I totally agree with what you just said. Althought I do believe that in the long run Sony and Microsoft will drop out of the hardware business. After all, both of them have things to lose if they don't succeed immediately....

But, their launch sales so far have been good.

I think for many studios the option will be to bow out of the AAA race or go bankrupt. I do agree that bowing out of the AAA arms race is not the same as switching to the Wii U. I do think however that if developers scale down their games it makes sense for them to support all three current gen consoles. (Assuming porting scaled down PS4 games to Wii U is trivial to very low impact, I don't know enough about the architectures to assert this for sure). So, in a sense, the idea that Nintendo will force third parties to support their platform makes a little sense if that is  what it comes too. I am not sure that this scenario is very different from what is cureently happening though. The bleeding edge AAA studios will still stay away and the Wii U already gets decent AA support if you will. Of course, there is also the posibility that developers will be shed off to the crimson red ocean of mobile gaming if they can't stomach the high cost of console gaming.

Another thing to consider is the oft referenced diminishing returns. I don't know that we are there yet, but at some point the difference between very very very high production values, and just high production values will be very small. So, even studios that have limited resources will be able to develop very good looking games for much smaller budgets. We're already seeing that some independent studios is putting out very good looking games on reasonable budgets. The cost of making a 7th gen looking game is much lower now then it was when the HD consoles first came out.

Of course, John Luacs' claim is that with third party support the superior craftmansship of Nintendo will erode the user base for Sony and MS. While I agree with him that Nintendo produces much higher quality games that any other developer, I don't share his optimism when it comes to the end consumer. I think the videogame audience is just as quality concious as the music audience or the movie audience. Meaning they will sink their money into the newest, shinest thing with the heaviest advertising. This is why I think the market will continue to gravitate towards very high production value and very low risk projects. If Nintendo is able to stay alive in this market, more power to them. I hope they do since I respect the commitment they have to investing as heavy in the playability of a game as the presentation.

The reason why I don't count Nintendo out of the race is because I have lived too long to make that mistake. If there is one company out there that can ignite the passion of a huge mass market it's Nintendo. They sold an $80 scale to millions of people. They created the game & watch hysteria. The X factor is Nintendo's ability to create phenomenons, which I think they do better than anyone. People say 'the casuals have moved on to tablets', and act as if that's where they will stay forever. There is no guarantee that Nintendo can't create the next disruptive gaming device or software that once again blows everyones minds. I think Nintendo has the most potential to pull out another home run like that, because they have done it before, and because it is not the focus of Sony or MS.

Overall though, finding that viral smash hit is difficult and probably won't happen. I think the 8th generation will see contraction across the board. If it is bad enough to force one, two or three players out of the game though? I don't know. 

John, since we were discussing Malstrom, here´s his latest article:

'Wii U is a burning platform

The ‘Burning Platform’ is a business term coined after a famous leaked Nokia memo. When your platform is burning, you do things you normally wouldn’t do such as jump into icy waters. If you knew the burning was going to come, you’d have thought up a better plan than jumping into the water. The Wii U is a burning platform. Nintendo is doing things with it they normally wouldn’t do. One of these was the price cut. Another was the bundle of the hardware with NSMB U (Nintendo is trying their hardest to kill off 2d Mario). An earlier burning platform for Nintendo was the 3DS. Nintendo ended up selling the 3DS at a loss which is the equivalent to jumping into icy waters.

Last generation, when Microsoft and Sony were watching, stunned, as the Wii left them behind, they acted similar to how Nintendo is acting today. They announced price cuts, some new ‘bundles’, and how the latest first party game is a ‘system seller’.

Why are game journalists telling us what is a ‘system seller’? Doesn’t that sound suspicious? Game journalists tell us whether a game is good or not, but the ways of the market are unknown to the game journalists as they are to many people. I prefer the term ‘killer app’ than ‘system seller’ which is another reason for my suspicion.

There is something called ‘Nintendo Fan Fiction’ where fans write stories about Mario, Princess Peach, and Zelda. It is most creepy, but there is something even creepier than ‘Nintendo Fan Fiction’. It would be ‘Nintendo Developer Fiction’. Yes, Nintendo developers’ favorite pastime seems to be writing fictional stories about how they see the market playing out. Miyamoto created an entertaining fictional tale about how Pikmin 3 would re-kindle RTS interest in the West (since RTS is bigger in the West) and how everyone would go out and buy Pikmin 3. Iwata created a fiction about how Nintendo Land was going to be the new Wii Sports. The latest Nintendo Developer Fiction is how Super Mario 3d World will, all by itself, drive market momentum behind the Wii U. This is very entertaining seeing how Super Mario 3d Land failed to created any significant momentum for the 3DS (3DS sales are still way behind DS sales). Come to think of it, every 3d Mario game has failed to create sales momentum for the hardware. Mario 64 didn’t sell the N64 (especially not outside America). Super Mario Sunshine didn’t sell the Gamecube. Super Mario Galaxies 1 and 2 didn’t sell the Wii. Super Mario 64 DS only delivered sales victory to the PSP over the DS during its time in the sun. I see a pretty clear pattern that trails through generations.

Yet, the current Nintendo Developer Fiction is that everyone is going to rush out their door to buy a Wii U for ‘Super Mario 3d World’. Color me skeptical. People might be buying a Wii U for Christmas, especially the bundle with the 2d Mario in it, but for 3d World? Well, we’ll see when the actual sales data comes in.

If Nintendo Developer Fiction doesn’t come true, then the Wii U is Gamecubed. If the Nintendo Developer Fiction DOES come true, then the Wii U is N64ed. In either scenario, the Wii U’s goose is cooked.

Nintendo’s bumbling around really makes me nostalgic for the good old days of Yamauchi. Sure, he had the N64 and Gamecube problems (but remember that Iwata designed the Gamecube and Miyamoto was the force of direction behind the N64), but the handheld line under Yamauchi never faltered. Nintendo has had to resort to buying marketshare in order to protect its diminishing handheld presence with selling the console for a loss, buying rights to Monster Hunter, etc.

It is better for Nintendo to consider the Wii U a loss and start working towards Generation 9. Nintendo will have to look at the two greatest selling Nintendo consoles to replicate: the NES and the Wii. Of course, when this happens it will be the burial of the twin Nintendo ideologies of ‘Now Is The Time for 3d!’ and ‘A More User Friendly Gamecube’.

NES and Wii had something in common: customers saw them as access to gaming. Today, people view the Wii U in a very different way: as access to an eccentric way of gaming. Wii U is just way too eccentric for the general population.

What´s your take on it?