As the Chistmas season approaches Nintendo has been winning market share from rivals Sony and Microsoft by targeting consumers outside the hard-core market.
The balance of power in the Japanese electronics industry has tipped further towards Nintendo and away from former bellwether Sony after the phenomenal success of the Wii gaming console helped the Kyoto-based company almost triple its profits in the first half of the year.
Both Nintendo and Sony reported results yesterday and heading into the crucial Christmas trading period, the contrast between the fortunes of two companies could hardly be more stark. Nintendo, which overtook Sony in terms of market valuation in May, has continued its upward march after increasing its forecast for the number of Wii and DS devices it will sell this year. The games company behind classic characters such as Super Mario, Donkey Kong and Zelda, is now the second most valuable company in Japan, trailing only the automotive giant Toyota. Meanwhile, shares in Sony, which has lost almost 30 per cent of its market value since May, slipped further after the company admitted that it could miss its sales target for its flagship PlayStation 3 console.
The reversal of fortunes within the games console sector has been stunning and highly unexpected given Nintendo's Wii was tipped to struggle to compete with its competitors. Sony – which had achieved unparalleled success with the first two incarnations of its PlayStation mach-ine – and Microsoft were widely expected to dominate the market for next-generation consoles with state-of-the-art machines. With Nintendo's GameCube spectacularly flopping only four years ago, many observers wondered whether it had a future in the console market and whether it should instead focus its energy on handheld devices, due to the success of its GameBoy series, and on developing more hit games around Mario and his adventures.
The failure of the GameCube – which went head to head with Sony's PlayStation 2 and the original Xbox – triggered headlines proclaiming that Mario – the animated plumber that symbolised Nintendo's dominance of the computer games market in the 1980s – had finally run out of tricks and the company's valuation collapsed as analysts fretted that Micro-soft's entry into the video games sector may have been terminal for the Japanese company. Nintendo's demise was attributed to a serious strategic error as analysts derided its attempts to target older gamers and a more mainstream audience at a time when sales of violent action games such as Halo and Grand Theft Auto were all the rage.
Yet Nintendo stuck to its guns and despite concerns that the Wii would be another also-ran compared with the top-end Play-Station 3 and Xbox 360, the console has sold like wildfire and proved the doubters wrong. It has outsold the PS3 three-to-one in the Japanese market and five-to-one in the US and has taken the PS2's mantle as the fastest selling console in history in the UK after shifting 1 million machines in just eight months.
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By Nic Fildes
