Nintendo head lays out game plan

Via mercury news

Less than three years ago, Nintendo, the venerable video game company, was looking like a fading icon.

With archrival Sony's PlayStation 2 game console leaving Nintendo's Game Cube in the dust, the company was in the midst of losing a second straight round in the video console wars. And Sony looked ready to replicate its success in the handheld arena, long Nintendo's strong suit. Though Nintendo planned to counter with a new handheld of its own, few gave its relatively dim-screened, underpowered DS much of a chance against Sony's powerful, multimedia PlayStation Portable (PSP).

Fast forward a few years, and things look a lot different. Sales of Nintendo's DS have trounced those of the PSP, thanks in part to Nintendo's focus on quirky, fun-to-play games for the machine.

The company is using a similar formula with its new Wii console - and seeing similar success thus far. The machine, which includes a unique, motion-sensing controller, has outsold Sony's new PlayStation 3 ever since they both launched last year, and Wii sales even topped Microsoft's Xbox 360 in January.

Reggie Fils-Aime, president of Nintendo of America, says this is only the beginning. Sales of game consoles are typically dependent on the number and quality of the games available for them. As Fils-Aime, notes, there's been a major shift in the game industry of late toward developing titles for Nintendo's platforms.

At the Game Developers Conference earlier this month

Mercury News reporters Mike Antonucci and Troy Wolverton sat down with Fils-Aime to talk about this shift and Nintendo's resurgence.
Q The Wii has been hard to find in stores ever since it launched. Will there be any change in that any time soon?

A Mr. (Sarturo) Iwata (president of Nintendo) has already publicly said that we are increasing our capacity.

He did not give a timeline, and he did not give specific numbers. What I will say is we are all acutely aware of the issue. And we all recognize that we have a limited period of time to address the issue, because more so than the core gamer, the casual gamer will get frustrated if they cannot get their hands on the product. And so, certainly from a total company perspective, we're making a full-court press. Now the interesting thing about this - and this is where I'll look back - we had the same issue with DS all last year. And so, when a product is in such high demand, you can't solve it overnight.

The fact that we sold 494,000 (consoles in January) ... certainly speaks to getting as much product into the marketplace as possible.

Q To what extent have you guys been surprised by the demand for the Wii?

A We knew we had magic in a bottle back at E3. Certainly our performance has been much more than the industry had anticipated.

Q Speaking of that, Electronic Arts said recently it's shifting resources over to the Wii and to the DS. Pandemic says it's doing the same thing. To what extent are you hearing about similar moves by other major publishers and developers?

A Every publisher has either made the decision and stated it publicly or made the decision and not stated it publicly, but the amount of resource shift has been tremendous. The natural follow-up question is, "What's driving it?" What's driving it is, they see the install base, they see the mix of established players ... with the potential for new gamers, and they see a business opportunity. Coupled with the lower development costs, it really is a no-brainer.

The decisions started at E3 for a lot of publishers. We had been having conversations with certain publishers, obviously, well before that. Ubisoft, for example, had early access. EA had early access. But a lot of non-traditional Nintendo developers really made the decision as they watched the lines and saw for themselves what the reaction was.

Q Outside the console arena, you guys saw strong sales of your aging Game Boy handhelds over the holidays despite having few new games. What was that about? Did it just get to the point where it's a stocking stuffer?

A Exactly. It's a mass market price point; fantastic library of games; frankly, better availability than DS; and that's what drove the numbers.

Q Conversely, you guys had a dip in U.S. sales of the DS in January. Sales of Sony's rival PSP handheld nearly caught up with you. What's the story there?

A Availability. All availability.

Based on worldwide production numbers, the Americas ran out of stock of Nintendo DS essentially on the 25th of December. And we were not back in stock until sometime the second week in January. So, effectively three weeks the consumer could not get their hands on a Nintendo DS. So what happened? They bought our competitor. And they bought Game Boy Advance. Now that we're back in stock, let's see what the February data says.

Q The data I've seen indicates that among the new consoles the Wii is the top seller in the U.S. and in Japan. What do European sales look like?

A Europe is in the same situation. They're selling out as soon as they're putting it into the marketplace.

Q But vis-a-vis the competition, where's the Wii stacking up?

A Well, there's no PS3 yet ... 360 is selling well only in one country: UK. Across the rest of Europe, it is not performing well. Wii, on the other hand, is selling exceptionally well all through Europe.

Q There was a lot of publicity early on about the strap issue. Any updates on how you are addressing that issue?

A We saw early on that consumers didn't quite understand what they needed to do. Especially in bowling, they were letting go of the controller. And so the strap, instead of acting as a secondary precaution, was becoming the primary precaution and a limited number were breaking. We immediately addressed the issue, made it available to any consumer through a 1-800 number as well as online. I mean, the fact is, we didn't even require proof of purchase. If a consumer called up and said, "I need a new strap," we sent them a new strap.

Q What about the people that cracked their televisions and damaged equipment, how are you guys handling those cases?

A We have a process where those consumers are contacted and the investigation process goes through. I think it's fair to say that unfortunately there are always consumers who want to make an issue out of something that doesn't necessarily happen to them. And as we go through an investigation process, we're finding a remarkably small number of consumers who actually had damage (to their equipment).

Q But will you replace somebody's TV?

A It's actually something that's out of my hands. That is handled through our investigative arm. Our policy is we will satisfy the consumer. ... But in terms of are we actually replacing televisions, I can't honestly tell you.