They seem to have very good supply, even though it's not enough, and they seem to have really strong demand. They seem to be reaching into audiences that traditionally haven't gamed much. How concerned are you about Nintendo's ability to impact your business? You're seeing publishers like EA building studios specifically for the Wii; you're seeing publishers step up their support for the Wii; and while none of that seems to be coming at the expense of 360 or PS3--no-one's canceling for those platforms--people are saying, "Hey, we may have underestimated the Wii. We need to get behind it in a big way." You said $199 is the key price point--they're closer to that than anyone. So how much of a concern do you have about the impact that Nintendo can have on your business?
One thing I admire about Nintendo is that they recognize what they need to do to be successful as a company and they do it. They also say what they're going to do as a company and then they do it. There's no surprises, there's no backtracking, they deliver on what they need to do. They delivered good inventory and they delivered an innovative experience.
The jury is still out, N'Gai, as to whether that experience can carry that platform at a mass market level to as many homes as I they think they think they need to on a global basis. It's still--I think the Nintendo Wii experience is an innovative experience. I've said that since the first time I saw Iwata-san pull it out from under his podium at Tokyo Game Show three years ago. I played Wii and I enjoyed playing Wii. The question is, is it a sustainable experience that will continue to have great third party support? Because, yeah, third parties are getting behind it, but I'm not sure the numbers bear out that it's going to be something all third party publishers can drive big numbers at.
As I think you know, Nintendo is a very first party-focused, and the numbers bear that out as regards what Zelda has sold versus anything else. I'm not seeing huge third party successes on the Wii right now, and that might improve as the installed base improves. But I will, as I've gone down on record many times, applaud their innovation, applaud their launch--I think they did a very, very solid job in getting the product out there and appealing in particular to some of their marketing efforts with broader demographics and what have you--I thought they did a great job there. The jury is still out, if we sit here a year or two years from now, as to whether that is sustainable at the levels that we need it to be as an industry to get to that mass market level.
When you look at the success of the DS, which has the same characteristics that you would point to: primarily driven by Nintendo's own software; hardware sales through the roof; third parties not doing terribly great, not doing horrible--there's a couple doing well--but hardware sales are through the roof. So what is it about the Wii that would make you feel it might not be sustainable?
I think that Nintendo would say that the Playstation 3 and the Xbox 360 are serious competitors in the same space as the Wii. I don't know what really competes with the DS, because I don't believe the PSP truly competes; I don't think that Sony ever intended it to compete in that space. The portable space, it's very difficult for you to try to compare a portable experience at a price that's almost disposable income with a console experience that's a very important part of the way that entertainment is consumed in the living room. As a result, the DS is doing incredibly well because of the uniqueness of its experience, but at the same time, it doesn't really have a competitor in the same space that is offering an alternative experience. Because the PSP is not proving, as you point out, to be a viable competitor in the portable handheld space.
So all I'm saying is that the jury is still out; I'm not saying that the Wii is going to taper off in 2007. The jury's out. As is the jury out on this salad. I keep nibbling and going nowhere. You make me feel bad that you're not eating that burger.
