Nintendo. Loaded.

· by Steve · Read in about 4 min · (745 Words)

I’m guessing that due to the cultural differences, Nintendo’s execs aren’t sitting back with a fat cigar and a glass of port, over-indulging themselves and generally generally enjoying how much goddam money they’ve managed to make last year, but you could understand it if they did. Sales figures for December 2006 are coming in, and my goodness did Nintendo rake it in. In terms of generating raw cash, everything seems to be in their favour.

Firstly on the hardware front, they sold a vast amount of hardware across all regions. Figures indicate that more than 5 million DS’s were bought worldwide in December 2006 alone, making it the most popular console by a significant margin and now with a population of over 35 million according to VGCharts. The Wii sold around 2.5 million units worldwide in December. Remember that unlike Microsoft and Sony, Nintendo makes a profit on every one of these units, so high hardware sales are actually a revenue stream for them rather than a deficit that has to be made up from software.

An addition, software sales for the DS were staggeringly high in 2006, and the attach rate on the Wii is very good (for a launch) at about 1.8, certainly when compared to its peers (the PS3 was notoriously below 1.0). Nintendo of course makes money on every one of these games, but even more since the most popular games are almost always first-party titles. They’re raking it in.

Time will of course tell how well the Wii will do beyond it’s launch, but it’s clear that the DS is well and truly established and will continue to pull in revenue for them for a long time to come. Since the Wii shares many characteristics with the DS (relatively cheap, emphasis on fun and invention) it’s going to be interesting.

It’s certainly going to be interesting to watch what happens when the PS3 gets released in Europe, which is rumoured to be late March now. Certainly in Japan the situation is pretty clear-cut - the 360 has completely flopped there, having sold a paltry 290,000 consoles since launch in Oct 05 which is just embarrasing. December 06 saw 1.3 million DS’s, 989,000 Wii, 466,000 PS3s and 99,000 360’s sold in Japan (the latter being an all-time record, although I can’t see it turning the tide). So in Japan it’s not really a next-gen race at all - both Wii and PS3 sold multiples of the 360’s entire installed base in a single month there.

In North America and Europe I couldn’t call it. 360 is doing extremely well of course (at least on the face of it, this article has quite an interesting spin), and PS3 looks to have lost the plot somewhat, with the high price, disappointing launch selection and release promise breaking. But I wouldn’t call the war won yet, despite MS’s trumpeting of the ‘first to 10 million wins the war’ rule recently. Remember, pretty much all of those 10m 360 units are in 2 of the 3 major regions. By performing so badly in Japan, MS still has something of a weak spot, that if Sony get their act together on, they could still pull it back. After all whilst XBox has to get to 5m-ish in each of the US and Europe to get to 10m, PS3 only has to get to 3m-ish in each region to equal that, because their continental base is likely to be more balanced, assuming Europe follows the US’s lead when the PS3 is released. For example in December in the US, 1.2 million 360’s were sold against about 550,000 PS3’s. Clearly 360 is winning there right now, due to a number of factors like price and game selection, but when you combine US and Japan (we’ll ignore Europe since there’s not comparison), the margin is hardly there at all. When you count launch stock shortages (in places where people did want to buy it, and factor in a price drop and a larger game library later in the year, it could easily turn it around, and PS3 doesn’t have to win in the US to win overall, because of the Japanese element. I’m not sure what will happen - a continental fragmentation is possible, with 360 dominating the west and PS3 the east perhaps, with no clear worldwide victor, with Nintendo just running backwards and forwards under the radar of both, their pockets bulging full of cash. Interesting times.