As anyone in the games industry can confirm, most family members and close friends came around these past few weeks asking the same question: “Can you help me get a Wii?” As the Wii closes its third holiday season, I would venture to guess that sales records again will be broken when last week’s holiday results are reported. Look at November alone: Nintendo sold over two million units including 800,000 during the Thanksgiving weekend despite the down economy. It appears that the Wii is and will be the console king. However, software sales hint at a slightly different story.
No one can argue that Nintendo has a more efficient profit model for the Wii than its console competitors. Many estimates have surfaced explaining the average loss that Microsoft suffers on each Xbox 360 sold and Sony on each PS3, while Nintendo actually makes money on the Wii. But history shows that the video games industry has been fueled by the “blades and razor” model. The console providers love to see the cash flowing in from their box sales aka razors, but they really get lathered up when consumers come back for the actual games and accessories aka blades that offer higher margins.
The latest sales results show that the Wii software doesn’t quite paint the same dominant picture as the hardware. In November, we saw Xbox 360 own the top two spots with new blockbuster sequels to recognized first person shooter (FPS) franchises (Gears of War and Call of Duty). The Wii software cracks the top 10 but by no means replicates the record-breaking success of its console. Top titles for the Wii include: “Wii Play” (includes an extra controller and more fun mini-games to show your true living room dominance); “Wii Fit” (the latest fitness craze); “Guitar Hero: World Tour” (the Guitar Hero franchise speaks for itself); and “Wii Music” (a mixture of Wii Sports and Guitar Hero).
The surprising software totals led me to a few key takeaways:
- Will we witness a huge increase in focus on development for the Wii during 2009 and beyond? Every major publisher has either admitted to not properly supporting the console or wanting to increase their support in the future. If this holds true and the install base continues to multiply, we can expect to see more opportunities for marketers to work with Wii titles reaching a vast group of consumers.
- Is the Wii more akin to a board game than a game console? I have not seen any studies that dissect the reasons behind purchase of the Wii (feel free to send any my way if you have come across them), but the numbers would suggest that families are purchasing the Wii to replace game time that used to be occupied by Monopoly, Scrabble, and Pictionary instead of PlayStation 2. By recognizing this opportunity, marketers should explore ways to integrate into the new family “board game” experience. I would politely push all snack brands to quickly examine ways to integrate.
- What if Nintendo can replicate the online success of Microsoft and Sony? Through its Xbox Live experience, Microsoft has created incremental content opportunities for consumers that lead to additional revenue models for Xbox. Sony also provides an online experience not limited to games that feed consumers hunger for more media and recent advertising shows they intend to continue this focus. Microsoft and Sony are hoping these offerings will expand the audience interested in their consoles outside of the typical gamer demographic. In other words, they hope to win over all of those families buying or attempting to get their hands on a Wii. Imagine the possibilities for marketers able to deliver a branded message directly to all of those Wii living rooms.
With all that said, these questions will remain unanswered over the next 12 months as we monitor how the industry changes or continues on the same path. However, there is no question that marketers should be keeping tabs on the industry’s hardware and software sales as they will a story that presents opportunities.