Thursday, April 09, 2009

Wall Street Journal Cites Weakening Sales for Nintendo In Japan

The Wall Street Journal, following news of slowing sales for the Wii and Nintendo DS and a boost in "hardcore" games sales in Japan, says Nintendo is "beginning to look vulnerable" after years of success.

The Journal is referring, of course, to the most recent sales data from Japan, courtesy of sales trackers Enterbrain and Media Create, who show that Sony's PlayStation 3 has started to gain some ground against the Wii, where the contest between the Nintendo DS and PSP is a little more even.

While Sony's monthly domination of Nintendo on the console front may be temporary, video game sales declined in Japan some 18% last year, in contrast to another year of growth for the industry in the United States. Nintendo president Satoru Iwata chalks that up to a weaker market. And it's up to Nintendo to do something about it.

"The Japanese market is not very strong right now overall," Nintendo president Satoru Iwata said in an interview with the publication, presumably while wearing an energizing leather blazer. "So we need to do something to re-energize it."

As the Journal points out, sales trends in Japan often, but not always, foretell similar trends in the West, a market that Nintendo is still seeing massive success competing in.


Here's a snippet:

What's more, Japan tends to be an early indicator for global consumer trends. Japanese consumers were at the forefront of the shift to casual games. Unconventional titles for Nintendo's handheld DS machine, such as Brain Age and Nintendogs, first became hits in Japan and the market is still seen as an early testing ground for new concepts.

"The usual idea is that whatever you see happening in Japan, you tend to see overseas two to three years later," said Hiroshi Kamide, an analyst at KBC Securities in Tokyo.

Sachiyo Kaneda, a 43-year-old housewife in Tokyo, bought a Wii for her two sons nearly three years ago. Her boys, now 12 and 7 years old, played the Wii often at first and constantly asked for new games.

However, in recent months, the boys have stopped asking for new games. The younger boy still plays with the Wii, but the elder son is now asking for Sony's PlayStation Portable, a handheld with games geared toward more traditional gaming fans.

"Maybe the Wii's software, designed for families, is not as exciting," said Ms. Kaneda about her elder son's request for a PSP.

While Nintendo's Wii has far outsold rivals and continues to be the top seller outside Japan, sales of Sony's PlayStation 3 surpassed those of the Wii in Japan last month. Sony sold 146,948 PS3 consoles for the month, while 99,335 Wii units were sold, according to Enterbrain. Microsoft sold 43,172 Xbox 360 consoles.


I haven't been following Media-Create sales that much lately; I'm surprised that the Playstation 3 is now doing well over in Japan. That's a good trend for fans of hardcore games, at least we're not just going to see more and more casual games in the future.

While I understand the need for casual games to attract new gamers to the hobby, it's the hardcore games that keep the industry alive. If every game made from this point were casual, the market would lose sales from hardcore gamers, who are clearly loyal and buy again and again (thus sustaining the market). Usually casual gamers buy a system for one game (case in point: Wii Sports) and that's that; they'll rarely buy more games because gaming is not really their hobby. A focus on casual games could actually cause another video game crash, much like what happened in the 80's, where the market was flooded with poorly designed games and games which were just carbon copies of other existing titles.

In a way, it's Nintendo's fault for being complacent and ignoring the market that keeps on buying games. They could have had a more balanced approach to their releases, but lately they're really focused on making games for non-gamers. I believe it's entirely possible to have games for every market on one system (both casual and hardcore). This approach is more inclusive, and helps grow the market; while at the same time, continuing to sustain more 'hardcore' game titles keeps the industry alive thanks to repeat sales from experienced gamers.

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