CORRECT: Wii On The Wane: Videogame Companies See Sales Slowing
08 5월 2009 - 7:14AM
Dow Jones News
Videogame makers are bracing for slowing sales of Nintendo Co.
Ltd.'s (7974.OK) Wii console, the platform that has carried the $20
billion industry for more than a year.
Over the last week, a host of videogame makers have hinted in
their quarterly earnings reports that the innovative console's
waning popularity may eventually weigh on their results. The latest
to fret about the withering Wii is Santa Monica, Calif.-based
Activision-Blizzard Inc. (ATVI), which reported the percentage of
its first-quarter revenue from Wii sales had slipped to 14% of
revenue, from 22% a year ago.
"It certainly causes concerns generally," said Activision CEO
Bobby Kotick. "But from a product strategy standpoint, we don't
have the percentage of [Wii] market share that other companies
have."
Slowing sales of the Wii are a problem for the videogame
industry, which has held up well even as the recession dents
consumer spending. The game's motion-activated controller made it a
hit with younger children, as well as with women and older
consumers who generally weren't the target audience for videogames.
For much of this year and last, Wii games represented half of any
given month's Top 10 games, according to data tracker NPD
Group.
Now, the Wii's dominance appears to be ebbing. The signs first
emerged in January, when Nintendo lowered its expectations for its
fiscal 2009, ending in March, to come in 1 million units lower than
forecast.
In March, Wii sales in Japan dropped 63%. Later that month,
Satoru Iwata, Nintendo's president, said Wii sales in Japan were
the "unhealthiest" since it went on sale in June 2007. The trend is
the same in the U.S., where Wii sales fell 16% in March, according
to NPD. And softness continued in April, game executives say.
The hardware slowdown likely presages a similar decline in game
software, and such publishers as Electronic Arts Inc. (ERTS) and
THQ Inc. (THQI) could be hit harder than others. That's because
those companies have grown more dependent on the Wii and targeted
much of their catalog at the console.
EA, which makes the popular "Madden" franchise, has focused more
of its resources on producing games for the Wii. Over the rest of
the year, the Redwood City, Calif., company is expected to release
more than 20 games for the console - a large percentage of its
portfolio - and at least a quarter of its Wii titles will sell a
million copies or more.
Los Angeles-based THQ, best known for its "Ultimate Fight Club"
games, has also become more dependent on Wii sales, which it
acknowledged during its earnings call this week were showing "a
little softness." Wii games constituted 17% of its fiscal
fourth-quarter 2009 net revenues.
Of course, the popping of the Wii bubble doesn't spell G-A-M-E
O-V-E-R for the videogame industry. As Wii sales slumped, Microsoft
Corp.'s (MSFT) rival Xbox 360 surged 25% to help fill the void.
Some videogame makers, like Activision, for example, have been
diligent about keeping a broad mix of titles, a strategy that keeps
them well-cushioned.
Nintendo remains confident, though, and is targeting an 8% rise
in Wii sales to 220 million units for this fiscal year. Still, with
so much riding on the console, investors in videogame software
makers are hoping Wii sales hit a power-up button soon.
-By Ben Charny; Dow Jones Newswires; 415-765-8230;
ben.charny@dowjones.com