We don't often speak of real competition around here -- that is, competition with Microsoft and Sony. There are a lot of reasons for this; after all, Nintendo themselves claim (quite rightly) that when it comes to this market, they're not competing with the other guys. They're looking to do something new.But the fact remains that for a while, Nintendo has been in third place when it comes to the console wars. Is that really so bad? According to the New Yorker, when you're Nintendo and the other guys are bleeding money, it's just fine to come in last. We know, it seems strange on the face, but once examined, it makes sense. Without the pressure of out-processing and out-performing the other guys when it comes to power, graphics, and sound, Nintendo is free to do whatever they want -- and that shows in the Wii. We don't mean just in the innovative turn the system design took, either. It means Nintendo is free to wield their money where it counts, and in return, they reap the reward of profiting on every system that sells.
We've heard most of this before, but rarely in a context that compares the video game industry to other businesses. The New Yorker draws a comparison to car companies by posing the question of who one would rather be in that market: GM or Honda? The choice is easy. Staying near the top is a benefit when it comes to making and selling cars. But the business of games doesn't seem to follow all the same rules -- and it's interesting to look at what's going on in the industry from that perspective.
So what does that mean will happen if Nintendo continues the roll they're on with the Wii and the DS and catapults back into the spotlight as the biggest and baddest of all? Will their profitability slip? Or is Nintendo just the best business model gaming has to offer, regardless of the standings between the big three?
Reader Comments (Page 1 of 1)
11-29-2006 @ 7:37PM
mgroves said...
Whenever someone talks about these "console wars" and who is going to "win", I always ask: how do you define winning? Total console sales? Total number of console sales? Total profit? Total profit of all games and hardware for all companies?
Some of these things are hard to measure, some of them are easy, but I don't think they all point to the same company.
If there was a poll, for instance, in 3 or 4 years from now simply asking, "Who won?", what would it mean? Probably a lot more qualitative opinion than quantitative measures.
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11-29-2006 @ 8:25PM
Free Wii said...
"They're looking to do something new."
That right there is why I like Nintendo
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11-29-2006 @ 9:27PM
skyrous said...
Well in every other generation the "winner" was pretty clear. One system pulls ahead in market share and gets the lion share of 3rd party support and most of the big exclusives. Last gen the PS2 sold 100+ consoles and the xbox and GC both sold just over 20 million. Anyone could guess those numbers just by looking at each machines respective game libraries.
the first it was atari... which literally drowned in the 3rd party support, then nintendo came along. Only the 16bit era did not have a definitive winner the SNES and the genesis more or less tied. and for the last two rounds Sony has been the king.
1 or 2 years from it'll be clear which console has captured the publics imagination. They'll clearly ahead in units sold and probably won't ever be caught by the other two. Developers will be scrambling to put their latest title out on that system.
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11-29-2006 @ 10:25PM
xcrunner28 said...
Is that article implying it is better to be GM in the car industry? The way I look at it, the car industry is very similar to this situation in the videogame industry. GM may have a bigger name, but they lose somewhere near $1,200 per vehicle sold, whereas Honda makes about $1,200 profit per vehicle sold (hence making it better to be Honda). Now that I think about it, that example has many parallels to the videogame industry (Honda cars=reliable, relatively inexpensive, innovative--just like Nintendo products).
Anyway, the article is a good one with many good points. Regardless of what happens this generation, Nintendo will do fine.
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11-29-2006 @ 10:28PM
interspecies erotica said...
skyrous - your facts are wrong. the xbox sold double what gamecube did, go to en.wikipedia.org and search for console wars. xbox sold i think 40 mil, while gamecube was 20 mil.
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11-29-2006 @ 11:04PM
Shinn said...
* Nintendo GameCube: 21.20 Million as of September 30, 2006
* Xbox: more than 24 Million as of May 10, 2006[8]
That's straight from the "Console Wars" wiki article. Don't know where you got 40mil from.
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11-29-2006 @ 11:37PM
gphoenix51 said...
Nintendo IS (and ALWAYS will be) the Best. Nuff Said
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11-30-2006 @ 9:54AM
WiiBoy2000 said...
If Nintendo finishes 3rd (last) place again; they will forever be in third place and be seen as a niche player: good handhelds + 'different' console. They will make oodles of profit and so their following and shareholders will be happy.
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11-30-2006 @ 6:53PM
Dan said...
xcrunner28: I read the article as implying that is would be much better to be the Honda of the games industry, for exactly the reasons that you mentioned.
Also, to the author: I find it amusing how you write here that you don't often speak of competition, and yet over at Dsfanboy, where you also write, there is a weekly sales chart just to show how much the DS is leading by. I also have no doubt that, should the Wii continually outsell the competition, those numbers would begin to make an appearance here.
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12-03-2006 @ 3:29AM
mietha CAG said...
Choosing not to compete appears to have been the right idea. The Wii offers something that the PS3 and the 360 can't. Nintendo's offering is not better, but it is different. Most people are only going to buy either a 360 or a PS3 (360 is the better choice IMO, but anyway). There is no real reason to buy a PS3 if you already have a 360, unless you REALLY want Blu-Ray, and, again, HD-DVD has more to offer for a cheaper price. However, the Wii is a totally different product. It is not a serious gaming platform (sorry fanboys, wake up to reality), but it does seem to be able to provide a fun experience that you can not have anywhere else. In the long run, that may very well put them in not only 2nd place, but 1st. Nintendo does have a product that can appeal to the traditional non-gamer, which was their stated goal. Only time will tell if the traditional non-gamer actually cares or not. They are off to a good start, but are still better than 6 million behind the 360. To be honest, I hope Nintendo comes in a close second and destroys the PS3. If the Wii wins, especially by a wide margin, I am very fearful of the future of the industry. I want a Wii, and I will probably have fun with it, but I do not want to be playing rehashed Gamecube games for the next 20 years. If the Wii takes first, publishers will be a lot less likely to spend 10 times as much to develop for systems with smaller installed bases. Effectively, if the Wii wins, especially by a wide margin, the gaming industry as a whole could stagnate and die.
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12-15-2006 @ 3:42AM
rhino said...
mietha,
it's pretty unfair of you to say that the Wii is not a "serious gaming platform," and that's why the rest of your argument doesn't make sense. Like you said, the Wii is just different. Whether a gamer prefers more power or an original control scheme is a matter of opinion. As for being "serious," the Wii offers boundless possibilities for gamers. A million different control schemes, the virtual console, the nunchuk... How can you say that doesn't provide enough depth for serious gamers? It's absurd to think that the Wii provides "rehashed gamecube games." You're basing that statement solely on comparable graphics and not on the actual games. If the Wii takes first, and expands the industry to untold proportions like it hopes to, publishers will be all the more likely to produce games for such a larger installed base (where did you get a "smaller installed base" from?) With such an innovative approach to gaming and with the possibility that the industry will multiply in size, the gaming industry will do just the opposite of "stagnate and die." It will produce original, fun games for a much wider, more dynamic audience. If the Wii wins, the industry wins.
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12-16-2006 @ 4:35AM
jay said...
Nintendo is the best.
There is no question there.
They've pushed the gaming industry beyond the limits time and time again. They may not sell the most systems every time, but I think, in the big scheme of things, it's more important to be an innovator and push the ideas forward, than to be a copycat who pumps out fluff for profit.
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