Nintendo could be the big winner this holiday season in the video-game wars, but that might not be great news for game publishers.The venerable video-game company's Wii console was the surprise hit of the industry's E3 conference this spring, and many analysts now believe that Nintendo could have a big hit on its hands once the Wii debuts later this year. But don't expect game makers such as Electronic Arts ( ERTS) to cash in right away on the Wii's success. Indeed, such companies will likely have few Wii games to offer this holiday as stocking stuffers. The publishers "were caught off guard" by the buzz around the Wii, says James Lin, a longtime industry analyst and a consultant with Simba Group. "They weren't expecting anything." That the publishers were apparently unprepared for the Wii is also bad news for investors in the sector who have seen their holdings get
A similar dynamic may be shaping up in the home console market. Sony got the early buzz last year when it showed off its upcoming sophisticated game machine, the PlayStation 3. But that attention and excitement shifted to the Wii this spring. Not only will the Wii likely carry a price less than half that of the PlayStation 3 and more than $100 less than Microsoft's Xbox 360, but also Nintendo's focus on making games fun -- most notably through an innovative new controller -- drew rave reviews. This coming holiday season, the Wii could have all the makings of a success: It has the buzz, and its price could make it a clear winner if consumer spending tightens amid rising oil prices and interest rates. Wii likely will be the only game console on the market with a bona fide must-have title, the long-awaited next installment in the hit Zelda series: The Legend of Zelda: Twilight Princess. "The Wii has very strong potential to be the first-place platform" this console cycle, says David Cole, an industry analyst with DFC Intelligence. In the short run, that's not great news for the publishers. Though game makers have been spending millions of dollars investing in games for next-generation consoles, much of their efforts have been devoted to the PlayStation 3 and the Xbox 360 -- not the Wii. Midway Games ( MWY) had little in the works for the Wii until recently, says Miguel Iribarren, the publisher's vice president of publishing. Much of that had to do with Nintendo keeping news on the Wii fairly quiet until around E3, he says. "We didn't have the information to work off of," Iribarren says. "I think everyone pushed
Wii development to the back burner till they got the information on the machine itself and the business model."
Likewise, industry giant EA was "pleasantly surprised" by the reception the Wii received at E3, says John Schappert, general manager of the publisher's Canadian studio. Although the company had already been developing the next version of Madden NFL for the Wii, it has since added more titles to the mix and now expects to have four to six titles for the platform by the end of its fiscal year next March, company spokesman Jeff Brown says.