Here's a surprising bit of corporate honesty for you. During BusinessWeek's coverage of the Xbox 360 price cuts (which hit this week), Microsoft Senior Vice-President of Interactive Entertainment Business Don Mattick came right out and admitted that even with the price cuts, it was very unlikely that the 360 could outsell the Wii on a worldwide basis.
Luring such gamers should keep Microsoft ahead of Sony, though even Microsoft's top Xbox boss acknowledges the company is unlikely to catch up to Nintendo. "I'm not at a point where I can say we're going to beat Nintendo," says Don Mattrick, senior vice-president of Microsoft's Interactive Entertainment Business. Indeed, Nintendo is likely to run away with the lead in the current generation of console gaming, leaving Microsoft and Sony to battle for second place. Microsoft's lead over Sony, coupled with the changes it's bringing to the console, positions it to secure that spot, Mattrick says: "We will sell more consoles this generation than Sony."
Gamasutra has the good word today about Nintendo's profits, and the word is very good indeed for Nintendo. This Q1 alone Nintendo's sales were up 24%, resulting in single quarter profits of $992 million dollars.
This may sound dramatic, but actually it's down a little from Nintendo's ridiculous performance around this time last year. The big difference is that demand for the Nintendo DS has stalled significantly in Japan, although sales are still very healthy in less saturated territories. Software sales for the DS are way, way up, so everyone who has DSes are still using them.
Wii sales are also way up over this time from last year, due to worldwide supplies of the console meeting demand more adequately. Software sales are consequently way up, with Nintendo citing Mario Kart Wii and Wii Fit as top sellers. Sales of non-bundled Wii Sports in Japan and worldwide sales of Wii Play remain strong.
The only surprise for me here is Mario Kart Wii's performance-- after the tepid fan reaction and mixed reviews, I wasn't expecting it to do so well.
Mario Kart Wii
So, who actually buys licensed games? Folks who write about games mostly hate them. I'd be surprised if many of my readers didn't hate them. Yet apparently licensed titles are some of the most reliable moneymakers in the industry. This financial report from GameSpot has the lowdown:
THQ noted in its report that games based on its three biggest brands--World Wrestling Entertainment, Pixar, and Nickelodeon--accounted for 54 percent of its net sales over fiscal 2007 and fiscal 2008. The same trio accounted for 47 percent in fiscal 2006. ...
Having sold off its internal development studios, fellow publisher Atari is also leaning more heavily on licensed games, specifically Dragon Ball Z. According to its annual report, Atari garnered more than 49 percent of its annual revenues for fiscal 2008 from Dragon Ball Z, compared to 45.7 percent in fiscal 2007.
Are casual gamers using big brand names as assurances of quality the way more hardcore gamers follow developers and publishers? I can't think of any other explanation.
An avalanche of reports from a Nintendo analysts meeting earlier this weekconfirm: chances of a 2008 price cut for the Wii or DS are low. Then again, with 25 million Wiis and 70 million DSes out there and persistent supply shortages for both, why bother? With Nintendo's profits up almost 50% from fiscal 2006, Nintendo hardly needs help clearing out its warehouses.
Now, I'm curious: were any of you readers out there actually expecting Nintendo to drop prices in 2008? Were you waiting for the Wii or DS to get a little bit cheaper before you took the plunge? I'm betting there aren't many of you, as compared to people hoping for a cheaper 360 or PS3 in 2008.
I try not to look at NPD sales figures too hard, or too often. Oh, sure, you need to generally know which console's sales are rocking and which are generally lagging, but if you study games sales numbers in depth, you can only leave knowing one horrible lesson: for the most part, good games don't and won't sell. Crappy games based on G-rated flicks like Happy Feet sell. Franchises and sequels sell. Knockoffs of other things that sell sometimes sell even better. If you like to think you're doing some sort of favor for the world by recommending the best and most interesting games, NPD numbers are a depressing bucket of cold water in the face.
That said: in March, it happened that Nintendo sold. Sold like freaking crazy. So just this once, I'm going to take a look at Next Gen's NPD numbers round-up, by alliterative video game statistics guy Matt Matthews. Check behind the cut for a synopsis of the Nintendo-relevant facts n' figures, since the actual piece is quite long and talks about all kinds of things we don't care about here.
Super Smash Bros. Brawl
The Wii is not a good console for multi-platform titles, usually combining low-end graphics with half-baked use of the Wii Remote. That doesn't stop the odd title that really resonates with the Wii audience, like Activision's problem-plagued Guitar Hero III, from selling well. Still, doesn't it hurt the Wii when a big game like GTA4 is coming up and there's no SKU for the system?
... well, I guess not. The chart above, courtesy of financial site Seeking Alpha, shows Compete's estimates of people shopping online for the system mapped against the NPD sales figures for each month listed. You'll notice that even hot first-party titles like Brawl or Mario Galaxy don't really generate demand spikes. They may gently increase actual sales on occasion, but the Wii itself generates demand, and usually sells at roughly the pace that Nintendo can manufacture the units. For that matter, overall demand for other consoles doesn't seem to be directly tied to any particular piece of software.
Food for thought, anyway.
So what do the slashed analyst expectations for Nintendo in 2008, reported earlier, really mean? Here's another conflicting piece of the puzzle: right now Reuters is reporting that Nintendo's stock price has surged past Canon and is now the second-most valuable stock on the Japanese market, behind Toyota.
"At the Tokyo Game Show last week, Nintendo wasn't there officially. But there were a lot of software companies who are dedicating software to Nintendo platforms," KBC Securities analyst Hiroshi Kamide said.
"I think it's reasonable to think that this Christmas Nintendo strategy of catering to both core and casual gaming markets will succeed again."
It seems like KBC's calling for Nintendo to peak and start going downhill soon, or at least flattening out. At the same time, a Nintendo slowdown doesn't seem likely until 2009 given this kind of enthusiasm.
Part of Nintendo's success with the Wii and DS has been glowing investment recommendations and soaring stock prices. A few pundits worried that Nintendo had gotten overvalued, and it seemed it had. Shortly after announcing its record high earnings, Nintendo's stock value took a 10% dive on Monday. From the Reuters coverage:
"This has little to do with the company itself, but a lot to do with market sentiment," said Mizuho Asset Management fund manager Yoshihisa Okamoto.
"In the current market environment, investors rush to sell at the first sign of negative developments or exhaustion of positive news."
Shares in Nintendo fell 9.7 percent on Monday, hitting their downward daily limit of 46,800 yen and extending their losing streak to a third trading day.
Nintendo's hot streak started roughly two years ago, shortly after the Wii launched and became a hot commodity. There's been a lot of speculation about Wii-mania cooling off in Japan, and this may be proof of that happening.
Nintendo finally revealed its yearly earnings yesterday, and they are huge.
Nintendo's profit for the first nine months of the fiscal year nearly doubled from the previous year, propelled by booming sales of its hit Wii game machine, the company said Thursday.
Nintendo expects to sell 18.5 million Wiis and 29.5 million DSes through March 31st of this year. This would put total DS sales ahead of total GBA sales unless demand slows down.
The news was so positive that it caused Nintendo's stock price to immediately jump upwards 5%.
Bloomberg suggests that part of Nintendo's monstrous profit is coming from the current strength of the yen on the global market. Reuters also mentions cutbacks on advertising expenditures.
Portable Video Gamer has a yearly breakdown of Nintendo DS sales in 2007 up, and wow are they huge. The DS, like the GBA before it, is quickly surpassing other consoles and portables to become the world's most popular gaming system.
The official numbers are in, and the DS had a tremendous year in terms of sales and market expansion. By the end of last year, the system was just shy of selling 65 million units worldwide. 2007s second quarter saw a significant jump in sales, surely aided by the Pokémon craze. As good as that was, however, the holiday rush and the popularity of titles such as Zelda: Phantom Hourglass and Mario Party DS gave the DS its best quarter sales ever, going above 11 million systems sold in a three-month period.
PVG thinks the DS might hit 100 million units sold in 2008. If it doesn't, it may only be manufacturing constraints that keep it from doing so. If the Q4 craze is spilling over to Q1, then that probably explains the sudden shortage of DSes.
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