The expense of developing games for the Sony PS3 and the Microsoft Xbox 360 will help Nintendo who are currently the #1 games console manufacturer in the world running into the peak buying period.
With his gaming consoles sitting on the top of the market, Nintendo’s Reggie Fils-Aime thinks his rivals have erred in choosing a path of developing expensive devices that game makers find difficult — and expensive — to develop content for, the president of Nintendo in the USA said in a briefing to investors in New York this week.
Now into the peak buying period, Nintendo is looking to make further headway on the runaway success of its Wii console. Launched a year ago, the Wii has managed to outpace sales of both the Sony PlayStation 3 and the problem plagued Xbox 360 from Microsoft this year, with the company barely able to produce enough boxes to meet demand.
The Wii, with its motion-sensor controller, was designed to appeal primarily to those outside the current video game audience, who are often put off by the more complex games that appeal to the market’s core user.
At a conference sponsored by BMO Capital Markets, Fils-Aime compared his company’s approach to that of his rivals, who have spent heavily to develop cutting-edge machines that sport superior graphics but are priced too high for all but the most dedicated gamer.
“The challenge that our competitors have is significant. They’ve gone down the path with building expensive machines that they lose money on. They’ve gone down the path with games that are hard to develop,” Fils-Aime said in response to a question from an audience member.
“They’ve put themselves in a box. I don’t know how they’re going to get out of it,” he said.
However, Nintendo is likely to face tougher competition this year. The Xbox 360, despite its failure problems, has seen a boom in hardware sales thanks to the launch of the hotly-anticipated “Halo 3” in late September.
The game sold about 3.3 million units in the USA and over 200,000 units in Australia and is expected to remain a top seller for the holiday season. And because “Halo 3” is exclusive to the 360, the console also saw a surge in sales, moving more than 527,000 units in September, according to data from NPD Group.
That proved to be the first month that 360 sales topped the Wii, which moved 501,000 units during the month.
The 360’s ability to sell games was touted at the same conference by Mindy Mount, chief financial officer for Microsoft’s entertainment unit. In her presentation, Mount noted that the 360 sells more games per unit than the Wii or the PS3. This helps engender the loyalty of third-party game makers such as Electronic Arts to develop titles for the console.
“If you look at the leading indicators, all leading indicators would say that this is the platform that’s going to have all the games because this is the platform that sells all the games,” Mount said. Sony, which did not participate in the conference, may also see increased business this year. The consumer electronics giant cut back the price on its PS3 — which initially sold for around $995 — to $695 last month.
“We are confident that our new $699 price point, great new games and new and exciting advertising campaign will go a long way in helping to further accelerate momentum for PS3 as we head into the ever-important holiday buying season,” the company said in a statement.
Game quality a major focus
Besides game hardware, Nintendo also competes with other game publishers. Most of the popular titles for its systems are developed in-house, including franchises based on popular characters such as Zelda, Donkey Kong and Mario.
Later this month, the company will release “Super Mario Galaxy,” the most anticipated new title for the Wii platform for the holiday season. Early reviews of the title have been strong, with the title scoring a Metacritic rating of 96 — which would make it the highest rated game for the console to date.
In her own presentation, Microsoft’s Mount pointed out that the 360 has the greatest number of game titles with 90-plus ratings. According to Metacritic’s Web site, there are currently 11 360 titles with ratings equal to or above 90, compared to four for the Wii and two for the PS3.
“When competing for the core-gamer demographic, there is absolutely no substitute for quality,” said Brian Farrell, chief executive of game publisher THQ in his own presentation at the BMO conference.
Last month, THQ disclosed to investors that it was shifting a handful of titles to the next year because it wanted to ensure quality of the titles after two of the company’s high-profile releases — “Stuntman” and “Juiced 2: Hot Import Nights” — failed to perform to expectations because of quality issues.