The PS2 had tons of shovelware, don't kid yourself. What was different was the third party blockbusters were at the top rather than Nintendo's stuff.  EA had dozens and dozens of million selling games on PS2, 50 or so the last time I checked.

If you were to imagine the structure of the PS2 and Wii software markets as buildings, the Wii would be a pyramid with a small amount of software selling much better than PS2 games, while PS2 would have a broader, but sharper cut off at the top, more of a narrowing square shape. The Wii does have alot of room for games to sell 500,000-1,000,000 copies though, and that is why you see alot of big, but not huge stuff developed for it.

The issue is that you said "overall"... which is a boon for Nintendo, but not necessarily 3rd parties individually.  Every thing about a Wii game makes it less profitable per unit than a HD game -- the cost-of-goods is higher, as a % of total revenue (because its its the same as a X360 game, but the revenue is lower per unit), the raw revenue is just plain lower (as evidenced by the data Pachter provided in his post), and the average unit sales, per title (i.e. per investment) are much lower.  In the end, combined with the cost benefits of sharing marketing and dev dollars between X360 and PS3 games, the profit per investment on a 3rd party HD title outweighs that of a 3rd party Wii title, despite the lower development investment in the Wii game.

I find it ironic that Nintendo is always proud to point out that the Wii has the largest number of 3rd party titles -- meaning the number of investments, and invested dollars, is quite high.  Yet their 3rd parties are not receiving the extra revenue return necessary to pay for all those titles development costs -- outweighing the fact that the per-title cost is lower than the HD-combo cost.

Marketing, in particular, is a big issue.  I don't see any reason why the marketing expense on a "big" Wii game would be any less than a big HD game -- and the marketing investment on big titles often outweighs the dev cost.  CoD:MW2 had a supposed marketing budget of $200M -- outweighing the $50M dev cost by a 4:1 ratio (see link below).  It's cost was thus $250M, not $50M.  The Wii demographics aren't there to support such large game investments, which explains the Wii market pretty clearly, I think.

MW2 vs Avatar investment graphic link

He didn't say it was a 1st party game. Infact by specifically mentioning the game he is admitting that it is not a first party game. However he is including it because it clearly is using the Mario name to generate sales. His whole argument is that casuals buy the nintendo name, not necessarily the nintendo developers or the nintendo ideas. That game uses the Nintendo name, even if the rest of the stuff is Saga. 

Procrastinato, do you have any figures to back that up? To prove that the economies of scale make for higher profits on HD games on average?

Yes the PS2 did have a boatload of shovelware, but it didnt constantly make it in the top 20-30 in sales charts.  Some of the Wii's top selling games of all time are simply shovelware titles (WiiPlay, Carnival Games for instance).

Wii Play and Carnival Games are not shovelware. They're both well designed games at a budget price. They serve the job they were intended to quite well, and were made with the customer in mind.

Shovelware is crap developers make in order for poorly informed customers to buy in poor judgment, neither of those games are that. It's not just games that aren't deep enough for you to be interested in.

The difference is, as you said, PS2's 'shovalware' was never at the top of the pile in terms of sales. PS2 sales are remembered for Grand Theft Auto, Metal Gear Soild, Final Fantasy, Gran Turismo etc. The shovalware exsisted but nothing sold like Carnival Games or Just Dance did (I'm not saying these games are bad, but they're what most people see as 'bringing the Wii down'.

 I can't honestly 'see' the comparison, the difference to me is if you release 15 **** Wii games, sooner or later something will stick and one will catch on and sell a million copies. On the Ps2 shovalware was shovelware, it has it's place and it very rarely got rewarded for it.

I have been contemplating doing a post with the data from this very thread (which was in Pachter's post), and EAs last quarter, along with VGChartz sales #s for those titles (I was going to use Pachter's price average, as a close approximation).  I don't really have the time though.  It'd be fun to work it out, even if it was just guessing via VGChartz approximations.  I may do it in the near future.

EA was interesting last quarter, because not only are they one of the biggest 3rd parties on the Wii (or the biggest), but they also had the convenient fact that their overall Wii and PS3 revenue was identical last quarter (although, as I always have stated, the HD dev and marketing costs are very intertwined, and thus the revenue needs to be considered that way as well), despite EA Wii games released (i.e. finishing development) being a much higher number than PS3 games released.  I know the dev costs are spent over the previous years, but they are ongoing, so I think its fair to use overall releases as a proportional statistic going forward...

EA also stated that their Wii investments were hurting them... which implied that EA Wii releases of the past (which we have data for) are the "hurters".  All the data is here, int he treasure trove that is VGC., along with Pachter's numbers here, and EA's (and other publishers) recent statements...

Nail on the head for me.

 By my figures, after production, retailer cuts, publisher royalties, taxes, shipping etc, games see a good ~$30 taken out their profit margin. That means that a $60 game generates ~50% more per copy then a $50 game, and right there is a reason to invest more money into the title; when scaled into everything else you've posted.

 If Patcher is right and the average third party Wii game is selling for ~$37 per copy, I'd be seriously worried for those companies. There really is no profit margin there. Fair enough they've got a fair share of themselves to blame for that, but the market seems to already be turning into something thats very difficult to into a gold mine.

Pachter doesn't have costs though. He has sales figures, not development costs. In order to show economies of scale making up for higher development costs you'd have to actually show the costs, and then in comparison to the revenue would you have profit.