TDG: Nintendo should push for Wii video-on-demand, whether it likes it or not

TDG (The Diffusion Group) last month sung the praises of the streaming-on-demand video content available on the Xbox Live Marketplace and PlayStation Network, predicting that 75 percent of the 190 million US households expected to have a next-generation console by 2012 will be accessing console-based video services "at least a couple times each week". Now the consumer technology research and strategic marketing firm wonders if Nintendo can afford to take a sidelines approach with its own video-on-demand services for the Wii.

Given the Wii’s explosive diffusion (over 35 million points of presence at year-end 2008) and cross-market appeal (helping to bring console gaming into the mainstream), Nintendo would seem to put be in an ideal position from which to launch a highly-competitive video delivery service. To date, however, it has remained relatively silent on the issue of Wii-based video delivery.

Back in October, Nintendo revealed its own solution for Japan in the form of the "Everybody's Theater" Wii Channel. Accessing the Channel will require a download of Fujisoft's Ulexit media player which costs 500 Nintendo Points. The Channel itself is expected to launch sometime this month with a selection of 500 programs which include movies, documentaries, music shows, anime and probably soaps.  Gotta have soaps!  TDG's Colin Dixon feels the popularity enjoyed by the Wii on its native soil does help increase the chances of success for the OTT (over-the-top) video service.

However, Dixon is bothered by the fact that responsibility for managing the service lies with Fujisoft, not Nintendo itself. In other words, unlike its competitors Nintendo isn't really quite in charge of operating its own digital video service, and this suggests that the company is not yet serious about Wii-based video distribution; at the very least, Nintendo does not expect to make a whole lot of money off of it.

In order for the Wii to remain competitive in the long-term, Nintendo must enable Wii-based OTT video services of some kind. TDG expects that within the next two years either (a) Nintendo will seek third-party partners in both the U.S. and Europe for Wii-based video delivery, or (b) Nintendo will work with a company like Move Networks to roll out their own service and thus compete directly with Microsoft and Sony. Either way, Nintendo will be forced to get into the video game, likely sooner than even they may expect.

As Nintendo itself is a big promoter of Wii activity that's not entrenched in "core" gaming trappings, Dixon believes the company is well positioned to profit handsomely off of pushing video services for the console. In fact, Dixon claims the move toward a Wii video gateway will come about whether Nintendo wants to or not, so the company is better off being prepared.