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Nintendo and Vidyo Jump into Consumer Video

Six years ago, with the introduction of the Wii game console, Nintendo disrupted the industry it had previously created. It was a bold strategy that returned sales of more than 97 million consoles. Microsoft and Sony had been battling over the console market with highly optimized hardware platforms aimed at serious gamers. They were selling their consoles at a loss, and earning revenue on licensing revenue from game developers.

Nintendo realized the market of non serious gamers was much bigger, and offered a lower-priced, simpler platform called the Wii. It could be profitably sold at a relatively low price. Sure, it meant standard definition instead of HD, but that didn't seem to slow sales. The motion-based games appealed to families, and it sold about 20 million units better than its competitors.

So what will it take to compete in 2013? A video-enabled tablet. And, in partnership with Vidyo, that's what Nintendo will deliver.

The new Wii U offers two distinct components. The base station, similar in size to the original Wii, now supports HD via an HDMI connection. It also has four USB ports, and an IBM processor supplemented with AMD graphics. The controller supports new U games as well as games for the original Wii.

The second component is the new wireless controller or GamePad that contains a 6.2 inch color touchscreen and camera. This second screen can provide the player the same or additional information besides what's on the television. Now, in multi-player games, the same information doesn't have to be provided to all players. The GamePad camera and Vidyo's software enables point-to-point video chat among "Miiverse" members, which is currently about 100 million strong.

This time around, Nintendo is being pressured by other console vendors as well as mobile phones and tablets, which offer a far bigger library of games distributed through their application stores. Nintendo intends to fight with powerful hardware, new and old games targeted at both family and power gamers. The tablet-like touchscreen and real-time video communications further differentiate the solution.

Vidyo states that the product roadmap for the Wii U includes plans for bridgeless multi-party conferencing, video-enabled gameplay, and conferencing between Wii U and mobile devices. The touch screen on the controller enables on-picture drawing that both parties can see. At this time, the only camera is in the handheld GamePad, but potentially the USB ports on the base could support a fixed camera.

When Microsoft acquired Skype, I wrote about potential synergies including the possibility of leveraging the Kinect camera to transform the X-Box into a video-enabled Skype endpoint--though that has not happened (yet). With the Cisco Umi withdrawn, Nintendo is now positioned to create the largest network of living room-connected video chatters. Although connectivity from Wii U to enterprise Vidyo systems is not initially supported, Vidyo states there are no technical limitations preventing this from occurring in the future.

Ofer Shapiro, CEO and co-founder at Vidyo said, "Through this collaboration, we'll be adding Wii U consoles to the pool of Vidyo enabled systems, which will build critical mass around Vidyo's scalable architecture and software platform." Vidyo expects this collaboration to drive consumer mass adoption of video as a mainstream means of communication, enabling B2C, non-game related services such as tutoring or personal training, thus creating a billion-dollar market opportunity.

The Wii U utilizes Vidyo's adaptive video layering architecture. "Vidyo provided Nintendo with a video solution that adapts to changing network conditions while being easy for consumers to use from the comfort of their living rooms," said Genyo Takeda, General Manager, Integrated Research & Development Division, Nintendo Co., Ltd.

Video-enabled communications are dramatically increasing, but still largely remain constrained to islands of like-users. Vidyo now claims three islands: its enterprise solutions, Google+ which uses Vidyo technology to power Google Hangouts, and now a consumer network powered through Nintendo U consoles. Though no interconnection between these islands exists now, Vidyo claims it has more users on its technology than Polycom and Cisco combined.

Dave Michels is a contributing editor and independent analyst at