Long read: What might the ultimate character creator look like?

Baldur's Gate 3, Street Fighter and Lost Ark developers discuss.

If you click on a link and make a purchase we may receive a small commission. Read our editorial policy.

Knowingly Undersold

The Wii is no longer the cheapest console. It doesn't matter.

Published as part of our sister-site GamesIndustry.biz' widely-read weekly newsletter, the GamesIndustry.biz Editorial is a weekly dissection of one of the issues weighing on the minds of the people at the top of the games business. It appears on Eurogamer after it goes out to GI.biz newsletter subscribers.

If you're everyone's second console, you're in first place overall. When it first bubbled up through the industry's discourse, this oft-quoted logic seemed almost too simple - even a little naive, perhaps. A few years later, it looks for all the world like one of the most canny and prescient assessments of the present console battle.

From an ignominious third place finish with the GameCube, Nintendo has propelled itself back to the forefront of the home console market. The Wii is an immensely popular second console, found nestled next to a large percentage of Xbox 360s and PlayStation 3s. Moreover, it's also conquered new markets as a first console - replacing ageing PlayStation 2s in a large number of homes, and breaking into virgin territory in homes that have never owned a games machine.

While core gamers focus on what has essentially become a battle for second place between Sony and Microsoft, Nintendo goes from strength to strength. In August, the last month for which we have NPD figures, Nintendo sold just over half a million Wii consoles in the United States. The PS3 and Xbox 360 combined couldn't break the 400,000 mark.

Only by adding PS2 figures to that tally do you manage to beat the Wii's sales. The bottom line is that, excluding extremely cheap last-generation hardware (although admittedly not factoring-in the recent Xbox 360 price cuts), the Wii constitutes well over 50 per cent of the US home console market. In other parts of the world, that figure is even higher.

Nay-sayers - and those who have hitched their fortunes to the other current-gen machines - are proved wrong time and time again by Nintendo's success. The temptation to describe the Wii's success in the casual space as a fad has been dulled by month after month of immense sales. Concerns over third-party support are gradually being eroded as publishers recognise that the huge installed base and lower costs of development assuage many of their fears over an unpredictable and potentially hostile market.

The question, however, is where Nintendo can go next with this success. The strategies that have made the Wii successful are tough to replicate, but not impossible - and Sony and Microsoft are gradually starting to make their own moves into this market. The keys to Nintendo's new kingdom are low-cost, low-profile, family-friendly, social gaming - complemented with easy, intuitive control interfaces, powerful and instantly recognisable character franchises, and a sharp perception of the demands of disparate consumer markets.

The Xbox 360 is now certainly in the low-cost bracket. Microsoft now undercuts the Wii - a strategy which could win it an entirely new audience this Christmas, although the likelihood of effectively "poaching" from the Wii consumer base is limited. Microsoft is also working hard on the social gaming market, with karaoke game Lips and its new, avatar-driven dashboard - the "New Xbox Experience" - being major steps in that direction. Sony has a huge head-start here, thanks to the popularity of games like SingStar and Buzz, and the hype around the forthcoming LittleBigPlanet, but its price point simply doesn't fit with the market those products should be reaching.

So, as strange as it feels to be describing Microsoft and Sony as snapping at Nintendo's heels, that's exactly what's happening. Among core gamers, the choices are relatively clear - few of them will go without a 360 or PS3, so the Wii exists in that "second console" space. New announcements this week, such as Sin & Punishment 2, Dynasty Warriors, Tales of... and various other "hardcore" titles for the Wii, will help to keep core gamers happy and cement that second console position. Here, the battle was over before it even started; Nintendo aimed at being the discreet white box that sits next to your large 360 or PS3, and succeeded.

The real battle is for the rest of Nintendo's market, and here the Kyoto-based firm still has the upper hand - for now. Casual consumers are unlikely to be in the market for a new console again in the years after buying a Wii, so its existing installed base is fairly solid. However, the continuing strong sales of Wii indicate that there's still a market here to compete for - and both Sony and Microsoft are keen to make it their own.