GameDaily BIZ: Do you have data comparing how well catalog downloadable games (Wii's entire virtual console) sell compared to new/original downloadable games? Is the Wii at a disadvantage because of this (at least until Wii Ware comes out)?

Geoffrey Zatkin: With the Wii, Nintendo created a powerful new platform for their enormous back catalog of games. This is the first console device on which a user can potentially play every game Nintendo has ever supported due to its deep native emulation capabilities.

This has obviously been a key strategy for Nintendo: to date the Wii has no original downloadable games – every game on their virtual storefront has been a rerelease of a title previously available on an earlier generation console (the majority of which were originally shipped between 1990 and 1994).

There are many advantages for Nintendo in revisiting its huge catalog of past game titles. They are much cheaper to produce as they have already been made. Consumers are familiar with most of these games; there is less need to spend marketing dollars to acquaint consumers with a new product. Additionally, the Wii is using nostalgia as a selling point – many of these games have been unavailable for years at retail. Parents who bought a Wii for their kid may find that they have access to games they played in their youth.

Of course, there is a down side to utilizing direct emulation; downloadable Wii don't support the latest features the online experience allows. Where the Xbox 360 is adding new functionality such as leaderboards, online multiplayer and Achievements, the Wii is not. Additionally, some games have actually been updated on other consoles, improving their graphics and updating gameplay. With the Wii the game plays just as it did when you popped the cartridge in your Nintendo system a decade or more ago. Players often get a more complete game experience when they purchase a downloadable title on other consoles.

BIZ: Since downloadable content seems to be so important, why has Nintendo been so slow to adopt it for Wii titles? Would Wii games generate more revenue with downloadable content in your opinion?

GZ: From the rapid release of back-catalog titles on the Wii (91 in the first 7 months, more than double the number of the Xbox 360 and PS3 combined in the same period) it seems clear that Nintendo's primary objective with its virtual storefront was to monetize this highly valuable asset base of game titles that they had been unable to do in their previous console devices.

Downloadable content support doesn't appear to have been at the forefront of their design. This is clearly reflected in the Wii's storage capabilities. The Wii has only 512Mb of internal flash storage. To date this hasn't been an issue for their downloadable games from past generations; the average size of these games is only 4.59 megabytes per game. You could download over a hundred of them onto your Wii without having issues with storage space.

Downloadable content for current generation games is much larger; the average size for a single piece of downloadable content for the PlayStation 3 is 93.02 megabytes and 52.36 megabytes on the Xbox 360. The Wii simply does not have the storage space to hold this type of content for enough titles to create a viable revenue stream. If Nintendo wants to build this space they will have to provide a larger storage solution long term.

That being said, downloadable content has such a significant long tail effect on game revenue that we suspect Nintendo will eventually add it in some form (they have unofficially said that they will, and several development studios are already at work on this "unofficial" downloadable content). If Wii users follow any of the same patterns of PS3 and Xbox 360 users, adding downloadable content will definitely increase the revenue of Wii game titles. There are creative ways for Wii developers to achieve this if they put sufficient consideration into it while they are developing their title. (see below).

BIZ: Are publishers carefully considering how to monetize downloadable content before they ship games?

GZ: This is a mixed bag. Some publishers are obviously paying attention beforehand. Others are using the time between product gold master and moving the team onto a new product to produce downloadable content; this is smart because you have a team that is familiar with the game's toolset and is able to produce new content very quickly. For others, it is obviously an afterthought.

On the side of publishers that consider the issue before hand, games published by EA have a lot of different types of content to download. In fact, EA has the most downloadable content of any publisher by far; one out of every three pieces of downloadable content for seventh generation consoles is for an EA game. Microsoft has the largest average diversity of types of downloadable content both per game and of any publisher. They even got a little sneaky about it on Kameo: Elements of Power – this game has Achievements that can only be obtained after you have downloaded some of their free downloadable content (thus forcing you to check out the downloadable content on their storefront). Some companies are getting smart and preloading content on the game's disk that gets unlocked through a downloadable content purchase – this means that it takes up almost no space on your hard drive (*wink* *wink* Nintendo)!

BIZ: Of the three consoles and their storefronts, who do you believe has the edge and how should the others look to improve?

GZ: The Xbox 360 clearly has the edge in this area – of all available downloadable content for the PS3, Wii and Xbox 360, 94% is found on the Xbox 360. Microsoft obviously spent a lot of effort getting their development studios to think about downloadable content and it shows. Additionally, Microsoft spent a lot of time making sure that their virtual storefront was user friendly. It is easy to find what you want to download on the Xbox 360; the same is not necessarily true on the other consoles. The Xbox 360 virtual storefront even has an excellent web presence. You can easily log onto the Xbox Live Marketplace and see what is available for purchase.

Props do go to the Wii for having a virtual storefront that is point-and-click friendly. Nintendo leveraged their unique input device to provide an intuitive browsing experience. EEDAR is looking forward to the appearance of Wii Ware and how Nintendo continues to innovate.

The PlayStation Store is a virtual storefront in transition. They are currently on their second major version of the store, with Home coming in at some point. One thing the PlayStation Store really needs is stuff to buy; they just don't have enough downloadable games and content to be competitive at this point. We expect to see a strong showing from Sony in the future – but they are not there yet.