Industry analyst Todd Mitchell has recently declared to investors that Nintendo’s success with the Wii and DS platforms does not bode well for major software publishers in the games industry. He argues that because Nintendo produces great software titles on their consoles, consumers are less likely to purchase third party titles (from other publishers). This analysis is short-sighted and disingenuous, and many agree:

“Wedbush Morgan analyst Michael Pachter has dismissed comments by a fellow analyst which suggested that Nintendo’s success will have a negative effect on third party publishers. […] Speaking to GamesIndustry.biz, Pachter described Mitchell’s comments as “naive”.” [Michel Patcher]

Nintendo showed self-confidence, and companies that understand, and share Nintendo’s vision have greatly benefited. Biggest case in point: Ubisoft saw the potential of the Wii very early on, and could well be the only major publisher with the business foresight and acumen to do so. After investing early in the development of several games for the Wii, they have indeed financially capitalized on this investment. In the last quarter, they rank 1st amongst independent publishers for the Wii, both in the US and in Europe. Oddly enough however, Ubisoft is not listed as a recipient or focus of the investor’s note in question. Although listed, even EA has benefited from the success of the Wii through their 20% stake in Ubisoft.

A Long Time Coming

Ever since the DS was announced, the path adopted by Nintendo has been clear. In the past few years, Nintendo has consistently asserted an unconventional approach to their development, quite distinct from Microsoft and Sony’s core technological focus.

This industry analyst may well belong to the same school of thought that, failing to see the potential of the Wii and the DS, imagined that the 360 and the PS3 would dominate this generation of the console. They dismissed Nintendo completely based on the lackluster sales of the GameCube. In an industry as volatile and fast-paced as ours, it is short-sighted to assume the status qo will remain constant. Just because the PS2 dominated the market last generation does not automatically mean the PS3 will this generation; quite the opposite, in fact, given the competitive spirit within the industry, and the ever evolving creativity of game developers.

As to this analyst’s concern, not only is Nintendo not a threat to third party product marketability, it is actually growing the consumer market. The DS and the Wii are both targeted at non-traditional gamers (without driving away perennial Nintendo fans, a feat in itself). The DS has been a runaway success with older people, and female audiences. The Wii’s simple interface has overcome long standing barriers, allowing people who may have previously felt intimidated by the technology, to pick up a remote/controller and play a game of tennis. These new consumers wouldn’t buy a PS3 or an Xbox 360 anyway, so Nintendo is certainly not taking away from their rivals potential. Publishers are free to continue making games the traditional way, for traditional consoles, but if they want to maximize their potential profits, they would do well to learn how to make innovative games for the Wii so they can capture some of that emerging market.

Posted by Raoul on Tuesday, May 1st, 2007 at 10:53 pm.