Analysts Fear For Nintendo

Market analysts in the UK have warned that Nintendo is likely to suffer in the current economic climate.

Nintendo's shift towards the casual gamer market has undeniably put the company in the lead in the current generation of consoles, but now market analysts fear that this may put the company in an unfavorable position as the global economic situation worsens.

Piers Harding-Rolls, an analyst for media business research company Screen Digest, expressed concerns at the sustainability of the casual gaming market. "We are not sure how the recession will affect the buying habits of these new, more casual mainstream consumers. These consumers are more likely to view gaming as a discretionary luxury," he said.

Nick Gibson of Games Investor Consulting, echoed Harding-Rolls predictions, adding, "As the market has become more casual-gamer focused, then it will be more susceptible to the economic rhythm...I would say that Nintendo therefore would be the most susceptible."

It was not all doom and gloom however, as consoles sales over all are 15% higher than this time last year, suggesting that, while the gaming industry is by no means recession-proof, it is certainly in a good position to weather the oncoming storm.

Source: The Guardian via CVG

Permalink

I wouldnt say Nintendo are suseptable so much as those 3rd party companies that have leaped on the 'casual' game market. Nintendo still have their catalogue of franchises that appeals to their core audience. Indeed it might even be a good thing: More Classic Nintendo franchise games (coplain all u want. They milk that cow coz it gives good milk) & less Samba De Amigo crap

Funny, I would say Nintendo is the least susceptible of the current console manufacturers. Why? Well their products are cheapest for starters.
By dint of using old technology their consoles are also cheapest to develop for, no doubt that will become more significant when people stop dropping £250+ on Xbox's and PS3's. The fact that the HMV I work in sold one 360, no PS3's and nearly 40 Wii's and DS's this week probably reflects that already.
If the number of Wii's being sold keeps outstripping the other two, eventually it will become developer's lead format, otherwise they may as well be admitting they don't want to make money.

If the number of Wii's being sold keeps outstripping the other two, eventually it will become developer's lead format, otherwise they may as well be admitting they don't want to make money.

I wouldn't agree with that, although Wii sales may surpass that of the Xbox 360 and PS3 it will never become the 'developers choice of format' due to the low amount of computing power. The less you have the harder it is to build for, and the Xbox 360/Ps3 market is still significant enough for developers to develop for the platform.

Wow...my parents had been asking me what video game companies are successful, so they could know who to invest in (I was being honest, so I told them EA, along with the stern warning that they are the anti-christ of the gaming industry and they shouldn't support them unless necessary.). I'm glad I didn't say Nintendo.

orannis62:
Wow...my parents had been asking me what video game companies are successful, so they could know who to invest in (I was being honest, so I told them EA, along with the stern warning that they are the anti-christ of the gaming industry and they shouldn't support them unless necessary.). I'm glad I didn't say Nintendo.

Should have said Valve. They're starting to do pretty well for themselves.

Skrapt:

If the number of Wii's being sold keeps outstripping the other two, eventually it will become developer's lead format, otherwise they may as well be admitting they don't want to make money.

I wouldn't agree with that, although Wii sales may surpass that of the Xbox 360 and PS3 it will never become the 'developers choice of format' due to the low amount of computing power. The less you have the harder it is to build for, and the Xbox 360/Ps3 market is still significant enough for developers to develop for the platform.

It will become the default developing platform if the other two consoles continue to perform so poorly.

Sure they may "want" to develop for the 360 or PS3, but if no one is buying those systems and the Wii continue to increase it's audience by leaps and bounds then the developers are going to actually start putting their top developers on the Wii rather than ignoring it like they have.

xitel:

orannis62:
Wow...my parents had been asking me what video game companies are successful, so they could know who to invest in (I was being honest, so I told them EA, along with the stern warning that they are the anti-christ of the gaming industry and they shouldn't support them unless necessary.). I'm glad I didn't say Nintendo.

Should have said Valve. They're starting to do pretty well for themselves.

Oh, you're right! What was I thinking?

Skrapt:
I wouldn't agree with that, although Wii sales may surpass that of the Xbox 360 and PS3 it will never become the 'developers choice of format' due to the low amount of computing power. The less you have the harder it is to build for, and the Xbox 360/Ps3 market is still significant enough for developers to develop for the platform.

Alright then. You're about to give a new game the green light. It's going to take 2 years to develop and cost $8 million by the time you're done, it's a new IP and neither you nor your investors have any idea how it's going to sell.

Do you tell your investors you're developing for two consoles with a combined market of 38.8 million consoles, which is slowly expanding.
Or that you will be making it for one console with a potential market of 30.4 million, rapidly expanding and showing very few signs of a slowdown, despite the global recession.

Also, do you really think it's harder/more expensive to program for something based on a seven year old hardware system against the latest, most graphically advanced consoles?

Market analysts in the UK have warned that Nintendo is likely to suffer in the current economic climate.

Don't you have to go to school or something to be an analyst?

I guess not.

Echolocating:

Market analysts in the UK have warned that Nintendo is likely to suffer in the current economic climate.

Don't you have to go to school or something to be an analyst?

I guess not.

Anyone can be an analyst. There was a penny-arcade comic on being an analyst as well. I'm at work right now so I can't find it but I will link it if possible.

I'm being an analyst right now. I'm analyzing that Nintendo will still turn around and sell more Wii's then they can make, and swim in all the money and giggle while they think of new plastic things to sell people. Perhaps a Wii-Helmet that records your head movement for..uhh.. ducking in boxing games. Or something. Yeah, thats the ticket.

TsunamiWombat:
I'm analyzing that Nintendo will still turn around and sell more Wii's then they can make, and swim in all the money and giggle while they think of new plastic things to sell people.

But that's happened already. :)

I think that Nintendo won't get affected because A: A lot of people are still buying the Wii and DS, and B: the products are really cheap. Yes, the 360 has become a lot cheaper than the Wii now, but people are buying it because of the motion controller.

I fear for Nintendo about one thing, and that's how they cater to their core audience. Sure Mario and Zelda were awesome, but the Wii has more potential. There are a lot of core based games that should come to the Wii as fast as they can. Starfox and F-Zero for example. The audience Nintendo picked is the reason why most of these party games are popping up all over the place. Thankfully, The Conduit, Punch Out Wii and Sin and Punishment 2 are coming out, so hopefully that will resolve that dilemma.

I fear that I won't get any more use out of my wii, since they made the switch to more casual gamers (even tho they we're fairly casual to begin with) I haven't bought a single game for the wii. I just want another Zelda or Metroid level game.

Indigo_Dingo:

fix-the-spade:

Skrapt:
Moar stuff

Stuff

Ok, lets make it more like the actual market - neither you nor anyone on your team have any knowledge, or desire, to make a sim game. Now, are we going to sell to the market with a total potential of 41.3 million (actual figure last time I checked) with a likely adoption rate of 5%, or a market with 36.6 million, with a potential adoption rate of .02%?

I assume the Wii is the 41.3 million.

Skrapt:
I wouldn't agree with that, although Wii sales may surpass that of the Xbox 360 and PS3 it will never become the 'developers choice of format' due to the low amount of computing power. The less you have the harder it is to build for, and the Xbox 360/Ps3 market is still significant enough for developers to develop for the platform.

Actually, I'm going to have to disagree with you on that one. Game companies aren't making as much money these days (and I'm talking about your average developer, not large publishers) because the cost of doing next-gen games is ENORMOUS. Games for the last gen systems typically were around 2 years and 4 million to develop a AAA title. Now, they're looking at 3-4 years and 20 million, easy in dev costs (a lot more in the case of games like GTA IV). The Wii is extremely easy and cheap to develop games on, which is one of the reasons for all the shovelware. I think that Wii development will become more attractive to the big boys because of it.

Of course, this is my opinion based on the data I've read.

KaZZaP:
I fear that I won't get any more use out of my wii, since they made the switch to more casual gamers (even tho they we're fairly casual to begin with) I haven't bought a single game for the wii. I just want another Zelda or Metroid level game.

There's some good stuff coming for the Wii... you're going to get your wish. And you alwas have "No More Heroes" to tide you over, which is outstanding (despite what Yahtzee says).

well common sense dictates that they wouldve seen somthing like this coming and as such have a store of cash stashed away somwhere uuh metaphorically but then again nintendo could go for the daring make tons of money strategy and stuff but hey who knows?

Either that or they'll just fail.

Indigo_Dingo:

Kubanator:

Indigo_Dingo:

fix-the-spade:

Skrapt:
Moar stuff

Stuff

Ok, lets make it more like the actual market - neither you nor anyone on your team have any knowledge, or desire, to make a sim game. Now, are we going to sell to the market with a total potential of 41.3 million (actual figure last time I checked) with a likely adoption rate of 5%, or a market with 36.6 million, with a potential adoption rate of .02%?

I assume the Wii is the 41.3 million.

I assume that you are wrong.

So essentially, you're saying that the population that looks at reviews, feedback from forums (that nitpick about every mistake) and generally looks into a game before buying it, would sell more then a population of casual soccer moms, that judge the quality of a game by how many different colours it has on the box?

Jimmyjames:

KaZZaP:
I fear that I won't get any more use out of my wii, since they made the switch to more casual gamers (even tho they we're fairly casual to begin with) I haven't bought a single game for the wii. I just want another Zelda or Metroid level game.

There's some good stuff coming for the Wii... you're going to get your wish. And you alwas have "No More Heroes" to tide you over, which is outstanding (despite what Yahtzee says).

I can't imagine what, I was expecting Brawl and Mario Kart to last me for years but here I am. This casual gamers only thing sucks! I have bought more classic games than Wii games.

Actually, I'm going to have to disagree with you on that one. Game companies aren't making as much money these days (and I'm talking about your average developer, not large publishers) because the cost of doing next-gen games is ENORMOUS. Games for the last gen systems typically were around 2 years and 4 million to develop a AAA title. Now, they're looking at 3-4 years and 20 million, easy in dev costs (a lot more in the case of games like GTA IV). The Wii is extremely easy and cheap to develop games on, which is one of the reasons for all the shovelware. I think that Wii development will become more attractive to the big boys because of it.

When did the Wii last receive a high profile release that wasn't done in house by Nintendo itself? (And by high profile, I'm including good sales). The Wii may be selling very well, but the fact is it is still extremely difficult for small developers to make it anywhere near the system, perhaps even more so then it is for them to go with the Xbox 360/PS3 due to the power constraints. And if I recall more indie developers have in fact made more successful games for the Xbox 360 and PS3, because whereas Nintendo rarely, if ever publishes a game that isn't in house work, Sony and Microsoft publish for many small developers that are not their own.

Considering the current position in the market, and huge brand appeal, I doubt that Nintendo will be in any sort of trouble during this bad economic period, not to mention that they'll have reserve cash put away for just such an occasion. If worst comes to it they'll just do what any other business will have to, tighten their belts, operate as efficiently as possible and ride it out.

From the console perspective the one that could have some serious problems in the next year or two is the PS3 thanks to that high price tag, the Xbox 360 Elite may suffer as well but with the other models the 360 will keep ploughing on.

Hey, I can do this analysis crap too, I can haz job please analysis firm? :)

They must have enough money to buy Africa twice over by now, I don't see why I should care...

i think this entire argument is flawed. with the economic crisis people aren't able to go out and do the same things they used before it to for a reasonable price. hell, these days it costs over $50 dollars to take a family of 4 to see a movie and that is only an hour or two worth of entertainment. now if you have to same family of 4 and you buy one of these family oriented casual games, you get soo much more practical use out of it. this is just the same thing that you here every few months from analysts saying why nintendo is going to fail, but the thing is, they haven't and i really don't thing they're going to. they provided a product people want for a price people want and they openned themselves up to an audience that the other systems didn't think mattered.

Nintendo has withstood through anything the world can throw at it and even made profit from it. And since Nintendo isn't even situated in the core of the economic crysis it has nothing to fear. I'd be more scared for Sony because as great as their hardware may be, it's expensive.

Indigo_Dingo:

fix-the-spade:

Alright then. You're about to give a new game the green light. It's going to take 2 years to develop and cost $8 million by the time you're done, it's a new IP and neither you nor your investors have any idea how it's going to sell.

Do you tell your investors you're developing for two consoles with a combined market of 38.8 million consoles, which is slowly expanding.
Or that you will be making it for one console with a potential market of 30.4 million, rapidly expanding and showing very few signs of a slowdown, despite the global recession.

Ok, lets make it more like the actual market - neither you nor anyone on your team have any knowledge, or desire, to make a sim game. Now, are we going to sell to the market with a total potential of 41.3 million (actual figure last time I checked) with a likely adoption rate of 5%, or a market with 36.6 million, with a potential adoption rate of .02%?

Got a source for those numbers?

From what I see on vgchartz.com, you're looking at a Wii market of 39 million, attach rate of about 3.5%, or two markets totalling 41 million, with an attach rate averaging about 6%. But those two markets will probably require a couple of extra artists and a couple of extra coders for porting issues.

Latest sales figures show that Xbox has jumped up considerably in sales.. that reduction in price is probably their best move to date. The Wii, however, is still outselling them (both put together), and at an increasing rate.

i love how things turn into an argument on the merits of the systems every time they are brought up :) Nintendo and other game companies are going to do fine through a recessionary environment, even if they take a couple scrapes and bruises on the way up. Sony may have more to lose as a straight up hardware manufacturer, talkin' TVs and stereos here. If people don't buy new PCs because they love vista so much, they could suffer more, but nintendo sells inexpensive hardware... and a lot of it.

bUT I'LL tell you what, even if I lost my (very stable) job, I'd probably still game. A lot. I'd be happy to cancel cable, cell phone, all other expenditures, but gaming would be the last to go. And thats why game companies seem recession-proof.

So wait, the company actually turning a profit on each console sale is the one most susceptible to financial hardship? What?

Who are these analysts and how did they get jobs?

I can understand their logic that the new influx of casual gamers would be the people least likely to keep buying games, but at the same time something just seems off about that projection.

While Nintendo does make a profit on each Wii sold and are currently selling them by the bucketload, the huge numbers sold to date indicate that they are selling them to an audience beyond the traditional gamer demographic.

If these more casual gamers stop buying games because of the credit crunch/recession, which is a very feasable scenario, then Nintendo are going to suffer a lot more than Microsoft or Sony.

It's worth mentioning as well, that Wii sales are slowing down.

Indigo_Dingo:

nilcypher:
While Nintendo does make a profit on each Wii sold and are currently selling them by the bucketload, the huge numbers sold to date indicate that they are selling them to an audience beyond the traditional gamer demographic.

If these more casual gamers stop buying games because of the credit crunch/recession, which is a very feasable scenario, then Nintendo are going to suffer a lot more than Microsoft or Sony.

It's worth mentioning as well, that Wii sales are slowing down.

Isn't that more an effect of Nintendos unnnatural disposition towards artifically increasing demand by never making enough Wiis?

Look if life were like an RTS we could just drop a bunch of Wii production factories and it'd all be good, but they can't, so that doesn't happen.

Also even if they're doing it on purpose they're hardly the first people to purposely misrepresent their production numbers (*cough*Sony with the PS2 and PS3 launches*cough*). Ok to be fair the former case was due to some anomalous shortage of chips. My point is that Sony should've known better the second time around and since they decided to pull (surprise) a dick move, people got shot as a result.

Ugh I have no idea where I was going with that. My point is as thus: Nintendo has been targeted at one time or another as the company to fail and it hasn't happened yet.