Counting Rupees: The WiiCube

Each week Jeff Engel and Geoff Brooks contribute Counting Rupees, a column on the business behind gaming:
In my last column I suggested that, if Microsoft is to make a Wii-like controller, it should still continue to focus on the "traditional" types of games that have so far made the 360 a success, because Nintendo had already basically wrapped up the "casual" crowd. I also mentioned that the only Wii games that are apparently selling are Nintendo games and some casual games. And with that in mind, the New York Times published an article on Monday detailing that, while the Wii hardware is selling well, even seemingly popular Wii software still has some trouble continuing to sell to the Wii audience.

A somewhat surprising tidbit from the article is that, while Nintendo broke records selling more than 1.4 million copies in its first week with Super Smash Bros., its sales dropped a precipitous 90% after just 4 weeks. At that point, the sales of the game were apparently bad enough that retailers began to bundle the game with the Wii system in order to sell through their inventory. What this data suggests is that, while Nintendo may be expanding the audience that it can sell the Wii to with casual games like Wii Sports, it's failing to expand that same audience into other franchises that may represent more traditional genres. The Wii isn't just selling Nintendo-developed games and some casual games to a big audience; the audience seems almost strictly divided into casual, low-attach-rate gamers, happy with Wii Sports and picking up the occasional Wii Play and whatnot, and Nintendo loyalists who have probably played Nintendo games since the NES days. The Nintendo loyalists snapped up Super Smash Bros. instantly, and once all of those gamers had it, sales dried up soon after, seemingly failing to really expand through word of mouth into the casual crowd.

At the same time, well-reviewed 3rd-party games, like Zack & Wiki and No More Heroes, typically perform poorly on the system. This makes perfect sense considering the schema of Wii owners that we're assuming, as these games don't fit into either the casual gamer or Nintendo loyalist profile. The exception to these rules are well-established franchises, like Resident Evil or Guitar Hero, as even Nintendo loyalists (and some casual gamers) know about these and probably have played them on other systems, whether theirs or a friend's.

Is this starting to sound familiar to anyone else?

Here's a hint:

Best-selling Gamecube Software (Source: Wikipedia)

1. Super Smash Bros. Melee (7.09 million)
2. Super Mario Sunshine (5.5 million)
3. Mario Kart: Double Dash!! (4.67 million)
4. The Legend of Zelda: The Wind Waker (3.07 million)
5. Luigi's Mansion (2.53 million)
6. Animal Crossing (2.32 million)
7. Mario Party 4 (2 million)
8. Metroid Prime (2 million)
9. Mario Party 7 (1.86 million)
10. Pokemon Colosseum (1.86 million approximately)

Best-selling Wii Software (Source: Wikipedia)

1. Wii Sports (17.85 million)
2. Wii Play (9.23 million)
3. Super Mario Galaxy (5.19 million)
4. Super Smash Bros. Brawl (4.463 million)
5. Mario Party 8 (4.35 million)
6. The Legend of Zelda: Twilight Princess (4.3 million)
7. Mario & Sonic at the Olympic Games (3.4 million)
8. Super Paper Mario (2.16 million)
9. Big Brain Academy: Wii Degree (2 million)
10. Guitar Hero III: Legends of Rock (2 million)

For as much as Nintendo was touting its "Blue Ocean" strategy for the Wii, it sure doesn't look like much has changed. Of the Gamecube top sellers, all ten were published by Nintendo. Of the top-selling Wii-games, eight are Nintendo published, one is both arguably a Nintendo game and a "franchise" game (Mario & Sonic, since it includes the two company mascots), and the other is a well-established franchise (Guitar Hero III). Granted, some of the Nintendo games are focused on this new "casual" crowd as well, but what this suggests is simply an augmentation of its Gamecube strategy and not necessarily a completely new direction as "Blue Ocean" would suggest.

"For as much as Nintendo was touting its "Blue Ocean" strategy for the Wii, it sure doesn't look like much has changed."

This isn't necessarily such a bad thing for Nintendo. After all, even through all the doom and gloom of the Gamecube, the company was still profitable. Like the Wii, the Gamecube always sold at a profit (or very close to it). With arguably the best development teams in the industry, Nintendo has cultivated an extremely loyal fanbase who anxiously await every one of their new releases. Since these games are Nintendo published as well, they reap the full reward of their sales as well. And, of course, the Wii hardware is selling at a much better overall rate than the Gamecube, meaning that Nintendo's installed base is bigger and allows for higher software sales. But, like the Gamecube, there are some troubling aspects of the strategy. Namely, it seems to alienate 3rd-party developers, and it makes the company dependent almost entirely on self-developed "hits" a few times a year.

What Nintendo must have realized after the Gamecube is that it could only produce so many of these traditional "Nintendo-loyalist" games per generation, and therefore limited the number of "hits" it could rely on during its run. Adding in "Casual Gamers" has allowed Nintendo to basically augment the number of "hits" they can produce, as the manufacturer can simply sell those games to a different, parallel audience. This would also suggest that Nintendo may not be served well by trying to blend games for consumption by both audiences, as it's trying to do with Mario Kart Wii. This could have the effect of actually alienating both of the major audiences that the Wii seems to be thriving with.

So what do we have? A machine that's selling the same games that sold on the Gamecube, as well as (mostly) Nintendo-developed casual games. Hardcore gamers may mock the Wii as simply "a Gamecube 1.5 with waggle", but the business strategy actually makes this seem like a fairly apt comparison. Say hello to the WiiCube.

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As co-editors of A Link To The Future, Geoff and Jeff like to discuss, among many other topics, the business aspects of gaming. Game companies often make decisions that on their face appear baffling, or even infuriating, to many gamers. Yet when you think hard about them from the company's perspective, many other decisions are eminently sensible, or at least appeared to be so based on the conditions at the time those choices were made. Our goal with this column is to start a conversation about just those topics. While neither Geoff nor Jeff are employed in the game industry, they do have professional backgrounds that are relevant to the discussion. More to the point, they don't claim to have all the answers -- but this is a conversation worth having. You can reach them at