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Legend11 said:
As others have mentioned the problem with the PS3 and Xbox 360 is that they're too expensive for casual gamers. Even if they did have the games it would likely still be a hard sell until they come down to a mass market price (likely $199 or maybe $249 with a pack-in game like Nintendo did). The only problem is that neither one has so far come up with a casual game that has the buzz of Wii Sports and Wii Fit. It's going to take an amazing amount of creativity for them to challenge Nintendo after coming from this far behind.

What I would do if I were them... Devote resources to making games that appeal to young children (even though Nintendo truly dominates in that area) like Banjo Kazooie 3, but also extremely creative stuff like perhaps interactive lego kits or a wand plug-in controller for a big budget Harry Potter game, educational sesame street/elmo games (I know my ideas aren't exactly great but I'm sure a lot of creative people getting paid a lof of money would come up with stuff) and keep working on driving down the price of their systems.

I agree, the reason the Wii is selling better than the PS2 was isn't just the "new" casual gamers though as some seem to think.  They are attracting the old casuals too, as they are the only system in their price range.  Once a 360 or PS3 manages to get below $300, then maybe they will start getting chunks of the casual.  Right now though the 2 systems are dominated primarily by the "hardcore" 13-25 year old males.  If they want to expand their market they are going to need to adjust their price more than anything.  Adults won't pay $400+ to play games very often.   That's why the Wii gets the casual adult market as well.  

As for what the Wii needs to do, they need to keep their library very diverse.  Rather than focus on one area of gaming, they need to show games for ALL areas for the entirity of the Wii's life.  Although it wasn't as interesting for hardcore gamers like us as say Sony's conference, Nintendo did a masterful job of this at E3.  They spent an hour plugging their hardcore 3rd party games and already announced games, then they anounced Mario Kart Wii and it's online play for the hardcore.  After that (and mainly for the mainstream press like MSNBC, CNN, etc.) they announced Wii Fit.  This is what they need to continue to do for the Wii to garuntee it's success.