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noname2200 said:

Nontheless, until recently many Nintendo titles (Mario, Mario Kart, Donkey Kong, F-Zero, etc.) seem to be selling less than their predecessors. I'm not sold on Malstrom's explanation of why, though.

Well there's probably not going to be any one reason. Smaller install bases on every home console until the Wii is a contributing factor. The gaming industry has changed a great deal over time. Look at what's become of Midway. They use to be a big player, now they're more or less bankrupt. Also as a greater variety emerges the chances of someone finding something better to fit their tastes increases and the same amount of people will likely spread out amongst a greater number of franchises.

And finally how many times can you enjoy the same thing? Nothing stays new forever, and short of being a complete die-hard fanatic of something, you'll eventually grow accustom to what you enjoy, even if it is still enjoyable. There was a Simpson's episode once where Bart and Lisa weren't really watching Itchy and Scratchy anymore, and the producers of the show get them and some of their friends to watch some episodes and use a dial to show what parts they like. They generally liked everything the show was famous for and the producer finally asked what the hell the problem was. Lisa explained to them there was nothing wrong with the show, but after a few hundred episodes it just didn't have the same impact.

That kind of stagnation usually leads to change, but changing an existing series (games or forms of entertainment) is generally dangerous territory to walk as well. Small tweaks can help to keep it fresh, but won't attract many new customers. This also creates pressure to continue to tweak with each iteration, which usually becomes harder each time. Look at the Tony Hawk series, which added major gameplay elements in two and three, minor ones in four, then actually started a storyline for underground and up. After about ten of the damn things Activision has finally shelved them, claming they're retooling the Tony Hawk franchise.

You can go with a big change, try an attract new people to what you're doing, but then your risk alienating your older fans. Even if you successfully completely change gears, then it won't be long before you're right back to where you were and need to keep your new thing fresh. Look at Resident Evil 4 and 5. Four was a big reboot for the series, and it largely worked, but some people are already kind of turned off by 5 since it looks so incredibly similar to the last game.

Creating something new is difficult as well. Strong brand names are hard to ignore, and new IP's without some kind of familiar branding might struggle for enough exposure to gain recognition. Big budget advertising campaigns with a strong company name can help to establish a firm foothold, but are usually very expensive, risky, and may not even payoff. Capcom allegedly spent about 20 Million to advertise Lost Planet, a series that still isn't a series.

And the ultimate risk of trying anything new or different is it may simply not work, or may work, but not catch on anyway. There is a reason why a lot of companies, stick to familiar formats, make "new" IP's that very heavily resemble old ones, that milk franchises to death. It's generally easier, and safer a lot of the time. I think last year you had EA complaining that Mirror’s Edge and Dead Space didn’t perform as well they wanted. Meanwhile Activison was making massive bank on the Call of Duty 5 and Guitar Hero 4 (Which is like the 7th or 8th game in the series =P)

Despite that, things eventually have to change at times, because nothing last forever either. So I guess I’m saying this whole cycle of new and old is a very complicated balance, and none of us really know the best course of action.