MassiveAttack
Banned
Nintendo Punches Back
Portable Device Will Try to Counter
Sony Hand-Held Challenger
By PHRED DVORAK
Staff Reporter of THE WALL STREET JOURNAL
November 5, 2004
The holiday season will be crunch time for Nintendo Co.
The inventor of Donkey Kong, far behind Sony Corp. in the videogame-console market, will soon face new competition from its rival in the market where Nintendo is still king: hand-held games. Sony's first hand-held, dubbed the PlayStation Portable, or PSP, boasting high-powered graphics and the ability to play movies on a wide, 10.9-centimeter screen, is due out at the end of the year in Japan and in early 2005 in the U.S.
Nintendo, maker of the formidable Game Boy, is fighting back. It has its own new portable game machine, the DS, a quirky gadget with two screens, one of which doubles as a touch pad. Nintendo is betting that the novel interface, combined with other tricks such as voice-recognition software that lets players talk to characters in a game, will give it a meaningful edge over Sony's PSP.
In a telling sign of how intent Nintendo is on holding onto Game Boy's No. 1 spot in hand-held games, President Satoru Iwata is backing an unprecedented advertising and promotional campaign in the U.S. For the $40 million (31 million) effort, Nintendo plans to zero in on older gamers, fighting a tendency in the market to view the company's products as toys.
The DS -- set to hit U.S. stores Nov. 21, a week before it comes out in Japan -- will feature games aimed squarely at U.S. gamers' taste for sports and shooting, compared with Japanese gamers' preferences for fantasy role-playing. The careful tailoring for the U.S. is a marketing first for Nintendo, a company long ruled tightly from its home base in Kyoto, Japan. In the Japan market, Nintendo insists the DS is for gamers of all ages, while in the U.S. it is targeting an audience far older than the avid teen and preteen users of the Game Boy.
"What you're seeing is a renewed commitment to market relevance," says Reginald Fils-Aime, the head of sales and marketing at Nintendo's North American unit. While the average age of a Game Boy user is 14, Mr. Fils-Aime says Nintendo believes it can reach an older audience of gamers, 19- to 20-year-olds, with the DS. One tactic: so-called advertorial spreads in magazines such as Maxim and Stuff titled "How to Score."
Nintendo has a lot riding on the DS launch. About 60% of its revenue last year of 514 billion yen, or 3.78 billion, came from sales of hand-held machines and software. The DS is expected to retail for about $150 in the U.S. and 15,000 yen in Japan.
The DS and its U.S. marketing strategy are Nintendo's biggest nod yet to how the industry has changed since the days when Nintendo creations such as Mario the plumber ruled the industry. Nintendo insists it hasn't deviated from its videogaming roots, and the company still rules in its home market of Japan. But that market is shrinking: Videogame console and software sales fell 8% from a year earlier in the 12 months ended March 31, according to Japan game-data tracker Enterbrain Inc. More than half of Nintendo's sales and profit now come from the U.S. and Canada.
Last year in the U.S., the world's largest videogame market, the best-selling software title was a Madden NFL game from Electronic Arts Inc., according to videogame tracker NPD Group. Nintendo was in second place with a Pokémon game. The appeal of Nintendo's best-known game franchises, such as Pokémon, with children is a major reason the company is increasingly perceived as a toy maker -- even as the number of older videogame players is rising.
At the same time, Nintendo's hardware rivals, Sony and Microsoft Corp., are pushing the industry in new directions, making Nintendo seem even more like an outlier. As Sony and Microsoft race to mix videogame software and consoles with other forms of entertainment, they are pushing high-performance hardware that lets developers make games that are increasingly realistic.
Sony's hand-held PSP is part of that push. The PSP will be able to play movies as well as videogames stored on a read-only optical-disk cartridge, a feature Sony hopes will help attract an older market. PSP users also will be able to use the device's memory stick to store and play digital music in the MP3 format popularized by Apple Computer Inc.'s iPod. And Sony boasts the PSP will be able to display graphics similar in quality to those of its popular PlayStation 2 console.
Nintendo, in contrast, isn't marketing the DS as a portable music or movie player. The company probably won't make multifunction gadgets unless it is sure they can compete with current leaders such as the iPod.
Instead, Nintendo's U.S. lineup for the DS will include sports and shooting games popular with teens and young men. Among the first games available in the U.S. -- but not Japan -- will be versions of Madden NFL and Tiger Woods PGA Tour Golf from Electronic Arts.
But in both Japan and the U.S., the DS game lineups will feature Feel the Magic XY/XX, a risqué game from Sega Corp. in which the player flirts with a woman in a minidress.
The strategy to tailor the marketing of the DS carefully to U.S. tastes has the backing of Mr. Iwata, who has made a point of visiting Nintendo's U.S. operations, based in Redmond, Washington, every few months since taking the president's post two years ago. When Nintendo's U.S. team asked during a July meeting in Kyoto for the early U.S. launch date, he backed the idea, despite resistance from other executives.
"If we had started sales at the same time in both Japan and the U.S., we wouldn't have had enough [of the DS] for either market," Mr. Iwata said at a DS demonstration in Tokyo last month.
Nintendo's aggressive push in the U.S. is giving it a valuable head start against Sony. Sony recently announced it will sell its PSP in Japan for 19,800 yen, slightly more than the DS's Japanese price. Sony's PSP won't hit the U.S. market until well after Christmas, and Sony hasn't yet set a U.S. price for it.
Sony is still aiming to ship three million PSPs -- mostly in Japan -- by March 31, the end of its fiscal year. Nintendo recently raised its DS shipment target to four million units, in the same period.
Portable Device Will Try to Counter
Sony Hand-Held Challenger
By PHRED DVORAK
Staff Reporter of THE WALL STREET JOURNAL
November 5, 2004
The holiday season will be crunch time for Nintendo Co.
The inventor of Donkey Kong, far behind Sony Corp. in the videogame-console market, will soon face new competition from its rival in the market where Nintendo is still king: hand-held games. Sony's first hand-held, dubbed the PlayStation Portable, or PSP, boasting high-powered graphics and the ability to play movies on a wide, 10.9-centimeter screen, is due out at the end of the year in Japan and in early 2005 in the U.S.
Nintendo, maker of the formidable Game Boy, is fighting back. It has its own new portable game machine, the DS, a quirky gadget with two screens, one of which doubles as a touch pad. Nintendo is betting that the novel interface, combined with other tricks such as voice-recognition software that lets players talk to characters in a game, will give it a meaningful edge over Sony's PSP.
In a telling sign of how intent Nintendo is on holding onto Game Boy's No. 1 spot in hand-held games, President Satoru Iwata is backing an unprecedented advertising and promotional campaign in the U.S. For the $40 million (31 million) effort, Nintendo plans to zero in on older gamers, fighting a tendency in the market to view the company's products as toys.
The DS -- set to hit U.S. stores Nov. 21, a week before it comes out in Japan -- will feature games aimed squarely at U.S. gamers' taste for sports and shooting, compared with Japanese gamers' preferences for fantasy role-playing. The careful tailoring for the U.S. is a marketing first for Nintendo, a company long ruled tightly from its home base in Kyoto, Japan. In the Japan market, Nintendo insists the DS is for gamers of all ages, while in the U.S. it is targeting an audience far older than the avid teen and preteen users of the Game Boy.
"What you're seeing is a renewed commitment to market relevance," says Reginald Fils-Aime, the head of sales and marketing at Nintendo's North American unit. While the average age of a Game Boy user is 14, Mr. Fils-Aime says Nintendo believes it can reach an older audience of gamers, 19- to 20-year-olds, with the DS. One tactic: so-called advertorial spreads in magazines such as Maxim and Stuff titled "How to Score."
Nintendo has a lot riding on the DS launch. About 60% of its revenue last year of 514 billion yen, or 3.78 billion, came from sales of hand-held machines and software. The DS is expected to retail for about $150 in the U.S. and 15,000 yen in Japan.
The DS and its U.S. marketing strategy are Nintendo's biggest nod yet to how the industry has changed since the days when Nintendo creations such as Mario the plumber ruled the industry. Nintendo insists it hasn't deviated from its videogaming roots, and the company still rules in its home market of Japan. But that market is shrinking: Videogame console and software sales fell 8% from a year earlier in the 12 months ended March 31, according to Japan game-data tracker Enterbrain Inc. More than half of Nintendo's sales and profit now come from the U.S. and Canada.
Last year in the U.S., the world's largest videogame market, the best-selling software title was a Madden NFL game from Electronic Arts Inc., according to videogame tracker NPD Group. Nintendo was in second place with a Pokémon game. The appeal of Nintendo's best-known game franchises, such as Pokémon, with children is a major reason the company is increasingly perceived as a toy maker -- even as the number of older videogame players is rising.
At the same time, Nintendo's hardware rivals, Sony and Microsoft Corp., are pushing the industry in new directions, making Nintendo seem even more like an outlier. As Sony and Microsoft race to mix videogame software and consoles with other forms of entertainment, they are pushing high-performance hardware that lets developers make games that are increasingly realistic.
Sony's hand-held PSP is part of that push. The PSP will be able to play movies as well as videogames stored on a read-only optical-disk cartridge, a feature Sony hopes will help attract an older market. PSP users also will be able to use the device's memory stick to store and play digital music in the MP3 format popularized by Apple Computer Inc.'s iPod. And Sony boasts the PSP will be able to display graphics similar in quality to those of its popular PlayStation 2 console.
Nintendo, in contrast, isn't marketing the DS as a portable music or movie player. The company probably won't make multifunction gadgets unless it is sure they can compete with current leaders such as the iPod.
Instead, Nintendo's U.S. lineup for the DS will include sports and shooting games popular with teens and young men. Among the first games available in the U.S. -- but not Japan -- will be versions of Madden NFL and Tiger Woods PGA Tour Golf from Electronic Arts.
But in both Japan and the U.S., the DS game lineups will feature Feel the Magic XY/XX, a risqué game from Sega Corp. in which the player flirts with a woman in a minidress.
The strategy to tailor the marketing of the DS carefully to U.S. tastes has the backing of Mr. Iwata, who has made a point of visiting Nintendo's U.S. operations, based in Redmond, Washington, every few months since taking the president's post two years ago. When Nintendo's U.S. team asked during a July meeting in Kyoto for the early U.S. launch date, he backed the idea, despite resistance from other executives.
"If we had started sales at the same time in both Japan and the U.S., we wouldn't have had enough [of the DS] for either market," Mr. Iwata said at a DS demonstration in Tokyo last month.
Nintendo's aggressive push in the U.S. is giving it a valuable head start against Sony. Sony recently announced it will sell its PSP in Japan for 19,800 yen, slightly more than the DS's Japanese price. Sony's PSP won't hit the U.S. market until well after Christmas, and Sony hasn't yet set a U.S. price for it.
Sony is still aiming to ship three million PSPs -- mostly in Japan -- by March 31, the end of its fiscal year. Nintendo recently raised its DS shipment target to four million units, in the same period.
