Nintendo's Wii: A Long-Term Dust-Magnet 'Faddy'?

Scan through the ‘Most Commented On’ section of my blog home page, and you’ll find a diversity of topics that particularly caught readers’ eyes and emotions. The popularity of some of them (note: only as measured by comments…some of my most traffic’d content has historically received very little reader response) surprised me, others not so much. Lessee…in the top 5, there’s:

• Sirius Satellite Radio (#1)
• Foveon image sensors (#2)
• Microsoft’s Windows Vista O/S (#3), and
• Solar flare-induced disaster potential (#5)

Wait…what about #4? That’s the Nintendo Wii (which I actually mentioned just yesterday), and it’s the focus of this particular post. Back in August of 2007, within a writeup in which I postulated that Nintendo was intentionally constraining supply in order to keep demand (and therefore selling prices) high, I wrote:

Granted, Wii Sports is a lot of fun; bundling it with the console (along with creating it in the first place) was a stroke of brilliance on Nintendo’s part. But neither Nintendo nor any of its third-party partners has yet come up with a follow-up ‘killer application’ for the console, aside from perhaps the until-recently-free Opera web browser. And frankly, everyone I’ve talked to who owns a Wii (and I’ve actually talked with quite a few Wii owners the past few months) admits that the console’s now sitting in their entertainment center collecting dust. The Wii Sports novelty wore off after a few (or, for the truly hard-core, a few dozen) playings.

By analogy, I was suggesting that the Wii might be the high-tech equivalent of a piece of exercise equipment purchased in the heat of New Year’s Resolution weight-loss passion, used briefly, but eventualy ending up only as a fancy clothes-drying rack. Predictably, dozens of Nintendo fanboys vehemently disputed my ‘collecting dust’ conclusion, both via public comments and private emails-and-voicemails. Thereby explaining why I was so interested in some recently released Nielsen data. Take a look at this graph, for example:

Unfortunately, nowhere can I find what criteria Nielsen used to define an ‘active’ gamer. But the Microsoft Xbox 360 touts the highest percentage of any given console’s total population of users that are ‘active’. Conversely, the Wii has the lowest ‘active’ owner percentage, even below that of the prior-generation Nintendo Gamecube!

Inherent in that last bit is the Achilles Heel of the Nielsen data, particularly if you’re Nintendo, who reportedly turns a profit on each Wii console sale and therefore isn’t as ‘razor and blades‘-dependent as are Microsoft and Sony on subsequent content profits to counterbalance console losses. If, say, there were only five Gamecube owners surveyed, and one of them was deemed ‘active’, Nielsen would end up giving that archaic console a 20% ‘active’ rating.

There seems to be no meaningful correlation between ‘active’ percentage and total user base in the Nielsen report. Given that the Wii reportedly first took the cumulative-worldwide-units lead from the Xbox 360 in August 2007, in spite of being one year later to market than the Xbox 360, I suspect that the Wii’s installed base by this time is notably larger than that of the Xbox 360 (though offhand I can’t find any more recent cumulative-sales data; sources, readers?). But keep in mind, too, that the average sales price of the Wii is also lower than that of the Xbox 360; the ‘Arcade’ version of the latter didn’t dip below the Wii’s consistent-over-time $249.99 price until September of 2008, and the Pro and Elite variants currently remain priced above the Wii. So a revenue-vs-revenue comparison of the two consoles will probably be quite different than units-vs-units analysis results.

Another graph in the Nielsen report is more user-spectrum-encompassing, thereby improving the Wii’s comparative standing:

The Xbox 360, Sony PlayStation 3 and Nintendo Wii combined to account for 50% of total share of minutes played by all those surveyed, with the PS3 notably bringing up the rear of the three latest-generation platforms. By the way, if you add up the percentages for the consoles listed, you won’t come up with 100%; apparently a tangible number of folks are still regularly firing up their Sony PS Ones, Nintendo 64s, Sega Genesis units, and other archaic devices.

And here’s one final Nielsen graphic to pass along:

The high dependence of the Xbox 360 on the traditional male-dominated gamer audience is, I think, obvious in the graph. Conversely, the data bears out Nintendo’s claims of the Wii’s ability to cultivate new customer bases, notably women in this particular survey. Next time, perhaps Nielsen could do its data-gathering in nursing homes?