Wii the Peephole

Wii's online digital store is about to become an open shop. Nintendo 's (OTC: NTDOY.PK) next-generation gaming platform is looking to share the fat margin wealth of digital delivery to aspiring game developers with its WiiWare initiative.

Over the past few months, Nintendo has been loading its virtual storefront with throwback classics, priced for as little as $5 a download. There is no physical inventory to stock, products to ship, or retailer returns to worry about. Beyond the small cost of delivering the game files, transactions are mostly gravy.

 

Nintendo isn't the first video game maker to cash in on the magic of digital delivery. Microsoft 's (Nasdaq: MSFT) Xbox set the standard with its Xbox Live interface. Sony (NYSE: SNE) also isn't going to let the opportunity get away. In fact, Sony and Microsoft are shifting to fatter hard drives to store even more games, music, and video content that they will actively peddle in the future.

Microsoft has already moved to sell game enhancements to existing titles through Xbox Live. It's a revenue channel so lucrative that Microsoft will pay $50 million to Take-Two Interactive (Nasdaq: TTWO) for a pair of follow-up episodes to the upcoming Grand Theft Auto IV game.

If there is any surprise here with Nintendo's announcement, it's that the company's Wii ships with much smaller storage capacity than its peers.

Nintendo's move will give developers -- especially small ones that may not have the finances to bankroll a costly physical release -- a shot at cashing in on the hottest next-generation console.

Yes, even now -- long after the 2006 holiday rush has come and gone -- it's awfully hard to find a Wii console in stock. Amazon.com (Nasdaq: AMZN) has plenty of PS3 and Xbox 360 systems in its warehouse, but Wii shoppers are down to paying well above retail to get a console from a third-party seller.

Nintendo's move to embrace budding developers, even as its own star is shining brighter, is admirable. It just goes to show that you're never too big to think small.