The Third Degree

The Third Degree

The vagaries of sales figure reporting across the world's major territories make it quite hard to establish where, exactly, the tipping point lies - but it seems likely that at some point around now, Nintendo's Wii will become (or has become) the top selling home console of the next generation.

It's entirely possible that this lead will change hands a few times in the coming months, as games like Halo 3 drive a sales spike for the Xbox 360 - but the trajectory of the Wii's sales curve suggests that even a moderately successful holiday season should bring it out comfortably on top when the bells ring on New Year's Day.

Obviously, this is wonderful news for Nintendo - a firm which has gone from dominating the videogames industry to being seen as an innovative underdog, and suddenly finds itself on the path back to being the market leader. However, it's also likely to lead to many tough questions being asked in the boardrooms of third-party publishers across the industry.

To put it bluntly, there are many people in third-party development and publishing who won't be terribly happy to see Nintendo out in front. There is a perception in the industry that the success of a Nintendo platform is not necessarily followed by success for publishers who support that platform - and as a result, many would prefer to see the continued dominance of the PlayStation platform, which is perceived as more conducive to third-party success.

It's not an entirely unfair view to hold. History relates that the most successful titles on Nintendo platforms are almost always Nintendo's first-party products - a stark contrast to Sony's ecosystem, where the biggest winners on the software front have traditionally been third-party publishers such as EA, Take Two and Square Enix.

It's not just the headline titles that count, however - it's the overall market share which is held by first-party titles. The huge success of brands such as Pokemon, Mario and Zelda have meant that in recent years, Nintendo's platforms have been dominated by sales of its own games. The Wii is continuing this trend, with over half of all software sales on the platform being first-party.

Nintendo recognises this as a problem, with president Satoru Iwata telling Newsweek this week that he believes that third-party publishers want Nintendo's share of the software market to drop to one-third.

Iwata reckons that next year, third-party software will be more prevalent on the Wii, taking with it the widely held perception that the firm is too powerful on its own platform. In the meanwhile, however, there's a strong argument that this is a great problem for a firm like Nintendo to have.

The incredible success of the Wii console has been driven, and will continue to be driven, by first-party software. The most important titles in the future line-up for the system are almost exclusively first-party titles, and despite Iwata's positive noises regarding the future of third-party software on the Wii, it's likely that for the next 12 months at least, third-party game sales will largely be picked up in the wake left behind by the hugely successful first-party titles.

Nintendo, however, can hardly be blamed for making good games. Indeed, while publishers and developers may bite their bottom lips at the ongoing success of the Wii, the simple fact is that this is a challenge which they must knuckle down and meet head-on.

Nintendo is turning up to the party with millions of consumers and a platform which is almost uniquely cheap to develop for. The opportunity to make money is very clear, and the signs all suggest that Nintendo's targets for the platform (16.5 million units sold by March 2008) are likely to be limited by the firm's ability to manufacture consoles fast enough, not by demand. No publisher can afford to ignore the platform.

However, success on the Wii will require something many publishers aren't very good at - innovation, and its attendant partner, risk. Developing products for the Wii is cheap, no more expensive than developing for the PS2. However, it is risky, because the console demands new styles of gameplay, new types of user interaction, and new forms of content that appeal to an audience more diverse than those found on other console platforms.

As such, it is only to be expected that the Wii will be home to some high-profile failures as well as high-profile successes. Many publishers have become experts at avoiding risk on conventional console platforms, but those strategies will prove ineffective on the Wii - where a low-risk strategy of multi-platform porting and focusing on franchise sequels is likely to be a commercial disaster.

The Wii's success is undeniable - but for third party publishers, the challenge posed by the console is equally clear. The gauntlet is on the floor; it's not up to Nintendo to haul third-party firms up by the lapels. Rather, it is up to the third parties to demonstrate that they, too, can deliver innovation and fresh content. If Nintendo's market share of Wii software remains this high next year, it's important to remember that it is the third parties, not Nintendo, who will have failed to rise to the opportunity before them.