10m VC games sold, but boxed titles still a focus for Nintendo

Nintendo president Satoru Iwata has revealed that 10 million games have been sold online via its Virtual Console service, but he still believes that boxed retail games will be relevant for the next three years at least.

He also said that he's constantly having to reassure people that the forthcoming WiiWare digital download service is not about cutting out the distributor, but rather introducing new concepts and business models to the games market.

"The current state of affairs is that the Virtual Console saw over 10 million downloads by the end of last December," stated Iwata to GameSpot.

"That's the total number of titles people paid to download. I think that selling over 10 million classic games in that price range stands as proof that there are great possibilities with the download model. Since that's the case, I feel that WiiWare is one answer to a lot of the problems that I perceived even back when I was still a developer myself," he added.

Iwata acknowledged that margins for boxed games were low and titles in store suffer from a short shelf-life, but he still believes hard product is a viable business for the company.

"I don't think that packaged, retail games will be replaced by downloads over the next three- to five-year cycle," said Iwata.

"Packaged games have a number of advantages, from the guarantee of a certain amount of sales volume to the firmly established buying habits and infrastructure that I think should be preserved in the future.

"But packaged games aren't a complete solution any more. The cost of materials and distribution margins mean that there isn't much price flexibility, and there's always a risk with inventory. Plus the majority of a product's life span ends within a very short period after its release in the current market, such that titles can no longer compete for shelf space a month after their release," he detailed.

Nintendo is due to introduce WiiWare to market this year, a download service for developers to digitally deliver games direct to consumers via the Wii console. Iwata believes this should help titles that would struggle to get to market via more traditional methods.

"For me, the biggest reason for wanting to do WiiWare is to create an opportunity for new products to materialise by providing a forum where those products can be sold without having to compete in terms of size or name recognition, or be bound by inflexible prices or inventory risk," he said.

"I hope that WiiWare can act as a platform for that kind of an experience, but there are always people who suspect that WiiWare is all about cutting out the distributors. I try to explain that that's really not the case every opportunity I get," he added.