Nintendo's Iwata On GameCube Sales, Future Plans

Thanks to 1UP for its article covering a recent interview with Nintendo president Satoru Iwata, in which he discusses "Nintendo's current state and its plans for the future in what will be a critical year for the company." Iwata seems to be confident in Nintendo's "..current target of 6 million GameCube consoles sold worldwide in the current fiscal year, which will conclude in March", and also notes that he believes the China-launched iQue "will grow into a major business in three to five years." Finally, Iwata has comments about the mysterious new Nintendo device due to launch at E3 in May, suggesting he "doesn't necessarily expect this product to be an immediate hit upon its announcement - he's prepared to see a lack of applause from some of the audience."

Comments

Re:visual adolescent non-gender specific entity DE

[PainKilleR-CE]

I'm pretty sure that he was referring to the Japanese game industry when talking about a decline. Since this is actually just 2 interviews translated and chopped up, it's hard to say whether or not that was clarified, but at the same time since the interviews were conducted in Japanese mags, it's more likely that the context of the interview would be enough to justify the lack of clarification.

Anyway, the article does state:
Elsewhere in that same interview, Iwata reiterated his confidence in meeting sales targets for GameCube hardware, but was more pessimistic about the general fortunes of the Japanese games business. In the Japanese market, he said, sales of hardware have been declining over the last three years, and though software sales have been able to cover up that decline in the past, that's no longer possible now. While the overseas market still has a passion for playing games, Iwata explained, that's not the case in Japan, although Nintendo plans to play an important role in revitalizing the market in the coming year.

If you look at earlier portions of the article, he states that Cube sales doubled in Japan, but more than doubled in the rest of the world, showing that there's still a market in Japan that will respond to price drops, but unless the price drops were not as significant as elsewhere, it also shows that the market isn't as interested in the industry (of course, other economic factors are at work, as well).

Looking at Japanese sales figures for 2001, 2002, and 2003, you can see some trends such as more games selling over a million units in 2003, but the top-selling game for 2003 sold fewer units than the top-selling game for 2002, and the top-selling game for 2002 was the #2-selling game for 2003.

Overall, games seem to stay in the weekly top-selling lists for either a fairly long period of time or a very short period of time, with little falling in between. In other words, they sell extremely quickly to their core audience and probably receive mild reviews or little attention from those outside that core audience and disappear after the first week or two on the charts. Games with broader appeal and a more well-known name seem to stay in the charts indefinitely, even on fairly moderate weekly sales, as only new highly-awaited titles will shoot up the charts.

To put it another way, how good is the market when Pokemon Ruby & Sapphire was #1 in 2002, beaten out of #1 by FFX-2 in 2003 (by a small margin), and is still in the top 15 on the weekly charts a little over a week ago? Good for Nintendo to be able to maintain a title to almost 5 million sales in the Japanese market and hold the charts for 2 years, but everyone's released plenty of titles since then, and the North American charts reflect a much more friendly environment for new games, and a more moderate timeframe for successful games to stay on the charts through continued sales.

All of that being said, there could be some other more blatantly obvious explanation ;)

Re:"games have stopped selling"?

[Zangief]

This guy must have shot out of some sort of bizzare-o world. I mean, Nintendo may be having a rough generation, but the rest of the industry seems to be just fine, and the overall numbers are still always better than last year.

You must be looking at EA/Vivendi numbers, who have no problem in releasing the same games every year, with small modifications. If somehow they stumble into some innovation (GTA), they will quickly make the creators release a new edition every year.

Out of that, every succesful gamehouse (blizzard, ID, Valve) has a strict set of games they know will be a success, and they stick to that. Innovators die slowly, but they die.

Re:"games have stopped selling"?

[fireduck]

This guy must have shot out of some sort of bizzare-o world. I mean, Nintendo may be having a rough generation, but the rest of the industry seems to be just fine, and the overall numbers are still always better than last year.

not true. according to this random article, "Game sales, meanwhile, shriveled 9 percent to 336.7 billion yen." (when compared to the previous year, i presume). Combined with a 33% decline in console hardware sales for the year, mentioned in the article, the video game industry in Japan is going through hard times. Especially relevant given that no new hardware is planned for release for at least another year or 2... (i.e., hardware sales are only going to get worse.)

Re:"games have stopped selling"?

[nelsonal]

The investigation regarding Take-Two is about a fairly obscure bit of accounting, although it's common to the game industry. You have to understand that in the game industry retail stores are allowed to return unsold merchandise (or get a credit to mark them down). Well more than half the years sales occur in the months of November and December, and game makers would rather have some unsold merchandise returned than run out halfway though black friday. As a result, when game makers book a sale to the store, they are required to estimate how much product will be returned (and subtract that amount from the sales the just recorded. ie 100million copies of Madded 2004 go out, we figure that 5 million will come back, and so we shiped 100 million copies, but only record as sold 95 million copies. As you can guess this is still pretty much a black art, but there are some guidlines (how much got returned last year). Since the product is not returned until January (into the next quarter) a tactic that some companies use to appear to sell more than they really have is to under reserve, in the above example book 97 or even 100 million copies as sold. Then take the hit in March long after anyone cares, or you ship that really cool game that was late, so no one notices, or something else. However the wheels of justice turn slowly, I believe this case dates back to revenues recorded in the PS1 cycle.