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There wouldn't be much sense drawing Mario 64 in 1080p, would there? Not without major texture and model upgrades there wouldn't.

I think there would be. And to illustrate, here's a comparison of it running in 320*240 on N64 versus 480p on Wii. And there's a lot of room left for improvement.

For something more comparable to Wii's level of graphics, here's a link I've posted before: Kingdom Hearts 2 running in 720p.

This kind of HD, without ultra-detailed environments and textures, really is just a matter of "turning on a switch" for a developer. And it makes a big difference.

Now we're getting into specifics that it appears neither of us can answer with much certainty.

My personal estimate is that real HD support for the console would have bumped the price 100 dollars or more, making the price 300-350, not 250. Do you have math to prove otherwise? I'm certainly not suggesting that my knowledge is precise.

That's true, neither of us knows what it would actually have cost. But if you consider that the 360 is believed to cost around $300 to manufacture, I would think that Nintendo could have added just HD support for a lot less than that, or for the same cost have made something comparable on an overall graphical level (while taking a small loss and keeping the $250 price). Now, I know that the 360's price has seen the benefit of a year's worth of streamlining and cost-reduction, so they're not directly comparable. But on the other hand, the Wii had the advantage of launching a year later, and it's already got the same install base the 360 had when it got down to that cost. I think Nintendo would be in at least as good a position cost-wise at this point.

As a gamer and Nintendo fan you have to ask yourself: Do I want HD support or a big, varied library of games?

Keeping in mind that the HD support I was actually talking about would not increase developer costs, let's suppose instead that Wii had been a completely cutting-edge system graphically like its competitors. It still wouldn't have hurt its developer support. As you said, nobody was interested in developing for Wii until they saw how successful it was. While a few publishers might be working with the platform just because it's cheap, most are doing it because it's the most successful and has the brightest future. That wouldn't change if it were more powerful. And for every developer that welcomes Wii for the savings it offers (which brings us some cool risky games, but also a lot of crap and shoddy ports), there's another who doesn't want to touch it because it isn't exciting and impressive to work with. Seems to me the two groups are a trade-off.

Selling their hardware at a profit gives Nintendo also the oppurtunity to charge lower royalty fees from 3rd parties than their competition which has to rely on fees since they are selling their consoles at a loss. That's another cookie that Nintendo is giving 3rd parties to finally come back to a Nintendo console.

They have the opportunity, but are they going to do it? I haven't heard anything (correct me if I'm wrong).