The Nintendo Wii was the clear leader in the Console Wars in 2008, but that may be about to change in 2009. Yesterday the company cut its yearly profit projection by one-third, with analysts
prognosticating that this could be the sign of a major slowdown in the demand for the console. Nintendo's stock tumbled 12% following the news, and although the slowdown of hardware sales is bad
enough news, the outlook for Nintendo's software sales is even gloomier.
Despite growing its installed base by an impressive 40% year-over-year, Nintendo's software sales grew only an anemic
3%. The Wii's broader appeal and greater focus on casual gamers, while driving enormous amounts of console sales, means that the Wii's installed base is full of people who are satisfied with only a
few games - "Wii Sports," "Wii Fit," "Guitar Hero" -- to play with their friends or to bring out during parties. By comparison, Sony and Microsoft's launch calendars are crammed with a parade of
must-own AAA titles that appeal to gamers who dedicate dozens of hours per week to the pastime. Even worse for Nintendo, the versions of those titles that they release are inevitably lower-quality
when it comes to graphics, and frequently have problematic controls, as developers continue to struggle with programming for the wiimote.
The economic slowdown could also play a major role in
Nintendo's decline. Although demand for the latest video games may be somewhat recession-proof (I doubt you'll find many people canceling their "WoW" subscription because of the recession, or forgoing
the next installment of "GTA" because budgets are tight), games generally play a smaller role in the entertainment lives of casual gamers who prefer the Wii to the PS3 and the 360. If the game
allowance is cut, the titles these casual gamers currently own can probably sustain them.
Hopefully in 2009, the Wii titles reaching market will be less shovelware (which is the bulk of the
current Wii library) and more games like "Mario Galaxy" and "Smash Bros." -- games that sell the console and inspire casual gamers to expand their collections.