How the Wii Saved Nintendo and Changed Gaming Forever

How to make a huge change, and succeed.
Oct. 22 2012 11:52 AM

Wii Revolution

How Nintendo saved itself from irrelevance and turned everyone into a gamer.

Nintendo Wii console.
Nintendo Wii console.

Photo by Evan Amos/Wkimedia Commons.

Imagine that Apple released a new iPhone not once a year but once every six years. Apple's press conference would get higher ratings than the Oscars. Users wouldn’t just complain about the terrible new map app. They would riot about it. It would be, in short, unbelievably exciting.

That's kind of what it's like to be a gamer.

Gamers wait six years between new consoles, and they're going to get another one, finally, on Nov. 18, when Nintendo will release the Wii U. What's different this time is that the hungry masses of the Nintendo tribe include the old as well as the young, girls as well as boys, and extroverts as well as recluses. Gaming has not only grown larger, it has grown diverse in its players and its forms and its functions. And that's thanks, in large part, to a phenomenal turnaround by Nintendo.

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The Nintendo brand name evokes a cast of gaming characters widely known and widely loved: Mario, Princess Peach, Donkey Kong. It conjures up for men of a certain age fond memories of collecting coins and shooting fireballs and breaking barrels. But by 2006, the company virtually synonymous with gaming found its relevance fading.

After introducing the Nintendo Entertainment System to the United States in 1985, Nintendo spent the next 10 years virtually dominating the video-game console market. Other consoles came and went, but few approached Nintendo’s popularity. Nintendo met its match when Japanese entertainment giant Sony entered the field in 1994 with the PlayStation. The Nintendo 64, released two years later, would never outsell the PlayStation. Still, Nintendo’s popular games bolstered the console’s success, and it sold well in the United States. Despite the new competition, Nintendo held strong.

But Sony and American tech behemoth Microsoft, which eyed the market, belonged to a different weight class. They had more resources than little Nintendo could ever dream of. They could draw knowledge and resources from their other lines of business to produce technologically advanced devices. Sony’s PlayStation 2, released in 2000, and Microsoft’s Xbox, released in 2001, had great processing power, spiffy graphics, sleek design, and inbuilt memory. Although more expensive, they doubled as DVD players. They included online play. Microsoft spent a billion dollars on Xbox Live, an online service for multiplayer gaming and digital content delivery.

Nintendo, meanwhile, countered in 2001 with the Gamecube, a cute little device with a cubical purple exterior. It ran on miniDVD discs. It had no online play. Next to an Xbox, it looked like a lunchbox. Halo, an Xbox exclusive, outsold Nintendo's flagship first-person shooter, Metroid Prime, by a two-to-one margin. The Xbox and Playstation 2 offered immensely popular franchises sorely missing from the Gamecube's offerings, such as Final Fantasy, Gran Turismo, and Grand Theft Auto. The Gamecube’s most popular game, Super Smash Bros. Melee, sold 7 million. The PlayStation 2’s sold 17 million.

By 2006, Nintendo was in last place. While Nintendo sold about 22 million Gamecubes, Microsoft sold about 25 million Xboxes, and Sony sold 150 million Playstation 2s. What's more, Nintendo sold about one-third fewer Gamecubes than it had sold Nintendo 64s.

Nintendo’s share of the market seemed likely to shrink again in the next round of consoles. Microsoft and Sony could ultimately do to Nintendo what Nintendo and Sony did to Sega, which once peddled its keystone character, Sonic the Hedgehog, on its own consoles. Nintendo and Sony shouldered it out of the hardware market until it devolved into a mere software company.

Instead, like any smart company that knows it can't keep up with its bigger competitors, Nintendo changed the game. Nintendo came up with the Wii. The console had worse graphics and a slower processor than its rivals, yet it destroyed them in sales, and it drove the company to new heights of popularity, praise, and profit.

Reggie Fils-Aime, chief of Nintendo's North American division, articulated Nintendo's new strategy at the 2006 E3 Conference. "It's no longer confined to just the few," he said. "It's about everyone." Those simple words spelled out Nintendo's strategy from that day forward: Get everyone. Get the kids. Get the teenagers. Get the parents. Get the grandparents. Get boys. Get girls. Nintendo games would not just be the unhealthy addictions of reclusive, pockmarked teenagers or aimless twentysomethings. Nintendo games would be for everyone.

That had been Microsoft's vision, once. "The power of Xbox isn't just for the popular racing and boxing games," Bill Gates said before Microsoft released the first Xbox. "Its possibilities are wide open. There will be games that women like, while there will be others that capture the hearts of the elderly." But neither the Xbox nor its games could deliver that revolution, and that was clear even before they hit the shelves.