Sunday, October 29, 2006

Nintendo bets on Wii's novelty, but software rules

TOKYO/LOS ANGELES, Oct 12 (Reuters) - With the year-end shopping season approaching, expectations are running high that Nintendo Co. Ltd. (7974.OS: Quote, NEWS, Research) will repeat the success of its DS handheld machine next month with its new game console, the Wii.
Nintendo has developed the Wii not to please hardcore gamers with lifelike graphics but to entice game novices with innovative but easy-to-play games -- the same concept that helped the DS far outsell Sony Corp.'s (6758.T: Quote, NEWS, Research) PlayStation Portable.
But the novelty of Wii's one-hand controller may fade quickly if game makers are slow to come up with fresh titles, analysts say.

"Software makers and distributors are holding such high hopes for the Wii," Deutsche Securities analyst Takashi Oya said. "Their latest stance is like, 'Why don't we reallocate some of the resources from the PS3 to the Wii,'" he said, referring to Sony's forthcoming PlayStation 3.
Electronic Arts Inc. (ERTS.O: Quote, Profile, Research), the world's biggest video game publisher, is working on seven Wii titles this business year ending March 2007, up from its previous plan for five, in a bid to capitalise on the unexpected buzz around the console.
In the year to March, Nintendo aims for global sales of 20 million DS units. The DS lets users navigate games by touching the screen with a stylus instead of manipulating a keypad, and carries a price tag of $129.99 in the United States.
Sony, in comparison, expects to ship 12 million units of the PSP, a basic model of which sells for $199, over the same period.
For the Wii, Nintendo offers a TV remote-like controller, which uses motion-detection sensors that allow players to control the game by swinging the device like a tennis racket or wielding it like a sword, opening up new avenues for game playing.

Nintendo's own "Wii Sports" software, which will be included with the console in the United States and Europe, makes it possible for grandparents to play a virtual tennis match with their grandchildren in the living room.
"(The Wii) is something that will appeal to a 7- to a 70-year-old," said Laurent Detoc, who leads French video game publisher Ubisoft Entertainment SA's (UBIP.PA: Quote, Profile, Research) North American business.
Reflecting blistering DS demand and mounting hopes for the Wii, Nintendo shares shot up 71 percent from January to September.
The Kyoto-based company is set to launch the Wii in the United States on Nov. 19 for about $250, roughly half the price of the PS3 model that comes with a 20-gigabyte hard disk drive and Blu-ray high-definition optical disc player.

Sony plans to start rolling out the PS3 in North America two days ahead of Nintendo's Wii. Microsoft Corp. (MSFT.O: Quote, Profile, Research) released its latest console, Xbox 360, late last year.
$64,000 QUESTION
Despite the game-changing controller, affordable price and strong software lineup such as "The Legend of Zelda: Twilight Princess," the Wii launch is not without concerns.
"For the DS, whoever found it interesting carried it with them and showed it to people around them. That was a great demand driver," Nintendo President Satoru Iwata said last month. "We cannot expect that sort of push for a stationary console."
Analysts point out the possibility that the new controller, which requires substantially more physical movement than the traditional keypad, could eventually make game playing tiresome, causing gamers to turn their backs on the machine.

Japanese videogame maker Square Enix Co. Ltd. (9684.T: Quote, NEWS, Research) launched a game in 2003 in which players wield a toy sword in front of a sensor-mounted TV set to fight monsters on the screen, but it failed to become popular enough to spawn a sequel, casting a shadow over the Wii's prospects, Deutsche Securities' Oya said.
"Wii Sports is a fun diversion," said Sam Kennedy, editor-in-chief of videogame Web site "People will play it for a while, but it's not something that will capture your attention for weeks."
To make things harder for Nintendo, a boosting effect from PS3's Blu-ray player is likely to kick in next year, Oya said.
"There are quite a few people out there today who have no idea what Blu-ray is," he said. "But a year after its launch, at around this time next year, more people will start recognising the added value brought by a Blu-ray player, just as a DVD player function helped the PS2 to a flying start."

KBC Securities analyst Hiroshi Kamide said the Wii may start to show its age quicker than the PS3 or Xbox 360 as it is not a particularly powerful machine from a technological perspective.
The fate of the console comes down to depth and width of game software, he added.
"If it's just the same pointing and shooting all the time, it won't be particularly attractive," Kamide said.
"So to a certain extent, it's up to Nintendo software and software developers all over the world to try and think for themselves how best to utilise the controller."
Asked if the Wii's novelty would wear off, Larry Probst, chief executive of Electronic Arts, said: "That's the $64,000 question. I think it will do really well during the launch window."

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