Nintendo owns so much of the video game console market that it may be coming up against market share problems. But, the entire industry could be facing the issue of whether it has picked the low-hanging sales fruit and is faced with a prolonged slowdown in revenue growth.
According to The Wall Street Journal, "After overseeing several years of rapid growth at Nintendo Co., President Satoru Iwata faces new challenges: how to keep players of the company’s videogames interested, and how to cultivate a new wave of customers." The firm’s popular Wii console has done extremely well because it is easier to use than the Microsoft (MSFT) Xbox 360 and Sony (SNE) PS3. It is also less expensive.
Nintendo’s issue may quickly spread to the entire video game market Through May, the Wii, Xbox 360, and PS3 had sold 25 million units in the US. Between approaching market saturation and an economic slowdown, game console sales could hit a wall fairly soon.
The people most likely to buy a new game system have probably already done so. They are at the hard core of the market and won’t wait for lower prices. This group almost certainly buys the lion’s share of the games that run on the platforms.
That leaves the buyer who has a much more modest interest in the products. He may wait for lower prices, or may not buy at all. Moving him into the "sold" column will be tough, especially if the economy is making him feel poor.
Video game sales have been the bright spot for consumer electronics for over a year. That is about to end.
Douglas A. McIntyre
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