How the Wii was born

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Oct 032006

Nice article here on How the Wii was born that sounds very much like my Age of the Dinosaurs talk in some ways, and includes a lovely graph of rising costs for game development.

  21 Responses to “How the Wii was born”

  1. Today, Raph provided a link to an interview in which Nintendo’s CEO, Iwata Satoru, pointed out that each generation of Nintendo consoles has sold less copies ( Satoru also references Nintendo’s current strategy of skipping the high-definition bandwagon to build games more cheaply and perhaps encourage focus on gameplay. I was raised on the Nintendo consoles, starting on the NES when I six or seven years

  2. Whether they succede or fail, at least they are trying something different. (Just like Seed (which died), and Uru live (then Uru dead, and not Uru live again) before that.)

    And related to evolution… The Wii controller is a specialized sense organ that the dinosaurs don’t have. Plus the Wii’s low power consumption (and low development costs) might allow it to survive an asteroid-induced winter. (If the asteroid never comes they may not do so well.)

    Which leads to another random point: I suspect that one of the reasons why most MMORPGs are Diku-EQ-WoW clones is because that’s what a combination of CPU speed and the I/O devices attached to the CPU allow. I wrote something up in

    Basically, algorithmic technology combined with the CPU to deliver (such as text-to-speech, speech recognition, and even 3d graphics) and new IO devices (like Wii controllers, data gloves, giant hampster balls for people, smellovision, dance pads, guitar-hero guitars, etc.) enable new games. Without such improvements, games will find it difficult/impossible to do anything innovative.

  3. Thanks for the link.

    My thoughts, as a gamer raised on Nintendo consoles:

  4. I don’t see what the problem is.

    It costs more.

    Well, they are getting more advanced and the machines they play on are also.

    Isn’t this also the case of the movies?

    VHS was crappy quality (compared to DVD), so they moved to DVD, there more room on a DVD, so they added more content. Now, you get the movie, the making of the movie, and the making of the the making of the movie, and sometimes even games, wallpapers ETC…

    Why cant games evolve also? Is there some commandment that games should not evolve?

    I understand cost… but the value increases with the cost. Take eq2 for example….

    From first glance i see lots of “color” only textures, and the details are brought out by bump maps and detail textures.

    But the engine, and textures scale with the TECH (In theory).

    Did it cost more to make eq2? maybe not… i think there was some good reuse design there…

    But im thinking that the voice overs and musical scores offset that.

    whatever, lol. If it costs more to make a great game with tons of content and all the things that make people think “wow, next gen!” then whats the problem?

    On line fees and subscription plans are due for a rise, and also eq2 and other games are exploring more revenue avenues than ever before (The eq2 players site can add a total of about 4$ to you subscription all bells and whistles, the mini expansions… guild site Ralph plushes…)

    Seems more like “We want to make games at the cost we had in 1990, but offer more ways for us to cash in on the product.”

    and why dont you have “The nOOb” in your comics section?

  5. It costs a LOT more, and the increased cost is not being made up in revenue. Triple-A next gen games are estimated to cost around $35m, last I heard.

    I don’t read “The n00b” daily. 🙂

  6. Good for Wii, man I hope they grab some market share with this, I might actually buy one.

  7. Do you think the money Wii’s developers save from the choice for lower-definition graphics will keep production costs down? Or will that money just go to other aspects of the games’ design?

  8. Aaron wrote:

    Do you think the money Wii’s developers save from the choice for lower-definition graphics will keep production costs down? Or will that money just go to other aspects of the games’ design?

    My guess it that it’ll mean (slightly) cheaper games. If you pay $600 for the game box, $60 seems ok for a game. If you pay $250 for a game box, $60 suddenly seems like a lot of money.

    One disturbing point in the Wii’s always-on CPU – I have a solar house; I pay close attention to how much power my electronics gear uses. People with solar care so much that they unplug all equipment with standby (such as stereo, vcr, computers) because even in standby, each device usually draws around 5 watts (mostly lost due to AC-to-DC power conversion). 5W x 20 devices = 100W continuous = 2.4 kW/day = one fridge. An always-on CPU will draw even more than the usual 5 watts.

  9. It costs a LOT more, and the increased cost is not being made up in revenue. Triple-A next gen games are estimated to cost around $35m, last I heard.

    This is just because it is a more competitive market. Competitive pressures raise development costs and lower margin. But there is a limit as to how far the margin can be squished and no reason to think that development costs will go beyond this. I’m not sure why anyone thinks that this will suddenly mean that high-budget games implode and the industry dies. The development costs on movies, cars, computers, etc., have all grown over the years and as markets mature, margins tend to get skinnier. And occasionally, some companies may guess wrong as to how much to spend and may go out of business. But then other companies will spend a bit less or a bit more and carry on.

  10. Yes, competitive markets do reduce margins over time and costs do rise over time. But it’s not common for an established competitive marketplace to suddenly be overtaken by radically different business structures. With computers it happened with Dell, and it very much reconfigured the entire landscape. When the value chain gets disrupted, you tend to see a lot of market leaders with a lot invested in the old chain get pushed off their perches.

  11. But it’s not common for an established competitive marketplace to suddenly be overtaken by radically different business structures.

    Of course. But reduced margins have nothing to do with this. The increasing budgets is a red herring and the calls of “extinction” need a different argument.

  12. I don’t see it as a red herring, because cost is one of the things that is pushing many developers towards these alternate distribution schemes and alternative genres and so on. It’s just one of the factors, though — not the sole cause.

    I mean, aren’t you yourself an example?

  13. That assumes that markets are “zero sum” but I don’t think these markets are. Increased interest in new gaming markets with new consumers will only feed back into the more traditional markets increasing them as well.

  14. Unless those new markets have no appeal to the traditional set. If that new market becomes the dominant one, then the “traditional” one, its competitive landscape and the rules for success in that traditional landscape become dinosaurs. The zillion-dollar AAA-title could be the “Hollywood Blockbuster” of games, but like that milieu, the vast majority of games that come out year round will not compete with that at all. Actually, much like AAA titles today are far FAR less numerous where the majority of online gamers seem to be spending their time.

    Trucegore wrote: Why cant games evolve also? Is there some commandment that games should not evolve?

    Because what is being “evolved” is little more than appearance. This isn’t us going from DOS to bitmap or bitmap to 3D. For the PS3 itself, it seems mostly to be about visual quality and number of avatars. Does that fundamentally change the experience? No. And the “other” innovations for the PS3 are basically the same set of things all three are offering: default internet connectivity, an ecosystem for getting and buying content online and off and a variety of methods for doing something additional with that content once gotten.

    PS3 meanwhile has spent significantly on the ability to drive 1080i graphic quality, from games that are now quadruple the price to developer, and from the also-brand-new-tech-and-DRM-system in the Blu Ray player. Their system is the most expensive and STILL by some estimates a big loss leader for them, more so based on their recent drop in price.

  15. It seems like you’re just working too hard to find a definition whereby it is appropriate to say that traditional gaming is declining. You’re letting hundreds of products in a different market convince you that somehow there is a change in the traditional market. It would almost as much sense to say that introducing HDTV’s to the market means a “decline” in traditional gaming (because mindshare goes to HDTV’s or something). There is MORE overlap between consumers in the HDTV market and consumers in the traditional gaming market than between traditional and “casual” gaming.

    Can’t we just admit that maybe we personally are more interested, academically, in the new markets? Or that we don’t like the direction that traditional gaming is going? Without having to find creative definitions of doom and gloom for what we are leaving behind when there is no evidence that demand for that older market is going away, or will be anything but increased by new markets?

    I hate the producer-dominated, glitz-over-gameplay, slap a license on it and sell it in Walmart style of game development. I can’t remember the last time I bought something from EA (maybe FIFA 2001?). However, my personal preferences don’t seem to have anything to do with how much demand that market has overall and I can understand why the market has headed this direction. It makes sense for the competitive market we have where developers can raise production value/cost almost indefinitely.

  16. I guess one way to say what I am saying is this:

    Bejewelled and Oblivion are both referred to as video games. And because of this we assume that they are strongly linked in matters such as economics. Enough so that we might make the mistake of assuming that there is some zero sum relationship going on between the markets for these two games where one wins and one loses.

    But really, is there more in common with the XBox 360 market and the Bejewelled market than there is in common with the HDTV market and the XBox 360 market? And would we make the same zero sum comparisions between HDTV’s and 360’s or would we in fact recognize those as differnt but complementary and mutually reinforcing markets? Is language (calling something a “video game”) really that important if there’s more in common with the marketshare of HDTV and XBox 360 than with casual games and XBox 360?

    Maybe all we’re really bickering about is who gets to call themselves the “real” video game? But that has nothing to do with the markets themselves or the economics behind them. Maybe the biggest problem with the “culture clash” between two types of video gamers is just that both want to use the same word (as marketshare seems to be irrelevent when they are targetting largely mutually exclusive audiences). And in-so-much as this is true, someone like Raph is just as zealous as a hardcore gamer in that both insist on this zero sum conflict and just have different final conclusions.

  17. Hang on, cause I think that there’s some misunderstandings going on.

    I see a few different phenomena that conspire to have a combined effect. This doesn’t mean the phenomena are related in any way. For example, the rise of digital distribution does not have a negative effect on publishers of retail games in and of itself.

    I also do not think that anything is declining yet, at least not in the sense you mean. I particularly do not think that there will be any sort of audience decline for the current core games industry — those consumers are not going anywhere.

    These are the trendlines that I see for mainstream gaming:

    – AAA gaming is reaching extremely high development costs and all indications are they are going to continue to rise
    – the charts are becoming more hit-driven (e.g., big hits are bigger and more dominant)
    – distribution channels for new AAA games have narrowed over the last few years (both the loss of EB and the massive shift towards used game sales)
    – the audience for AAA games is not expanding demographically, even though the demographics of games in general are

    The effects that I KNOW are happening right now are:

    – publishers are worried, because every major title is that much bigger a risk for them. Already many well-known studios “bet the company” on every release they do.
    – On the other side, the big publishers are also heavily incentivized to start finding alternatvies, which they are doing fairly aggressively.
    – “alternative publishers” are springing up and acquiring the audience outside the core gamer using alternate distribution channels and generally different content. Some of these are subsidiaries of the major publishers, but many are not.
    – This non-AAA games market is just as hit-driven, but has far lower development costs and allows “spreading the bets” much more. It also has far less overhead.

    When I add these effects together, I arrive at the scenario I have described. I like AAA games. I enjoy playing them. So it’s not that I want this doom-and-gloom scenario (and really, it’s not really all THAT doomy and gloomy).

  18. And I agree with all of that. Or most of it anyway. I just don’t think that is the message you are putting across through most of your writings. Maybe it’s just drama but you seem to be forcing this zero sum, new games market versus old games market dichotomy on us with every post that references the meteor about to strike the dinosaur. The problem with that whole analogy is that the new game genotypes are exploiting an entirely new market (niche), not taking over the prior one and extinction, if imminent, has little to do with success or failure in the new market.

    The part I’m not sure about is whether publishers are incentivized to find alternatives. I think they need a market with a high barrier to entry. It is by raising the barrier to entry and pushing out the competition that they have become market leaders. It is by having relationships with retailers and leveraging this important pipeline to consumers that they’ve kept control of it. Some of that will fade, but, by and large, publishers are still interested in selling products that only they can offer and as their primary resource is money, that means a market that is dominated by high-budget products.

    In other words, “hit-driven”, “high budgets”, “betting the company on each title” is a market that is working as intended for publishers (but not developers).

    I’m also not sure that the gamer demographic has stopped growing. Do you have evidence to support that? I just don’t think it is growing as quickly as may have in the past (another sign of a maturing, competitive market).

  19. Well Raph, it appears Lucas agrees with you as well…

    Hrmmm unified messages…I think theres room here for a conspiracy theory!

    Whats even more wierd is I drove by Skywalker Ranch on my way to Point Reys on Friday. And Saturday went into the origional Tower Records stores here in Sacramento, currently in its death throws, its like a long tail festival here in N. California these days.

  20. Here’s a Wired article that goes into more detail about the trend towards “short-form” games that on the profit margin and return on investment basis beat the high-cost “long-form” games, particularly in the Japanese market.

    To head-off Wii, some manufacturers already have build specific exercise-based games like tennis, golf, boxing, etc. They’re won’t have the breadth of games available with the Wii, but they are already out in the markets now.



  21. Frank-

    A lot of the kids I’m talking to playing mobile games (devices and phones)are telling me essentially the same thing: easier, cheaper, more distributable. 60.00 Console games are like movie studios making Titanic, its that whole hit driven thing thats not working anymore, not for these kids in this demographic. (active/connected between 14-21) there are to many other demands on thier time/income/entertainment that a 60.00 game forecloses. (3 used handheld games and 30 iTunes for instance). Here I’d like to point out the relative, grey market value of 1 60.00 console game traded amongst a group of friends is nowhere near 3 games and 30 songs.

    Which gets into the whole platform vs market share thing. This is the same thing Lucas was talking about. You can control the platform but its costly, or you can embrace digital distrobution, incur significantly less costs and provide variety while building brand recognition (cf YouTube) the cost of ownership is to high now, and consumers are not willing to have the costs passed on to them any longer, mainly because they dont have to when they can aquire thier content elsewhere, for less even Rupert Murdoch seems to understand this.

    This was the fundamental lesson Napster tought us, a lesson that even an army of lawyers and years of litigation cant reverse.

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