Nintendo made money, really big money, in the last quarter. Then, it had the audacity to say that things would get even better.
According to Reuters, "Nintendo said it now expects an operating profit of 650 billion yen ($6 billion) in the year to March, up from its previous forecast of 530 billion yen."
The news is spectacular for Nintendo, but it begs the question of how many video consoles the market can absorb.
The most optimistic portrait that Nintendo competitors Microsoft (MSFT) and Sony (SNE) can paint is that the demand for their Xbox and PS3 products is nearly limitless. Hundreds of millions of people want to play video games. Hundreds of millions of people may not be able to afford them.
With all of the evidence of consumer spending taking on water in the US and Europe and anecdotal information about slowing economies in Asia and India, it may be the market for video games is not as large as it appeared just a year ago.
A market which is not growing is often a market driven more by price than by features. Ninetendo has proved that buyers like its products. The fact that they cost only about half of what the Microsoft and Sony products do becomes more important as time passes.
One company’s loss is not always another company’s gain. But, in the game console market it is starting to look that way.
Douglas A. McIntyre
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