Wii sneaks up behind its competitors

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The anticipated battle between Microsoft's Xbox 360 and Sony's PlayStation 3 for video game console supremacy has become a sideshow to the unexpected rise of Nintendo's Wii as the new-generation console of choice.

Once a dark-horse contender, the Wii has outsold both its competitors in recent months. According to sales data from the NPD Group, the Wii sold 335,000 units in February to the Xbox 360's 228,000 and the PS3's 127,000.

Of the three new-generation game consoles, the Xbox 360 has sold the most at 5 million units in the United States alone, but that's mainly due to the fact that it was released a full year earlier than either the Wii or the PS3. Since they first hit shelves last November, the PS3 has sold 1.1 million units, while the Wii has tallied 1.86 million.

What's interesting is that the Wii achieved this feat not by offering a lot of multimedia bells and whistles like its competitors do, but by simply focusing on games.

"We've seen Nintendo expand the marketplace and grow it beyond the traditional gamer," says Michael Gartenberg of Jupiter Research. "They really redefined the video game experience by creating something new and different."

That innovation is the Wii controller, a motion-sensitive wand that allows gamers to control the action onscreen by waving the device about rather than jostling a joystick and pushing buttons.

That controller and the games developed for it have captured the imagination of both the core gamer demographic and their parents, wives and other family members.

So what does that say about Sony and Microsoft, which also are hoping to attract nongamers to their respective new-generation consoles by positioning them as home entertainment hubs?

Both consoles contain hard drives to store content and allow users to stream music and video content from their home computers. The PS3 features a Blu-ray DVD player and is developing a Second Life-style virtual world called PS3 Home, while the Xbox Live Marketplace offers downloadable movies and TV shows.

"Microsoft and Sony clearly have larger aspirations for the game console in the living room as a portal for some of the other services they're trying to sell," Gartenberg says. "The hardcore gamer may be the one purchasing the console, but other family members may use the other features. Nintendo's approach has been to get nongamers playing games."

According to NPD Group spokesman David Riley, the Wii's "gaming first" message is much easier for nongamers to grasp than Microsoft and Sony's more complicated home entertainment message.

"While they have that capability, it's not that easy to use," he says. "It's going to be a ways off before that capability becomes mainstream."

Yet that's not to say the effort is in vain. Microsoft is showing signs of early success with its decision to add TV and movie downloads to the Xbox Live Marketplace. Since first making such content available last November, the company says it has seen a 400% increase in downloads. Microsoft did not reveal exactly how many downloads that figure represented.

"All of these strategies are viable," Gartenberg says. "It's not a question of one over the other. Nintendo has demonstrated that there are multiple ways to get into the hearts and minds of other family members."

Other factors also play a role in the Wii's early success. At $250, the Wii is the cheapest option on the shelves, with the Xbox 360 carrying a $400 tab and the PS3 a whopping $600. Additionally, the PS3 was hampered early on with severe product shortages and a dearth of blockbuster games that show off the system's capabilities.

But it's far too early to pick the ultimate winner. Gaming industry press and analysts still feel the PS3 has the chops to dominate in the end. Reviews at video game site GameSpot say that "the PS3 has all the processor, graphics and communications power necessary to win this generation," while Electronic Arts departing CEO Larry Probst told a Web conference audience that he believed the PS3 will prove the ultimate winner.

Meanwhile, the Xbox 360 is taking strong lead in the number of games sold. The Xbox 360 has six titles in the top 10 for February -- including the No. 1 title -- while Wii has three and PS3 none (PS2 title "Guitar Hero" took the final spot). Additionally, Xbox 360 owners buy far more games than the owners of other consoles at a rate of 5.4 games per 360 owner. That rate falls to 2.3 for the PS3 and 2.8 for the Wii.

That leaves the Wii, for now, with everything to lose.

"Their challenge going forward is to make sure this is not a passing fad by getting a stream of content into the market," Gartenberg says. "The game console purchase driver is still going to be first and foremost games. The secondary stuff is the icing on the cake."
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