Nintendo's Wii is winning battle of the game builders

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In the competition among the makers of video-game consoles, momentum for the Wii from Nintendo is building among crucial allies: game developers and publishers.

Inspired by the early success of the Wii, the companies that create and distribute games are beginning to shift resources and personnel toward building more Wii games, in some cases at the expense of the competing systems, the PlayStation 3 from Sony and Xbox 360 from Microsoft.

The shift is closely watched because consumers tend to favor systems that have the biggest choice of games.

More resources diverted to the Wii would mean more games, and that would translate into more consumers buying Wii consoles.

Jon Goldman, chairman and chief executive of Foundation 9 Entertainment, an independent game development company, said that he was hearing a growing call for Wii games from game publishers and distributors.

“Publishers are saying, ‘Instead of spending $15 million or $20 million on one PS3 game, come back to me with five or six Wii pitches,’ ” he said. “We had one meeting two weeks ago with a publisher that was asking for Wii games. Three or four months ago, they didn’t want to hear word one about the Wii.”

Goldman said developers were spending 25 percent more time on Wii. Nintendo said that titles would be coming from several major developers, like Activision and Ubisoft, that are making an enhanced commitment to the system.

“Electronic Arts is doing much more for us than they have in the past,” said George Harrison, Nintendo’s senior vice president for marketing.

The interest in the Wii follows a period of uncertainty about the console among developers and publishers. They were initially cautious because the Wii was less technologically sophisticated. They worried that consumers would not take to its unorthodox game play, which uses a motion-controlled wand that players move to direct action on the screen. For example, to serve balls in the tennis game, players circle their arms overhead as they would in real tennis.

History gave developers and publishers reason for caution, too. Nintendo’s last system, the GameCube, was initially a hot seller, but was ultimately outsold – and by a considerable margin – by the PlayStation 2 and Xbox. Also, Nintendo has historically made many of the popular games for its own systems, discouraging heavy participation by other developers and publishers.

The shift does not represent any shunning of the Xbox or Sony consoles, but rather an elevation of the Wii’s status – one that was clear last week at E3, the video-game industry’s annual trade show in Santa Monica, California, in many conversations with developers and publishers.

It is early in the current console product cycle, given that these machines are intended to be on the market for more than five years. Industry analysts said they did not expect to declare a victor anytime soon. Unlike Nintendo, Sony and Microsoft lose money selling game consoles, but they are not ready to cede the market. Nevertheless, the trend is clear.

Since its first appearance in U.S. stores in November, the Wii has been outselling the Xbox 360 and PS3, which came out the same month, and it continues to be in short supply. NPD Group, a market research firm, reported that as of May, Americans had purchased 2.8 million Wii systems, compared with 1.4 million PS3s. About 5.6 million Xbox 360 consoles have sold, but it hit the market a year earlier.

The Wii has clearly benefited from a price advantage; it costs $250, compared with $300 for the least-expensive Xbox 360 and $479 for the top-of-the-line machine. The PS3 sells for $500, after a price cut last week by Sony to clear inventory before the Christmas selling season, when its new $600 device will be offered. Microsoft has been hampered of late by widespread product failures, and the company said it would spend $1.15 billion to repair individual machines.

While the growing size of the Wii’s customer base is attractive, developers are favoring Wii for other reasons. Developers are able to create games in less time than is needed for its rivals, because of the Wii’s less-complex graphics.

Colin Sebastian, a video-game industry analyst with Lazard Capital Markets, said that in rough terms, it costs around $5 million to develop a game for the Wii, compared with $10 million to $20 million to make a game for the Xbox 360 or PS3. Sebastian said that given the cost differences, a developer would need to sell 300,000 copies of a Wii game to break even, compared with 600,000 of a game for the PS3 or Xbox 360.

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[Submitted by Imran Asad]

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