Nintendo's Wii: Privily, Why So Rare Art Thee?
Having just filed my September 27 issue feature article first draft (phew!), I’m going to strive to spend the next few weeks whittling down my perpetual ‘to-blog topics’ list (which, I regularly need to remind myself, is a good problem for someone in my profession to have). I realize that I write about game consoles quite a lot; for any of you who are wondering why, I’ll begin this particular post with a short justification list:
- Consoles ship in high volumes (if they’re successful, that is….anyone remember Atari’s Jaguar or Sega’s Dreamcast, or for that matter the Nintendo GameCube?) and can therefore have a disproportionately significant effect on the shipments of already-introduced technologies inside them, as well as the success or failure of new technologies that often appear first in them. The Sony PlayStation 3, for example, is today’s ‘poster child’ for the Cell processor, for Blu-ray optical storage, and for Rambus XDR memory. And regardless of whether or not you design game consoles, wouldn’t you be interested in evaluating and possibly designing in the same DDR SDRAM flavour (for example) found in the Microsoft Xbox 360, thereby ensuring yourself potentially-longer-than-PC product availability and high-volume-driven low prices?
- Because consoles are so performance-demanding, and because of the ‘razors and blades‘ model under which they’re (with the notable exception of the Nintendo Wii) usually sold, which by not requiring profitability for the initial console sale somewhat diminishes the traditional bill-of-materials cost pressure, they tend to employ leading-edge ICs and other subsystems. They therefore provide an indicator of what components mainstream products may be using in the future
- The latest generation of consoles focuses not only on traditional gaming functions but also strives to act as the total entertainment and information nexus for whatever room a consumer installs them. In that respect, they provide a means for me to monitor the progress of (as well as personally test-drive) emerging trends such as television-based web browsing, UPnP LAN streaming, and Internet-downloadable movie and television show purchases and rentals.
With that big-picture perspective out of the way, I’d like to now focus specifically on the earlier-mentioned Nintendo Wii. Launched in major markets in mid-November, 2006, it experienced the same initial shortages and long lines of interested consumers as did its competitors. However, whereas the Xbox 360 (launched one year earlier) and the Sony PS3 (launched at roughly the same time) are now abundantly available and have both experienced one round of price cuts so far, the Wii is still selling for its original price and demand still outstrips supply.
Why? 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.
So again: why? My theory: clever marketing. One of the most effective ways to cultivate demand for your product is to create and perpetuate (as long as you can….keep reading) the perception of a product shortage. It’s what some folks accused Apple of doing with the iPhone (I’m not one of them; if anything, I think Apple was abnormally quiet in the months leading up to the iPhone launch, but then again Apple didn’t need to say anything when the popular media was already frothing about and creating ‘buzz’). And, I suspect, it’s what Nintendo’s doing with the Wii.
Now granted, Nintendo’s like any other company; it doesn’t want to spend a lot of money overbuilding manufacturing capacity that’ll just sit dormant and in mothballs once the resultant supply overshoots demand. It’s a balancing act. But c’mon….9 months after introduction, no stream of content ‘hits’ to keep stoking consumer interest, and you still can’t be guaranteed of finding a console on your favourite retailer’s shelves? If it’s not clever marketing, it’s incompetent product management.
Regardless of the root cause of the lingering shortage, Nintendo’s walking a tightrope here, and if it’s not careful it’ll have a dramatic fall. At some point, potential customers are going to hear about all the Wiis collecting dust in their neighbors’ and relatives’ homes. They’re going to get tired of waiting for their own Wiis (if they’re not already), and unless Nintendo or a partner delivers another game home run (with all due respect, I don’t think Wii Fit is it), consumers are going to scratch the $249.99 Wii off their to-buy lists and pick up a $279.99 (new) or $189.99-plus-free-game (refurbished) Xbox 360 Core system instead. I guess it’s a good thing for Nintendo that the Wii’s profitable and therefore doesn’t require lots of subsequent title sales to fiscally pull the corporation out of a typical, initial console-created loss ‘hole’, huh?