From a cultural standpoint, games have never been bigger. Nielsen found that half of all American households have a console, and the amount of time spent playing games has increased 7% since last year (due mostly to mobile and tablet games). But the current crop of consoles is aging rapidly: Xbox 360 is seven years old; Wii and PlayStation 3 are six. As a result, hardware sales are down 15% over the past year, and software isn't faring much better. Even factoring in projected Wii U sales, NPD analyst Anita Frazier expects physical video game industry revenue to be around $14.5 billion for 2012. That would be 15% lower than 2011. Meanwhile, two of the biggest movements in games-the rise of social and mobile gaming-were pioneered not by the establishment but by outsiders like Apple, Facebook, and Zynga.
Nonetheless, Nintendo is pushing ahead with its usual MO: create a console with broad appeal, and then lean on franchises like Zelda and Mario. What gamers desire, according to Fils-Aime, is games, and games alone. "When you talk to players and understand what they want," he says, "it can only be delivered through a dedicated gaming device."