Santa Monica (California): The smashing video game success of Nintendo Co. Ltd., considered to be an "also-ran" in the new console war just a year ago, is unlikely to fizzle any time soon, thanks to solid support from software makers and a growing number of casual gamers.
Microsoft Corp. and Sony Corp. are set to offer a barrage of big-name games to shore up demand for their consoles, but that is unlikely to affect Nintendo's relatively unique audience, or its business, analysts say.
"There's no sign of slowdown in their handheld business. What we are also seeing is the console business getting increasing scale. This should continue for another two years," KBC Securities analyst Hiroshi Kamide said on the sidelines of the E3 video game show, the industry's most important.
"Nintendo realises Sony and Microsoft will become a lot more aggressive. But for the moment at least, they are doing everything right," he said. Instead of offering lifelike graphics and fast action to appeal to hard-core gamers, who are mostly young men, Nintendo has wooed a wider audience including game novices, women and the elderly with innovative but easy-to-play titles.
Nintendo's DS portable is a quirky, inexpensive hit, and the Wii console, which sells for $250, or half the price of Sony's PlayStation 3, comes with an unusual motion-sensing controller that can be swung like a bat or a sword.
Nintendo's own "Wii Sports" software makes it possible for grandparents to play a virtual tennis match with their grandchildren in the living room, for instance.
Nintendo's early lead in the console sector has left the gaming and financial communities wondering how much steam is left in the company's growth engine. "I know what some people are saying. 'Sure, that's all happening now. But it's just a fad,'" Nintendo of America President Reggie Fils-Aime told a presentation at E3 last week. Sales figures clearly show Nintendo's advance is more than just a temporary phenomenon, he argued.
Microsoft has shipped 11.6 million units of the Xbox 360 in the one-and-a-half-year period since its launch, while Nintendo sold half as many Wiis in just the roughly four months since its November 2006 release.
It plans to sell another 14 million Wiis in the business year to March 2008. Sony, which has dominated the $30 billion game industry over the past decade, is in a tougher position. Its PS3 was outsold by the Wii by a ratio of 6-to-1 in June in Japan, according to game magazine publisher Enterbrain.
In the handheld business, Nintendo's DS outsold Sony's PlayStation Portable by nearly 3-to-1 in the year ended March.
"Nintendo is successfully building up casual game users overseas as it did in their home market," Mizuho Investors Securities analyst Etsuko Tamura said. "DS demand is likely to peak out in Japan this year, but overseas expansion will continue next year on."
Investors took notice of the changing fortunes of the two game giants. Nintendo shot past Sony in market capitalization last month and elbowed the Tokyo-based electronics conglomerate off the list of Japan's 10-most-valuable companies. In an effort to ignite demand for its latest console, Sony last Monday cut the U.S. price of the PS3 by $100 to $500, boosting sales at major retailers two-fold. But some do not anticipate a major PS3 boost.
"I don't expect a substantial impact ... With $500, you can buy a personal computer," said Kazumi Kitaue, the head of game maker Konami Corp.'s North American and European operations. A raft of hot titles is expected for the Sony and Microsoft machines, but KBC's Kamide was not concerned for Nintendo. "Because Nintendo makes games that are so unique to them, it shouldn't be such a huge problem," he said.
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