Should Nintendo consider a "two console strategy"?

[UNCjigga]

Its no secret that the Wii has been a runaway success for Nintendo. It has succeeded on so many levels. Consumers literally can't get enough of Wii (there are still shortages and stockouts reported). It has expanded the console gaming market to include casual gamers (more so than Xbox Live! or PS Online/Home) and has thus attracted a market segment unique to Nintendo. It has brought innovation to gameplay through use of the Wiimote vs. cutting edge graphics. And it is profitable. You can argue all you want about whether it is a true ?next generation game console?, but the above facts cannot be disputed. That said, I think the momentum around Wii could soon be slowing, and I would argue that Nintendo should consider a high-end option to truly compete with Xbox 360 and PS3 further into the product lifecycle.

Right now there aren't many 3rd-party exclusives for Wii that aren't just rehashed DS titles. You could say that the success of Wii caught developers by surprise, and they are just now scrambling to get on the bandwagon (so it'll be another 12-18 months before we see the titles they're working on in stores.) But I'm afraid a lot of these titles won't venture beyond the established "casual gaming" category where Wii has established itself. That means more party games, more minigame collections, and more of the same boring graphics. In fact, the Wii and GameCube architectures are very similar, so I wouldn?t be surprised if developers will have already reached the Wii?s graphical limits within the 12 months.

While the Wii has proven that casual gamers represent a significant slice of the gaming market, they haven?t proven anything regarding brand loyalty?its too soon to tell really. But I?ve seen a lot of anecdotal evidence suggesting that many of Wii?s ?casual? users haven?t really ventured beyond Wii Sports. When the novelty of that game dies, you might see a fair chunk of the casual market give up on the platform altogether and go back to Yahoo! Games or MSN. Nintendo and its developers have their work cut out to bring more compelling (read: addictive) content to Wii.

Given that the viable lifecycle of Wii may be shorter than we think, and the fact that it doesn?t really offer the same content or gameplay options as Xbox 360 or PS3, I think Nintendo will be in a unique position to offer another console concurrently with Wii. This would be a true next gen console, with specs at least matching or surpassing those from MS and Sony. This would be an HD console, with 1080p rendering and output, built-in hard drive and high-capacity removable storage (Blu-Ray or HD-DVD). But don?t call it ?Wii Pro?. In fact, don?t even put the ?Wii? brand anywhere near it. This would cater to a different audience, namely the core gamers looking for the latest and greatest hardware and a fully immersive entertainment experience. Sure, it can be backwards compatible with the Wii and offer the same Virtual Console titles and Wiimote motion controls, but it would be a different brand.

Going forward with this strategy, Nintendo would support/update both brands/platforms independently. For example, Nintendo could introduce ?Revolution HD? in Fall 2008, ?Wii 2? in Fall 2010, and ?Revolution 3? in Fall 2013. This staggered schedule could allow Nintendo to always one up their competition (i.e. undercut Sony and MS 2nd year sales by debuting a new console of their own).

Of course, the big question is whether developers would support this strategy. You could argue that developing content for 3 consoles, handhelds, mobile phone and PC is already too expensive for all but the largest publishers. Even with their established success on DS and Wii, developers may be wary of supporting a 3rd Nintendo device. But here?s where I think having a clearly differentiated strategy will work. The Wii will be the mass market/cash cow device, and ?Revolution HD? will be the cutting edge, ?halo? (no pun intended) or brand ambassador device.

In the end, I think Nintendo could make this strategy work. Either way?I?m pretty sure they will be introducing a new console before ?Xbox 720? or ?PlayStation 4? (even if its just an updated Wii with HD output and HD-DVD/Blu-Ray playback). What do you think?

 

[BD2003]

I've definitely been saying for a while that the Wii isnt going to follow a 5 year cycle. We'll see a new system in fall 09 I'm thinking. There is precedent for this: the DS followed the GBA by only 3 years, and they still sell concurrently. The GBA is the cheaper, more "casual" of the two systems.

Brand loyalty does not go very far in the video game market, at least not across generations. Sony went from #1 (PS2) to #3 (PS3) in the drop of a hat, just as nintendo went from #1 (SNES) to #2 (N64) to #3 (GC) back to #1 (Wii) almost instantaneously. And if you look at every generation beforehand, you will notice one major trend of all - the cheaper/out first system usually wins, unless the name of your company is Sega.

Regarding casual games/gamers, there is something very important to be recognized: they don't care when a game comes out. Only the hardcore gamers are on top of the new releases. Just like the GBA, all the Wii needs is a decent catalog of "casual" games, and they'll sell well for quite some time. So in 09 when the Wii can drop to $150 or so, and have a backlog of $20-30 games, it'll still sell quite well.

But the "hardcore" gamers are still a huge part of the market, and theyre not going to just give that away. As much as I love my Wii, by 09 it'll really start looking shabby compared to the PS3/360, waggle or not. But by then, they can drop an HD console at $250 or so, and if they desired to go as far (which I doubt), they could even pick the winner of the HD/BR war to power it, but I'm thinking they'll stick with DVD. But it won't come until they can make this console for a profit. Nintendo is a very conservative company, with billions in cash reserves, and they could weather it out if they decide to stick with the Wii for 5 years and it drops.

I seriously doubt there will be an interim Wii HD. Their new console will certainly be backwards compatible with Wii, MAYBE render the games in HD, but I'm thinking its going to be an entirely new system. If they stick with DVD and they really want to keep compatibility, they could make dual format games and squeeze them onto a single DVD, but that might be more trouble than its worth.

I dont think developer support is a problem - devs supported the DS instead of sticking with the GBA. You still see occasional GBA releases, just as I'm sure there will be occasional Wii releases once the new console drops. As long as it's backwards compatible like the DS, there should be no issues of devs complaining.

If people can drop $250 every 2-3 years for an ipod, they'll most certainly do it for another console. Asking $400-600 every few years won't fly. But $250, all the way. Backwards compatibility makes frequent console updates palatable, as long as they price it reasonably and come up with another killer app. Because more than anything else, people need a *real* reason to buy a new console. They cant be promised potential, they need to see it before they buy it. I doubt xbox would have ever even gotten off the ground if it didnt launch with halo, and you can attribute the Wii's success almost entirely not to the Wiimote, but to Wii Sports.

 

[RaiderJ]

Different SKU's are silly. Causes more problems than it solves.

For Nintendo, they desperately need to revamp their online system for the DS and the Wii. Online multiplayer is horrendous. If in three years they release a system that can do HD, online multiplayer, have a hard drive, AND be Wii compatible, they'll do just fine.

 

[tatteredpotato]

They won't though.

The DS came because Sony was developing the PSP and Nintendo needed something that wasn't horrendously underpowered. So they started work on the DS, but either they didn't want to risk using the Gameboy name, or they were targeting a different audience. They have said again and again that the DS is the "third pillar" but I doubt there will be another iteration of the Gameboy.

Nintendo didn't want to compete with Sony or Microsoft, so they developed the Wii and have been immensely successful. Why would they go back to the old way if they are very successful now?

 

[randomlinh]

I don't see it happening. If anything, I see the Wii on a far shorter cycle, maybe 2.5yrs. By then, HD will, in theory, be far more relevant. But for now, Nintendo needs developers before they go attempting any crazy 2 system strategy.

 

[Wheelock]

Aside:
This "SKU" buzzword is getting really annoying. The law has "nexus" and "calculus" (misused, I'll add), science journals have "elucidate," and video game articles/discussions have "SKU." It's really annoying.

 

[RandomFool]

Having two different consoles would just be confusing. It's getting bad enough with the all the different versions of the 360 and PS3 floating around. The GBA and DS are concurrent console

I'm thinking Nintendo is going to switch to a shorter development period for the consoles. Similar to the GBA -> DS releases. So every 2.5 years or so they'll release a "new" console that has some incremental improvements over the previous version. It'll also be conveniently backwards compatible with the previous console. That way they can keep selling new hardware to people without alienating people who bought the old console.

 

[PricklyPete]

Originally posted by: Wheelock
Aside:
This "SKU" buzzword is getting really annoying. The law has "nexus" and "calculus" (misused, I'll add), science journals have "elucidate," and video game articles/discussions have "SKU." It's really annoying.

Huh? "SKU" is the a common retail term for differentiating products on shelves (Product ID). it is not something just used in Video Games...but rather any retail store.

 

[mugs]

Originally posted by: Wheelock
Aside:
This "SKU" buzzword is getting really annoying. The law has "nexus" and "calculus" (misused, I'll add), science journals have "elucidate," and video game articles/discussions have "SKU." It's really annoying.

I'm with you. I prefer to refer to different variations of the same console as different models. Seems silly to me to differentiate based on a meaningless string of numbers (SKU)

 

[clamum]

I think RandomFool's idea of a more incremental development cycle is a good idea. That way it would keep the prices down and you could still introduce new content and be at least somewhat backwards compatible with previous versions. Nintendo's got a pretty good thing going with the Wii, I don't know if they would want to focus their efforts on a totally new system (while still supporting the Wii).

What I'd really like to see them do is something akin to Microsoft's Live service for online play.

 

[RagingBITCH]

Nintendo got it right this generation. Instead of focusing on OMG 1080P IS ZE GOODNEZZ, they focused on a simple gaming platform. They're content this generation. I don't see them coming out with Wii rev.2, unlike their constant new upgrades to the DS/Gameboy platform. Doesn't make much sense at this point to alienate their existing market to improve on their current Wii product. I think Wii sales will taper off sooner or later, but fully expect them to be #1 or 2 this round, something no one but Nintendo saw happening.

 

[UNCjigga]

Originally posted by: RagingBITCH
Nintendo got it right this generation. Instead of focusing on OMG 1080P IS ZE GOODNEZZ, they focused on a simple gaming platform. They're content this generation. I don't see them coming out with Wii rev.2, unlike their constant new upgrades to the DS/Gameboy platform. Doesn't make much sense at this point to alienate their existing market to improve on their current Wii product. I think Wii sales will taper off sooner or later, but fully expect them to be #1 or 2 this round, something no one but Nintendo saw happening.

But that's the whole point about why I think a two-console strategy will work for Nintendo and no one else. Others have said they think the Wii will only have a 2.5 year lifecycle and that Nintendo will keep making refinements to the Wii platform. But that *would* alienate the existing customer base. It would make more sense for Nintendo to build an advanced console under a separate brand that captures the attention of the hardcore gaming niche--and they should do it within the next 2 years. I'm imagining something based on a multicore Power6/Power7 CPU with an advanced multicore GPU (from ATI?) for graphics and physics. They can then continue to sell and support Wii on the low end as a mass market cash cow, and sell the new console on the high end for bragging rights. They'll certainly have the cash to do it!

 

[digiram]

All they have to do is release different flavors of the Wii next year, and the public will be going crazy over it again.

Trust me

 

[mugs]

Originally posted by: UNCjigga
...that captures the attention of the hardcore gaming niche...

You mean the group that is dismissive of anything Nintendo offers because it's all "for kids"? They're making an effort this time around by encouraging development of "mature" titles. They have everything they need to get good third party support this time, and it's looking like it will happen. If "hardcore" gamers are too simple-minded to enjoy a game simply because the graphics are not HD, then Nintendo will have another shot at them next time around. Right now they're printing money.

 

[BD2003]

Originally posted by: UNCjigga

Originally posted by: RagingBITCH
Nintendo got it right this generation. Instead of focusing on OMG 1080P IS ZE GOODNEZZ, they focused on a simple gaming platform. They're content this generation. I don't see them coming out with Wii rev.2, unlike their constant new upgrades to the DS/Gameboy platform. Doesn't make much sense at this point to alienate their existing market to improve on their current Wii product. I think Wii sales will taper off sooner or later, but fully expect them to be #1 or 2 this round, something no one but Nintendo saw happening.

But that's the whole point about why I think a two-console strategy will work for Nintendo and no one else. Others have said they think the Wii will only have a 2.5 year lifecycle and that Nintendo will keep making refinements to the Wii platform. But that *would* alienate the existing customer base. It would make more sense for Nintendo to build an advanced console under a separate brand that captures the attention of the hardcore gaming niche--and they should do it within the next 2 years. I'm imagining something based on a multicore Power6/Power7 CPU with an advanced multicore GPU (from ATI?) for graphics and physics. They can then continue to sell and support Wii on the low end as a mass market cash cow, and sell the new console on the high end for bragging rights. They'll certainly have the cash to do it!

Alienation was much more of a risk when backwards compatibility wasnt an issue. As long as the system is backwards compatible with Wii games, I'd imagine if nintendo did drop an HD system in 09, the "Hell yeah!" would drown out the "wtf's?".

Casuals wont be alienated...not at $250. The GBA's continued viability in the face of the DS for years now proves that dropping another console is probably not going to hurt them.

Now they've got the reasonably priced hardware. What needs to change is the price of games. They truely want to reach casual gamers, they need to get off of $50 games and get onto $20-30 games. IMO, thats the main reason the DS sells so well - because the games are affordable. The Wii could be the system to do that down the line, while the big brother HD system sticks with the $50 blockbusters. A $129 Wii full of affordable games might as well be a money farm.

Right now the Wii is a bit too expensive to be truely, ubiquitously casual, and a bit too underpowered to satisfy the hardcore. Yet the number of people willing to buy a new $250 console to pay $50 for an HD mario, zelda and metroid should not be underestimated at all.

 

[Fingolfin269]

I don't think Nintendo needs to change anything considering the fact that they are kicking ass right now. I'm sure they are developing something new but will not release it until it looks like this profitable concept starts to dip. I still haven't found one on a shelf so something must be going right for them.

 

[RagingBITCH]

Originally posted by: UNCjigga

Originally posted by: RagingBITCH
Nintendo got it right this generation. Instead of focusing on OMG 1080P IS ZE GOODNEZZ, they focused on a simple gaming platform. They're content this generation. I don't see them coming out with Wii rev.2, unlike their constant new upgrades to the DS/Gameboy platform. Doesn't make much sense at this point to alienate their existing market to improve on their current Wii product. I think Wii sales will taper off sooner or later, but fully expect them to be #1 or 2 this round, something no one but Nintendo saw happening.

But that's the whole point about why I think a two-console strategy will work for Nintendo and no one else. Others have said they think the Wii will only have a 2.5 year lifecycle and that Nintendo will keep making refinements to the Wii platform. But that *would* alienate the existing customer base. It would make more sense for Nintendo to build an advanced console under a separate brand that captures the attention of the hardcore gaming niche--and they should do it within the next 2 years. I'm imagining something based on a multicore Power6/Power7 CPU with an advanced multicore GPU (from ATI?) for graphics and physics. They can then continue to sell and support Wii on the low end as a mass market cash cow, and sell the new console on the high end for bragging rights. They'll certainly have the cash to do it!

I see your point, but the point you fail to realize is all games can play under all SKU's for the 360 and PS3. (Assuming memory card for the Core 360) You're talking about a completely seperate platform for a SKU that encompasses completely different technology, which requires another $XXX million in R&D, marketing, etc. Gaming companies expect consoles to last 5 years because it helps recoup all the R&D and marketing costs, the hundreds of millions if not billions invested. A 2.5 year turnaround makes zero financial sense whatsoever. Nintendo purposely put the Wii out as a gaming machine and not as an end all, badass media center like the 360/PS3 for a reason. You're cutting short the product life cycle of the Wii if they did this. Like it or not, who the hell would support the Wii when you have a high end graphics powerhouse that can play the same games, and especially Nintendo exclusives? Why Wii when you can WiiGIGAWATZ the same game with better graphics using a better controller? It makes NO sense.

 

[Wreckage]

Nintendo is beating the poo out of Sony and MS, they have no need for another SKU. They just need to make more of the SKU they have.

 

[CasioTech]

why have a wii and a revolution? Why not just scrap the wii and give a revolution motion tech and then that's all...?

 

[BDawg]

Sony has 2 SKUs, but one platform. Every PS3 plays every PS3 game.

MS has 3 SKUs and 2 platform. Not every 360 game will play on the Core.

Nintendo doesn't need to get into the 2 platform game for non-portable.

 

[RandomFool]

Originally posted by: BDawg
Sony has 2 SKUs, but one platform. Every PS3 plays every PS3 game.

MS has 3 SKUs and 2 platform. Not every 360 game will play on the Core.

Nintendo doesn't need to get into the 2 platform game for non-portable.

As of right now I believe every 360 game plays on every model including the core. It's only currently unreleased mmorpgs that will require a hard drive at this point.

 

[mlm]

Originally posted by: RandomFool

Originally posted by: BDawg
Sony has 2 SKUs, but one platform. Every PS3 plays every PS3 game.

MS has 3 SKUs and 2 platform. Not every 360 game will play on the Core.

Nintendo doesn't need to get into the 2 platform game for non-portable.

As of right now I believe every 360 game plays on every model including the core. It's only currently unreleased mmorpgs that will require a hard drive at this point.

There are already some games out there. FFXI is one, and I think one other is some soccer game.

 

[tatteredpotato]

Originally posted by: mlm

Originally posted by: RandomFool

Originally posted by: BDawg
Sony has 2 SKUs, but one platform. Every PS3 plays every PS3 game.

MS has 3 SKUs and 2 platform. Not every 360 game will play on the Core.

Nintendo doesn't need to get into the 2 platform game for non-portable.

As of right now I believe every 360 game plays on every model including the core. It's only currently unreleased mmorpgs that will require a hard drive at this point.

There are already some games out there. FFXI is one, and I think one other is some soccer game.

I know Boarderlands will.

 

[EricMartello]

If I was Nintendo I wouldn't do this. The Wii is basically a slightly overclocked Gamecube...in other words, it's what the Gamecube should have been in the first place. To make a version of the Wii that could spit out HD graphics would require re-engineering the console. It's not like the new XB360 that just adds an HDMI port with no major hardware changes.

Nintendo's Wii maybe outselling the competition but it suffers from the same key problem that the PS3 and XB360 suffer - lack of quality games. The XB360 has some more games out since it has been around for an extra year, but none that I'm really interested in. The PS2 is still chugging long quite well even today due to its massive selection of games.

 

[RandomFool]

Originally posted by: EricMartello
If I was Nintendo I wouldn't do this. The Wii is basically a slightly overclocked Gamecube...in other words, it's what the Gamecube should have been in the first place. To make a version of the Wii that could spit out HD graphics would require re-engineering the console. It's not like the new XB360 that just adds an HDMI port with no major hardware changes.

Nintendo's Wii maybe outselling the competition but it suffers from the same key problem that the PS3 and XB360 suffer - lack of quality games. The XB360 has some more games out since it has been around for an extra year, but none that I'm really interested in. The PS2 is still chugging long quite well even today due to its massive selection of games.

The gamecube was more powerful than the PS2. The thing that killed it was lack of support by third parties.