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Nintendo "underdog" could bite Sony, MS back

Mario the Xbox, Sony killer?
Tue Feb 25 2003, 11:22
Pic-copyright-nintendo CONSOLE MAKER NINTENDO might well be the underdog in the fight for market share with Sony and Microsoft, but underestimating it is a big mistake, according to market research firm DFC Intelligence.

In a 600 page report, Market Leaders in the Video Game and Interactive Entertainment Industry, DFC Intelligence says that Nintendo's $4.6 billion in revenue makes it second only to Sony at $8.2 billion in the video game industry in 2002.

And because Nintendo is a cautious company which always looks at the bottom line, it beats even Sony on profitability, and has a record of top selling video games, sitting on a cash pot of $7 billion.

But that cash pot might well be needed, the report adds - by concentrating on short term earnings, it may well have taken its eye off the ball in terms of long term strategy.

Nintendo failed to realise that grown ups are now playing games in big numbers, and has only recently shifted to that realisation. And as far as online games go, it's nowhere found.

But even for games in the eight to 14 age group, Nintendo faces increasing competition - particularly so as kids like Grand Theft Auto III, even if their parents don't like them playing this kind of game.

And Nintendo's market share in the portable market is bound to slip, according to DFC Intelligence, although perhaps the Nokia N-Gage may give it some additional share.

Despite these downs, the report says that Nintendo is still relevant, despite it losing market share, and describes the firm as a "video game powerhouse". Console firms can always re-invent themselves every five years, the report reckons.

Nintendo is likely to release a successor to the GameCube and unlike Sega, which surrendered, has the cash to put up a major fight. It just needs a strategy. But the firm will aggressively slash prices and is cooperating with some major Japanese firms including Namco, Square and Capcom, again. µ

DFC Intelligence


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