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Nintendo Widens Gaming Audience

29 May, 2007 By: John Gaudiosi

SEATTLE—Nintendo is riding a videogame high that's driving the entire industry in the United States as well as worldwide. It's also put the company in a position Sony and Microsoft would love to be in — not being able to keep up with never-ending demand.

Nintendo is expected to up its monthly run of 1.5 million Wiis to 1.75 million throughout this year to try to catch up to global demand for the $250 system, according to Michael Pachter, video game analyst, Wedbush Morgan Securities.

“Nintendo needs to make a decision now to increase assembly line production, and I think they'll try 1.75 million or possibly 1.9 million production runs to address demand,” Pachter said. “It would be horrible for Wiis to be out of stock this Christmas because Nintendo can own the holiday this year.”

Pachter also believes Nintendo can sell more than 3 million Wiis this Christmas, which would break the holiday hardware sales record Sony holds from its PlayStation 2 console a few years back.

“Nintendo could sell 4 million Wiis this holiday if it can get them to retail,” Pachter said. “Nintendo is currently struggling to get product to the U.S. Japan currently is getting two-thirds of Wii allotments with only one-third of the population of the U.S.”

Nintendo recently showcased its upcoming Wii games to analysts and press in Seattle, where Nintendo of America President Reggie Fils-Aimes talked about the company's new vision for games.

“In the history of the video game industry, only one company has been the No. 1 game publisher, console maker and hardware manufacturer,” Fils-Aimes said. “That was Nintendo back in the ‘80s. Now today, we've done it again. Nintendo has momentum, and we'll maintain that momentum all through the summer and throughout this year.

Looking at the broader trend of game expansion, Fils-Aimes said that last year in Japan, half of all game systems sold were Nintendo DS. During the GameCube generation, less than half of Japanese families kept the console in their living room.With Wii, more than 75% play the system in the living room.

In Europe, both the PlayStation 3 and Xbox 360 are selling slower than their predecessors did. All 15 of the Top 15 games in Europe were for Nintendo systems last month.

In the United States, over the past year-and-a-half, Fils-Aimes said there has been a huge movement in the make-up of the gaming consumer. Female purchasers of Wii are up 42 percent. For gamers over age 30, there's been a 127% increase in Wii purchases.

“There's a reason for this widening of the audience,” Fils-Aimes said. “Wii introduces a new type of software.”

Nintendo went after the non-gamers and lapsed gamers after E3 last summer, and the company has seen Wii grow virally and become a cultural phenomenon.

“What's most compelling is when you look inside the Wii households,” Fils-Aimes said. “People are playing games that never did before.”

Homes with Wiis find regular gaming among all age groups, Fils-Aimes pointed out. A whopping 95% of males ages 6 to 24 play Wii regularly, while 61% of males ages 25 to 49 are regular Wii users. One-third of females ages 25 to 49 are regular Wii users, and older gamers also are playing regularly, with 16% of males over 50 and 10% of females over 50 spending time on Wii.

“We're competing with leisure time activities like movies and TV,” Fils-Aimes said. “If someone plays Wii Bowling instead of going to see a movie, we win. If a consumer spends 23 minutes building Miis instead of watching a sitcom, we win. We're not just competing with Microsoft and Sony any more.”

Nintendo has retained its core audience through Pokemon Pearl and Pokemon Diamond, which launched last month and in two weeks sold 1.75 million copies collectively to become the top two games of the year in sales. Next up in the franchise is Pokemon Battle Revolution for Wii, which will be the first game to offer Wi-Fi online competition for up to four players.

“The success of Wii and Nintendo DS games all boils down to fun,” Fils-Aimes said. “It's not just about looking a little better. Whether you're a hardcore or casual gamer, you want to have fun playing.”

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