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Nintendo sales flagging, price cuts soon, consumers reject $149

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#1 of 35 OFFLINE   Michael St. Clair

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Posted August 05 2003 - 09:40 AM

http://money.cnn.com....ming/index.htm

One analyst doubts that Nintendo would actually make profit on $99 Gamecubes, but it looks like the price may end up there in September.

Retailers are (allegedly) threatening Nintendo with a reduction in shelf space if Iwata and company don't do something.

It seems they will announce strategy, if not details, on Thursday.

#2 of 35 OFFLINE   Camp

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Posted August 05 2003 - 03:37 PM

Thanks for the link. It's rare to see an industry analyst actually get things right. Most of them haven't a clue.

#3 of 35 OFFLINE   Joel Mack

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Posted August 05 2003 - 04:46 PM

Quote:
One analyst doubts that Nintendo would actually make profit on $99 Gamecubes,


Are they making a profit on the $149 ones?

#4 of 35 OFFLINE   Michael St. Clair

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Posted August 05 2003 - 05:05 PM

Quote:
Are they making a profit on the $149 ones?


Well, they say they are. However, my understanding (dating back years ago) of the business world in Japan is that it is completely legal and moral to 'bend' the truth in the name of strategy and saving face.

In other words, if they were losing money on the Gamecube at $149, it would be acceptable (in the face of competition and for the sake of marketing) to claim otherwise. Likewise, I think that short-term sales figures in Japan are less reliable than in our culture.

That's my understanding, and has been for some time. If I am wrong, I welcome correction.

#5 of 35 OFFLINE   Morgan Jolley

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Posted August 05 2003 - 06:05 PM

They're making profits while the GameCube is at $149, which means the GBA is kicking ass in sales. So saying that they're making profits with the GCN at that price is not a lie, though it is a bent truth.

#6 of 35 OFFLINE   Scott L

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Posted August 05 2003 - 06:11 PM

Quote:
They're making profits while the GameCube is at $149, which means the GBA is kicking ass in sales. So saying that they're making profits with the GCN at that price is not a lie, though it is a bent truth.
Posted Image How in the world would you know?

#7 of 35 OFFLINE   Morgan Jolley

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Posted August 05 2003 - 06:46 PM

I'm guessing.

#8 of 35 OFFLINE   BrianB

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Posted August 05 2003 - 11:44 PM

Quote:
They're making profits while the GameCube is at $149, which means the GBA is kicking ass in sales. I'm guessing.

Yes, you are.

One needs to remember to take into consideration that for each GameCube sold at $149, it "costs" Nintendo either a piece of software or the trade price of the Gameboy Player in addition to the cost of the GC.

Dropping the price to $99 may cause an initial spark in sales, but long term, I don't think it'll do much more than cut Nintendo's profit margin even more. It's heretofore at that price, effectively.
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#9 of 35 OFFLINE   Camp

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Posted August 06 2003 - 02:40 AM

Quote:
I don't think it'll do much more than cut Nintendo's profit margin even more.

Unless the tactic works and they actually sell more software/accessories to all the new cube owners.

#10 of 35 OFFLINE   BrianB

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Posted August 06 2003 - 03:01 AM

We shall see.
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#11 of 35 OFFLINE   Mike Brogan

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Posted August 06 2003 - 03:24 AM

According to the CNN article; only 80,000 units were sold between April and July.

But, according to the article below, the number is 800,000:

GameCube Gloom...

So which one is correct? I think 80,000 would have to be way off.

Or is one figure referring to how many were actually sold to consumers, while the other is how many were sold to retailers?

I'd probably buy a GC for $99...as long as they start marking down some of there older titles.

#12 of 35 OFFLINE   Adam Tyner

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Posted August 06 2003 - 04:37 AM

Admittedly, these articles could all be quoting the same inaccurate source for the 80K figure, but:

From http://money.cnn.com....ming/index.htm :
Quote:
Worldwide, only 80,000 GameCubes were sold between April and June.

http://story.news.ya....an_nintendo_dc :
Quote:
For the April-June quarter, Nintendo sold 3.24 million units of the Game Boy Advance (GBA), including the newest version GBA SP, but only 80,000 units of the GameCube console.

From http://www.forbes.co....tr1048520.html :
Quote:
TOKYO, Aug 5 (Reuters) - Japanese videogame maker Nintendo Co Ltd <7974.OS> said on Tuesday it sold 80,000 GameCube consoles worldwide in the latest quarter.

From http://www.gamebunke...php?newsid=1397 :
Quote:
And in sales news, Nintendo sold 80,000 GameCube consoles world-wide in the first quarter of the business year, which is from April to June.

From http://www.gamerfeed....php?story=3956 :
Quote:
During the quarter, Nintendo sold a whopping 3.24 million GBA units, while sales of the GameCube were far lower at 80,000 units.

From http://www.atimes.co...n/EH07Dh01.html :

Quote:
Shipments of the Gamecube home-use console came to 80,000 machines across the world, but shipments of the portable Game Boy Advance grew to 3.24 million.


#13 of 35 OFFLINE   Michael St. Clair

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Posted August 06 2003 - 05:51 AM

They are all 'borrowing' the same typo from the same sources. Some game 'news' sites just steal articles from each other.

80,000 is probably too low.

I find it interesting that they may have to sell the Gamecubes for a per-unit loss, or probably already are. It kills a lot of fanboy ammunition that is always parroted: 'Nintendo doesn't lose money on hardware'.

Is Nintendo about to disappear? Of course not. Can they turn around their in-home hardware business? I'm not sure.

But the most telling thing about the article isn't how much Nintendo is making or losing, it is that retailers are threatening reduced shelf space. That is a Very Bad Thing.

#14 of 35 OFFLINE   BrentC

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Posted August 06 2003 - 06:02 AM

Honestly the price drop to $99 dollars does nothing for me. If i were to buy a cube (and i have been tempted to do so) I would also buy either Zelda or Metroid. So either way I am out $150, because I seriously doubt they will be offering those games for free with the purchase of a $99 cube... now if they had a package deal for say $120 that would be hard to pass up!!!

#15 of 35 OFFLINE   Michael St. Clair

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Posted August 06 2003 - 06:05 AM

Wow, the 80,000 (sell-through) units was accurate.

http://www.nintendo....ews/030805e.pdf
http://ve3dboards.ig...?topic=12693905

Regardless of how profitable the company is as a whole, they've got to seriously rethink how they've been handling the home console business.

#16 of 35 OFFLINE   Allen_Appel

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Posted August 06 2003 - 06:44 AM

Everything I remember reading has said that Nintendo was making a profit on hardware sales, though it was probably not that big at the $149 price point. That profit will most likely disappear at $99, though if you're only selling 80,000 units a quarter, it's not that big of a loss. Posted Image One scenario that I think is far more likely than Nintendo abandoning the hardware business is them abandoning the US/EUR market. They still sell very well in Japan, why not just concentrate their efforts there?

#17 of 35 OFFLINE   Mark Hedges

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Posted August 06 2003 - 07:19 AM

Quote:
One scenario that I think is far more likely than Nintendo abandoning the hardware business is them abandoning the US/EUR market. They still sell very well in Japan, why not just concentrate their efforts there?



I don't see that happening. The US/EUR markets are just too big to ignore. And quite frankly I wouldn't say they are doing all that well in japan. Even if all 80000 sales were in japan that is still very poor.

#18 of 35 OFFLINE   Jason Seaver

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Posted August 06 2003 - 07:59 AM

Quote:
One scenario that I think is far more likely than Nintendo abandoning the hardware business is them abandoning the US/EUR market. They still sell very well in Japan, why not just concentrate their efforts there?
Isn't that the equivelent of sending a fax to Microsoft and Sony reading "Kick My Ass"? Posted Image Seriously, wouldn't that make Nintendo even less of a draw for third parties than they already are? And, heck, once you're limiting your potential audience that way, doesn't the amount of money that you're willing to put into "Mario XXVII" drop sharply, leading to even their first-party games being less desirable and accelerating the downward spiral?
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#19 of 35 OFFLINE   Joe Szott

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Posted August 06 2003 - 08:11 AM

I love Nintendo's market strategy, can't wait to play Metroid 2 on my PS3.

Posted Image

#20 of 35 OFFLINE   Romier S

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Posted August 06 2003 - 10:50 AM

Some interesting sales figures I ran across. NPD game sales for June. Just picked a couple of releases:

GCN HULK VIVENDI UNIVERSAL May-03 45,726 $2,242,041
XBX HULK VIVENDI UNIVERSAL May-03 72,876 $3,531,086
PS2 HULK VIVENDI UNIVERSAL May-03 185,067 $8,981,055

GCN ENTER THE MATRIX ATARI May-03 129,590 $6,433,430
XBX ENTER THE MATRIX ATARI May-03 358,932 $17,591,680
PS2 ENTER THE MATRIX ATARI May-03 810,507 $39,576,240

XBX DISNEY'S FINDING NEMO THQ May-03 33,975 $1,358,973
GCN DISNEY'S FINDING NEMO THQ May-03 50,743 $2,028,826
PS2 DISNEY'S FINDING NEMO THQ May-03 125,025 $4,901,066

GCN X2:WOLVERINES REVENGE ACTIVISION Apr-03 31,687 $1,525,319
XBX X2:WOLVERINES REVENGE ACTIVISION Apr-03 62,516 $3,022,473
PS2 X2:WOLVERINES REVENGE ACTIVISION Apr-03 151,511 $7,175,371

GCN T.CLANCY'S SPLINTER UBI SOFT Apr-03 47,540 $2,343,271
PS2 T.CLANCY'S SPLINTER UBI SOFT Apr-03 430,621 $21,168,450

GCN NBA STREET VOL 2 ELECTRONIC ARTS Apr-03 68,787 $3,398,749
XBX NBA STREET VOL 2 ELECTRONIC ARTS Apr-03 180,343 $8,906,355
PS2 NBA STREET VOL 2 ELECTRONIC ARTS Apr-03 614,554 $30,308,370

XBX RAYMAN 3: HOODLUM UBI SOFT Mar-03 15,235 $556,954
GCN RAYMAN 3: HOODLUM UBI SOFT Mar-03 27,637 $1,041,840
PS2 RAYMAN 3: HOODLUM UBI SOFT Mar-03 41,637 $1,507,782

GCN MLB SLUGFEST 20-04 MIDWAY Mar-03 16,908 $596,415
XBX MLB SLUGFEST 20-04 MIDWAY Mar-03 20,293 $941,332
PS2 MLB SLUGFEST 20-04 MIDWAY Mar-03 95,502 $4,294,715

GCN VEXX ACCLAIM ENTERTAINMENT Feb-03 19,289 $745,402
XBX VEXX ACCLAIM ENTERTAINMENT Feb-03 22,734 $1,022,101
PS2 VEXX ACCLAIM ENTERTAINMENT Feb-03 39,803 $1,727,983

GCN ATV QUAD POWER RACE 2 ACCLAIM ENTERTAINMENT Jan-03 21,468 $649,240
XBX ATV QUAD POWER RACE 2 ACCLAIM ENTERTAINMENT Jan-03 85,823 $2,558,756
PS2 ATV QUAD POWER RACE 2 ACCLAIM ENTERTAINMENT Jan-03 95,369 $2,840,170


The Splinter Cell sales figure are of most concern to me. W'ere talking a million selling title on the Xbox and half a million sold on the PS2 yet it barely reaches 50k on the GC. Enter the Matrix is also a bit disturbing (regardless of what you think of the games quality)as the Xbox alone almost doubled the number of GC copies sold.

To be fair the rest of these titles are fairly low key and not big sellers (ie the Xbox versions didn't exactly light up the sales charts either), however they do show a trend. The PS2 leaves both its competitors in the dust of course which is to be expected with the greater userbase.

The point? Any other subject you can argue about, be it hardware bundles peaking sales, etc etc etc...simply are a symptom, this ladies and gentleman is the real root of the problem.

Nintendo's fanbase can only help push hardware for so long before things are going to let up. Nintendo really needs to work at helping its third parties achieve better sales on its next gen platform. How? I honestly dont know. I feel for Nintendo in a way because they are stuck under the bootheel of thier own quality. What I do know is that without a strong audience for sports games and sagging/lower than expected third party sales on major titles (ie Splinter Cell/Enter the Matrix) you've already limited your mainstream appeal. This is a point I've made several times in the past.

I try to stay out of getting involved in a Nintendo doom and gloom argument since a majority of the time very little actually comes out the discussion (besides the arguing of coursePosted Image). However I don't see Nintendo pulling the plug on anything here anytime soon (and IMO its silly to think so considering the position both MS and Nintendo are when faced with the giant that is Sony). Do changes need to be made? Defintely. How can they implement those changes? That really is the most difficult question to answer....


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