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Last Updated: Thursday, 23 August 2007, 14:22 GMT 15:22 UK
How the Wii won over the world's gamers

Even by conservative estimates Microsoft has invested many billions of dollars in its Xbox project, in an effort to be the market leader in an industry worth more than $30bn (15bn) annually.

After a practice run with its first console, Microsoft was first to market with the Xbox 360 and has established itself as the global sales leader.

But the lead may be short-lived; Nintendo is expected to overtake the Seattle-based giant as the sales leader in the current generation of games consoles within weeks.

Its Wii machine has become a social phenomenon, broadening the reach of gaming to new audiences and causing Nintendo supply problems. There are reports, not denied by the company, that it will take another year before the firm can ramp up production to meet demand.

"It's not like switching on a tap," according David Yarnton, Nintendo UK's general manager, who said the firm was working hard to ensure there was enough supply this Christmas.

He added: "The demand has outstripped what we could have ever imagined for it; it's unprecedented."

Production issues aside, Nintendo has transformed its status as a key player in the industry to leader in just 12 months, while Sony has struggled with its PlayStation 3 and Microsoft continues to throw money at the Xbox.

Xbox, PS3 and Wii
Nintendo Wii 9.27m
Microsoft Xbox 360 10m
Sony PlayStation 3 4.5m
*Based on manufacturer's figures

Almost 10 million Wii consoles have been sold since it went on sale at the end of last year and it is poised to overtake global sales of the Xbox 360 within weeks. Perhaps more crucially, it will reach the 10m mark in half the time it took Microsoft.

In Europe, the Wii is outselling the PlayStation 3 and Xbox 360 by three to one and unlike its rivals the machine is earning money for the company every time one is sold.

Even at the height of summer, almost 90,000 Wiis a week were being sold across Europe.

Last generation

So where did it all go right for Nintendo?

Mr Yarnton said: "Some of our success started a bit further back. The success we are enjoying now has been in the making for quite some time."

Nintendo's plans began with the last generation of consoles: the GameCube was the firm's rival to the PlayStation 2 juggernaut and new pretender, the Xbox.

But the machine struggled in the US and the UK and came a distant second to Sony in many other countries.

The Wii has made gaming more of an activity and less passive
The firm realised that the five-year cycle of ever more powerful and multimedia console launches that the industry had locked itself into was not helping grow the games industry as a whole.

"The games market has been either stagnating or declining," said Mr Yarnton. "We wanted to bring old gamers back to playing and appeal to people who wanted to enrich their lives through games like Wii Sports and Brain Training.

"We didn't want people to feel as though they had to hide the fact they like playing games."

Three years ago Nintendo began to signal its desire to move away from the traditional battleground of ever better graphics and bigger processors.

At games jamboree E3 in Los Angeles, the president of Nintendo Satoru Iwata warned that unless things changed people "would tire of games".

'Beef up'

He said: "Looking at the past 20 years, as long as we could beef up the processing power, as long as we could make computer graphics approach realism, then people were excited about the result.

"Some of the people in the industry still believe we can simply beef up the current technology in order to provide a constant supply of games to people.

"We don't agree with that."

The company's first signal of change was the handheld Nintendo DS, a console that let people touch the screen when playing or control games through voice commands.

Nicole Kidman
Nicole Kidman is the face of Nintendo DS, representing a new breed of gamer

More than 47 million DS consoles have been sold since then and Sony's efforts in the handheld market, through the PSP, have looked distinctly also ran.

But the radical design of the DS was only a taste of the changes Nintendo planned: a year later it showed off the basic design of the Revolution and hinted that the wireless controllers would be unique.

"It is the game experience that will most separate the Revolution from its competitors," said Mr Iwata.

For once the hyperbole was right. The Wii, as it was later named, introduced motion sensitive wands instead of traditional controllers and its focus on participation and activity removed many of the barriers to games encountered by would-be players.

Sunk billions

Sony has sunk billions into its Cell processor, and Microsoft a similar amount on its entry into the market and push into the online space, while Nintendo has spent less than $5.50 for a sensor which has transformed gaming for many.

At the heart of the Wiimote controller is an accelerometer, made by an American firm, which can detect movement along three axes.

It has helped make gaming a more social and interactive experience and the internet is filled with videos of children, parents and grandparents playing tennis or bowls on the Wii.

In Japan, the TV industry is becoming concerned that it is losing audiences to Wii families.

The worry for Nintendo is that the Wii is becoming something of a party game and that the novelty will soon wear off.
Nintendo boss
Nintendo president Satoru Iwata promised a revolution

In five years time the high definition revolution launched by Sony and Microsoft will be in its stride and the immersive and cinematic experiences offered by PlayStation 3 and the Xbox 360 could leave the Wii looking a little tired.

The company is also eschewing any sort of drive to make the Wii a multimedia hub - it cannot play DVDs, let alone high definition formats, nor can it stream video or audio from your PC.

'Creative talent'

Mr Yarnton responded: "We are always looking at innovation and new products. We believe there is a lot of life in it. We haven't even got out of the launch cycle yet."

He added: "We are very lucky to have some of the most creative talent in the industry. Good games don't have to be complicated or with high definition graphics."

Recently the company has launched a series of accessories for the Wii that build on the innovation of the Wiimote controller, such as an interactive balance board.

Nintendo clearly feel it can still innovate through hardware as well as through software.

And it is keen to stress that if and when it leads the console wars, accusations of arrogance, which have been levelled at Sony, will not be forthcoming.

"If we do introduce people to games who had never even thought of playing, then it's to the benefit to the industry at large," said Mr Yarnton.

The Nintendo Wii in action

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