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It will be interesting.

First off, the next Wii will be full blown HD, Nintendo has already said that. The limit of the state of the art in television will level that playing field. Probably Nintendo won’t push the processing power as far in order to keep a good price point, smaller, cooler running and high reliability.

They will have full backward comparability through the Game Cube offering a very large library plus VC, Wii Ware and possibly some version of home brew. I think people tend to forget that the Wii’s perfect GC compatibility makes up for a lot of the weakness in their current 3rd part library. A decision to NOT support full BC is a HUGE mistake.

They will stick with but refine motion control, the balance board will be a no-brainer accessory and they will add head/eye movement. All controls will quicker, more response and more precise but without sacrificing simplicity and intuitive movements.

Online gaming will be offered at two levels. A more open version with chat requiring proof of age/ parental OK. A level much like the current one designed for greater safety for younger children.

If they execute all of these things well; and Nintendo usually does. They will start out with most new and casual gamers used to their system and owning Wii libraries making up a huge customer base which will be theirs to lose.

To compete with them Sony and Microsoft will have to decide whether to cater to the “hardcore” gamer and hope that not too many defect. Or they must come up with something very innovative, new and so compelling that it will disrupt the market and steal that huge customer base from Nintendo. That’s a tall order. If either company pulls it off, it will most likely be Sony because they are better suited to make some huge leap into the future. Microsoft does not usually innovate on that scale.

My guess is that baring a mistake by Nintendo, they are going to be hard to beat.