Something is happening to Nintendo's Wii which has been unheard of in its existence, hardware sales forecast have been declining, and projections say it will fall second to PS3 by Q3 2012. The Wii came about to be a low technology platform that was friendly for all users, while relying on established franchises for software rather than investing in new Intellectual Property. They turned the industry around, where the norm was to create increasingly high tech products and target the hard core gaming audience. Competitors have realized this and have released similar functionality on their consoles and apparent saturation may have been reached for the Wii.
On another side, which is sometimes overlooked, another of their star products continues to strive, the Nintendo DS, with the second largest Hardware base in Video Game history, at around 145 million units sold. As other competitors have fallen behind on traditional "mobile" gaming Nintendo has gone strong in this aspects with new models being sold almost yearly (DS, DSi, DSi XL, 3DS) with the same proprietary software model, including some new features, such as WiFi and an internet browser. Information on the margins for these Hardware products aren't public, but due to the difference in price one could assume that the Wii has higher margins, specially due to the fact that they sell much more accessories through it.
What do experts think? That the purchase of software has been reducing in terms of number of consoles in existence, a major indicator that a new platform may be on the horizon. Add this to the news that the PS4 is already in development and it seems that a new generation of console wars may be coming. With distribution moving continually towards digital and technical specification wars escalating, business might be changing for Nintendo. Traditional players have the threat of micro payment gaming online, companies such as Zynga (with their social application games) and a seeming consensus that the future and big bucks may lie away from consoles and more towards mobile and online.
If we look at this objectively, a recent study by PWC forecasted that a in a 30 month period Video Games will be a 70 billion dollar industry, with 40 billion coming through traditional distribution platforms. This doesn't take away from the current trend towards more online mobile gaming; so we can see there is an established way of doing business and a growing trend, but certainly no the death of traditional distribution.
All this being said reports are that Nintendo will come with a High End product to rival the new generations to come with high processing capabilities and 3D support. This seems to be radically different from what is said in this post and increasingly similar to what their competitors might do. This means, probably another traditional console war, in which over time the most consistent winner is Sony with most absolute HW and SW sales through all their platforms. How will Nintendo maintain its advantage from their competitors is hard to know, specially if they do the same as them. There is a significant amount of money to be distributed in the future of video games, but can Nintendo effectively compete?
This is hard to say, specially if they go from not being technologically proficient machine to one that is. If asked a visionary might say that the future of gaming will be totally mobile and digital; but numbers might suggest something different, business as usual (indicated by high investment from traditional players).
It would be interesting to see if their next console would gravitate towards being more portable and less "techy", competing in a different market than Sony and Microsoft. They would then maybe enter in direct competition with tablets and smartphones, a whole other battle in of itself. It seems that the battle lines may be drawn between traditional console gaming and more portable online gaming, with Nintendo going back to business as usual; respecting the difference between both.
Why doesn't Nintendo come up with another seemingly disruptive business idea and try to combine console and portable? They seem like a smart company and the time probably hasn't arrived yet, and more interestingly, it may never arrive.
Thanks to the following sites for information:
http://www.vgchartz.com/article/86406/the-big-three-shipment-update-through-march-2011/
http://schedule.sxsw.com/events/event_IAP7078
http://uk.wii.ign.com/articles/113/1135489p1.html
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