Nintendo wins over outside game publishers with Wii
LOS ANGELES (Reuters) - In the video game industry, the spoils of the console wars come in the form of support from third-party software publishers selling games to run on your machine.
Nintendo Co Ltd (7974.OS), surging from the commercial success of its Wii game machine, is winning over this coveted group of partners in a marked departure from the Wii's ill-fated predecessor, the GameCube.
During this week's E3 video game industry trade show, Nintendo boasted about the success that third-party publishers are finding on the Wii, saying that 19 non-Nintendo games have surpassed the 400,000 unit sales mark in the United States.
"When this generation started, if you would have talked to any of the third parties, chances are they were putting their investments in other consoles, not the Wii," said Reginald Fils-Aime, president of Nintendo of America.
"They've all been shocked by the success that has happened in the marketplace and had to catch up with Wii development."
Third-party publishers tend to flock to the best-selling game machine since this gives them a chance to sell more games. This tends to set off a virtuous cycle where a leading game machine will feature better games, which then drives more console sales.
Games that publishers began working on after the Wii's sudden success are just now being brought to market, Fils-Aime said, meaning the third party sales momentum will only continue to increase.
The GameCube was routinely blasted for being a showcase only for Nintendo-created games like "Metroid Prime," "Animal Crossing," "Super Mario Sunshine," "Super Smash Brothers Melee" and "The Legend of Zelda: The Wind Waker."
For Nintendo, these first-party titles are more lucrative because the company captures all the revenue and profit from game sales compared to a small royalty from third-party games. However, outside support is critical to keeping customers loyal with a diverse set of titles available on the console.
Many third party titles released on multiple platforms severely underperformed on the GameCube. In less than two years, the Wii has sold 24 million units worldwide, more than the GameCube sold during almost six years on the market.
The Wii, which debuted in late 2006, also leads Microsoft Corp's (MSFT.O) Xbox 360 and Sony Corp's (6758.T) PlayStation 3, which have respectively sold 19 million and 12.85 million units since their launch, as of the end of March.
DOES THE WII HAVE LEGS?
Still, competitor Microsoft questioned Nintendo's lofty standing among third party publishers.
"Nintendo is a great company. It's got a great program, but in terms of the financial opportunity for third party partners, Microsoft wins hands down," said Don Mattrick, a senior vice president at Microsoft's Xbox division. "We're not counting in increments of 400,000."
Mattrick said the majority of games being purchased for the Wii are still Nintendo games, and that third parties are left to battle for the fraction of profits that remain.
However, French publisher Ubisoft Entertainment (UBIP.PA), an early believer in the Wii, is currently one of the top third parties on the console after committing to significant Wii development more than three years ago.
While Ubisoft was one of the first to see the potential, competitors like Electronic Arts Inc (ERTS.O) are quickly closing the gap.
"All games are going to be on the Wii," said Wedbush Morgan analyst Michael Pachter. "There's a base of 20 million people who will buy your game."
And rather than create dumbed-down versions of existing games, as many third parties were accused of doing during the early days of the Wii, many publishers are changing the way they develop games to take advantage of the Wii's motion-sensing controllers.
"The Wii .... has opened up an entirely new set of gamers that weren't there before," said Electronics Arts Games Label president Frank Gibeau, noting that Wii games can appeal to anyone from 8-year-olds to 80-year-olds.
(Additional reporting by Daisuke Wakabayashi; Editing by Gary Hill)
