Nintendo May Be Recession-Proof, Rest of Game Biz, Not So Much

December 15, 2008 -

While much has been made of the supposedly recession-proof video game industry, a Bloomberg report says that if you remove Nintendo from the mix, the economic picture for the rest of the industry sags considerably.

U.S. sales of games, players and accessories rose 10 percent to $2.91 billion in November, researcher NPD Group Inc. said last week. Nintendo, maker of the Wii console, accounted for almost three-fourths of the growth, leaving the rest of the industry with a gain of 3 percent or less...

“If you’re worried about your job, are you going to buy a $400 PS3?” said Mike Hickey, an analyst for Janco Partners in Greenwood Village, Colorado. “Christmas is not going to have the same glow.”

The Wii, outselling PS3 and Xbox together by almost 2-1, also is having an impact in software. Five of the top 10 titles last month were for the Nintendo player...

 

The company also is leading in sales of handheld devices. Consumers purchased 1.57 million DS machines last month, up 2.6 percent from a year earlier, according to NPD. Sony’s sales of 421,000 PSP players were down 26 percent from last year.

GP: Bloomberg makes sense on this one. After all, EA is hurting. Sony is a disaster right now. Midway's future beyond January 31st is questionable. NCsoft has cut back. And they're not the only companies that are hurting.


Comments

Re: Nintendo May Be Recession-Proof, Rest of Game Biz, Not So

I think Nintendo is affected by it too, they would probably be doing even better.  

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Re: Nintendo May Be Recession-Proof, Rest of Game Biz, Not So

If anything, nintendo is the most recession vulnarable. The Wii is mostly a secondary console, or a singular "toy" rather than something like the xbox 360 and PS3 as a platform. On the PS3 and 360, people will buy Halo, Metal Gear, Final Fantasy, Gears of War, no matter what the cost. With the wii side, I think that people will look at gameparty or Ski and Shoot and say "I can live without that." But the hardcore say "I gotta have Halo: ODST!!!!"

Re: Nintendo May Be Recession-Proof, Rest of Game Biz, Not So

You are not factoring in cost of development though.

PS3 - sells at a loss hoping to make up for it in game sales.

360 - arguably still sells at a loss, Same as the PS3.

Wii - makes a profit on every console sold. Licensing fees are icing on the cake.

PS3 Games - developed for and sold to hard core gamers. These gamers like the best of the best. These games cost $20 million plus to develop. They need to sell in large numbers (millions) to break even. The chances of losing money are quite high here.

360 Games - Same as the PS3.

Wii Games - The Wii does not require high intensity graphics or sound to make a good game. Games for the Wii can be developed for a fraction of the cost of PS3 or 360 game. Can be done for $5 million or less. Don't need to sell as many copies to break even (100s of thousands.) The chances of losing money are much lower on this console.

The reason the economic downturn will hurt the 360 and PS3 more is that they are high cost machines that require more units to be sold to actually make money. The Wii being a low cost system doesn't require as many copies to be sold and will therefore will be hurt less when people are tightening their belts.

I hope you understand.

E. Zachary Knight
Oklahoma City Chapter of the ECA
MySpace Page: http://www.myspace.com/okceca
Facebook Page: http://www.facebook.com/profile.php?id=1325674091

Re: Nintendo May Be Recession-Proof, Rest of Game Biz, Not So

But the hardcore market is always more stable than the casual market when it comes to games, that's why nintendo survived during the N64  and Gamecube days because they can always rely on their fanbase to buy millions of zelda's, mario's, and metroids. And it's the main reason why companies like Stardock turn a profit with their fanbase, they can always depend on them to buy their games when they release them because they are dedicated to those games. The casual base however are not as rabid and dedicated to those types of games, thats why I probebly think they say they can live without wii ski, or some other dumb shovelware.

Casuals view games as a luxery, hardcore view some games as a necessity. Like I mean that there are fans that no matter what kind of economic downturn, they will have to play Metal Gear Solid 4 or have to play Halo 3. However the casuals do not care as much, therefore will not buy the game in favour of saving money. Like say for you guys and us, if your budget only allowed 50-60$ today for entertainment and there was Half Life 2: episode 3 the final game in the series which ends the story, woulden't you automatically buy that?  

Michael Pachter and Ryan Davis also said this during a taping of bonus round.

Re: Nintendo May Be Recession-Proof, Rest of Game Biz, Not So

Not really. IF you had the choice between buying HL2: ep 3 or be able to fill your gas tank, which would you choose? Hardcore gamers are far from the fountain of gold you claim they are. They have limits on how much disposable income they have. Sure they may spend less on movies or music but they still have limits. Just the hardcore alone will not be enough to save all companies and great games from extinction.

AS for the "casual" market of the Wii. These are generally adults with families and are more willing to spend money when it benefits the whole family. When choosing entertainment, they often choose based on what the whole family can enjoy. That could be a movie or a game. And let's not kid ourselves, the PS3 and 360 are not a good place for those kinds of games.This group of people will often spend more on entertainment than the "hardcore". But they spread it out over time and mediums. They don't spend all their entertainment budget or free time with games as teh hardcore do.

This new market that Nintendo tapped is actually the more stable of the two markets. Hardcore gamers will grow older, get full time jobs, get married have families. Their time and budget will shrink and they will be able to afford fewer of the hardcore titles they enjoyed growing up. Sure they could still buy all of them, but when would they play them? So why buy something you will never use? They will eventually turn into the very market that the Wii is aimed at. People who have limited time and budget to spend on games.

I can atttest to that. That has happened to me and many others I grew up with. We used to play RPGs and RTS games all the way through in days. Now it takes me months to get through one RPG. I have limited personal time and the rest is spent either working, with my wife and kids, or sleeping. I am lucky to get in 2-3 hours a week in gaming. I haven't been able to buy a new release game in 6 years. All the games I have bought this year with the exception of one have been around for several years before I bout them. I only bought them because they were cheap.

That brings me to another point, the Wii is cheaper than the other consoles. $250 fully featured vs $400-$500 fully featured (360 arcade is not fully featured). $50 game vs $60 game. Cheaper. Easier to justify when finances are tough.

E. Zachary Knight
Oklahoma City Chapter of the ECA
MySpace Page: http://www.myspace.com/okceca
Facebook Page: http://www.facebook.com/profile.php?id=1325674091

Re: Nintendo May Be Recession-Proof, Rest of Game Biz, Not So

Are you really that sure that the audience for the wii will still buy games because it somehow is justified throughout the whole family? If it is, I think it's going back the NES and SNES era where you get one game for the year and that was your game for the entire year. That's not exactly the best profitable position for nintendo. And also that's not really what I ment by game vs budget. I'm sure hardcore gamers are rational enough to not let games interfere with necessity budgeting, but I'm sure they would sacrifice all their entertainment and eating out budget over increasing the game budget. Like even, live without cable TV for 2 months or something for Half Life 2: EP3. Or refuse to eat at reasturants and use the money saved for HL2:EP3.

To enthusiest gamers, games are a luxery priority probebly over other luxeries.

And to be fair an Arcade is basically more fully featured than a wii

I belive you can do Netflix, play Gears of War, Fable, Fallout, all these other games, and play one or two arcade games, and if you forgo that a little bit of DLC, and for only 20$ you can get a 20 gig hard drive which basically makes it fully featured. And the storage device is like 768 vs the wii's 512.

Re: Nintendo May Be Recession-Proof, Rest of Game Biz, Not So

When I said "fully featured" I was speaking respective of their brands. The Arcade is not fully featured compared to the Pro or Elite. The Low end PS3 is not fully featured compared to the high end. The Wii on the other hand has only one set of features and is thus fully featured when compared to other Wiis on the market.

Are you really that sure that the audience for the wii will still buy games because it somehow is justified throughout the whole family?

Yes they will. When it comes to entertaining the whole family, the more that can be involved the better. I am a father. I have a chooice between buying a hardcore game that only I can play at any given time as long as the kids are not around, or a game that I ca nplay at any time with my kids. If I really want to game, the second is my best option. I would get more enjoyment out of it than the former. I would also be sharing in that joy with my kids. More value per dollar for the family game.

Now if I were not married and did not have kids, I could justify spending that gaming money on games such as HL 2: ep 3. But I am no longer in that position and neither are millions of gamers out there.

Peopel in my position do the same with movies. Movies that I can watch alone or with just my wife are a rare commodity. We don't get as much  time to ourselves as we would like to just watch movies for us. So we choose movies that we can watch wit hthe kids and still enjoy.

This market that Nintendo has tapped are not spending less on games, they are just spreading what they spend out away from those select blockbuster titles. Zippy, in his charming loony way, made a great point. IF you take the game attach rate of the Wii (5.5 games per console) and multiplied it by the number of Wiis sold, you have a total software sales number that puts the PS3 and 360 to shame. Just because the Wii does not have blockbusters in the Top Ten every month doesn't mean people aren't spending money. They are just more frugal with it.

But my main point is that the Wiis new market is more stable than the PS3 or 360 market. Those two may have more big spenders, but they have fewer people buying games.

E. Zachary Knight
Oklahoma City Chapter of the ECA
MySpace Page: http://www.myspace.com/okceca
Facebook Page: http://www.facebook.com/profile.php?id=1325674091

Re: Nintendo May Be Recession-Proof, Rest of Game Biz, Not So


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Re: Nintendo May Be Recession-Proof, Rest of Game Biz, Not So



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Re: Nintendo May Be Recession-Proof, Rest of Game Biz, Not So

EZK

Even without the price issues the nature of the 360 and PS3 will push away the larger non gamer market.
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Re: Nintendo May Be Recession-Proof, Rest of Game Biz, Not So

You fail to understand the casual market, when times are tough they become more shut in and the other consoles are not casual non gamer focused and the WII will maintain even more so as the majority of  consumers sell off the mroe costly consoels and hobbies to slim down to have something.

Non gamers are the majority here not gamers much less the so called hardcore that are nothing but a bunch of fan boys.
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Re: Nintendo May Be Recession-Proof, Rest of Game Biz, Not So

There is no such thing as reccession proof, only reccession resistant. The gaming industry won't be hit as hard as some other industries would but if things are bad enough, long enough then even it will suffer.

IMO the Wii's success is something of an anomoly. They have practically no third party support, bare bones online/multiplayer, and thier best selling games are stuff like Wii Fit. Yet the consoles are selling faster than they can crank them out. It simply makes no sense to me.

Re: Nintendo May Be Recession-Proof, Rest of Game Biz, Not So

I can say the same for anything in the casual market I see so many poorly developed and unfinished games selling well, frankly its just how the consumer market operates not so much on quality but on sellablity and marketing.

 

Its clear consumers do not want better they want something to plunk money into despite themselves....
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Re: Nintendo May Be Recession-Proof, Rest of Game Biz, Not So

I hope MS and Sony are hurt from this the hardware specific aspect of consoles with the cost of hardware they cannot keep up appearances without a hard look at efficacy and cost saving.

Nin has the right idea keep the hardware in line with the previous hardware as so coding does not have to be reinvented you cut costs doing it as such this makes BWC easy and the process is simplified and cuts costs and development time.

MS in part has the right idea use PC parts to cut cost but with the further miniaturization and customization it adds to cost that slows a new consoles expansion into the market and racks up debt for the maker, even if new consoles are old Xbox size and ran off a locked down OS it would save them so much time and money.


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---------------------------------
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http://zippydsmlee.wordpress.com/


Copyright infringement is nothing more than civil disobedience to a bad set of laws. Let's renegotiate them.

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Re: Nintendo May Be Recession-Proof, Rest of Game Biz, Not So

This could have multiple ripple effects on the other companies.  I don't know about Nintendo today, but for Sony and Microsoft, they take a loss for every console they sell.  They make their money through liscensing fees from third-parties wanting to make games on their systems.  But developers pay those fees on the promise that the game systems will be in millions of homes for years to come.  If they aren't selling very well, then a developer is more likely to either go multiplatform, go to a better selling system (Wii), or go PC exclusive (I'm pretty sure there are no fees for PC development).

XBox 360 is ok, they've been out for years and have built a solid library, and they've dropped the price to $200.  This might be trouble for Sony, though, which hasn't gotten the sales for the PS3 that they expected, even in Japan.  If people continue to turn away from the PS3, then that means less exclusive titles (FFXIII, anyone?), which means even more sales for the "safer" systems, like Wii and XBox.  As for Nintendo, their only issue is to build on their game library, which is rather sparce of blockbusters.

Re: Nintendo May Be Recession-Proof, Rest of Game Biz, Not So

Correct, there are no licencing fees for PC software or games.  Mac may be a different story.

Nido Web Flash Tutorials AS2 and AS3 Tutorials for anyone interested.
How to set Xbox 360 Parental Controls

Nido Web Flash Tutorials AS2 and AS3 Tutorials for anyone interested.
How to set Xbox 360 Parental Controls

Re: Nintendo May Be Recession-Proof, Rest of Game Biz, Not So

There are no licensing fees to develop for any personal computer platform. Hell, Apple gives away the developer tools while Microsoft charges hundreds for Visual Studio.

Re: Nintendo May Be Recession-Proof, Rest of Game Biz, Not So

Yes Nintendo needs better 3rd party support. But that is kind of hard to do when all the 3rd party developers are going bankrupt developing for the PS3 and the 360. Developers want to develop for those "next gen" consoles because they know what those owners want in a game. They are scared of the new market that Nintendo has opened up and are unsure of how to approach it.

That is why we had such a huge surge of PS2 ports in the first year. That is why we had a huge surge of crappy casual games this past year. Publishers and developers, with the exception of a couple, have lost touch with the majority of the human population.

THe Wii is not just a kids console. It is not just a console for casual games. There are millions of people with a wide vaiety of tastes that don't fit into the "casual" or "hardcore" or "kiddie" markets. But publishers and developers are afraid to research those tastes out.

Just look at the struggle we have of tapping the female gamer market. Women make up 30% of game players in the US. Yet the best we can come up with are the Sims and Barbie. Surely we can do better.

Funny thing is, these are the exact problems that are causing the majority of the games industry to suffer. There failure to tap markets other than the high cost slim returns of the "hardcore" market is what is killing them.

Take some time and spend some money on R and D and you will do better in the long run.

E. Zachary Knight
Oklahoma City Chapter of the ECA
MySpace Page: http://www.myspace.com/okceca
Facebook Page: http://www.facebook.com/profile.php?id=1325674091

Re: Nintendo May Be Recession-Proof, Rest of Game Biz, Not So

Good points all around.  Actually, the economic downturn may lead to inceased creativity and innovation, as developers look for ways to make fun games while trying to avoid money pits like ever increasing graphics.  I don't want the PS3 or XBox to fail, but this could be a serious boon to the Wii even more than the article implies.

Re: Nintendo May Be Recession-Proof, Rest of Game Biz, Not So

Well said EZK.  Until publishers and developers get their collective heads out of their lower digestive tracts, this is going continue getting uglier and uglier.  Japan is starting to get it (DQ10 anyone?), but western devs are still suffering from rectal-cranial inversion.

Re: Nintendo May Be Recession-Proof, Rest of Game Biz, Not So

One can only wonder how '09 will be. It looks to be fairly dry Nintendo wise, but they are operating on low budgets for high profits. The other companies have big budgets and make little back from the short term gains they seek especially with how many other titles are out there during their launch windows.

 
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