The games-following media went all a-flutter for a moment last week when, for the first time since Nintendogs went on sale, a real piece of bad news came to light regarding Nintendo. Nintendo's share price tumbled 12 per cent following a one-third cut of its full year net income forecast, and industry watchers, keen for anything to break the monotony of weekly hardware sales charts, greedily snapped it up.
While the children of the Iwata and Miyamoto households definitely won't be going hungry this year, it marks the second time that Nintendo has reduced its profit expectations for fiscal 2008 - something inevitable given the miserable state of the world economy and the ludicrous strength of the yen compared to the dollar, but also something that has had industry watchers casting glances at the Wii's performance, especially in its homeland.
After three years on the market, a position of dominance and the stellar domestic sales of the DS, the Wii's performance in its home market leaves something to be desired. Iwata admitted as much, noting that "Wii sales in Japan during the year-end shopping season didn't meet our forecast".
To mark this as the bursting of the Wii bubble is a mistake. The Wii has many, many hands left to play in this game yet, from potential game-changers like MotionPlus to minor sales boosters like introducing color variations in consoles, not to mention the price cut that will surely come sometime this year.
But the more worrying trend is how, having already shied from the PS3 and Xbox 360, Japanese consumers are now starting to ignore consoles entirely. It's always been ironic that the country with one of the highest penetration rates of HDTVs in the world has given such a cool reception to both the Xbox 360 and the PS3, but the cooling towards the Wii helped contribute to a worrying 13% decline in the videogames market in Japan last year.
The Japanese games market had been shrinking since the halcyon days of 1997 when Final Fantasy VII launched, and it's certainly difficult to imagine almost any console title selling more than 2 million copies on its first three days on sale as FFVII did back in the day. These days, Japanese developers are paralyzed in fear, knowing that any game green lit now will be released two to three years later in a radically different market, or perhaps even on an entirely different machine. This fear itself is manifesting itself in the ultra-safe titles that are hitting the market, appealing to a dwindling number of "core" gamers.
Taking their place at the top of the market has been the remarkably successful handheld machines. Fully half of the top-ten selling titles in Japan last year were on portables (all the rest were Wii games). While the release of Dragon Quest IX and GTA: Chinatown Wars will pair up nicely to ensure the DS is the must-have machine in both Japan and the West next month, take the DS and the Monster Hunter-powered PSP out of the equation, and the Japanese market starts to look fairly dull.
The nasty nationalism that infects the industry in all quarters no doubt means that this news will have certain sections of the market jumping for joy, and others claiming their superiority. But Japan's apparent rejection of "next-gen" gaming may not be a trend isolated to one country. After all, it would not be the first global gaming trend to start in Japan, and Nintendo's little patch of bad news follows in the wake of massive job cuts by both Sony and Microsoft, and worrying trends with both of their lead machines.