Business Week Analyses Wii Strategy - 40 Million to Ship
By 2011. Compared with 71 million PS3's, mind.
Business Week runs a feature in anticipation of Tokyo Game Show this week, asking simply 'Will Nintendo's Wii Strategy Score?' and somewhat surprisingly asserting that "...few expect truly dedicated gamers to choose the Wii over the PS3 or Xbox."
The piece begins by outlining what we already know about Nintendo's disruptive marketing strategy for the Wii, stating that: "...the Kyoto-based company is making a huge strategic bet that "less is more" in the global game-console market...Nintendo is clearly trying to position the Wii as a low-budget alternative."
Nintendo's Reggie Fils-Aime is then quoted, pointing out that, "While we needed adequate processing power, there was a threshold beyond which customers didn't really need more..." and adding that, "[the] Wii will be profitable from day one."
Of course, for Business Week, it's all about the bottom line. So let's look over those impressive figures once more: "The company's stock is up 74% since April, and its quarterly results released in July were robust thanks to the DS. For the three months through June, Nintendo's sales rocketed 85%, to $1.1 billion, while operating profit increased almost eightfold, to $248 million. A weak yen helped, but a tripling of DS sales to 4.54 million units was the biggest factor behind the better-than-expected results."
Strangely though, the article concludes that: "Few expect truly dedicated gamers to choose the Wii over the PS3 or Xbox. And ultimately, the advantage may go to Sony. Yuta Sakurai, an analyst at Nomura Securities in Tokyo, expects the PS3 to sell 71 million units by 2011, compared with 40 million units for the Wii. Microsoft, meanwhile, is planning a stripped-down version of the Xbox without a hard-disk drive and other accessories that will cost about $250 in Japan, where the U.S. software maker has endured disappointing results."
Are you a dedicated gamer? Will you choose Wii instead of or in addition to an Xbox 360 and/or a PS3? Let us know what you think about Business Week's predictions in the forum.
The piece begins by outlining what we already know about Nintendo's disruptive marketing strategy for the Wii, stating that: "...the Kyoto-based company is making a huge strategic bet that "less is more" in the global game-console market...Nintendo is clearly trying to position the Wii as a low-budget alternative."
Nintendo's Reggie Fils-Aime is then quoted, pointing out that, "While we needed adequate processing power, there was a threshold beyond which customers didn't really need more..." and adding that, "[the] Wii will be profitable from day one."
Of course, for Business Week, it's all about the bottom line. So let's look over those impressive figures once more: "The company's stock is up 74% since April, and its quarterly results released in July were robust thanks to the DS. For the three months through June, Nintendo's sales rocketed 85%, to $1.1 billion, while operating profit increased almost eightfold, to $248 million. A weak yen helped, but a tripling of DS sales to 4.54 million units was the biggest factor behind the better-than-expected results."
Strangely though, the article concludes that: "Few expect truly dedicated gamers to choose the Wii over the PS3 or Xbox. And ultimately, the advantage may go to Sony. Yuta Sakurai, an analyst at Nomura Securities in Tokyo, expects the PS3 to sell 71 million units by 2011, compared with 40 million units for the Wii. Microsoft, meanwhile, is planning a stripped-down version of the Xbox without a hard-disk drive and other accessories that will cost about $250 in Japan, where the U.S. software maker has endured disappointing results."
Are you a dedicated gamer? Will you choose Wii instead of or in addition to an Xbox 360 and/or a PS3? Let us know what you think about Business Week's predictions in the forum.
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Comments
ozfunghi 21 Sep 2006 11:43
1/6
I'm a dedicated gamer, and i'll get the Wii before anything else. So, make that 40 million and one :)
Joji 21 Sep 2006 11:52
2/6
I class myself as a dedicated gamer. I've already droped a preorder on my Wii, I also have a 360 so I will eventually buy a PS3.
I think Business Week are underestimating the Wii the same way they probably did with the DS, and because Sony is the current market leader. Its easier for them to just say Sony will still be on top than anything else. The success of DS proves that nothing is ever written in stone how they make out.
I think all three formats will do well this time, I can't give a percentage run down. I'll leave that to them, but I do think Nintendo have a better, sharper edge to battle the other with this time. Wii is unique enough like DS to do well despite more complex competition. MS strength is in a superb Xbox Live service and Sony's is brand loyalty and marketing.
Whatever happens it will be interesting to watch.
I think Business Week are underestimating the Wii the same way they probably did with the DS, and because Sony is the current market leader. Its easier for them to just say Sony will still be on top than anything else. The success of DS proves that nothing is ever written in stone how they make out.
I think all three formats will do well this time, I can't give a percentage run down. I'll leave that to them, but I do think Nintendo have a better, sharper edge to battle the other with this time. Wii is unique enough like DS to do well despite more complex competition. MS strength is in a superb Xbox Live service and Sony's is brand loyalty and marketing.
Whatever happens it will be interesting to watch.
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jadnice 21 Sep 2006 12:37
3/6
I do agree with the point that outside of the die hard Nintendo fans... must serious gamers will buy the 360 or the PS3, very few will get both. Nintendo however stand to break into the market of gamers who will purchase two systems. 360 and Wii or PS3 and Wii.
The fact is that hardcore gamers (non Nintendo fanboys equate hardcore gaming with amazing graphics... that just the facts. Yes gameplay is very important, Sony and Microsoft know this. Nintendo's position is gameplay first then graphics hence Wii not taking part in the HD era (its more like a financial risk for Nintendo that if fail will put them out of business)... the real reason is Nintendo can't compete with the other companies that can take the risk of taking huge lose during the life cycle of the systems. Nintendo is just a gaming company and have no other revenue making options to buffer a lose in going HD.
Nintendo more so than Sony and Microsoft will have to bring AAA games to the table since they their battle cry is great gameplay over shiny graphics... cause you already know that their will be great AAA games on PS3 (Metal Gear...) and 360 (Gears of War...).
The fact is that hardcore gamers (non Nintendo fanboys equate hardcore gaming with amazing graphics... that just the facts. Yes gameplay is very important, Sony and Microsoft know this. Nintendo's position is gameplay first then graphics hence Wii not taking part in the HD era (its more like a financial risk for Nintendo that if fail will put them out of business)... the real reason is Nintendo can't compete with the other companies that can take the risk of taking huge lose during the life cycle of the systems. Nintendo is just a gaming company and have no other revenue making options to buffer a lose in going HD.
Nintendo more so than Sony and Microsoft will have to bring AAA games to the table since they their battle cry is great gameplay over shiny graphics... cause you already know that their will be great AAA games on PS3 (Metal Gear...) and 360 (Gears of War...).
ozfunghi 21 Sep 2006 14:51
4/6
Err...
Nintendo's business model practically ensures them that they will never go broke. Unlike the other two, they aren't taking a loss on hardware. So basically, if they only sell 5 million Wii's, they will still not lose money, or very little. ALso, you need to know that Nintendo's reserve is actually quite big. They are the biggest player in a market that is practically as big as the movie industry. They are the second largest and best selling software developer (after EA), yet they almost make 100% on their software, because it goes straight into their pockets, unlike EA who has to pay fees to Sony, MS, and Nintendo etc. They are also the only company that makes a profit on hardware (GCN, GBA, DS...) instead of losing money. Remember that there have been over 150 million units sold of those three systems combined, which is more than PS2 + PSP. Plus, they make a load on lisencing fees from software developers that develop for their systems. Then there is Pokemon etc, cartoons, gadgets...
Even if Nintendo sells zero Wii's, they'll be sticking around. Make no mistake. Nintendo=/=Sega. They still have GBA and DS to back up that system in case of failure.
Nintendo's business model practically ensures them that they will never go broke. Unlike the other two, they aren't taking a loss on hardware. So basically, if they only sell 5 million Wii's, they will still not lose money, or very little. ALso, you need to know that Nintendo's reserve is actually quite big. They are the biggest player in a market that is practically as big as the movie industry. They are the second largest and best selling software developer (after EA), yet they almost make 100% on their software, because it goes straight into their pockets, unlike EA who has to pay fees to Sony, MS, and Nintendo etc. They are also the only company that makes a profit on hardware (GCN, GBA, DS...) instead of losing money. Remember that there have been over 150 million units sold of those three systems combined, which is more than PS2 + PSP. Plus, they make a load on lisencing fees from software developers that develop for their systems. Then there is Pokemon etc, cartoons, gadgets...
Even if Nintendo sells zero Wii's, they'll be sticking around. Make no mistake. Nintendo=/=Sega. They still have GBA and DS to back up that system in case of failure.
realvictory 21 Sep 2006 17:47
5/6
jadnice wrote:
I do agree with the point that outside of the die hard Nintendo fans... must serious gamers will buy the 360 or the PS3, very few will get both. Nintendo however stand to break into the market of gamers who will purchase two systems. 360 and Wii or PS3 and Wii.
The fact is that hardcore gamers (non Nintendo fanboys equate hardcore gaming with amazing graphics... that just the facts. Yes gameplay is very important, Sony and Microsoft know this. Nintendo's position is gameplay first then graphics hence Wii not taking part in the HD era (its more like a financial risk for Nintendo that if fail will put them out of business)... the real reason is Nintendo can't compete with the other companies that can take the risk of taking huge lose during the life cycle of the systems. Nintendo is just a gaming company and have no other revenue making options to buffer a lose in going HD.
Nintendo more so than Sony and Microsoft will have to bring AAA games to the table since they their battle cry is great gameplay over shiny graphics... cause you already know that their will be great AAA games on PS3 (Metal Gear...) and 360 (Gears of War...).
The fact is that hardcore gamers (non Nintendo fanboys equate hardcore gaming with amazing graphics... that just the facts. Yes gameplay is very important, Sony and Microsoft know this. Nintendo's position is gameplay first then graphics hence Wii not taking part in the HD era (its more like a financial risk for Nintendo that if fail will put them out of business)... the real reason is Nintendo can't compete with the other companies that can take the risk of taking huge lose during the life cycle of the systems. Nintendo is just a gaming company and have no other revenue making options to buffer a lose in going HD.
Nintendo more so than Sony and Microsoft will have to bring AAA games to the table since they their battle cry is great gameplay over shiny graphics... cause you already know that their will be great AAA games on PS3 (Metal Gear...) and 360 (Gears of War...).
To be honest, this is why I'm sick of the games industry these days. Everything has inverted, it's all about mainstream, and everything is s**te.
Basically, if people don't like Nintendo, then they are not the most "serious" kind of gamers that exist.
The factors that most people take into account when buying computer games (or anything) is nothing to do with how good it is, because they know nothing about it. That's why people only know about the graphics - the obvious aspect.
Nintendo can compete with other companies, but it wouldn't have been sensible. They could have taken a variety of paths, but they chose out of all of them to do something unique.
I don't think most people play games for fun anymore - people just buy all sorts of crap, and these days, the game with the most shiny box or the biggest movie licence, is the "best" game, and fun is not a factor.
It's like Metal Gear Solid 3 and Gears of War - they probably are technical achievements, but that is good enough these days, but it shouldn't be - they should also be artistic achievements in terms of fun. I'm sure Metal Gear Solid 3, especially, will be amazing, but people won't see it from the creators' points of view - they'll just say, "oh, it's looks brilliant, and it lasts 100 hours, and has no load times."
I don't see why everyone takes it so seriously, because it's got to a stage where no one cares about fun anymore. I just want to be able to play computer games with my friends and not feel like a geek, and not have them refuse to play because they don't know the controls. With the Wii, it's not the same game with more particles, it emphasizes the creation of brand new games (gameplay-wise), which is what made games so much more interesting in the past - every game these days is guaranteed to be a man walking around with a gun, for example.
tyrion 25 Sep 2006 12:37
6/6
ozfunghi wrote:
Nintendo's business model practically ensures them that they will never go broke. Unlike the other two, they aren't taking a loss on hardware. So basically, if they only sell 5 million Wii's, they will still not lose money, or very little.
Not quite. You are only talking about parts and manufacturing, since that is how Nintendo define profitable when talking about hardware.
Once you factor in research and development, marketing, industrial relations and the like, you need to sell a lot more than 5M units to make your money back, never mind be profitable overall.