game industry. The shoot-‘em up sensation for the company’s Xbox 360 took $170m in the US alone in its first 24 hours on sale a week ago; it flew off the shelves in Britain, too. The game blitzed Hollywood’s blockbuster opening of the year, Sony Pictures’ ‘Spider-Man 3’, which took in a comparatively poor $151m at the box offi ce during its three-day opening weekend in May.
Uniquely, Nintendo has turned the gaming experience on its head by making it far less sedentary. The console has tapped new gaming audiences previously resistant to the lure of the console and is so popular that reports suggest that Nintendo is struggling to meet demand. David Yarnton, Nintendo’s UK General Manager, described the clamour for Wii as ‘unprecedented’ and the industry itself is awe-struck by the relatively short time — 12 months — it’s taken Nintendo to become market leader. That’s half the time it took Microsoft to shift 10 million units. The console is outselling Playstation3 and Xbox by a factor of three to one and, more crucially, even with hefty price tags both Microsoft and Sony are losing money on each console they sell; not so for Nintendo. The Wii — which costs around £180 in the UK — makes Nintendo $74 on every unit sold in Europe, $49 in the US and $13 in Japan. By contrast, Microsoft’s Entertainment and Devices Division — which houses the Xbox business — lost $693m in 2006 while the game segment of Sony’s business produced an operating loss of $1.97bn in fiscal 2007. For now, Nintendo is well and truly on top. In fi scal 2007, it reported an 89% increase in sales and a 77% rise in net income, pushing its market cap to $8.4 trillion. Astonishingly, it became the second most valuable Japanese company after Toyota in September this year.
Three years ago Nintendo President Satoru Iwata took a long-term overview of the gaming market and concluded that there was a danger people ‘would tire of games’ unless a new stimulus was found. The twin response was the DS handheld unit — which easily eclipsed Sony’s PSP model — and the Wii. The DS used touch screen technology and voice commands and to date has shifted just shy of 50 million units.
The key to the success of the Wii is that it has off ered a participatory experience to the gamer that is active; that breakthrough has been achieved on the back of a very simple sensor that retails for less than a fiver. The revolution – and there is no other word – for the gaming industry has been all the additional users that have been attracted by the Wii and its implicit anti-couch potato agenda. Very young kids are using it, but so are very old ones too. In some cases, they are extremely old with grandparents playing games on Wii with grand children. In Japan, Wii culture is so dominant that the TV industry is concerned at losing audiences to what it describes as ‘Wii families’.
So far, Nintendo has managed to resist the clamour for the additional functions that grace the consoles of rivals; there is no DVD facility, no HD and no streaming facilities. Simplicity — it seems — has been the victor here with an innovative product anticipating the needs of a jaded consumer base.
But in the ongoing tri-company shoot ‘em up, who can say just how much longer Nintendo can enjoy the spoils of victory?
