The success of Nintendo’s Wii and DS platforms have caught many industry observers and analyst by surprise. Some persist to view the Wii’s success as shortlived, a passing fad, but sales figures continue to grow unabated, even as the console remains very difficult to obtain in Japan and North America.

In Japan, Nintendo simply owns the market. A few weeks ago, during Japan’s golden week (the Japanese equivalent of Christmas in terms of sales), Nintendo software products occupied the first 22 places in the charts. In North America and Europe, the Wii and DS continue to outstrip sales of their competitors.

Some worry that the rest of the industry will have to follow suit. By contrast, we are convinced that, while this trend is likely to emerge to some degree, a huge market will remain for the hardcore fan, the consumer primarily targeted for the past 15-20 years. Not only will that market remain, it is likely to grow given its predominantly young age structure. Clearly understanding this, Nintendo has moved to expanding the existing market base and creating new ones.

For a while, much has been said about expanding the market, especially in reference to Nintendo’s strategy with the Wii and DS. They are appealing to a new genre of consumers, non-traditional and casual gamers. Kotler provides a great breakdown of the different segments of gamers, and labels this new market as the expanded audience.

But no one seems to have tried to project, with any statistical precision, the likely potential size, as well as the patterns and rates of growth of these markets. With the DS, Nintendo managed to successfully target entire segments of previous non-gamers such as adult women, seniors and non-gaming adult men (those males in the 25 - 45 age bracket who don’t usually play games). Nintendo’s level of success in Japan has yet to be matched elsewhere, but they are progressing steadily in these new markets. Making use of effective commercials targeted at these non-traditional gamers, an inordinate amount of consoles and games has been sold to new consumers. Nintendo did this without alienating their classic core market, as illustrated by strong sales figures of typical Nintendo titles such as New Super Mario, Mario Kart DS, and the recently released Pokemon titles.

What does that represent in terms of numbers? Typically, gamers are/were males between the ages of 5-35. The demographics are changing of course. Gamers are getting older, with a significant increase in the numbers of adults. However, the number of potential female and senior consumers is just as significant. We already know that the games market has been growing year-in year-out thanks to the ability to mass-market consoles (a process widely helped by the success of the PlayStation consoles). Is it difficult to believe that Nintendo’s effort could lead to a doubling of the size of the market in just a couple years?

Those concerned that Nintendo’s ambitions will produce a copy-cat effect in the industry, ought to recall that these new sales do not take away from potential sales to the hard-core gamer. The choices of games available will continue to expand along with the market, to the benefit of both consumers and developers; both mass-market and niche products will continue to be perform.

On a more philosophical point, it is satisfying to see games’ appeal spread beyond the classical gamer and to the mainstream markets. The games industry is still very young, and is set to become the most profoundly significant form of entertainment in our societies. This growth will allow developers to continue to explore the boundaries of our entertainment art form, and create new experiences, whether they are fun, educational, a form of socialization, or simply self-expression.

Posted by Raoul on Wednesday, June 20th, 2007 at 4:43 pm.