Topic: Analysts Recommend Nintendo Turn Third-Party

[WindyMan]

The numbers never lie.  Also, analysts recommend that pigs should fly in the very near future.

Strategy Analytics: Nintendo Likely to Lose GameCube Gamble

Microsoft's XBox Will Gain Ground In This Year's 36 Million Unit Console Market

LONDON--(BUSINESS WIRE)--Feb. 25, 2003--The number of users of advanced games consoles soared by 128 percent in 2002, reaching 56.3 million worldwide, according to the latest research from Strategy Analytics' Broadband Entertainment Strategies service. 75 percent of users own Sony's PlayStation 2, compared to 13 percent with Nintendo's GameCube, and 12 percent with Microsoft's XBox. Forecasts suggest GameCube will lose ground during 2003. According to the analysts, Nintendo could build a leading position in the $12 billion software market, but it must first abandon its present console strategy.

Global sales of advanced 128-bit consoles reached 32.9 million units in 2002, according to the research. PS2 was the choice of nearly 70 percent of buyers, while the remainder was split evenly between GameCube and XBox. Total sales of all platforms in 2003 are predicted to reach 36.2 million units, but GameCube's sales are expected to fall by 4 percent in 2003, while XBox sales will rise by 12 percent. Key drivers of this trend are XBox's growing software library, its clearly defined online gaming strategy, and Microsoft's substantial investments in the platform. By contrast, the GameCube's online strategy is unclear, and its support from publishers appears to waning.  

Strategy Analytics recommends that Nintendo abandon its traditional console-exclusive software publishing strategy and publishes its games across multiple platforms. The company stands to lose relatively little, while gaining access to an additional 77 million console owners during 2003.  

"Nintendo is missing out on the current generation of games players," says David Mercer, VP of the Strategy Analytics Global Broadband Practice. "Culturally it will be difficult for the company to change course, but it must do so in order to secure its long-term position as a leading games publisher."

[RickPowers]

Before this is taken the wrong, way, I'm going to echo my comments from the news story on PGC.

No mention of the fact that Nintendo makes a great deal of money through the licensing fees to make games on it's console either, something it would lose out on by leaving that market.

Most importantly, this article focused solely on SALES, not profitablity, where Nintendo leads. It also ignored Nintendo's stranglehold on the handheld market.

There is a lesson to be learned here. If these analysts knew all the answers to these questions, why aren't they running multi-million dollar successful companies? Because those that can, DO. Those that can't, play armchair quarterback.

On a side note, it's also worth noting that this report came from Europe, where Nintendo is having a particularly hard time, so of course, the sentiment from that part of the world is going to be more "doom and gloom" than is accurate for the rest of the world.
 

[Ian Sane]

Okay so a news item about how Nintendo is making more money than anyone was just posted on the site and analysts are recommending that Nintendo go third party.  Does anyone else think that doesn't make much sense?  If Nintendo is making good money with what they're doing why change it?  Sega went third party because they were in a money pit.  That's not the case with Nintendo.

Plus ignoring the GBA makes this whole "analysis" completely useless because it doesn't represent reality.  If Nintendo only relied on the Gamecube then they would be in trouble but they don't so the situation is completely different.

"GameCube's sales are expected to fall by 4 percent in 2003, while XBox sales will rise by 12 percent."

What is this based on?  What hot selling title is coming to Xbox to make it's sales rise so much?  The problem with these analysts is that they don't know anything about games.  A major title (Final Fantasy VII, Sonic the Hedgehog, Donkey Kong Country) can change console sales considerably.  If sales trends were all that made a difference then surely the N64 would have been top dog because it's sales were huge during it's first year.

[Sean]

The old adage "Everyone's a critic," seems to have just been changed to "Everyone's an analyst."

[Hisao]

Quote
Originally posted by: RickPowers
Before this is taken the wrong, way, I'm going to echo my comments from the news story on PGC.

There is a lesson to be learned here. If these analysts knew all the answers to these questions, why aren't they running multi-million dollar successful companies? Because those that can, DO. Those that can't, play armchair quarterback.

q]

O so true.

[Fammy2000]

How long have people forecasted doom for Nintendo? Since the SNES days. Nintendo made it through that. The N64 days? No way would they make it with a cartridge format. They outlasted the Dreamcast. Gamecube? XBox is going to claim second and send the GC packing. We'll see but unlikely. History would have to say that Nintendo's going to make it. Being profitable isn't a new secret business concept.

I could also add that the Lynx/Game Gear spelled doom for the Black and White Game Boy (I loved that thing!).

Is there anyone that believes this forcast?

[z0gster]

Does anyone else think it's ironic that they said "The number of users of advanced games consoles soared by 128 percent", when the advanced games consoles all have 128-bit graphics?  Just pointing that out, I thought it was pretty funny.

[Byron]

Hmmmm your article says that the GC has 13% of the market while XBox only has 12%.  I guess the GC is still in 2nd place worldwide.

[Ian Sane]

"Does anyone else think it's ironic that they said 'The number of users of advanced games consoles soared by 128 percent', when the advanced games consoles all have 128-bit graphics?"

Considering that's not irony no I don't.

[GaimeGuy]

And now we will hear  idiots screaming even LOUDER "NINTENDO SI GIONG THRID PARTEY!!!111oneoneone"  :/    Oi...  Has profit  become irrelevant in the eye of "analysts" or something?  

[GregHead]

IMO these analysts don't recognize a "niche" when they see one. "If you're not selling the most crap, join another company". XBox is a fine console, but N is making  Way more money than M$, so this report is a waste of webspace I'm not defending Nintendo, I'm just speaking the truth.

[Perfect Cell]

It might be half trues or lies or Microsoft sponsored crap, but the problem with articles like this is that it HURTS Nintendos image, Nintendo doesnt need to have companies calling it to leave the console wars, people will way, oh look Nintendo will go the way of Sega, why should i spend my hard earned money on a Gamecube now? Bad Press is Not  good in the Videogame console wars, Nintendo needs to fight back with their own sponsored propaganda to fight back this crap cause im sick of it! I want Nintendo to stay in the console buisness!

[ThePerm]

do you know how easy it is for people to have their opinions changed....hella easy. see wrestling. People are loved one minute..hated the next.

[mouse_clicker]

It pisses me off every time someone uses the "Nintendo makes more money" ploy when they realize Nintendo's sales are dying. You wanna know WHY Nintendo makes more money in videogames than any other company? It has nothing to do with "family values" or lack thereof- it's the GAMEBOY! The Gameboy, now with the Wonderswan being dropped by Bandai, has almost literally NO competition. The GBA is the fastest selling console in history and I believe it's matched the PS2 although being out for a year less. Just about *everybody* has a Gameboy of some sort, whether it's the original, Color, or Advance. Developers would have to be crazy to ignore this GIGANTIC user base, so they develop a ton of games. Most of them suck, but Nintendo gets licensing fees on every single one. THAT'S how they make all their money. I bet Nintendo's profits from the Gamecube are a joke when compared to the profit from the GB/A. I'd also bet Sony makes a LOT more off of the PS2 than Nintendo's making off of the Gamecube, and soon MS will be making more off the XBox or it's predecessor. Get it through your thick skulls, people, that Nintendo's money does NOT come from the Gamecube. Just because they get a bunch of money off of the GBA doesn't mean they're gonna pour all that money back into a console that's making very little profit. If Nintendo intends to keep it's home console *alive*, it had better learn that 3rd-parties are what matters. Nintendo can continue making their top-notch 1st and 2nd party games, but they need to hunt down 3rd-aprties as if their success depended on it. If you look at any very popular home console, there's one major trend- IMMENSE numbers of 3rd parties. This holds true for the Atari, the NES, the SNES, the Genesis, the PSX, and now the PS2. All had incredible 3rd-party support. In comparison, the Saturn and N64, for example, did rather poorly and had very little 3rd-parties (and don't try to tell me Nintendo made more money in the N64 era than Sony- nearly all of that was from the GBC). Nintendo needs to diligently grab 3rd parties, preferrably 3rd parties with VERY big selling franchises. That's not to say Nintendo needs to drop their mantra of quality, they just shoudln't elt that mantra interfere with getting 3rd-parties (because licensing is really where all the money is made). Luckily they're attracting some big name Japanese 3rd parties (Namco, Sega, Capcom), but they need more western developers (Rockstar, EA, etc). I've heard rumors Nintendo has some sort of deal with EA, but I don't nkow how much truth there is to it.

Oh, and in terms of sales, I believe Nintendo's 3rd everywhere except for Japan, in both consoles and software.  I could be wrong though.

"There is a lesson to be learned here. If these analysts knew all the answers to these questions, why aren't they running multi-million dollar successful companies? Because those that can, DO. Those that can't, play armchair quarterback."

And if you're so sure they're WRONG, Rick, why aren't you running your OWN multi-billion dollar company? To know that they're wrong, you must know what's RIGHT, and yet you work for a *free* Nintendo fansite, Rick, while blindly defending a business that is obviously fumbling in the home console market. I'm not saying Nintendo's doing *bad*, but they could be doing so much better. At the momemnt, Nintendo's an underachiever if I've ever seen one. While I do think that it's not our place as gamers to really worry about sales statistics and of the such, I also don't think we should be *denying* that in terms of home consoles, Nintendo has been digging itself into a hole with grossly incompetent marketing and business recently, and have only recently started climbing back out.

[RickPowers]

Cross posting is against the rules, mouse_clicker ... you know that.  And to repeat what I told you in the other Talkback thread, this arguement keeps coming up because it's TRUE.  Nintendo makes more money on GameCube than Sony does on the PS2, period.

And I'm not blindly defending anyone.  There's nothing blind about it.  I'm one of the few people you see writing about Nintendo and videogames that's been involved in all aspects of the business, and I understand it better than most.  I can speak from a position of authority because I KNOW.  The point of posting this article at all was to illustrate that "analysts" are usually making their assumptions and recommendations based on partial, and sometimes completely untrue information.  I know Nintendo's business better than any fansite, better than most "professional" sites, and better than most analysts.

The problem here is that some of these analysts got their jobs covering the "internet tech boom", where sales were more important than anything.  Most of them haven't shaken that mentality and gotten back to the basics.  Sales are not the end all, be all of a sucessful business, as all of the failed "dot coms" will tell you.

Most importantly, they all forget a MAJOR facet of the business.  Nintendo has ONE core competency ... GAMES.  Sony and Microsoft can afford to take losses to compete because they have other businesses they can fall back on.  Windows and Office subsidize everything at Microsoft.  Likewise with Sony, they have other areas that can help out.

Fact is, the numbers don't lie.  Only counting HOME CONSOLE SALES, not handheld, Nintendo made half as much on sales, but still made more money than Sony.  Argue that point all you want, but it's there in black and white.  Sony is outselling Nintendo six-to-one, and still can't beat Nintendo on profitability.  Say anything you want, but Nintendo is doing something RIGHT.  

[Azule]

How does this profitability benefit shareholders? can you tell me if this is only going to Nintendo's pocket?

[RickPowers]

The only place profitablility ever benefits a stock holder DIRECTLY is if the company issues dividends.  I don't beleive Nintendo does.  However, a profitable company is attractive to stock holders, and that alone makes the stock price rise, which does benefit the stock holders.

[Perfect Cell]

Sorry Rick but  i disagree. Nintendo isnt doing something right. If they were Nintendo would be Number 1 or at least number 2 in USA/Europe alongside Japan.  The fact is Nintendo is having problems. Why have we seen the string of third parties jumping ship? Why do we constantly see third parties release their games first or only on the other two consoles? The  fact is todays gamer i not the gamer of SNES days.  I remember the SNES days, Nintendo would get everything first on its console. Capcom released their best versions of its games on the SNES, Konami was a strong supporter, and it was arguably the best console for RPGS in a loong time. But the SNES is gone. The president of Sony said this generation isnt the NES generation its the Playstation generation, and by golly hes right. Sony is "pop" right now. Nintendo isnt. Steve Kent whose a RESPECTED analyst not these other analysts in this two bit BUSINESS WIRE magazine, said Nintendo is stuck in a hard place, Too Kiddy for the Adults but not Adult for the Kiddies. Its a damn shame. Nintendo WILL have to adapt its self to the new gamers to be able to survive, and by Miyamotos last interview it seems they are reluctant to do this. They also need to give out money for bettter third party support. You need to spend money to make money, finally they need new marketting and propaganda, also an adult Nintendo official magazine with demo disks could help

[Bloodworth]

Well, he said they were doing something right, not everything right.  It's true that Nintendo is not marketing as well as they could be and that they don't have the largest percent of the market, but the whole point we're trying to get across is that it doesn't really matter.  If they're still more profitable than Sony and they continue to make great games, then there's no reason to cater to the masses.  

People saying that Miyamoto needs to make different styles of games are just not thinking straight.  Miyamoto didn't get the status he has today by making games that copied other designers or fit perceived market wants, he is a creator and he has the freedom to create pretty much whatever he wants.  If you pushed him to fit a certain mold, chances are that he'd lose some of his passion and produce less than his potential.

[MikeHrusecky]

So... it's "right" to be in whatever market position is subjectively acceptable in terms of console penetration, even at the expense of profit? Nintendo's goals might not be what YOU want them to be, but how can anyone argue with black ink success? What makes Nintendo's goal of profitability wrong, and Sony's goal of penetration right?  

[RickPowers]

EXACTLY, Mike.  Thank you.

[Perfect Cell]

When the Gamecube launched Tech TV did say that because of eliminating DVD playback, and smaller less expensive parts, they would make more money  by the console. They made the comparison to selling Razors and Razor blades, normally a Company doesnt make money on the Razor(Console) they make money on the Razor Blades ( Liscensing fees to games) but they said the gamecube would be different since they were also making money with the Razor/Console.

That doesnt excuse nintendo for not changing. They need to evolve and adapt to the new gamer. Hardcore gamers who really like Mario and Metroid are a dieing breed. The new gamer is the maintream gamer, they buy games like DBZ Budokai, and Ty the Tasmanian Tiger.

Im not so sure the Gamecube is more profitable than the PS2, the PS2 has sold so many consoles, if im not mistaken its in the 40-50 million mark that they are making money now. The Xbox is selling at a loss though.


I never said Miyamoto should sell out and make a new Japanese GTA, God knows im a huge Miaymoto fan now, I thought Pikmin was a work of genius. But Miyamoto=Nintendo, what Miyamoto belives is probably what Nintendo belives. Nintendo needs to realize that they can add more violent games yet still make Mario.  

[MikeHrusecky]

If you're unsure of profitability, see the other news article on the site, and it's corresponding thread. Nintendo is the most profitable, hands down.

[RickPowers]

That's the problem with the Internet.  People sound off without having all the information, even when the information is there to be had.  It's fine to want Nintendo to be number one in sales.  That's great.  It's not like they aren't making money doing what they're doing, and they're pocketing more of it than anyone.  I fail to see the problem?  It may not make them the darlings of the media like Sony or Microsoft, but you can't argue with a bank balance.

[Perfect Cell]

Must be im some ignorant net user then.... Thats ok, then tell me why did both McDougal and Iwata have to talk about how they are not leaving the console buisness. If things were trully "all right" they wouldnt have to awnser these questions.