Tuesday, October 30, 2007

Nintendo's on a roll

The good news continues to pour in at Nintendo: Ad Age selected them as Marketer of the Year -- one of those rare occurrences where I don't disagree with that mag.
Video-game sales were starting to flatten in North America. In a dash of in-home market research, Nintendo executives saw their own families divided into gamers and nongamers. Instead of a problem, they saw an opportunity.

So while other video-game makers were busy trying to incorporate gamers' intense demands into their next-generation hardware, Nintendo set out to create products that could change the dynamics of gaming and expand the audience well beyond what it had been before.
More importantly, the company's profitability and stock price are soaring:

The stock rose 5.3 percent to 71,300 yen on Monday, bringing its market capitalization to 10.1 trillion yen -- a fivefold increase in the past two years.

Nintendo's market capitalization is almost double that of Sony, whose total revenue is more than eight times as big as Nintendo's.

From a channel marketing standpoint, what all this means is that Nintendo is able to watch smugly as their competitors are forced to cut price:

Profits at Nintendo have surged on the runaway success of the Wii and the portable Nintendo DS machine in North America, Europe and Japan, forcing Sony and Microsoft to slash console prices in a desperate catch-up bid ahead of the holiday season.

Iwata said the company was struggling to meet demand of the Wii and a price cut was out of the question.

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