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Friday, December 02, 2005

Nintendo Needs a Revolution

Nintendo Needs a Revolution

"Nintendo has been licking its wounds for a long time now. Sony's PlayStation consoles and Microsoft's Xbox systems are devaluing the lush brand equity once enjoyed by the makers of Mario, the world's most famous plumber. The company's latest earnings report confirms such negative notions.

According to reports, the company's H1 sales revenues (for April through September) declined by 6.2%, coming in at 176.4 billion yen. Operating profit dropped 51% to just under 20 billion yen, and net profit was down 21% to 36.63 billion yen. For the full year, Nintendo believes it can achieve a net profit of 75 billion yen, which would represent a 14% decline year over year.

The blame? Lackluster GameCube sales and a price cut for the Nintendo DS handheld system. Granted, the video game sector is in transition now as the new console generation gets under way; one would expect GameCube sales to evaporate as consumers wait for the next big thing. But let's be honest; the third-place GameCube never gave either Microsoft or Sony a run for their collective money.

Nintendo has its work cut out for it -- and that may actually prove to be the silver lining in all this gloom. Amid declining sales and profits, the company absolutely must regain its console dominance of yesteryear with the upcoming Revolution system. With its corporate back against the wall, we'll see if Nintendo can rise to the challenge and figure out a way to turn the globe back into a Mario-loving world." [more]

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