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Revenge of Nintendo

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Nintendo just boosted their profit estimates for the coming year by $150 million from over half a billion dollars, indicating that the company might be one of the unlikely winners in the console wars.

I would have laughed at that thought even a year ago, but the numbers speak for themselves. The Kyoto-based company is on a seemingly unstoppable path to winning the Japanese side of the next generation console war.

For the longest time, Sony and its Playstation series appeared unbeatable, with Microsoft’s Xbox system a distant second, and Nintendo’s Gamecube making up the rear. Its’ cutesy branding (think Mario) had relegated it to be a player for the pre-teen set.

But Sony’s appearance at the Electronic Entertainment Expo tradeshow last May was generally considered a disappointment, with a collective balking at the nosebleed-high $499 pricetag ($599 for the full-featured version) attached to the Playstation 3, when it hits the US market this November.

Game industry analyst DFC Intelligence goes so far to predict the pricey PS3 will drag down industry sales in general, and without course corrections, wind up in third place behind Xbox 360 and Nintendo’s upcoming Wii console. The company predicts they’ll sell 6 million units of Wiii next fiscal year.

All three next-gen consoles come integrated with broadband support, it’s worth pointing out here, while both the DS and PSP come with Wi-Fi functionality and Web browsers– making the console wars a battle for the broadband platform of the living room, and for the dominant PDA of the gamer generation.

Nintendo’s fortunes have been boosted in large part by robust sales of its DS handheld gaming console (21 million sold — and in my view, by innovating more than its rivals. With its action-predominant games and movies, Sony’s PSP handheld (17 million sold) is aimed squarely at the dude demographic of 18-34 males.

Nintendo, by contrast, has consciously cast its net wider with the DS, which comes with an intuitive, easy-to-use stylus control, and a library of unique, risk-taking games with far broader appeal, including Nintendogs, in which you care for a puppy (worldwide sales 4.5 million units), and Brain Age, an educational game, for God’s sake (worldwide sales approaching 3 miilion units.)

It’s too soon to write off Sony, of course, and you have to believe they’ll make some drastic moves to stay competitive. Then again, the president of their game division recently suggested that if consumers think the PS3 is too expensive, they should just work harder. So even that’s hard to say.

15 Responses to “Revenge of Nintendo”

  1. Jesse Kopelman

    Fukumimi, I’m not sure I buy your arguments. DVD players had been available for reasonable prices for years before the PS2 launched, that will not be the case with Blueray and PS3. Also, in the early days of DVD I heard many make the argument that consumers didn’t seem excited about it ahead of time. Same with surround sound. Same with HD TV. Same with mobile phones. Same with PCs. Same with Internet access. The list goes on forever. Like everything new, people don’t know they want it until they have seen it. The PS3 is certainly no guaranteed success, but I think Sony’s strategy makes sense and is consistent with their bigger picture goals.

  2. Jesse,

    Don’t you feel a sense of deja vu?
    Sony already tried that with PS2 and DVD capability.
    How many people do you know who bought a PS2 primarily to play DVDs? Consumers aren’t stupid, if they want a BD player, they’ll buy one (if BD takes off). We all know how consumer electronics prices rapidly go down, whereas consoles typically do not see price erosion to anywhere near the same extent.

    Problem with BD is that DVD seems to be more than good enough for most users. Tape to DVD offered some easily understandable selling points. Do the same exist for DVD to BD? The manufacturers tout HD quality picture and even better sound quality, but given these things are reliant on other hardware for users to even notice, it would appear to be a hard sell.

    This time around, there is a format war to contend with as well…

  3. Jesse Kopelman

    I think the key to PS3 success has little to do with games. The big issues are going to be whether people are feeling the need for Blueray (and whether a good catalog is available in that format) and whether the PS3 has good media center capabilities. Considering how much a PC-based media center costs, if the PS3 can bring a decent feature set (it definietely has the hardware capabilities to do so) $600 is going to start looking a lot more reasonable. So, I guess I saying that Sony is thinking outside the box too. Nintendo may be going after a broader gaming demo, but Sony is going outside the gaming demo completely and into the early adopter A/V market.

  4. Eric Eldon

    As a cross-platform gamer (and PS2 owner), my opinion: may the most user-friendly company win.

    Nintendo has always put a premium on gameplay and quality controllers. GameCube may not have had as many popular games as PS and Xbox, but it was of a higher quality.

    Nintendo’s core commitment to the user experience — beyond pricing issues and everything else — is what’s driving their success.

    Reminds me of the resurgence of Apple. Now all the PC-PS2 guys out there will be gunning for me. Guys, eat it.

  5. I’m predicting that Nintendo is going to win in NA also, not just Japan. The DS is setting up Wii sales big time. More and more people are buying DSs because it’s so well done.

    You can play multiplayer over the wifi connection with a friend even if that friend doesn’t have the game! It just downloads the multiplayer from you. What the RIAA/MPAA and their enterntainment industry ilk think of that?

    Nintendo games are just so much more fun. Wario Ware Inc is what a game would be if it had add. And it’s so much fun. Sports games are actually fun to play. It’s not just the nth iteration of the franchise series with slightly better graphics and identical gameplay.

    2007 is definetely going to be the year of Nintendo.

  6. 6 million units of Wii. Microsoft claims they’ll sell 15 million units of 360. Even if they sell half of that, it’s 7.5 million still higher than Wii. I doubt we can speculate at this. We just have to wait.

  7. Nintendo is by far my favorite console system, because that’s what I grew up on. Sure I like Xbox360, but until they get the “friendly” feel of Nintendo (and a few Mario and Zelda games), I’m stuck with Nintendo as a favorite.

    With that said, I play about 2 hours per month of N64, while the GameCube collects dust. I’m thinking about bringing the NES or SNES back out…

    Oh yeah, regular Xbox is good for something – playing SNES/NES roms ;)

  8. I appreciate Nintendo’s alternative approach to gaming. As nice as the Xbox 360 games look, I still have more fun with my old GameCube games. Nintendo’s focus on multiplayer gaming, reverse compatibility, and games that appeal to lots of people keeps me as a loyal fan. I’ve actually gotten my mother-in-law to play GameCube with me, and now she loves BrainAge. And I won’t deny that the reasonable price tag on the systems and games are quite appealing, too. I think the other manufacturers need to realize that expensive first-person shooters can only get them so far.

    However, I think we all have to admit that “Wii” is truly the worst name ever. I think I’m going to keep calling it the Revolution.

  9. “an educational game, for God’s sake”

    that quip basically sums up the mentality of the legacy game industry, and why Nintendo has been sucessful because they have been able to think outside that box (compare and contrast to PSP, which is struggling).

    I’m sure the traditional core M1 audience for games isn’t about to disappear, but Nintendo has shown there is a market beyond these boys and men, if only there were games which appeal to the masses outside the gamer community.

    I guess this is another example of the echo chamber effect and how that has affected both PS3 and XBox360 strategies. Granted, the market is plenty big enough for at least the dominant player, but if they saw the big picture (as Nintendo appears to be doing), they’ll see plenty of blue ocean to claim.