TechWeb

Nintendo Bumps Sony From Its Videogame Market Perch

Oct 30, 2007 (02:10 PM EDT)

Read the Original Article at http://www.informationweek.com/news/showArticle.jhtml?articleID=202800413


Nintendo, which has outsold Sony and Microsoft in the video game console market, became the leader in game revenue in the third quarter, toppling Sony, a market research firm said Tuesday.

Worldwide revenue from Nintendo DS and Wii gaming software amounted to $1.2 billion in the quarter, up more than 31% from $943.6 million Nintendo garnered in the second quarter, iSuppli said. In comparison, Sony generated $1 billion in gaming software revenue for its PlayStation 3, PlayStation 2, and PSP players, while Microsoft posted revenue of $317.8 million for Xbox and Xbox 360. In the second quarter, software sales for Sony and Microsoft were $1 billion and $271.9 million, respectively.

Nintendo is expected to maintain its lead as it ships about 200 additional titles by the end of the year, bringing the number of games to more than 350, many from outside publishers, iSuppli analyst David Carnevale said. In addition, game sales could get a further boost by the expected introduction of a new flagship title for the Wii, called Wii Fit. The game encourages players to engage in full-body exercises using Wii Balance Boards, performing activities including yoga, push-ups, aerobics, and stretching.

The Wii's revenue from software is expected to rise to $1.1 billion worldwide by the fourth quarter of 2008 from $66 million in the first quarter of last year, according to iSuppli. Nintendo's portable gaming device, called the DS, is expected to reap software revenue of $1.2 billion from $333.2 million during the same time frame.

Nintendo has achieved mass-market appeal through easy-to-use games, and the Wii's motion-sensing control that allows players to get more physically involved in games, which could involve swinging a virtual tennis racket or golf club.

In contrast, Sony's PlayStation 3 and Microsoft's Xbox 360 are aimed at more serious gamers with cutting-edge titles, such as the popular Halo 3 for the Xbox 360. Microsoft reported this month that sales of Xbox 360 jumped 100% in its fiscal first quarter ended Sept. 30, thanks to the debut of Halo 3. Microsoft hopes the trend will continue through the holiday shopping season.

Halo 3 has, to date, broken a number of gaming industry records, including the mark for first-day sales. The title pulled in $170 million on its Sept. 25 launch.

Sales of PlayStation 3 software, however, have been suffering due to the console's high price and a lack of compelling titles. The problems have affected third-party game publishers, such as leading game maker Electronic Arts, iSuppli said. EA is losing revenue due to meager PlayStation 3 sales and the company is rooting for price cuts and improvements to the console to encourage software sales.

Sony this month cut the price of the PlayStation 3, but because the company was slow to drop prices and produce compelling games, third-party publishers are flocking to other platforms, the research firm said. "If the PlayStation 3 can't promote more game sales," iSuppli said in a statement, "developers may begin to feel working with Nintendo outweighs the benefits of working with Sony."